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)
November 20, 1998
STRUCTURED ASSET SECURITIES CORPORATION (as Depositor under the Trust
Agreement, dated as of November 1, 1998, providing for the issuance
of Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1998-10)
Structured Asset Securities Corporation
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 333-47499 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)
<PAGE>
Item 5. Other Events
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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 $241,452,178 in aggregate principal amount of
Class A, Class AP, Class AX, Class B-1, Class B-2, Class B-3 and Class R
Certificates of its Structured Asset Securities Corporation Mortgage
Pass-Through Certificates, Series 1998-10 on November 20, 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 November 16, 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 November 1, 1998,
------------
between Structured Asset Securities Corporation, as depositor (the
"Depositor") and U.S. Bank National Association, as trustee (the "Trustee").
The "Certificates" consist of the following classes: Class A, Class AP, Class
AX, 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 fixed rate, fully
amortizing, conventional, first lien residential mortgage loans (the "Mortgage
Loans") with an aggregate outstanding principal balance of $243,400,122 as of
November 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.
<PAGE>
Item 7. Financial Statements; PRO FORMA Financial Information and
Exhibits
(a) Not applicable.
(b) Not applicable.
(c) Exhibits:
1.1 Terms Agreement, dated November 16, 1998, between Structured
Asset Securities Corporation and Lehman Brothers Inc.
4.1 Trust Agreement, dated as of November 1, 1998, between
Structured Asset Securities Corporation, as Depositor, and U.S.
Bank National Association, as Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement, dated as of
November 1, 1998, between Lehman Capital, A Division of Lehman
Brothers Holdings Inc. and Structured Asset Securities
Corporation.
99.2 Seller's Warranties and Servicing Agreement, dated as of
November 1, 1998, among Lehman Capital, A Division of Lehman
Brothers Holdings Inc., as purchaser, Cendant Mortgage
Corporation, as seller, and Cendant Residential Mortgage Trust,
as seller.
99.3 Mortgage Loan Purchase Agreement, dated as of November 1, 1998,
among Lehman Capital, A Division of Lehman Brothers Holdings
Inc., Cendant Mortgage Corporation and Cendant Residential
Mortgage Trust.
<PAGE>
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: December 3, 1998
<PAGE>
EXHIBIT INDEX
-------------
Exhibit No. Description Page No.
- ----------- ----------- --------
1.1 Terms Agreement, dated November 16, 1998,
between Structured Asset Securities
Corporation and Lehman Brothers Inc.
4.1 Trust Agreement, dated as of November 1, 1998,
between Structured Asset Securities
Corporation, as Depositor and U.S. Bank
National Association, as Trustee.
99.1 Mortgage Loan Sale and Assignment Agreement,
dated as of November 1, 1998, between Lehman
Capital, A Division of Lehman Brothers
Holdings Inc. and Structured Asset Securities
Corporation.
99.2 Seller's Warranties and Servicing Agreement,
dated as of November 1, 1998, among Lehman
Capital, A Division of Lehman Brothers
Holdings Inc., as purchaser, Cendant Mortgage
Corporation, as seller, and Cendant
Residential Mortgage Trust, as seller.
99.3 Mortgage Loan Purchase Agreement, dated as of
November 1, 1998, among Lehman Capital, A
Division of Lehman Brothers Holdings Inc.,
Cendant Mortgage Corporation and Cendant
Residential Mortgage Trust.
<PAGE>
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES, SERIES 1998-10
TERMS AGREEMENT
Dated: November 16, 1998
To: Structured Asset Securities Corporation, as Depositor under the
Trust Agreement dated as of November 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 1998-10.
Terms of the Series 1998-10 Certificates: Structured Asset Securities
Corporation, Series 1998-10 Mortgage Pass-Through Certificates, Class A, Class
AP, Class AX, Class B1, Class B2, Class B3, Class B4, Class B5, Class B6 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 fixed rate, fully amortizing,
conventional, first lien residential mortgage loans (the "Mortgage Loans").
Only the Class A, Class AP, Class AX, Class B1, Class B2, Class B3 and Class R
Certificates (together, 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, Class AP and Class AX Certificates be rated "Aaa" by of Moody's
Investors Service, Inc. and that the Class A, Class AP, Class AX and Class R
Certificates be rated "AAA" by Duff & Phelps Credit Rating Co. ("Duff &
Phelps"); that the Class B1 Certificates be rated "AA" by Duff & Phelps; that
the Class B2 Certificates be rated "A" by Duff & Phelps; and that the Class B3
Certificates be rated "BBB" by Duff & Phelps.
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: November 1, 1998.
Closing Date: 10:00 A.M., New York time, on or about November 20, 1998. On the
Closing Date, the Depositor will deliver the Offered Certificates to the
Underwriter against payment therefor for the account of the Underwriter.
<PAGE>
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
<PAGE>
Schedule 1
Initial
Certificate Certificate Purchase
Principal Interest Price
Class Amount(1) Rate Percentage
Class A $232,448,000.00 6.65% 98.98%
Class AP $1,213,078.69 0.00% 98.98%
Class AX (2) 6.65% 98.98%
Class B1 $4,382,000.00 6.65% 98.98%
Class B2 $2,435,000.00 6.65% 98.98%
Class B3 $974,000.00 6.65% 98.98%
Class R $100.00 6.65% 98.98%
- --------------------------------
(1) Approximate.
(2) The Class AX Certificates will have no Certificate Principal Amount
and will accrue interest on a Notional Amount as described in the
Prospectus Supplement.
<PAGE>
==============================================================================
STRUCTURED ASSET SECURITIES CORPORATION, as Depositor,
and
U.S. BANK NATIONAL ASSOCIATION, as Trustee
---------------------------
TRUST AGREEMENT
Dated as of November 1, 1998
---------------------------
STRUCTURED ASSET SECURITIES CORPORATION
MORTGAGE PASS-THROUGH CERTIFICATES
SERIES 1998-10
==============================================================================
<PAGE>
<TABLE>
Table of Contents
Page
ARTICLE I
DEFINITIONS
<S> <C>
Section 1.01. Definitions.....................................................................................2
Section 1.02. Calculations Respecting Mortgage Loans.........................................................25
ARTICLE II
DECLARATION OF TRUST; ISSUANCE OF CERTIFICATES
Section 2.01. Creation and Declaration of Trust Fund; Conveyance of Mortgage Loans...........................25
Section 2.02. Acceptance of Trust Fund by Trustee: Review of Documentation for Trust Fund....................27
Section 2.03. Representations and Warranties of the Depositor................................................28
Section 2.04. Discovery of Breach............................................................................30
Section 2.05. Repurchase, Purchase or Substitution of Mortgage Loans.........................................30
Section 2.06. Grant Clause...................................................................................31
ARTICLE III
THE CERTIFICATES
Section 3.01. The Certificates...............................................................................32
Section 3.02. Registration...................................................................................32
Section 3.03. Transfer and Exchange of Certificates..........................................................33
Section 3.04. Cancellation of Certificates...................................................................35
Section 3.05. Replacement of Certificates....................................................................35
Section 3.06. Persons Deemed Owners..........................................................................36
Section 3.07. Temporary Certificates.........................................................................36
Section 3.08. Appointment of Paying Agent....................................................................36
Section 3.09. Book-Entry Certificates........................................................................37
ARTICLE IV
ADMINISTRATION OF THE TRUST FUND
Section 4.01. [Omitted]......................................................................................38
Section 4.02. [Omitted]......................................................................................38
Section 4.03. Reports to Certificateholders..................................................................38
Section 4.04. Certificate Account............................................................................41
Section 4.05. Determination of LIBOR.........................................................................41
ARTICLE V
DISTRIBUTIONS TO HOLDERS OF CERTIFICATES
Section 5.01. Distributions Generally........................................................................43
Section 5.02. Distributions from the Certificate Account.....................................................43
Section 5.03. Allocation of Realized Losses..................................................................46
Section 5.04. Trustee Advances...............................................................................48
ARTICLE VI
CONCERNING THE TRUSTEE; EVENTS OF DEFAULT
Section 6.01. Duties of Trustee..............................................................................48
Section 6.02. Certain Matters Affecting the Trustee..........................................................49
Section 6.03. Trustee Not Liable for Certificates............................................................50
Section 6.04. Trustee May Own Certificates...................................................................50
Section 6.05. Eligibility Requirements for Trustee...........................................................51
Section 6.06. Resignation and Removal of Trustee.............................................................51
Section 6.07. Successor Trustee..............................................................................51
Section 6.08. Merger or Consolidation of Trustee.............................................................52
Section 6.09. Appointment of Co-Trustee, Separate Trustee or Custodian.......................................52
Section 6.10. Authenticating Agents..........................................................................54
Section 6.11. Indemnification of Trustee.....................................................................54
Section 6.12. Fees and Expenses of Trustee...................................................................55
Section 6.13. Collection of Monies...........................................................................55
Section 6.14. Trustee To Act; Appointment of Successor.......................................................56
Section 6.15. Additional Remedies of Trustee Upon Event of Default...........................................57
Section 6.16. Waiver of Defaults.............................................................................57
Section 6.17. Notification to Holders........................................................................58
Section 6.18. Directions by Certificateholders and Duties of Trustee During Event of Default.................58
Section 6.19. Action Upon Certain Failures of the Servicer and Upon Event of Default.........................58
ARTICLE VII
PURCHASE AND TERMINATION OF THE TRUST FUND
Section 7.01. Termination of Trust Fund Upon Repurchase or Liquidation of All Mortgage Loans.................59
Section 7.02. Procedure Upon Termination of Trust Fund.......................................................59
Section 7.03. Additional Trust Fund Termination Requirements.................................................60
ARTICLE VIII
RIGHTS OF CERTIFICATEHOLDERS
Section 8.01. Limitation on Rights of Holders................................................................61
Section 8.02. Access to List of Holders......................................................................62
Section 8.03. Acts of Holders of Certificates................................................................62
ARTICLE IX
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 9.01. Trustee To Retain Possession of Certain Documents..............................................63
Section 9.02. Preparation of Tax Returns and Other Reports...................................................63
Section 9.03. Release of Mortgage Files......................................................................64
ARTICLE X
REMIC ADMINISTRATION
Section 10.01. REMIC Administration...........................................................................64
Section 10.02. Prohibited Transactions and Activities.........................................................66
Section 10.03. Indemnification with Respect to Certain Taxes and Loss of REMIC Status.........................66
ARTICLE XI
MISCELLANEOUS PROVISIONS
Section 11.01. Binding Nature of Agreement; Assignment........................................................67
Section 11.02. Entire Agreement...............................................................................67
Section 11.03. Amendment......................................................................................67
Section 11.04. Voting Rights..................................................................................68
Section 11.05. Provision of Information.......................................................................68
Section 11.06. Governing Law..................................................................................69
Section 11.07. Notices........................................................................................69
Section 11.08. Severability of Provisions.....................................................................69
Section 11.09. Indulgences; No Waivers........................................................................69
Section 11.10. Headings Not To Affect Interpretation..........................................................69
Section 11.11. Benefits of Agreement..........................................................................70
Section 11.12. Special Notices to the Rating Agencies.........................................................70
Section 11.13. Counterparts...................................................................................71
ATTACHMENTS
Exhibit A Forms of Certificates
Exhibit B-1 Form of Initial Certification
Exhibit B-2 Form of Interim Certification
Exhibit B-3 Form of Final Certification
Exhibit B-4 Form of Endorsement
Exhibit C Request for Release of Documents and Receipt
Exhibit D-l Form of Residual Certificate Transfer Affidavit (Transferee)
Exhibit D-2 Form of Residual Certificate Transfer Affidavit (Transferor)
Exhibit E Sale 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
Schedule A Mortgage Loan Schedule
</TABLE>
<PAGE>
This TRUST AGREEMENT, dated as of November 1, 1998 (the "Agreement"),
is by and between STRUCTURED ASSET SECURITIES CORPORATION, a Delaware
corporation, as depositor (the "Depositor"), and U.S. BANK 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. (the "Seller"), 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,
Interest Rate, initial Class Principal Amount and minimum denomination for
each Class of Certificates comprising the interests in the Trust Fund created
hereunder.
<PAGE>
<TABLE>
<CAPTION>
Initial Certificate Minimum
Class Designation Interest Rate Principal Amount Denominations
- ----------------- -------------- -------------------- --------------
<S> <C> <C> <C>
Class A 6.65% $ 232,448,000.00 $100,000
Class AP 0.00 1,213,078.69 100,000
Class AX 6.65 (1) (2)
Class B1 6.65 4,382,000.00 100,000
Class B2 6.65 2,435,000.00 100,000
Class B3 6.65 974,000.00 100,000
Class B4 6.65 852,000.00 250,000
Class B5 6.65 487,000.00 250,000
Class B6 6.65 608,943.30 250,000
Class R 6.65 100.00 100
- ---------------------------
(1) The Class AX Certificates will accrue interest on an Aggregate Notional
Amount equal, as to any Distribution Date, to the product of (x) the
fraction, the numerator of which is the excess of the weighted average
of the Net Mortgage Rates of the Premium Mortgage Loans (weighted on
the basis of the Scheduled Principal Balance of such Mortgage Loans as
of the first day of the related Accrual Period) over 6.65%, and the
denominator of which is 6.65%, and (y) the aggregate Scheduled
Principal Balance of the Premium Mortgage Loans as of the first day of
the related Due Period.
(2) The Class AX Certificates will be issued in minimum percentage interests
of 4.55%.
</TABLE>
As of the Cut-off Date, the Mortgage Loans had an aggregate Scheduled
Principal Balance of $243,400,121.99.
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 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.
Accretion Termination Date: Not applicable.
Accrual Amount: Not applicable.
Accrual Certificate: None.
Accrual Component: None.
Accrual Period: With respect to any Distribution Date and any Class
of Certificates (other than any Class of Principal Only Certificates), 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 month preceding the month in which
such Distribution Date occurs.
Accrued Certificate Interest: As to any Class of Certificates (other
than the Class AP Certificates) and any Distribution Date, the product of the
Interest Rate for such Class of Certificates and the Class Principal Amount
(or Aggregate Notional Amount) of such Class of Certificates immediately
preceding such Distribution Date, as reduced by (i) such Class's allocable
share of the interest portion of any Excess Losses for such date and, after
the Credit Support Depletion Date, any Realized Losses for such date, (ii)
such Class's allocable share of any Relief Act Reduction for such date and
(iii) any Deferred Interest allocated to such Class on such date, in each case
allocable among the Senior Certificates (other than the Class AP Certificates)
and the Subordinate Certificates pro rata based on the Accrued Certificate
Interest otherwise distributable thereon. Interest will be calculated on the
basis of a 360-day year consisting of twelve 30-day months.
Additional Collateral: None.
Adjustable Rate Mortgage Loan: None.
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 Due 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 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 Notional Amount: With respect to the Class AX Certificates,
the aggregate notional amount described in the Preliminary Statement hereto.
Aggregate Principal Balance: The aggregate of the Scheduled Principal
Balances for all Mortgage Loans at any date of determination.
Aggregate Subordinate Percentage: With respect to any Distribution
Date, the percentage equivalent of the fraction, the numerator of which is the
sum of the Class Principal Amounts of the Subordinate Certificates immediately
prior to such date and the denominator of which is the Non-AP Pool Balance for
such date.
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.
AP Percentage: As to any Discount Mortgage Loan, the percentage
equivalent of the fraction, the numerator of which is 6.65% minus the Net
Mortgage Rate of such Discount Mortgage Loan and the denominator of which is
6.65%. As to any Non-Discount Mortgage Loan, 0.000%.
AP Principal Distribution Amount: With respect to any Distribution
Date, the sum of the following amounts:
(i) the applicable AP Percentage of the principal portion of each
Scheduled Payment (without giving effect to any Debt Service Reduction
occurring prior to the Bankruptcy Coverage Termination Date) on each
Mortgage Loan due during the related Due Period;
(ii) the applicable AP Percentage of each of the following amounts:
(1) each Principal Prepayment collected on a Mortgage Loan during the
applicable Prepayment Period, (2) each other unscheduled collection,
including Insurance Proceeds and Net Liquidation Proceeds (other than
with respect to any Mortgage Loan that was finally liquidated during the
applicable Prepayment Period), representing or allocable to recoveries of
principal of such Mortgage Loan received during the applicable Prepayment
Period and (3) the principal portion of all proceeds of the purchase of
any Mortgage Loan (or, in the case of a permitted substitution, amounts
representing a principal adjustment) actually received by the Trustee
with respect to the applicable Prepayment Period;
(iii) with respect to unscheduled recoveries allocable to principal
of any Mortgage Loan that was finally liquidated during the related
Prepayment Period, the applicable AP Percentage of the related Net
Liquidation Proceeds allocable to principal; and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid.
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.
Available Distribution Amount: As to any Distribution Date, the sum
of the following amounts:
(i) the total amount of all cash received by the Servicer and
remitted to the Trustee on the related Deposit Date (including proceeds
of any Insurance Policy and any other credit support relating to such
Mortgage Loans), plus all Advances made by the Servicer (or the Trustee)
for such Distribution Date, any Compensating Interest Payment for such
date and any amounts paid by the Servicer in respect of Prepayment
Interest Shortfalls for such date, but not including:
(a) all amounts distributed pursuant to Section 5.02 on prior
Distribution Dates;
(b) all Scheduled Payments of principal and interest collected
but due on a date subsequent to the related Due Period;
(c) all Principal Prepayments received by the Servicer after the
applicable Prepayment Period (together with any interest payments
received with such prepayments to the extent that they represent the
payment of interest accrued on the related Mortgage Loans for the
period subsequent to the applicable Prepayment Period);
(d) any other unscheduled collection, including Net Liquidation
Proceeds and Insurance Proceeds, received by the Servicer after the
applicable Prepayment Period; and
(e) all fees and amounts due or reimbursable to the Servicer
pursuant to the terms of this Agreement or the Sale and Servicing
Agreement; and
(ii) any other payment made by any Servicer, the Seller, the
Depositor, or any other Person with respect to such Distribution Date
(including the Purchase Price with respect to any Mortgage Loan purchased
by the Seller, the Depositor or any other Person).
Bankruptcy: As to any Person, the making of an assignment for the
benefit of creditors, the filing of a voluntary petition in bankruptcy,
adjudication as a bankrupt or insolvent, the entry of an order for relief in a
bankruptcy or insolvency proceeding, the seeking of reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief, or seeking, consenting to or acquiescing in the appointment of a
trustee, receiver or liquidator, dissolution, or termination, as the case may
be, of such Person pursuant to the provisions of either the United States
Bankruptcy Code of 1986, as amended, or any other similar state laws.
Bankruptcy Coverage Termination Date: The first Distribution Date on
which the Bankruptcy Loss Limit has been reduced to zero (or less than zero).
Bankruptcy Loss Limit: As of the Cut-off Date, $100,000, which amount
shall be reduced from time to time by the amount of Bankruptcy Losses
allocated to the Certificates.
Bankruptcy Losses: Any losses (as reported by the Servicer to the
Trustee) arising from a proceeding under the United States Bankruptcy Code or
any other similar state law or other proceeding with respect to the Mortgagor
of or Mortgaged Property under a Mortgage Loan, including, without limitation,
any such loss arising from (a) the difference between (i) the principal amount
that would have been due under the original scheduled payments of principal
and interest due on the related Mortgage Loan and (ii) the value established
in the relevant court with respect to such Mortgaged Property, including
without limitation a Deficient Valuation, or (b) a Debt Service Reduction.
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 AP, Class
AX, Class B1, Class B2 and Class B3 Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, (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 States of Minnesota or New Jersey, are authorized or obligated by law
or executive order to be closed.
Cendant Entities: As defined in Section 2.03(b).
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 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 (plus, in the case of any Negative
Amortization Certificate, any Deferred Interest allocated thereto on previous
Distribution Dates, and plus, in the case of any Accrual Certificate, its
Percentage Interest of any related Accrual Amount for each previous
Distribution Date), less the amount of all principal distributions previously
made with respect to such Certificate, all Realized Losses allocated to such
Certificate, and, in the case of a Subordinate Certificate, any Subordinate
Certificate Writedown Amount allocated to such Certificate. For purposes of
Article V hereof, unless specifically provided to the contrary, Certificate
Principal Amounts shall be determined as of the close of business of the
immediately preceding Distribution Date, after giving effect to all
distributions made on such date. Notional Certificates are issued without
Certificate Principal Amounts.
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 AP Deferred Amount: As to any Distribution Date on or prior to
the Credit Support Depletion Date, the aggregate of the applicable AP
Percentage of the principal portion of each Realized Loss on a Discount
Mortgage Loan, other than an Excess Loss, to be allocated to such Class of
Certificates on such Distribution Date or previously allocated to such Class
of Certificates and not yet paid to the Holders of such Class of Certificates
pursuant to Section 5.02(a)(iv).
Class B Certificate: Any Class B1, Class B2, Class B3, Class B4,
Class B5 or Class B6 Certificate.
Class Percentage: With respect to each Class of Subordinate
Certificates, for each Distribution Date, the percentage obtained by dividing
the Class Principal Amount of such Class immediately prior to such
Distribution Date by the aggregate Certificate Principal Amount of all
Certificates immediately prior to such date.
Class Principal Amount: With respect to each Class of Certificates
other than any Class of Notional Certificates, the aggregate of the
Certificate Principal Amounts of all Certificates of such Class at the date of
determination. With respect to each Class of Notional Certificates, zero.
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: November 20, 1998.
CMC: As defined in Section 2.03(b).
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.
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 Sale and Servicing Agreement.
Component: None.
Component Certificate: None.
Component Interest Rate: None.
Component Principal Amount: Not applicable.
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: None.
Convertible Mortgage Loan: None.
Cooperative Loan: Any Mortgage Loan secured by Cooperative Shares and
a Proprietary Lease.
Cooperative Loan Documents: As specified in the 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 180 East Fifth
Street, St. Paul, Minnesota 55101, Attention: Structured Finance.
Credit Support Depletion Date: The first Distribution Date on which,
giving effect to all distributions on such date, the aggregate Certificate
Principal Amount of the Subordinate Certificates is reduced to zero.
Credit Support Percentage: As to any Class of Subordinate
Certificates and any Distribution Date, the sum of the Class Percentages of
all Classes of Certificates that rank lower in priority than such Class.
CRMT: As defined in Section 2.03(b).
Cut-off Date: November 1, 1998.
Cut-off Date Aggregate Principal Balance: With respect to the
Mortgage Loans in the Trust Fund on the Closing Date, the Aggregate Principal
Balance for all such Mortgage Loans as of the Cut-off Date.
DCR: Duff & Phelps Credit Rating Co., or any successor in interest.
Debt Service Reduction: With respect to any Mortgage Loan, a
reduction of the Scheduled Payment that the related Mortgagor is obligated to
pay on any Due Date as a result of any proceeding under Bankruptcy law or any
similar proceeding.
Deferred Interest: With respect to any Class of Negative Amortization
Certificates and any Distribution Date, the lesser of (x) the applicable
Interest Distribution Amount for such date (without giving effect to any
Deferred Interest) and (y) the aggregate Mortgage Loan Negative Amortization,
if any, for the related Due Period.
Deficient Valuation: With respect to any Mortgage Loan, a valuation
by a court of competent jurisdiction of the Mortgaged Property in an amount
less than the then outstanding indebtedness under such Mortgage Loan, which
valuation results from a proceeding under Bankruptcy law or any similar
proceeding.
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.
Deposit Date: With respect to each Distribution Date, the 18th day of
the month in which such Distribution Date occurs or, if such 18th day is not a
Business Day, the next succeeding Business Day.
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
Business Day immediately preceding the related Deposit Date.
Discount Mortgage Loan: Any Mortgage Loan with a Net Mortgage Rate
less than 6.65% per annum.
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, (viii) any "electing large partnership" described
in section 775 of the Code, or (ix) 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 25th day
is not a Business Day, the next succeeding Business Day, commencing in
December 1998.
Due Date: With respect to any Mortgage Loan, the date in each month
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
Principal 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.
Escrow Account: Any escrow account established and maintained by the
Servicer pursuant to the Sale and Servicing Agreement.
Event of Default: An event described in Section 10.01 of the Sale and
Servicing Agreement, which pursuant to such agreement is a default by the
Servicer and entitles the Trustee to terminate such Servicer.
Excess Loss: Any Bankruptcy Loss, or portion thereof, in excess of
the then-applicable Bankruptcy Loss Limit, any Fraud Loss, or portion thereof,
in excess of the then-applicable Fraud Loss Limit, and any Special Hazard
Loss, or portion thereof, in excess of the then-applicable Special Hazard Loss
Limit. 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.
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.
Fraud Loss: Any Realized Loss on a Mortgage Loan sustained by reason
of a default arising from fraud, dishonesty or misrepresentation in connection
with the related Mortgage Loan, as reported by the Servicer to the Trustee.
Fraud Loss Limit: As of any Distribution Date after the Cut-off Date
(x) prior to the first anniversary of the Cut-off Date, $4,868,002.44, less
the aggregate of the Fraud Losses since the Cut-off Date, and (y) from the
first to the fourth anniversary of the Cut-off Date, an amount equal to (1)
the lesser of (a) the Fraud Loss Limit as of the most recent anniversary of
the Cut-off Date and (b) 2% (from the first to but excluding the second
anniversary of the Cut-off Date) or 1% (from and including the second, third
and fourth anniversary of the Cut-off Date) of the aggregate principal balance
of all the Mortgage Loans as of the most recent anniversary of the Cut-off
Date less (2) the aggregate of Fraud Losses since the most recent anniversary
of the Cut-off Date. On or after the fifth anniversary of the Cut-off Date,
the Fraud Loss Limit shall be zero.
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.
Initial LIBOR Rate: None.
Insurance Policy: Any Primary Mortgage Insurance Policy and any
standard hazard 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 (i) to cover expenses incurred by or on behalf of
the Servicer in connection with procuring such proceeds, (ii) to be applied to
restoration or repair of the related Mortgaged Property or (iii) required to
be paid over to the Mortgagor pursuant to law or the related Mortgage Note.
Interest Distribution Amount: Not applicable.
Interest Rate: With respect to each Class of Certificates, the
applicable per annum rate set forth or described in the Preliminary Statement
hereto.
Interest Shortfall: With respect to any Class of Certificates and any
Distribution Date, any Accrued Certificate Interest not distributed (or added
to principal) with respect to any previous Distribution Date, other than any
Net Prepayment Interest Shortfalls.
Intervening Assignments: The original intervening assignments of the
Mortgage, notice of transfer or equivalent instrument.
Latest Possible Distribution Date: February 25, 2031.
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: 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, including any
amounts remaining in the related Escrow Account.
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 Section 2.02(c) hereof.
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-1 to the
Sale and Servicing Agreement pertaining to a particular Mortgage Loan required
to be delivered to the Trustee or its custodian 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: Not applicable.
Mortgage Loan Sale and Assignment Agreement: The agreement, dated as
of November 1, 1998, for the sale of the Mortgage Loans by Lehman Capital, A
Division of Lehman Brothers Holdings Inc., to the Depositor.
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 pursuant to Section 2.02.
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.
Negative Amortization Certificate: None.
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 and unreimbursed Advances,
Servicing Advances or Servicing Fees, 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-AP Percentage: As to any Discount Mortgage Loan, the percentage
equivalent of the fraction, the numerator of which is the Net Mortgage Rate of
such Discount Mortgage Loan and the denominator of which is 6.65%. As to any
Non-Discount Mortgage Loan, 100%.
Non-AP Pool Balance: As to any Distribution Date, the sum of, as to
each Mortgage Loan, the product of the applicable Non-AP Percentage and the
Scheduled Principal Balance of such Mortgage Loan for such Distribution Date.
Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Non-Discount Mortgage Loan: Any Mortgage Loan with a Net Mortgage
Rate equal to or greater than 6.65% per annum.
Non-permitted Foreign Holder: As defined in Section 3.03(f).
Non-U.S. Person: Any 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 state thereof, including for this purpose the District of
Columbia; 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.
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: Any Class AX Certificate.
Notional Component: None.
Notional Component Amount: None.
Offering Document: Either of the Prospectus or the private placement
memorandum dated November 16, 1998 relating to the Class B4, Class B5 and
Class B6 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 Credit Support Percentage: With respect to each Class of
Subordinate Certificates, the Credit Support Percentage for such Class on the
Closing Date.
Original Subordinate Amount: The Subordinate Amount on the Closing
Date.
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.
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 a Class AX Certificate, the Percentage
Interest evidenced thereby shall equal the initial Certificate Principal
Amount thereof divided by the initial Class Principal Amount of all
Certificates of the same Class. With respect to any Class AX Certificate, the
Percentage Interest evidenced thereby shall be as specified on the face
thereof.
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.
Premium Mortgage Loan. Any Mortgage Loan with a Net Mortgage Rate
greater than 6.65% per annum.
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
outstanding 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 immediately 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: Not applicable.
Principal Only Certificate: Any Class AP Certificate.
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 November 16, 1998,
together with the accompanying prospectus dated March 18, 1998, relating to
the Class A, Class AP, Class AX, Class B1, Class B2, Class B3 and Class R
Certificates.
Purchase Price: With respect to the repurchase of a Mortgage Loan
pursuant to 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 (or the Trustee, if applicable) shall be
reimbursed from the Purchase Price for any Mortgage Loan or related REO
Property for any Advances made with respect to such Mortgage Loan that are
reimbursable to the Servicer under the Sale and Servicing Agreement, as well
as any unreimbursed Servicing Advances and accrued and unpaid Servicing Fees,
as applicable.
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:
(a) 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;
(b) 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;
(c) 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;
(d) provide that the Trustee's interest therein shall be transferable
to any successor trustee hereunder: and
(e) 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 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 DCR and Moody's.
Realized Loss: (a) 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, plus (ii) interest at the applicable Net Mortgage
Rate from the date as to which interest was last paid up to the last day of
the month of such liquidation, minus (iii) Liquidation Proceeds received, to
the extent allocable to principal, net of amounts that are reimbursable to the
Servicer with respect to such Mortgage Loan (other than Advances of principal
and interest) including expenses of liquidation, and (b) with respect to each
Mortgage Loan that has become the subject of a Deficient Valuation, the
difference between the unpaid principal balance of such Mortgage Loan
immediately prior to such Deficient Valuation and the unpaid principal balance
of such Mortgage Loan as reduced by the Deficient Valuation. In determining
whether a Realized Loss is a Realized Loss of interest or 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: None.
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 Due 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.
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: Not applicable.
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 and having direct responsibility for the administration of this
Agreement.
Restricted Certificate: Any Class B4, Class B5 or Class B6
Certificate.
Rounding Account: Not applicable.
S&P: Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, Inc., or any successor in interest.
Sale and Servicing Agreement: The Sellers' Warranties and Servicing
Agreement dated as of November 1, 1998, among Lehman Capital, a division of
Lehman Brothers Holdings Inc., Cendant Mortgage Corporation and Cendant
Residential Mortgage Trust.
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, as reduced (except where otherwise specified herein) by the amount of
any related Debt Service Reduction (excluding all amounts of principal and
interest that were due on or before the Cut-off Date whenever received) 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. In the case of any bi-weekly payment Mortgage Loan,
all payments due on such Mortgage Loan during any Due Period shall be deemed
collectively to constitute the Scheduled Payment due on such Mortgage Loan in
such Due Period.
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 Due Period, whether or not received from the
Mortgagor or advanced by the Servicer, and all amounts allocable to
unscheduled principal payments (including Principal Prepayments, Net
Liquidation Proceeds, Insurance Proceeds and condemnation proceeds, in each
case to the extent identified and applied prior to or during the applicable
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). With respect to any Mortgage Loan and the
Cut-off Date, as specified in the Mortgage Loan Schedule.
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.
Seller: Lehman Capital, A Division of Lehman Brothers Holdings Inc.,
or any successor in interest.
Senior Certificate: Any Class A, Class AP, Class AX or Class R
Certificate.
Senior Percentage: With respect to any Distribution Date, the
percentage equivalent of the fraction, the numerator of which is the Class
Principal Amount of the Class A and Class R Certificates immediately prior to
such date and the denominator of which is the Non-AP Pool Balance for such
date.
Senior Prepayment Percentage: With respect to any Distribution Date
occurring during the five years beginning on the first Distribution Date,
100%. With respect to any Distribution Date occurring on or after the fifth
anniversary of the first Distribution Date, the Senior Percentage plus the
following percentage of the related Subordinate Percentage for such
Distribution Date: for any Distribution Date in the first year thereafter,
70%; for any Distribution Date in the second year thereafter, 60%; for any
Distribution Date in the third year thereafter, 40%; for any Distribution Date
in the fourth year thereafter, 20%; and for any subsequent Distribution Date,
0%; provided, however, that if on any of the foregoing Distribution Dates the
Senior Percentage exceeds the initial Senior Percentage, the Senior Prepayment
Percentage on such Distribution Date will once again equal 100% for such
Distribution Date.
Notwithstanding the foregoing, no decrease in the Senior Prepayment
Percentage below the level in effect for the most recent prior period set
forth in the paragraph above shall be effective on any Distribution Date if,
as of the first Distribution Date as to which any such decrease applies, (i)
the average outstanding principal balance on such Distribution Date and for
the preceding five Distribution Dates of all Mortgage Loans that were
delinquent 60 days or more (including for this purpose any Mortgage Loans in
foreclosure and the Scheduled Payments that would have been due on Mortgage
Loans with respect to which the related Mortgaged Property has been acquired
by the Trust Fund if the related Mortgage Loan had remained in existence) is
greater than or equal to 50% of the Subordinate Amount immediately prior to
such Distribution Date or (ii) cumulative Realized Losses with respect to the
Mortgage Loans exceed (a) with respect to the Distribution Date on the fifth
anniversary of the first Distribution Date, 30% of the Original Subordinate
Amount, (b) with respect to the Distribution Date on the sixth anniversary of
the first Distribution Date, 35% of the Original Subordinate Amount, (c) with
respect to the Distribution Date on the seventh anniversary of the first
Distribution Date, 40% of the Original Subordinate Amount, (d) with respect to
the Distribution Date on the eighth anniversary of the first Distribution
Date, 45% of the Original Subordinate Amount, and (e) with respect to the
Distribution Date on the ninth anniversary of the first Distribution Date, 50%
of the Original Subordinate Amount.
Senior Principal Distribution Amount: With respect to any
Distribution Date, the sum of the following amounts:
(i) the product of (a) the Senior Percentage for such date and (b)
the principal portion (multiplied by the applicable Non-AP Percentage) of
each Scheduled Payment (without giving effect to any Debt Service
Reduction occurring prior to the Bankruptcy Coverage Termination Date),
on each Mortgage Loan due during the related Due Period;
(ii) the product of (a) the related Senior Prepayment Percentage for
such date and (b) each of the following amounts (multiplied by the
applicable Non-AP Percentage): (1) each Principal Prepayment on the
Mortgage Loans collected during the related Prepayment Period, (2) each
other unscheduled collection, including Insurance Proceeds and Net
Liquidation Proceeds (other than with respect to any Mortgage Loan that
was finally liquidated during the related Prepayment Period),
representing or allocable to recoveries of principal received during the
related Prepayment Period, and (3) the principal portion of all proceeds
of the purchase of any Mortgage Loan (or, in the case of a permitted
substitution, amounts representing a principal adjustment) actually
received by the Trustee during the related Prepayment Period;
(iii) with respect to unscheduled recoveries allocable to principal
of any Mortgage Loan that was finally liquidated during the related
Prepayment Period, the lesser of (a) the related Net Liquidation Proceeds
allocable to principal (multiplied by the applicable Non-AP Percentage)
and (b) the product of the Senior Prepayment Percentage for such date and
the Scheduled Principal Balance (multiplied by the applicable Non-AP
Percentage) of such Mortgage Loan at the time of liquidation; and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid.
Servicer: Cendant Mortgage Corporation or any successor in interest.
Servicing Advance: Any expenditures incurred by the Servicer in
connection with the servicing of a Mortgage Loan that is eligible for
reimbursement under the Sale and Servicing Agreement, other than an Advance of
principal and/or interest.
Servicing Fee: The Servicing Fee specified in the Sale and Servicing
Agreement.
Servicing Fee Rate: As specified in the Sale and Servicing Agreement.
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.
Special Hazard Loss: With respect to the Mortgage Loans, (x) any
Realized Loss arising out of any direct physical loss or damage to a Mortgaged
Property which is caused by or results from any cause, exclusive of any loss
covered by a hazard policy or a flood insurance policy required to be
maintained in respect of such Mortgaged Property and any loss caused by or
resulting from (i) normal wear and tear, (ii) conversion or other dishonest
act on the part of the Trustee, the Servicer or any of their agents or
employees, or (iii) errors in design, faulty workmanship or faulty materials,
unless the collapse of the property or a part thereof ensues, or (y) any
Realized Loss arising from or related to the presence or suspected presence of
hazardous wastes, or hazardous substances on a Mortgaged Property unless such
loss is covered by a hazard policy or flood insurance policy required to be
maintained in respect of such Mortgaged Property, in any case, as reported by
the Servicer to the Trustee.
Special Hazard Loss Limit: As of the Cut-off Date, $2,434,001.22,
which amount shall be reduced from time to time to an amount equal on any
Distribution Date to the lesser of (a) the greatest of (i) 1% of the aggregate
of the outstanding principal balances of the Mortgage Loans; (ii) twice the
outstanding principal balance of the Mortgage Loan having the highest
outstanding principal balance, and (iii) the aggregate outstanding principal
balances of the Mortgage Loans secured by Mortgaged Properties located in the
single California postal zip code area having the highest aggregate
outstanding principal balance of Mortgage Loans of any such postal zip code
area and (b) the Special Hazard Loss Limit as of the Closing Date less the
amount, if any, of Special Hazard Losses incurred with respect to Mortgage
Loans since the Closing Date.
Startup Day: The day designated as such pursuant to Section 10.01(b)
hereof.
Subordinate Amount: As to any Distribution Date, the excess of the
Non-AP Pool Balance for such date over the Class Principal Amount of the Class
A Certificates immediately prior to such date.
Subordinate Certificate: Any Class B Certificate.
Subordinate Certificate Writedown Amount: As to any Distribution
Date, the amount by which (i) the sum of the Class Principal Amounts of all
the Certificates (after giving effect to the distribution of principal and the
application of Realized Losses in reduction of the Certificate Principal
Amounts of the Certificates on such Distribution Date) exceeds (ii) the
aggregate Scheduled Principal Balance of the Mortgage Loans at the close of
the related Due Period.
Subordinate Class Percentage: With respect to any Distribution Date
and any Class of Subordinate Certificates, the percentage obtained by dividing
the Class Principal Amount of such Class immediately prior to such
Distribution Date by the aggregate Certificate Principal Amount of all
Subordinate Certificates immediately prior to such date.
Subordinate Percentage: With respect to any Distribution Date, the
difference between 100% and the Senior Percentage for such Distribution Date.
Subordinate Prepayment Percentage: With respect to any Distribution
Date, the difference between 100% and the Senior Prepayment Percentage for
such Distribution Date.
Subordinate Principal Distribution Amount: With respect to any
Distribution Date, the sum of the following:
(i) the product of (a) the Subordinate Percentage for such date and
(b) the principal portion (multiplied by the applicable Non-AP
Percentage) of each Scheduled Payment (without giving effect to any Debt
Service Reduction occurring prior to the applicable Bankruptcy Coverage
Termination Date) on each Mortgage Loan due during the related Due
Period;
(ii) the product of (a) the Subordinate Prepayment Percentage for
such date and (b) each of the following amounts (multiplied by the
applicable Non-AP Percentage): (1) each Principal Prepayment on the
Mortgage Loans collected during the related Prepayment Period, (2) each
other unscheduled collection, including Insurance Proceeds and Net
Liquidation Proceeds (other than with respect to any Mortgage Loan that
was finally liquidated during the related Prepayment Period),
representing or allocable to recoveries of principal received during the
related Prepayment Period, and (3) the principal portion of all proceeds
of the purchase of any Mortgage Loan (or, in the case of a permitted
substitution, amounts representing a principal adjustment) actually
received by the Trustee during the related Prepayment Period;
(iii) with respect to unscheduled recoveries allocable to principal
of any Mortgage Loan that was finally liquidated during the related
Prepayment Period, the related Net Liquidation Proceeds allocable to
principal (multiplied by the applicable Non-AP Percentage) less any
related amount paid pursuant to subsection (iii) of the definition of
Senior Principal Distribution Amount; and
(iv) any amounts described in clauses (i) through (iii) for any
previous Distribution Date that remain unpaid;
Tax Matters Person: The "tax matters person" as specified in the
REMIC Provisions.
Termination Price: As defined in Section 7.01 hereof.
Title Insurance Policy: A title insurance policy maintained with
respect to a Mortgage Loan.
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, any Escrow
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: U.S. Bank National Association, not in its individual
capacity but solely as Trustee, 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.
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. At all times during the term of this Agreement,
99% of all Voting Interests shall be allocated to the Certificates other than
the Class AX Certificates and 1% of all Voting Interests shall be allocated to
the Class AX Certificates. Voting Interests allocated to the Class AX
Certificates shall be allocated among the Certificates of such Class in
proportion to their Percentage Interests. Voting Interests shall be allocated
among the other Classes of Certificates (and among the Certificates within
each such Class) in proportion to their Class Principal Amounts (or
Certificate Principal Amounts).
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.
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 the Sale and Servicing Agreement,
and delegates its obligations under the Mortgage Loan Sale and Assignment
Agreement, which include the obligations of Lehman Capital under the Sale and
Servicing Agreement, (which rights and interest 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 the 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 Trustee, and/or any custodian acting on the Trustee's
behalf, if applicable, the documents or instruments with respect to each
Mortgage Loan (each a "Mortgage File") so transferred and assigned as are
specified in the Sale and Servicing Agreement.
The parties hereto acknowledge and agree that the form of endorsement
attached hereto as Exhibit B-4 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, or shall cause
its 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) In instances where a Title Insurance Policy is required to be
delivered to the Trustee, or to the applicable custodian on behalf of the
Trustee, under clause (b)(viii) above and is not so delivered, the Depositor
will provide a copy of such Title Insurance Policy to the Trustee as promptly
as practicable after the execution and delivery hereof, but in any case within
180 days of the Closing Date.
(e) 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 Sale and Servicing Agreement have
been so deposited. All original documents that are not delivered to the
Trustee shall be held by the Servicer in trust for the benefit of the Trustee
and the Certificateholders.
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 its 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 Trustee's review thereof as specified
herein. The Trustee or its custodian executed and delivered as of November 12,
1998, an initial certification (the "Initial Certification") certifying as to
its receipt of the documents required to be delivered pursuant to the Sale and
Servicing Agreement.
(b) Within 45 days after the Closing Date, the Trustee or its
custodian will, for the benefit of Holders of the Certificates, review each
Mortgage File to ascertain that all required documents set forth in Section
2.01 have been received and appear on their face to contain the requisite
signatures by or on behalf of the respective parties thereto, and shall
deliver to the Depositor an Interim Certification in the form annexed hereto
as Exhibit B-2 to the effect that, as to each Mortgage Loan listed in the
Mortgage Loan Schedule (other than any Mortgage Loan prepaid in full or any
Mortgage Loan specifically identified in such certification as not covered by
such certification), (i) all of the applicable documents specified in Section
2.01(b) are in its possession and (ii) such documents have been reviewed by it
and appear to relate to such Mortgage Loan. The Trustee or its custodian shall
make sure that the documents are executed and endorsed, but shall be under no
duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that the same are
valid, binding, legally effective, properly endorsed, genuine, enforceable or
appropriate for the represented purpose or that they have actually been
recorded or are in recordable form or that they are other than what they
purport to be on their face. Neither the Trustee nor its custodian shall have
any responsibility for verifying the genuineness or the legal effectiveness of
or authority for any signatures of or on behalf of any party or endorser.
(c) If in the course of the review described in paragraph (b) above
the Trustee or its custodian discovers any document or documents constituting
a part of a Mortgage File that is missing, does not appear regular on its face
(i.e., is mutilated, damaged, defaced, torn or otherwise physically altered)
or appears to be unrelated to the Mortgage Loans identified in the Mortgage
Loan Schedule (each, a "Material Defect"), the Trustee, or its custodian,
shall promptly identify the Mortgage Loan to which such Material Defect
relates in the Interim Certificate delivered to the Depositor (and to the
Trustee). Within 90 days of its receipt of such notice, the applicable Cendant
Entity, or, if such Cendant Entity does not do so, the Depositor shall be
required to cure such Material Defect (and, in such event, the Depositor shall
provide the Trustee with an Officer's Certificate confirming that such cure
has been effected). If the applicable Cendant Entity or the Depositor, as
applicable, does not so cure such Material Defect, the applicable Cendant
Entity, or, if such Cendant Entity does not do so, the Depositor, shall
repurchase the related Mortgage Loan from the Trust Fund at the Purchase
Price. Within the two year period following the Closing Date, the Depositor
may, in lieu of repurchasing a Mortgage Loan pursuant to this Section 2.02,
substitute for such Mortgage Loan a Qualifying Substitute Mortgage Loan
subject to the provisions of Section 2.05. The failure of the Trustee or its
custodian to give the notice contemplated herein within 45 days after the
Closing Date shall not affect or relieve the Depositor of its obligation to
repurchase any Mortgage Loan pursuant to this Section 2.02 or any other
Section of this Agreement requiring the repurchase of Mortgage Loans from the
Trust Fund.
(d) Within 180 days following the Closing Date, the Trustee, or its
custodian, shall deliver to the Depositor a Final Certification substantially
in the form annexed hereto as Exhibit B-3 evidencing the completeness of the
Mortgage Files in its possession or control.
(e) 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, for the benefit
of Certificateholders, 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;
(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 CMC and Cendant Residential
Mortgage Trust ("CRMT" and, together with CMC, the "Cendant Entities") with
respect to the related Mortgage Loans in the Sale and Servicing Agreement,
which have been assigned to the Trustee hereunder, were made as of the date
specified in the 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 either Cendant Entity under the 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 such Cendant Entity 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 either Cendant Entity in
Section 3.02 of the 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 either Cendant
Entity in Section 3.02 of the Sale and Servicing Agreement, without regard to
whether such Cendant Entity 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 Cendant Entities and Lehman Capital and
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 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 either
Cendant Entity assigned to the Trustee, the Trustee shall enforce its rights
under the 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 either Cendant Entity pursuant to the 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 applicable Cendant Entity 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
applicable Cendant Entity 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 applicable Cendant Entity 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, at the expense
of the Depositor and with the cooperation of the Servicer, shall cause the
Assignment of Mortgage with respect to such Qualifying Substitute Mortgage
Loan to be recorded by the Servicer 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. 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 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) 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 (or Notional 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 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 any Class of Residual Certificates 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) (i) 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 (i) a Disqualified Organization or (ii) an individual,
corporation or partnership or other person unless such person is (A) not a
Non-U.S. Person or (B) 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 (any such person who is not covered by clause (A) or (B)
above is referred to herein as a "Non-permitted Foreign Holder").
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, an agent or nominee acting
on behalf of a Disqualified Organization, nor a Non-permitted Foreign Holder
(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,
agent or nominee thereof, or Non-permitted Foreign Holder. Notwithstanding the
registration in the Certificate Register of any transfer, sale, or other
disposition of a Residual Certificate to a Disqualified Organization, an agent
or nominee thereof, or Non-permitted Foreign Holder, such registration shall
be deemed to be of no legal force or effect whatsoever and such Disqualified
Organization, agent or nominee thereof, or Non-permitted Foreign Holder 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, agent or nominee thereof, or Non-permitted Foreign Holder 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, agent or nominee
thereof, or Non-permitted Foreign Holder. The Trustee shall be entitled to
recover from any Holder of a Residual Certificate that was a Disqualified
Organization, agent or nominee thereof, or Non-permitted Foreign Holder at the
time it became a Holder or any subsequent time it became a Disqualified
Organization, agent or nominee thereof, or Non-permitted Foreign Holder, 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.
(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 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 and each Rating Agency 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 Deposit Date:
(i) 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 Notional Certificates, 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,
including any Accrual Amount added to the Class Principal Amount of any
Class of Accrual Certificates;
(iii) the amount, if any, of any distribution to the Holder of a
Residual Certificate;
(iv) (A) the aggregate amount of any Advances required to be made by
or on behalf of the Servicer (or the Trustee) with respect to such
Distribution Date, (B) the aggregate amount of such Advances actually
made, and (C) the amount, if any, by which (A) above exceeds (B) above;
(v) the aggregate Scheduled Principal Balance of the Mortgage Loans
as of the close of business on the last day of the related Due Period,
after giving effect to payments allocated to principal reported under
clause (i) above;
(vi) the Class 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, stating separately the amount of Special Hazard Losses,
Fraud Losses and Bankruptcy Losses and the aggregate amount of such
Realized Losses, and the remaining Special Hazard Loss Amount, Fraud Loss
Amount and Bankruptcy Loss Amount;
(viii) the amount of the Servicing Fee 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) 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 Interest Shortfalls and Net
Prepayment Interest Shortfalls, if any, for each Class of Certificates,
after giving effect to the distribution made on such Distribution Date;
(xiv) 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);
(xv) 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; and
(xvi) with respect to each liquidated REO Property, the loan number,
the Net Liquidiation Proceeds and the outstanding principal balance of
the related Mortgage Loan.
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: Joseph J. Kelly, 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, (or, to the extent
that such information or documentation is not required to be provided by the
Servicer under the Servicing Agreement, shall use reasonable efforts to obtain
such information and documentation from the Servicer, and provide) 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.
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 payments 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, shall 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. Funds held in the Certificate Account that are not
invested shall be held in cash.
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 to any Certificateholder owning an aggregate initial
Certificate Principal Amount of at least $2,500,000, or, in the case of the
Class AX Certificates, a Percentage Interest of not less than 4.55%, 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 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 Available Distribution Amount
and shall distribute such amount to the Holders of record of each Class of
Certificates in the following order of priority:
(i) to each Class of Senior Certificates other than the Class AP
Certificates, the Accrued Certificate Interest thereon for such
Distribution Date, as reduced by such Class's allocable share of any Net
Prepayment Interest Shortfalls for such Distribution Date; provided,
however, that any shortfall in available amounts shall be allocated among
the Classes of Senior Certificates in proportion to the amount of Accrued
Certificate Interest (as so reduced) that would otherwise be
distributable thereon;
(ii) to each Class of Senior Certificates other than the Class AP
Certificates, any outstanding Interest Shortfall for such Class and such
Distribution Date; provided, however, that any shortfall in available
amounts shall be allocated among the Classes of Senior Certificates in
proportion to the Interest Shortfall for each such Class on such
Distribution Date;
(iii) to the Senior Certificates other than the Class AX
Certificates, in reduction of their Class Principal Amounts,
concurrently, as follows:
(A) sequentially to the Class A and Class R Certificates, in
that order, the Senior Principal Distribution Amount for such
Distribution Date, until the Class Principal Amount of each such
Class has been reduced to zero; and
(B) to the Class AP Certificates, the AP Principal Distribution
Amount for such Distribution Date, until the Class Principal Amount
thereof has been reduced to zero;
(iv) to the Class AP Certificates, the Class AP Deferred Amount for
such Distribution Date, until the Class Principal Amount thereof has been
reduced to zero; provided, however, that (A) distributions pursuant to
this priority shall not exceed the aggregate Subordinate Principal
Distribution Amount for such date; and (B) such amounts will not reduce
the Class Principal Amounts of such Classes; and
(v) to the Class B1 Certificates, the Accrued Certificate Interest
thereon for such Distribution Date, as reduced by such Class's allocable
share of any Net Prepayment Interest Shortfalls for such Distribution
Date;
(vi) to the Class B1 Certificates, any Interest Shortfall for such
Class on such Distribution Date;
(vii) to the Class B1 Certificates, in reduction of the Class
Principal Amount thereof, such Class's Subordinate Class Percentage of
the Subordinate Principal Distribution Amount for such Distribution Date,
except as provided in Section 5.02(c), until the Certificate Principal
Balance thereof has been reduced to zero;
(viii) to the Class B2 Certificates, the Accrued Certificate Interest
thereon for such Distribution Date, as reduced by such Class's allocable
share of any Net Prepayment Interest Shortfalls for such Distribution
Date;
(ix) to the Class B2 Certificates, any Interest Shortfall for such
Class on such Distribution Date;
(x) to the Class B2 Certificates, in reduction of the Certificate
Principal Amount thereof, such Class's Subordinate Class Percentage of
the Subordinate Principal Distribution Amount for such Distribution Date,
except as provided in Section 5.02(c), until the Class Principal Amount
thereof has been reduced to zero;
(xi) to the Class B3 Certificates, the Accrued Certificate Interest
thereon for such Distribution Date, as reduced by such Class's allocable
share of any Net Prepayment Interest Shortfalls for such Distribution
Date;
(xii) to the Class B3 Certificates, any Interest Shortfall for such
Class on such Distribution Date; (xiii) to the Class B3 Certificates, in
reduction of the Certificate Principal Amount thereof, such Class's
Subordinate Class Percentage of the Subordinate Principal Distribution
Amount for such Distribution Date, except as provided in Section 5.02(c),
until the Class Principal Amount thereof has been reduced to zero;
(xiv) to the Class B4 Certificates, the Accrued Certificate Interest
thereon for such Distribution Date, as reduced by such Class's allocable
share of any Net Prepayment Interest Shortfalls for such Distribution
Date;
(xv) to the Class B4 Certificates, any Interest Shortfall for such
Class on such Distribution Date;
(xvi) to the Class B4 Certificates, in reduction of the Certificate
Principal Amount thereof, such Class's Subordinate Class Percentage of
the Subordinate Principal Distribution Amount for such Distribution Date,
except as provided in Section 5.02(c), until the Certificate Principal
Balance thereof has been reduced to zero;
(xvii) to the Class B5 Certificates, the Accrued Certificate Interest
thereon for such Distribution Date, as reduced by such Class's allocable
share of any Net Prepayment Interest Shortfalls for such Distribution
Date;
(xviii) to the Class B5 Certificates, any Interest Shortfall for such
Class on such Distribution Date;
(xix) to the Class B5 Certificates, in reduction of the Certificate
Principal Amount thereof, such Class's Subordinate Class Percentage of
the Subordinate Principal Distribution Amount for such Distribution Date,
except as provided in Section 5.02(c), until the Class Principal Amount
Balance thereof has been reduced to zero;
(xx) to the Class B6 Certificates, the Accrued Certificate Interest
thereon for such Distribution Date, as reduced by such Class's allocable
share of any Net Prepayment Interest Shortfalls for such Distribution
Date;
(xxi) to the Class B6 Certificates, any Interest Shortfall for such
Class on such Distribution Date; and
(xxii) to the Class B6 Certificates, in reduction of the Certificate
Principal Amount thereof, such Class's Subordinate Class Percentage of
the Subordinate Principal Distribution Amount for such Distribution Date,
except as provided in Section 5.02(c), until the Certificate Principal
Balance thereof has been reduced to zero.
(b) Net Prepayment Interest Shortfalls shall be allocated on each
Distribution Date to the Certificates other than the Class AP Certificates pro
rata based on the Accrued Certificate Interest otherwise distributable
thereon.
(c) (i) If on any Distribution Date the Credit Support Percentage for
the Class B1 Certificates is less than the Original Credit Support Percentage
for such Class, then, notwithstanding anything to the contrary in Section
5.02(a), no distribution of amounts described in clauses (ii) and (iii) of the
definition of Subordinate Principal Distribution Amount will be made in
respect of the Class B2, Class B3, Class B4, Class B5 or Class B6 Certificates
on such Distribution Date. (ii) If on any Distribution Date the Credit Support
Percentage for the Class B2 Certificates is less than the Original Credit
Support Percentage for such Class, then, notwithstanding anything to the
contrary in Section 5.02(a), no distribution of amounts described in clauses
(ii) and (iii) of the definition of Subordinate Principal Distribution Amount
will be made in respect of the Class B3, Class B4, Class B5 or Class B6
Certificates on such Distribution Date. (iii) If on any Distribution Date the
Credit Support Percentage for the Class B3 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B4, Class B5 or Class
B6 Certificates on such Distribution Date. (iv) If on any Distribution Date
the Credit Support Percentage for the Class B4 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B5 or Class B6
Certificates on such Distribution Date. (v) If on any Distribution Date the
Credit Support Percentage for the Class B5 Certificates is less than the
Original Credit Support Percentage for such Class, then, notwithstanding
anything to the contrary in Section 5.02(a), no distribution of amounts
described in clauses (ii) and (iii) of the definition of Subordinate Principal
Distribution Amount will be made in respect of the Class B6 Certificates on
such Distribution Date.
Any amount not distributed in respect of any Class on any
Distribution Date pursuant to the immediately preceding paragraph will be
allocated among the remaining Classes of Subordinate Certificates in
proportion to their respective Class Principal Amounts.
(d) On each Distribution Date, the Trustee shall distribute to the
Holder of the Class R Certificate any remaining Available Distribution Amount
for such Distribution Date after application of all amounts described in
paragraph (a) of this Section 5.02. Any distributions made to the Class R
Certificateholder pursuant to this paragraph shall not reduce the Class
Principal Amount of the Class R Certificate.
Section 5.03. Allocation of Realized Losses. (a) On any Distribution
Date, the principal portion of each Realized Loss other than any Excess Loss
shall be allocated as follows:
(i) the applicable AP Percentage of the principal portion oft any
such Realized Loss shall be allocated to the Class AP Certificates until
the Class Certificate Principal Amount thereof has been reduced to zero;
and
(ii) the applicable Non-AP Percentage of the principal portion of any
such Realized Loss shall be allocated in the following order of priority:
first, to the Class B6 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
second, to the Class B5 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
third, to the Class B4 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
fourth, to the Class B3 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
fifth, to the Class B2 Certificates, until the Class Principal
Amount thereof has been reduced to zero;
sixth, to the Class B1 Certificates, until the Class Principal
Amount thereof has been reduced to zero; and
seventh, to the Classes of Senior Certificates, pro rata, in
accordance with their Class Principal Amounts; provided, that any
such loss allocated to any Class of Accrual Certificates shall be
allocated (subject to Section 5.03(c)) on the basis of the lesser of
(x) the Class Principal Amount thereof immediately prior to the
applicable Distribution Date and (y) the Class Principal thereof on
the Closing Date (as reduced by any Realized Losses previously
allocated thereto).
(b) With respect to any Distribution Date, the principal portion of
any Excess Loss shall be allocated as follows: (1) the AP Percentage of any
such loss shall be allocated to the Class AP Certificates, and (2) the Non-AP
Percentage of any such loss shall be allocated among the Classes of
Certificates other than the Class AP Certificates, pro rata, based on the
respective Class Certificate Principal Amounts thereof; provided, that any
such loss allocated to any Class of Accrual Certificates shall be allocated
(subject to Section 5.03(c)) on the basis of the lesser of (x) the Class
Principal Amount thereof immediately prior to the applicable Distribution Date
and (y) the Class Principal Amount thereof on the Closing Date (as reduced by
any Realized Losses previously allocated thereto).
(c) Any Realized Losses allocated to a Class of Certificates pursuant
to Section 5.03(a) or (b) shall be allocated among the Certificates of such
Class in proportion to their respective Certificate Principal Amounts. Any
allocation of Realized Losses pursuant to this paragraph shall be accomplished
by reducing the Certificate Principal Amount of the related Certificates on
the related Distribution Date in accordance with Section 5.03(d).
(d) Realized Losses allocated in accordance with this Section 5.03
shall be allocated on the Distribution Date in the month immediately following
the month in which such loss was incurred and, in the case of the principal
portion thereof, after giving effect to distributions made on such
Distribution Date, except that the aggregate amount of Realized Losses to be
allocated to the Class AP Certificates on such Distribution Date shall be
taken into account in determining distributions in respect of any Class AP
Deferred Amount for such date.
(e) On each Distribution Date, the Subordinate Certificate Writedown
Amount for such date shall effect a corresponding reduction in the Class
Principal Amount of the lowest ranking Class of outstanding Subordinate
Certificates, which reduction shall occur on such Distribution Date after
giving effect to distributions made on such Distribution Date.
(f) In the event that there is a recovery of an amount in respect of
principal of a Mortgage Loan, which amount had previously been allocated as a
Realized Loss to one or more Classes of Certificates, each outstanding Class
to which any portion of such Realized Loss had previously been allocated shall
be entitled to receive, on the Distribution Date in the month following the
month in which such recovery is received, its pro rata share (based on the
Class Principal Amount thereof) of such recovery, up to the amount of the
portion of such Realized Loss previously allocated to such Class. In the event
that the total amount of such recovery exceeds the amount of Realized Loss
allocated to the outstanding Classes in accordance with the preceding
provisions, each outstanding Class of Certificates shall be entitled to
receive its pro rata share of the amount of such excess, up to the amount of
any unrecovered Realized Loss previously allocated to such Class. Any such
recovery allocated to a Class of Certificates shall not further reduce the
Certificate Principal Amount of such Certificate. Any such amounts not
otherwise allocated to any Class of Certificates, pursuant to this subsection
shall be treated as Principal Prepayments for purposes of this Agreement.
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
Sale and Servicing Agreement on or before the Deposit 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 late payments, 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.
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 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 consent or 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
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, opinion of counsel 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 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;
(v) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
custodians, or attorneys, which agents, custodians or attorneys shall
have any and 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 6.03. Trustee Not Liable for Certificates. 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, any Escrow Account or any other fund
or account maintained with respect to the Certificates.
Section 6.04. Trustee May Own 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 6.05. Eligibility Requirements for Trustee. 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 6.06. Resignation and Removal of 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 aggregate Percentage
Interests 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 aggregate Percentage Interests 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 the 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, 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 or the Sale and Servicing Agreement, provided that:
(i) to the extent that the indemnification provisions of the 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 or the Sale
and Servicing 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 the 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
the 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 aggregate Percentage Interests of each Class of Certificates,
terminate all of the rights and obligations of the Servicer under the Sale and
Servicing Agreement 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 the 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 the 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 Deposit 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 Agreement, 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 the
Sale and Servicing 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 the 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 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 the Sale
and Servicing Agreement, including the applicable portion of the 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 established
housing and home finance institution servicer, servicer, servicing 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 Agreement, as the successor to such Servicer under the Sale
and Servicing Agreement 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) the failure of the
Servicer to cooperate as required by the Sale and Servicing Agreement, (iii)
the failure of the Servicer to deliver the Mortgage Loan data to the Trustee
as required by the 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 the 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 to the 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 aggregate Percentage Interests of each
Class of Certificates 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. Fall all purposes of the 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 Distribution 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 Scheduled Principal Balance of the Mortgage Loans is less than 5% of
the Cut-off Date Aggregate Principal 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 Due 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
(x) no later than 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 (y) upon 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 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.
(c) Any reasonable expenses incurred by the Trustee in connection
with any termination or liquidation of the Trust Fund shall be paid from
proceeds received from the liquidation of the Trust Fund.
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 (x) the sale of the
property of the Trust Fund by the Trustee pursuant to Section 7.01(b) or
(y) 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 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
aggregate Percentage Interests of Certificates of each Class 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.
(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 shall prepare or cause to be prepared the initial
current report on Form 8-K and thereafter the Trustee shall 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 shall sign
each such report on behalf of the Trust Fund, and shall 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 shall be made by
the Trustee to treat the Trust Fund as a REMIC under the Code. Such election
shall 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 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 shall act as Tax Matters Person for each REMIC. The
Trustee or its designee shall perform on behalf of each 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 the 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 each 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 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.
(k) Upon the request of any Rating Agency, the Trustee shall deliver
to such Rating Agency an Officer's Certificate confirming the Trustee's
compliance with the provisions of this Section 10.01.
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 each 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) affect adversely the status of such
REMIC as a REMIC or of the Certificates 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.
Section 10.03. Indemnification with Respect to Certain Taxes and Loss
of REMIC Status. (a) 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
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 aggregate Percentage Interests of each Class of Certificates
affected thereby for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Holders; 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 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 aggregate
Percentage Interests 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.
(e) Notwithstanding anything to the contrary in the Sale and
Servicing Agreement, the Trustee shall not consent to any amendment of the
Sale and Servicing Agreement except pursuant to the standards provided in this
Section with respect to amendment of this Agreement.
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 Percentage Interests,
Certificates owned by the Depositor, the Trustee or 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 of 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, (b) in the case of the Trustee, U.S. Bank National
Association, 180 East Fifth Street, St. Paul, Minnesota 55101, Attention:
Structured Finance, 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) Notwithstanding 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 of 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;
(iii) the making of a final payment pursuant to Section 7.02;
(iv) resignation of the Trustee; and
(v) any Event of Default under the Sale and Servicing Agreement.
(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 DCR, to:
Duff & Phelps Credit Rating Co.
55 East Monroe Street
38th Floor
Chicago, Illinois 60603
Attention: Residential
MBS/SASCO 1998-10
If to Moody's, to:
Moody's Investors Service
99 Church Street, 4th Floor
New York, New York 10007
Attention: [[ ]]
(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.
<PAGE>
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/ Joseph J. Kelly
----------------------
Name: Joseph J. Kelly
Title: Vice President
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: /s/ C. Hatfield
---------------------
Name: C. Hatfield
Title: Vice President
<PAGE>
EXHIBIT A
FORMS OF CERTIFICATES
<PAGE>
EXHIBIT B-1
FORM OF INITIAL CERTIFICATION
-------------------
Date
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Trust Agreement (the "Trust Agreement"), dated as of November 1, 1998
between Structured Asset Securities Corporation, as Depositor, and
U.S. Bank, National Association, as Trustee, with respect to
Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1998-10
Ladies and Gentlemen:
In accordance with Section 2.02(a) of the Trust Agreement, subject to
review of the contents thereof, the undersigned, as [Custodian on behalf of
the] Trustee, hereby certifies that it (or its custodian) has received the
documents listed in Section 2.01(b) of the Trust Agreement for each Mortgage
File pertaining to each Mortgage Loan listed on Schedule A, to the Trust
Agreement, subject to any exceptions noted on Schedule I hereto.
Capitalized words and phrases used herein and not otherwise defined
herein shall have the respective meanings assigned to them in the Trust
Agreement. This Certificate is subject in all respects to the terms of Section
2.02 of the Trust Agreement and the Trust Agreement sections cross-referenced
therein.
[[Custodian], on behalf of]
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
--------------------------------------
Name:
Title:
<PAGE>
EXHIBIT B-2
FORM OF INTERIM CERTIFICATION
-------------------
Date
Structured Asset Securities Corporation
200 Vesey Street
New York, New York 10285
Re: Trust Agreement (the "Trust Agreement"), dated as of November 1, 1998
between Structured Asset Securities Corporation, as Depositor, and
U.S. Bank, National Association, as Trustee, with respect to
Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1998-10
Ladies and Gentlemen:
In accordance with Section 2.02(b) of the Trust Agreement, the
undersigned, as [Custodian on behalf of the] Trustee, 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 Schedule I hereto) it (or its
custodian) has received the applicable documents listed in Section 2.01(b) of
the Trust Agreement.
The undersigned hereby certifies that as to each Mortgage Loan
identified on the Mortgage Loan Schedule, other than any Mortgage Loan listed
on Schedule I hereto, it has reviewed the documents identified above and has
determined that each such document appears regular on its face and appears to
relate to the Mortgage Loan identified in such document.
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 including, but
not limited to, Section 2.02(b).
[[Custodian], on behalf of]
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT B-3
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 November 1, 1998
between Structured Asset Securities Corporation, as Depositor, and
U.S. Bank, National Association, as Trustee, with respect to
Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1998-10
Ladies and Gentlemen:
In accordance with Section 2.02(d) of the Trust Agreement, the
undersigned, as [Custodian on behalf of the] Trustee, 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 Schedule I hereto) it (or its
custodian) has received the applicable documents listed in Section 2.01(b) of
the Trust Agreement.
The undersigned hereby certifies that as to each Mortgage Loan
identified on the Mortgage Loan Schedule, other than any Mortgage Loan listed
on Schedule I 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], on behalf of]
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By:
----------------------------------------
Name:
Title:
<PAGE>
EXHIBIT B-4
FORM OF ENDORSEMENT
Pay to the order of U.S. Bank National Association, as trustee (the
"Trustee") under the Trust Agreement dated as of November 1, 1998, between
Structured Asset Securities Corporation, as Depositor, and the Trustee
relating to Structured Asset Securities Corporation Mortgage Pass-Through
Certificates, Series 1998-10, without recourse.
--------------------------------------
[current signatory on note]
By:
------------------------------
Name:
Title:
<PAGE>
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 November 1, 1998 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:
(a) 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.)
(b) The Mortgage Loan is being foreclosed.
(c) 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.)
(d) Mortgage Loan repurchased. (The Servicer hereby certifies that
the Purchase Price has been credited to the Certificate Account pursuant to
the Trust Agreement.)
(e) 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 Master Servicer]
By:__________________________________
Name:
Title: Servicing Officer
<PAGE>
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), any "electing large partnership" within the
meaning of Section 775 of the Code, 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 __________________ [date of
transfer] 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, as Depositor, and U.S. Bank National Association, as Trustee,
dated as of November 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 a 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. "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 state thereof, including for this purpose, the District of Columbia, 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.
<PAGE>
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__.
<PAGE>
EXHIBIT D-2
FORM OF RESIDUAL CERTIFICATE TRANSFER AFFIDAVIT (TRANSFEROR)
-------------------
Date
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:
<PAGE>
EXHIBIT E
SALE AND SERVICING AGREEMENT
<PAGE>
EXHIBIT F
FORM OF RULE 144A TRANSFER CERTIFICATE
Re: Structured Asset Securities Corporation
Mortgage Pass-Through Certificates
Series 1998-10
Reference is hereby made to the Trust Agreement dated as of November
1, 1998 (the "Trust Agreement") between Structured Asset Securities
Corporation, as Depositor, and U.S. Bank 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: __________________, ________
<PAGE>
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-ALS1 (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 November 1, 1998 between the Depositor and U.S. Bank
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.
(6) If we are acquiring ERISA-Restricted Certificates, we understand that
in accordance with ERISA, the Code and the Exemption, no Plan as to
which the Purchaser, the Depositor, the Servicer or the Trustee is a
party in interest or disqualified person, and no person acting on
behalf of such a Plan may acquire such Certificate unless the
acquisition would constitute an exempt transaction under a statutory
exemption or any of the administrative exemptions issued by the U.S.
Department of Labor.
Terms used in this letter which are not otherwise defined herein have
the respective meanings assigned thereto in the Trust Agreement.
<PAGE>
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:
<PAGE>
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 U.S. Bank National Association, as Trustee, dated as of
November 1, 1998, 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.
<PAGE>
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:
ATTEST:
- ---------------------------
STATE OF )
) ss.:
COUNTY OF )
Personally appeared before me the above-named _________________,
known or proved to me to be the same person who executed the foregoing
instrument and to be the _________________ of the Investor, and acknowledged
that he executed the same as his free act and deed and the free act and deed
of the Investor.
Subscribed and sworn before me this _____ day of ___________ 199__.
----------------------------------
NOTARY PUBLIC
My commission expires the ____ day
of __________, 19__.
<PAGE>
EXHIBIT I
MONTHLY REMITTANCE ADVICE
<PAGE>
EXHIBIT J
MONTHLY ELECTRONIC DATA TRANSMISSION
<PAGE>
SCHEDULE A
MORTGAGE LOAN SCHEDULE
<PAGE>
==============================================================================
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 November 1, 1998
==============================================================================
<PAGE>
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
<PAGE>
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 November, 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 November 1, 1998, between the Depositor and U.S.
Bank, National Association, as Trustee (the "Trustee").
W I T N E S S E T H:
WHEREAS, pursuant to each of the Sellers' Warranties and Servicing
Agreement, dated as of November 1, 1998 (the "Sale and Servicing Agreement"),
between Lehman Capital, Cendant Mortgage Corporation ("CMC") and Cendant
Residential Mortgage Trust ("CRMT" and, together with CMC, the "Sellers"), the
Sellers sold to Lehman Capital, and Lehman Capital purchased from the Sellers,
certain mortgage loans identified on the Mortgage Loan Schedule attached
hereto as Schedule A (the "Mortgage Loans"), and CMC 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 the Sale and Servicing Agreement, and delegate all
of its obligations thereunder, to the Depositor, as if the Depositor had been
a party to the 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 the Sale and Servicing Agreement, 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 $[[ ]]. 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 November 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 the Sale and Servicing Agreement, and delegates to the Depositor all of
its obligations under the Sale and Servicing Agreement. Concurrently with the
execution hereof, the Depositor tenders the purchase price of $[[ ]]
(including accrued interest). The Depositor hereby accepts such assignment and
delegation, and shall be entitled to exercise all such rights of Lehman
Capital under the Sale and Servicing Agreement, as if the Depositor had been a
party to the 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 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 Sellers with respect to
the related Mortgage Loans in the Sale and Servicing Agreement were made as of
the date specified in the 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 either Seller under the 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 applicable Seller 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 either Seller in Section 3.02 of the 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
either Seller in Section 3.02 of the Sale and Servicing Agreement, without
regard to whether such Seller 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 related Seller 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 either Seller under Section 3.02 of the 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.
<PAGE>
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: Vice President
<PAGE>
SCHEDULE A
MORTGAGE LOAN SCHEDULE
<PAGE>
Execution Copy
===============================================================================
LEHMAN CAPITAL, A DIVISION OF LEHMAN BROTHERS HOLDINGS INC.,
Purchaser
and
CENDANT MORTGAGE CORPORATION,
Seller and Servicer
and
CENDANT RESIDENTIAL MORTGAGE TRUST,
Seller
---------------------------------------------
SELLER'S WARRANTIES AND SERVICING AGREEMENT
Dated as of November 1, 1998
---------------------------------------------
Conventional Residential Fixed Rate Mortgage Loans
Group No. 1998-CD-01
===============================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE
FILES; MAINTENANCE OF SERVICING FILES; BOOKS AND RECORDS;
CUSTODIAL AGREEMENT; DELIVERY OF DOCUMENTS
Section 2.01 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 Custodial Agreement: Delivery of Documents....................12
ARTICLE III
REPRESENTATIONS AND WARRANTIES; REMEDIES AND BREACH
Section 3.01 Sellers Representations and Warranties.........................13
Section 3.02 Servicer Representations and Warranties........................15
Section 3.03 Representations and Warranties Regarding Individual
Mortgage Loans............................................17
Section 3.04 Remedies for Breach of Representations and Warranties..........26
Section 3.05 Restrictions and Requirements Applicable in the Event that
a Mortgage Loan is Acquired by a REMIC....................28
Section 3.06 Purchaser Representations and Warranties.......................29
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 CMC to Act as Servicer.........................................30
Section 4.02 Liquidation of Mortgage Loans..................................32
Section 4.03 Collection of Mortgage Loan Payments...........................33
Section 4.04 Establishment of and Deposits to Custodial Account.............33
Section 4.05 Permitted Withdrawals From Custodial Account...................35
Section 4.06 Establishment of and Deposits to Escrow Account................36
Section 4.07 Permitted Withdrawals From Escrow Account......................37
Section 4.08 Payment of Taxes, Insurance and Other Charges..................37
Section 4.09 Protection of Accounts.........................................38
Section 4.10 Maintenance of Hazard Insurance................................38
Section 4.11 Maintenance of Mortgage Impairment Insurance...................40
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions
Insurance.................................................40
Section 4.13 Inspections....................................................41
Section 4.14 Restoration of Mortgaged Property..............................41
Section 4.15 Maintenance of PMI Policy; Claims..............................42
Section 4.16 Title, Management and Disposition of REO Property..............42
Section 4.17 Real Estate Owned Reports......................................44
Section 4.18 Liquidation Reports............................................44
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged
Property..................................................44
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances....................................................45
Section 5.02 Statements to Purchaser........................................45
Section 5.03 Monthly Advances by Servicer...................................46
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.0l Transfers of Mortgaged Property................................47
Section 6.02 Satisfaction of Mortgages and Release of Mortgage Files........47
Section 6.03 Servicing Compensation.........................................48
Section 6.04 Annual Statement as to Compliance..............................48
Section 6.05 Annual Independent Public Accountants'Servicing Report.........48
Section 6.06 Right to Examine Servicer Records..............................49
ARTICLE VII
SECURITIZATION
Section 7.01 Securitization.................................................49
Section 7.02 Bring-down of Representations and Warranties...................50
ARTICLE VIII
SELLERS AND THE SERVICER TO COOPERATE
Section 8.01 Provision of Information.......................................50
Section 8.02 Financial Statements; Servicing Facility.......................51
ARTICLE IX
THE SELLERS AND THE SERVICER
Section 9.01 Indemnification; Third Party Claims............................51
Section 9.02 Merger or Consolidation of the Sellers or the Servicer.........52
Section 9.03 Limitation on Liability of Servicer and Others.................52
Section 9.04 Limitation on Resignation and Assignment by Servicer...........53
ARTICLE X
DEFAULT
Section 10.01 Events of Default.............................................53
Section 10.02 Waiver of Defaults............................................55
ARTICLE XI
TERMINATION
Section 11.01 Termination...................................................55
Section 11.02 Termination Without Cause.....................................55
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Servicer.........................................56
Section 12.02 Amendment.....................................................57
Section 12.03 Governing Law.................................................57
Section 12.04 Duration of Agreement.........................................57
Section 12.05 Notices.......................................................57
Section 12.06 Severability of Provisions....................................58
Section 12.07 Relationship of Parties.......................................58
Section 12.08 Execution; Successors and Assigns.............................58
Section 12.09 Recordation of Assignments of Mortgage........................59
Section 12.10 Assignment by Purchaser.......................................59
Section 12.11 No Personal Solicitation......................................59
Section 12.12 Joint and Several Liability...................................59
<PAGE>
EXHIBITS
EXHIBIT A-1 MORTGAGE LOAN SCHEDULE - CENDANT MORTGAGE CORPORATION
EXHIBIT A-2 MORTGAGE LOAN SCHEDULE - CENDANT RESIDENTIAL MORTGAGE TRUST
EXHIBIT B-1 CONTENTS OF EACH MORTGAGE FILE
EXHIBIT B-2 CONTENTS OF EACH SERVICING FILE
EXHIBIT C CUSTODIAL AGREEMENT
EXHIBIT D-1 FORM OF CUSTODIAL ACCOUNT CERTIFICATION
EXHIBIT D-2 FORM OF CUSTODIAL ACCOUNT LETTER AGREEMENT
EXHIBIT E-1 FORM OF ESCROW ACCOUNT CERTIFICATION
EXHIBIT E-2 FORM OF ESCROW ACCOUNT LETTER AGREEMENT
EXHIBIT F FORM OF MONTHLY REMITTANCE ADVICE
EXHIBIT G EXCEPTIONS TO SALES MANUAL GUIDELINES
EXHIBIT H SELLER-PAID PMI MORTGAGE LOANS
<PAGE>
This is a Seller's Warranties and Servicing Agreement for
conventional fixed rate residential first mortgage loans, dated and effective
as of November 1, 1998, and is executed between Lehman Capital, A Division of
Lehman Brothers Holdings Inc., as purchaser (the "Purchaser"), Cendant
Mortgage Corporation, as seller ("CMC" or "Seller" or, in its role as
servicer, the "Servicer") and Cendant Residential Mortgage Trust, as seller
("CRMT" or "Seller", together with CMC, the "Sellers").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Purchaser has agreed to purchase from the Sellers and
the Sellers have agreed to sell to the Purchaser certain Mortgage Loans which
have an aggregate outstanding principal balance as of the close of business on
the Cut-off Date, after deduction of principal payments due on or before such
date of $243,400,121.99;
WHEREAS, each of the Mortgage Loans is secured by a mortgage, deed
of trust or other security instrument creating a first lien on a residential
dwelling located in the jurisdiction indicated on the Mortgage Loan Schedule,
which is annexed hereto as Exhibit A; and
WHEREAS, the Purchaser and the Sellers wish to prescribe the manner
of delivery of the Mortgage Loans to Purchaser 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 is hereby acknowledged, the Purchaser and the
Sellers 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.
Agreement: This Seller's Warranties and Servicing Agreement and all
---------
amendments hereof and supplements hereto.
ALTA: The American Land Title Association or any successor thereto.
----
Ancillary Income: All income derived from the Mortgage Loans, other
----------------
than Servicing Fees, including but not limited to, (a) interest which
represents the excess, if any, of the Mortgage Interest Rate over the sum of
(i) the Mortgage Loan Remittance Rate, (ii) the Servicing Fee Rate and (iii)
with respect to each Mortgage Loan listed on Exhibit H, the PMI Fee Rate; (b)
late charges; (c) prepayment fees; (d) fees received with respect to checks or
bank drafts returned by the related bank for non-sufficient funds; (e)
optional insurance administrative fees; and (f) all other incidental fees and
charges.
Appraised Value: The value 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.
---
Breach: As defined in Section 3.03.
------
Business Day: Any day other than (i) a Saturday or Sunday, or (ii) a
------------
day on which banking and savings and loan institutions in the States of New
York and New Jersey are authorized or obligated by law or executive order to
be closed.
Certificates: Any and all of the Certificates issued pursuant to the
------------
Trust Agreement.
Closing Date: November 12, 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.
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.
Custodial Account: The separate account or accounts created and
------------------
maintained pursuant to Section 4.04.
Custodial Agreement: The Custodial Agreement, dated as of February
-------------------
1, 1993, as amended by (a) that certain Amendment to Custodial Agreement with
respect to Mortgage Loans secured by Co-op shares; (b) that certain Amendment
to Custodial Agreement with respect to FHA insured Mortgage Loans; and (c)
that certain Amendment Number 3 to Custodial Agreement dated as of July 7,
1995, by and between Lehman Capital Corporation, as owner and initial
servicer, and U.S. Bank Trust National Association (formerly known as First
Trust National Association), a copy of which is annexed hereto as Exhibit C.
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: November 1, 1998.
------------
Deleted Mortgage Loan: A Mortgage Loan which is repurchased by the
-----------------------
Sellers in accordance with the terms of this Agreement and which is, in the
case of a substitution pursuant to Section 3.03, replaced or to be replaced
with a Qualified Substitute Mortgage Loan.
Depositor: The person designated as "Depositor" under the relevant
---------
agreement or agreements executed in connection with the Securitization, or its
successor in interest or assigns.
Determination Date: The last day Business Day prior to the
--------------------
Remittance Date.
Disqualified Organization: An organization defined as such in
--------------------------
Section 860E(e) of the Code.
Due Date: The day of the month on which the Monthly Payment is due
--------
on a Mortgage Loan, exclusive of any days of grace. With respect to the
Mortgage Loans for which payment from the Mortgagor is due on a day other than
the first day of the month, such Mortgage Loans will be treated as if the
Monthly Payment is due on the first day of the month following the actual Due
Date.
Due Period: With respect to each Remittance Date, the period
-----------
commencing on the second day of the month preceding the month of the
Remittance Date and ending in the first day of the month of the Remittance
Date.
Eligible Investments: Any one or more of the obligations and
---------------------
securities listed below which investment provides for a date of maturity not
later than the Determination Date in each month:
(i) direct obligations of, and obligations fully
guaranteed 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; and
(ii) federal funds, demand and time deposits in,
certificates of deposits of, or bankers' acceptances
issued by, any depository institution or trust company
incorporated or organized under the laws of the United
States of America or any state thereof and subject to
supervision and examination by federal and/or state
banking authorities, so long as at the time of such
investment or 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 obligations of such holding company) are rated in one
of two of the highest ratings by each of Standard &
Poor's, Fitch and Moody's and the long-term debt
obligations of such holding company) are rated in one of
two of the highest ratings, by each of Standard & Poor's,
Fitch and Moody's, and the long-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
long-term debt obligations of such holding company) are
rated in one of two of the highest ratings, by each of
Standard & Poor's, Fitch and Moody's;
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.
Errors and Omissions Insurance Policy: An errors and omissions
----------------------------------------
insurance policy to be maintained by the Sellers 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, applicable law
or any other related document.
Event of Default: Any one of the conditions or circumstances
------------------
enumerated in Section 10.01.
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 the Sellers
--------------
pursuant to Section 4.12.
First Remittance Date: December 18, 1998.
---------------------
Fitch: Fitch Investors Service, L.P., or its successor in interest.
-----
FNMA: The Federal National Mortgage Association, or any successor
----
thereto.
FNMA Guides: The FNMA Sellers' Guide and the FNMA Servicers' Guide
-----------
and all amendments or additions thereto.
Insurance Proceeds: With respect to each Mortgage Loan, proceeds of
------------------
insurance policies insuring the Mortgage Loan or the related Mortgaged
Property.
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 Stated Principal Balance of the Mortgage Loan as of the date of
origination (unless otherwise indicated) 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 Servicer pursuant to Section 5.03 on the
Business Day immediately preceding the Remittance Date of the related month.
Moody's: Moody's Investors Services, Inc., or its successor in
-------
interest.
Monthly Payment: The scheduled monthly payment of principal and
----------------
interest on a Mortgage Loan.
Mortgage: The mortgage, deed of trust or other instrument securing a
--------
Mortgage Note, which creates a first lien on an unsubordinated estate in fee
simple in real property securing the Mortgage Note.
Mortgage File: The Mortgage Loan Documents pertaining to a
--------------
particular Mortgage Loan listed in Exhibit B-1 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 in accordance with the provisions of the Mortgage Note.
Mortgage Loan: An individual Mortgage Loan which is the subject of
--------------
this Agreement, each Mortgage Loan originally sold and subject to this
Agreement being identified on the Mortgage Loan Schedule, which Mortgage Loan
includes without limitation the Mortgage File and the Servicing File, and as
they apply to the period from and after the Cut-off Date, all 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 Mortgage
Loan.
Mortgage Loan Documents: The documents required to be delivered or
-----------------------
maintained pursuant to this Agreement.
Mortgage Loan Remittance Rate: The annual rate of interest remitted
-----------------------------
to the Purchaser, which shall be equal to 6.65%.
Mortgage Loan Schedule: A schedule of Mortgage Loans annexed hereto
----------------------
as Exhibit A-1 (with respect to Mortgage Loans being sold by CMC) or Exhibit
A-2 (with respect to Mortgage Loans being sold by CRMT), such schedule setting
forth the following information with respect to each of the applicable
Mortgage Loans: (1) the applicable Seller's Mortgage Loan identifying number;
(2) the Mortgagor's name; (3) the street address of the Mortgaged Property
including the city, state and the zip code; (4) a code indicating whether the
Mortgaged Property is a single family residence, a 2-4 family residence, a
townhouse, a condominium unit or a unit in a planned unit development; (5) 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; (6) the Loan-to-Value Ratio at origination; (7) the
Mortgage Interest Rate as of the Cut-off Date; (8) the date on which the
Mortgage Loan was originated and the first payment date of the Mortgage Loan;
(9) the stated maturity date; (10) the amount of the Monthly Payment and the
Mortgage Interest Rate; (11) the last payment date on which a payment was
actually applied to the outstanding principal balance and the next payment
date; (12) the original principal amount of the Mortgage Loan; (13) the
principal balance of the Mortgage Loan as of the close of business on the
Cut-off Date, after deduction of payments of principal due on or before the
Cut-off Date, whether or not collected; (14) the Mortgage Loan Remittance Rate
as of the Cut-off Date; (15) the PMI Policy certificate number; (16) the PMI
Policy coverage percentage; (17) a code indicating the occupancy status; (18)
a code indicating the loan purpose and the loan documentation type; and (19)
the Mortgagor's FICO score and the FICO score of any co-borrower. 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; (3) the weighted average Mortgage Interest Rate of the
Mortgage Loans; and (4) the weighted average maturity 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 and all improvements thereon
------------------
securing repayment of the debt evidenced by a Mortgage Note.
Mortgagor: The obligor on a Mortgage Note.
---------
Nonrecoverable Advance: With respect to any Mortgage Loan, any
-----------------------
Monthly Advance which, in the judgment of Servicer, may not be ultimately
recoverable by the Servicer from Liquidation Proceeds, Insurance Proceeds,
Condemnation Proceeds or otherwise.
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 Sellers, 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 Sellers, reasonably acceptable to the Purchaser, provided that
any Opinion of Counsel relating to (a) qualification of the Mortgage Loans in
a REMIC or (b) compliance with the REMIC Provisions, must be an opinion of
counsel who (i) is in fact independent of the Sellers and any master servicer
of the Mortgage Loans, (ii) does not have any material direct or indirect
financial interest in the Sellers or any master servicer of the Mortgage Loans
or in an affiliate of either and (iii) is not connected with the Sellers or
any master servicer of the Mortgage Loans as an officer, employee, director or
person performing similar functions.
Person: Any individual, corporation, limited liability company,
------
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof.
PMI Fee Rate: The PMI fee rate set forth opposite each Mortgage Loan
------------
listed on Exhibit H.
PMI Policy: A policy of primary mortgage guaranty insurance issued
----------
by a Qualified Insurer, as required by this Agreement with respect to certain
Mortgage Loans.
Prepayment Interest Shortfall Amount: With respect to any Mortgage
-------------------------------------
Loan that was subject to a Principal Prepayment in full or in part during any
Prepayment Period, which Principal Prepayment was applied to such Mortgage
Loan prior to such Mortgage Loan's Due Date in such Due Period, the amount of
interest (net the related Servicing Fee) that would have accrued on the amount
of such Principal Prepayment during the period commencing on the date as of
which such Principal Prepayment was applied to such Mortgage Loan and ending
on the day immediately preceding such Due Date, inclusive.
Prepayment Period: The month preceding the month in which the
------------------
related Remittance Date occurs.
Prime Rate: The prime rate announced to be in effect from time to
----------
time, as published as the average rate in The Wall Street Journal.
Principal Prepayment: Any payment or other recovery of principal on
--------------------
a Mortgage Loan which is received in advance of its scheduled Due Date 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.
Purchaser: Lehman Capital, A Division of Lehman Brothers Holdings
---------
Inc. or its successor in interest or any assignee thereof under this Agreement
as herein provided.
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 AA (or the equivalent) or better by Standard & Poor's and Aa2 (or the
equivalent) or better by Moody's.
Qualified Insurer: A mortgage guaranty insurance company duly
------------------
authorized and licensed where required by law to transact mortgage guaranty
insurance business and approved as an insurer by FNMA or FHLMC.
Qualified Substitute Mortgage Loan: A mortgage loan eligible to be
------------------------------------
substituted by the Sellers 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 Deleted Mortgage Loan; (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 remaining term
to maturity not greater than and not more than one year less than that of the
Deleted Mortgage Loan; (iv) comply with each representation and warranty set
forth in Sections 3.01 and 3.02; and (v) has a Loan-to-Value Ratio as of the
date of such substitution not greater than that of the related Deleted
Mortgage Loan.
Rating Agency: Any of Fitch, Moody's or Standard & Poor's, Duff &
-------------
Phelps or their respective successors designated by the Purchaser.
Record Date: The close of business of 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: Provisions of the federal income tax law relating
----------------
to a REMIC, which appear at Section 860A through 86OG 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 Servicer of any REO Property.
---------------
REO Disposition Proceeds: All amounts received with respect to an
-------------------------
REO Disposition pursuant to Section 4.16.
REO Property: A Mortgaged Property acquired by the Servicer on
-------------
behalf of the Purchaser through foreclosure or by deed in lieu of foreclosure,
as described in Section 4.16.
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 and distributed to the Purchaser to
the date of 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.
Sales Manual Guidelines: the standard underwriting guidelines of
------------------------
FNMA or FHLMC with respect to the origination of the Mortgage Loans, except as
otherwise provided in Exhibit G hereto.
Securities Act of 1933 or the 1933 Act: The Securities Act of 1933,
---------------------------------------
as amended.
Securitization: As defined in Section 7.01.
--------------
Seller: Each of Cendant Mortgage Corporation and Cendant Residential
------
Mortgage Trust, or its successor in interest or assigns, or any successor
thereto under this Agreement appointed as herein provided. "Sellers" shall
refer to all such entities, collectively.
Servicer: Cendant Mortgage Corporation, acting in its capacity as
--------
servicer under this Agreement, or its successor in interest or assigns, or any
successor thereto under this Agreement appointed as herein provided.
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 Servicer
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
-------------
monthly fee the Purchaser shall pay to the Servicer, 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 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 each Monthly Payment collected by the
Servicer, or as otherwise provided under Section 4.05.
Servicing Fee Rate: 20 basis points (0.20%) per annum.
------------------
Servicing File: With respect to each Mortgage Loan, the file
---------------
retained by the Servicer consisting of the Mortgage Loan Documents listed on
Exhibit B-2 annexed hereto.
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
Purchaser upon request, as such list may from time to time be amended.
Standard & Poor's: Standard & Poor's Ratings Services, or its
-------------------
successor in interest.
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 and
all Monthly Advances in lieu thereof.
Subservicer: Any 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 Servicer and a
-----------------------
Subservicer for the servicing of the Mortgage Loans.
Trust Agreement: The trust agreement between the Depositor and the
---------------
Trustee executed in connection with the Securitization.
Trustee: The person designated as "Trustee" under the Trust
-------
Agreement, or its successor in interest or assigns.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; POSSESSION OF MORTGAGE FILES;
MAINTENANCE OF SERVICING FILES; BOOKS AND RECORDS; CUSTODIAL AGREEMENT;
DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Mortgage Loans; Possession of Mortgage
------------------------------------------------------
Files; Maintenance of Servicing Files.
- -------------------------------------
The Sellers, simultaneously with the execution and delivery of this
Agreement, do 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 Sellers in and to the Mortgage Loans,
including all interest and principal received on or with respect to the
Mortgage Loans (other than payments of principal and interest due on the
Mortgage Loans on or before the Cut-off Date). Pursuant to Section 2.03, the
Sellers have delivered the Mortgage Files to the Custodian.
The contents of each Servicing File are and shall be held in trust
by the Servicer for the benefit of the Purchaser as the owner thereof. The
possession of each Servicing File by the Servicer is at the will of the
Purchaser for the sole purpose of servicing the related Mortgage Loan, and
such retention and possession by the Servicer is in a custodial capacity only.
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 related Mortgage Loan prepared by or which come into the
possession of the Servicer shall vest immediately in the Purchaser and shall
be retained and maintained by the Servicer, in trust, at the will of the
Purchaser and only in such custodial capacity. Each Servicing File shall be
marked and identified as owned by the Purchaser and shall be easily retrieved
from other servicing files for mortgage loans which are not the Mortgage
Loans. The Servicer shall release its custody of the contents of any Servicing
File only in accordance with written instructions from the Purchaser, unless
such release is required as incidental to the Servicer's servicing of the
Mortgage Loans or is in connection with a repurchase of any Mortgage Loan
pursuant to Section 3.03 or 6.02.
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 by the Sellers on or in connection with the Mortgage Loans,
shall be received and held by the Sellers in trust for the benefit of the
Purchaser as owner of the Mortgage Loans, and the Sellers may, at the option
of the Purchaser retain record title to the related Mortgages for the sole
purpose of facilitating the servicing and the supervision of the servicing of
the Mortgage Loans.
The sale of each Mortgage Loan shall be reflected on the Sellers'
balance sheet and other financial statements as a sale of assets by the
Sellers. The Sellers shall be responsible for maintaining, and shall maintain
books and records for each Mortgage Loan, which may be in the form of
electronic media, and shall be marked clearly to reflect the ownership of each
Mortgage Loan by the Purchaser. In particular, the Servicer 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, and requirements of
FNMA or FHLMC, including but not limited to documentation as to the method
used in determining the applicability of the provisions of the Flood Disaster
Protection Act of 1973, as amended, to the Mortgaged Property, documentation
evidencing insurance coverage and eligibility in accordance with the Sales
Manual Guidelines of any condominium project for approval by FNMA and periodic
inspection reports as required by Section 4.13. To the extent that original
documents are not required for purposes of realization of Liquidation Proceeds
or Insurance Proceeds, documents maintained by the Servicer 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 so long as
the Servicer complies with the requirements of the FNMA Selling and Servicing
Guide, as amended from time to time.
The Servicer shall keep at its servicing office books and records in
which, subject to such reasonable regulations as it may prescribe, the
Servicer shall note on its books and records any 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
Sellers 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
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,
provided, however, that (i) the transferee will not be deemed to be a
Purchaser hereunder binding upon the Sellers unless such transferee shall
agree in writing to be bound by the terms of this Agreement and a copy of the
instrument of transfer or assignment and assumption agreement executed by the
transferring Purchaser and by the transferee Purchaser shall have been
delivered to the Sellers; and (ii) no more than five (5) Persons at any given
time may have the status of "Purchaser" hereunder, unless otherwise consented
to by the Sellers, which consent shall not be unreasonably withheld. The
Purchaser also shall advise the Sellers of the transfer. Upon receipt of
notice of the transfer, the Sellers shall mark their respective books and
records to reflect the ownership of the Mortgage Loans of such assignee, and
shall release the previous Purchaser from its obligations hereunder with
respect to the Mortgage Loans sold or transferred.
Section 2.03 Custodial Agreement: Delivery of Documents.
------------------------------------------
Pursuant to the Custodial Agreement delivered to the Purchaser
contemporaneously with the delivery of this Agreement, the Sellers shall
deliver and release the Mortgage Files to the Custodian, at least seven (7)
Business Days prior to the Closing Date.
The Custodian has certified its receipt of all such Mortgage Files
as evidenced by the Initial Certification of the Custodian in the form annexed
to the Custodial Agreement. The Servicer shall be responsible for maintaining
the Custodial Agreement for the benefit of the Purchaser; Purchaser shall pay
all fees and expenses of the Custodian.
The Servicer shall forward to the Custodian original documents
evidencing an assumption, modification, consolidation or extension of any
Mortgage Loan entered into in accordance with Section 4.01 or 6.01 within one
week of their execution, provided, however, that the Servicer shall provide
the Custodian with a certified true copy certified by a Servicing Officer of
any such document submitted for recordation within one week of its execution,
and shall provide the original of any document submitted for recordation
within thirty days of receipt of such original recorded document from the
relevant public recording office.
ARTICLE III
REPRESENTATIONS AND WARRANTIES;
REMEDIES AND BREACH
Section 3.01 Sellers Representations and Warranties.
--------------------------------------
Each Seller (except where otherwise indicated) represents and
warrants to the Purchaser that as of the Closing Date:
(a) Due Organization and Authority. With respect to (i) CMC, the
---------------------------------
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the State of New Jersey and (ii) CRMT, the Seller is a
statutory Delaware business trust duly organized, validly existing and in good
standing under the laws of the State of Delaware; the Seller has all licenses
necessary to carry on its business as now being conducted 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 Seller, and in any event the
Seller 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 Seller 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
Seller 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 Seller; and all requisite corporate action has
been taken by the Seller to make this Agreement valid and binding upon the
Seller 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 Seller, and the transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Seller 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 acquisition of the Mortgage Loans by the Seller, the sale of
the Mortgage Loans to the Purchaser or the transactions contemplated hereby,
nor the fulfillment of or compliance with the terms and conditions of this
Agreement, will conflict with or result in a breach of any of the terms,
conditions or provisions of the Seller's charter or by-laws or any legal
restriction or any agreement or instrument to which the Seller is now a party
or by which it is bound, or constitute a default or result in an acceleration
under any of the foregoing, or result in the violation of any law, rule,
regulation, order, judgment or decree to which the Seller 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 Perform. The Seller 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. The Seller is solvent and the sale of
the Mortgage Loans is not undertaken to hinder, delay or defraud any of the
Seller's creditors;
(e) No Litigation Pending. There is no action, suit, proceeding or
---------------------
investigation pending or threatened against the Seller 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
Seller, or in any material impairment of the right or ability of the Seller to
carry on its business substantially as now conducted, or in any material
liability on the part of the Seller, 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 Seller contemplated herein,
or which would be likely to impair materially the ability of the Seller to
perform under the terms of this Agreement;
(f) 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 Seller of or compliance by the
Seller 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;
(g) Selection Process. The Mortgage Loans were selected from among
------------------
the outstanding fixed rate one- to four-family mortgage loans in the Seller's
portfolio at the Closing Date as to which the representations and warranties
set forth in Section 3.03 could be made and such selection was not made in a
manner so as to affect adversely the interests of the Purchaser;
(h) 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 untrue statement of material fact or omits to state a fact necessary to
make the statements contained therein not misleading in any material respect;
(i) Sale Treatment. The Seller has determined that the disposition
---------------
of the Mortgage Loans pursuant to this Agreement will be afforded sale
treatment for accounting and tax purposes;
(j) Financial Statements. CRMT has delivered to the Purchaser
---------------------
pro-forma financial statements as of December 31, 1998 for the period then
ended. All such financial statements fairly present the pertinent results of
operations and changes in financial position at the end of such period of CRMT
and its subsidiaries and have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as set forth in the notes thereto. There has been no change
in the CRMT's business, operations, financial condition, properties or assets
since the date of CRMT's financial statements that would have a material
adverse effect on its ability to perform its obligations under this Agreement;
(k) No Brokers' Fees. The Seller 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
(l) Fair Consideration. The consideration received by the Seller
-------------------
upon the sale of the Mortgage Loans under this Agreement constitutes fair
consideration and reasonably equivalent value for the Mortgage Loans.
Section 3.02 Servicer Representations and Warranties.
---------------------------------------
The Servicer represents and warrants to the Purchaser that as of the
Closing Date:
(a) Due Organization and Authority. The Servicer is a corporation
--------------------------------
duly organized, validly existing and in good standing under the laws of the
State of New Jersey and has all licenses necessary to carry on its business as
now being conducted 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 Servicer, and in any event the Servicer 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 Servicer 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 Servicer and the consummation of the transactions
contemplated hereby to be performed by the Servicer have been duly and validly
authorized; this Agreement evidences the valid, binding and enforceable
obligation of the Servicer, subject, as to enforceability, to bankruptcy,
insolvency, reorganization or other similar laws affecting creditors' rights
and to general principles of equity (regardless of whether the enforceability
of this Agreement is considered in a proceeding in equity or at law); and all
requisite corporate action has been taken by the Servicer to make this
Agreement valid and binding upon the Servicer 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 Servicer;
(c) No Conflicts. Neither the execution and delivery of this
-------------
Agreement, nor the fulfillment of or compliance with the terms and conditions
of this Agreement, will conflict with or result in a breach of any of the
terms, conditions or provisions of the Servicer's charter or by-laws or any
legal restriction or any agreement or instrument to which the Servicer is now
a party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Servicer or its
property is subject;
(d) Ability to Service. Each of the Servicer and the Subservicer is
------------------
an FNMA and FHLMC approved servicer and the Servicer has 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. Each of the Servicer and the Subservicer is in
good standing to service mortgage loans for FNMA and FHLMC, and no event has
occurred, including but not limited to a change in insurance coverage, which
would make the Servicer or the Subservicer unable to comply with FNMA or FHLMC
eligibility requirements, or which would require notification to either the
FNMA or FHLMC;
(e) Reasonable Servicing Fee. The Servicer 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 Servicer, 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 Servicer does not believe, nor does it
------------------
have any reason or cause to believe, that it cannot perform each and every
covenant made by it in this Agreement;
(g) No Litigation Pending. There is no action, suit, proceeding or
---------------------
investigation pending or, to the best of the Servicer's knowledge, threatened
against the Servicer which, either in any one instance or in the aggregate,
could reasonably be expected to result in any material adverse change in the
business, operations, financial condition, properties or assets of the
Servicer, or in any material impairment of the right or ability of the
Servicer to carry on its business substantially as now conducted, 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 Servicer contemplated herein, or which would be likely to impair
materially the ability of the Servicer 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 Servicer of, or compliance by the
Servicer with, this Agreement, or if required, such approval has been obtained
prior to the Closing Date;
(i) No Untrue Information. The information concerning the Servicer
---------------------
and the Mortgage Loans set forth in this Agreement, including exhibits hereto,
and in any statement, report or other document furnished or to be furnished by
the Servicer pursuant to this Agreement or in connection with the transactions
contemplated hereby is true, correct and complete in all material respects;
(j) Financial Statements. The Servicer has delivered to the
---------------------
Purchaser consolidated financial statements as to the last two complete fiscal
years. All such financial statements fairly present the pertinent results of
operations and changes in financial position at the end of each such period of
the Servicer and its parent and subsidiaries and have been prepared in
accordance with generally accepted accounting principles consistently applied
throughout the periods involved, except as set forth in the notes thereto. In
addition, the Servicer has delivered information as to its conventional
mortgage loan delinquency and foreclosure experience for the immediately
preceding two-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 Servicer since the date of the Servicer's
financial statements that would have a material adverse effect on its ability
to perform its obligations under this Agreement;
(k) Servicing. From and after the date of origination, each Mortgage
---------
Loan has been serviced in accordance with Accepted Servicing Practices in all
respects.
Section 3.03 Representations and Warranties Regarding Individual
------------------------------------------------------
Mortgage Loans.
- --------------
Each Seller (except where otherwise indicated) hereby represents and
warrants to the Purchaser, as to each Mortgage Loan being sold by such Seller,
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;
(b) Payments Current. All payments required to be made up to the
-----------------
Closing Date (including for the month of October, 1998) 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 past due for more than twenty nine
(29) days at any time during the twelve (12) months preceding the Closing
Date. The first Monthly Payment shall be made with respect to the Mortgage
Loan on its Due Date or within twenty nine (29) days thereafter, all in
accordance with the terms of the related Mortgage Note;
(c) No Outstanding Charges. There are no defaults in complying with
----------------------
the terms of the Mortgages, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or ground
rents which previously became due and owing have been paid, or an escrow of
funds has been established in an amount sufficient to pay for every such item
which remains unpaid and which has been assessed but is not yet due and
payable. Neither Seller has advanced funds, or induced, solicited or knowingly
received any advance of funds by a party other than the Mortgagor, 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 has been recorded, if necessary to
protect the interests of the Purchaser, and which has been delivered to the
Custodian. The substance of any such waiver, alteration or modification has
been approved by the issuer of any related PMI Policy and the title insurer,
to the extent required by the policy, and its terms are reflected on the
Mortgage Loan Schedule. No Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement approved by the issuer of
any related PMI Policy and the title insurer, to the extent required by the
policy, and which assumption agreement is part of the Mortgage Loan File
delivered to the Custodian and the terms of which are reflected in the
Mortgage Loan Schedule;
(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 no Mortgagor was a debtor in any state or federal bankruptcy or
insolvency proceeding at the time the Mortgage Loan was originated;
(f) Hazard Insurance. Pursuant to the terms of the Mortgage, all
-----------------
buildings or other improvements upon the Mortgaged Property are insured by a
generally acceptable insurer against loss by fire, hazards of extended
coverage and such other hazards as are customary in the area where the
Mortgaged Property is located 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 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
Seller 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 Seller
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
herein, 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 Seller;
(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 Seller 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 Mortgage 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 Seller 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 Seller waived any default resulting from any action or inaction by
the Mortgagor;
(i) Location and Type of Mortgaged Property. 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 a twoto four-family dwelling, a townhouse or an individual
condominium unit in a low-rise condominium project, or an individual unit in a
planned unit development, provided, however, that any condominium project or
planned unit development shall conform with the applicable Sales Manual
Guidelines, and no residence or dwelling is a mobile home or a manufactured
dwelling. No portion of the Mortgaged Property is used for commercial
purposes;
(j) Valid First Lien. The Mortgage is a valid, subsisting,
------------------
enforceable and perfected first lien on the Mortgaged Property, including all
buildings on the Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems located in or
annexed to such buildings, 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 to 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 property described therein and the Seller has full right to
sell and assign the same to the Purchaser;
(k) Pool Characteristics. With respect to aggregate outstanding
---------------------
principal balance of all Mortgage Loans, (a) no more than 17.6% are cash-out
refinance Mortgage Loans, (b) no more than 19.3% are rate term refinance
mortgage loans, and (c) at least 63.1% are purchase money Mortgage Loans. The
Mortgage Loans have a weighed average remaining term of approximately 358
months. The average principal balance of the Mortgage Loans is $321,532. With
respect to 100% of the Mortgage Loans of which a FICO score is known for the
Mortgagor (as per the Mortgage Loan Schedule), the weighted average FICO score
is at least 724. With respect to all Mortgage Loans, the FICO score for the
related Mortgagor is at least 563. With respect to the aggregate unpaid
principal balance of the Mortgage Loans: (i) no more than 0.1% were originated
pursuant to the Seller's reduced documentation program; and (ii) at least
99.9% of the Mortgage Loans were originated under a full or alternative
documentation program. With respect to the aggregate unpaid balance of the
Mortgage Loans, and the occupancy status of the related Mortgaged Properties
at the time of origination, (i) not more than 2.7% of the Mortgaged Properties
were owner-occupied second homes; (ii) not more than 0.3% of the Mortgaged
Properties were investor properties; and (iii) at least 97.0% of the Mortgaged
Properties were owner-occupied primary residences. With respect to the
aggregate unpaid principal balance of all the Mortgage Loans, the Mortgaged
Properties are located as follows: (i) no more than 48.0% are located in
California, (ii) approximately 7.8% are located in New Jersey, and (iii) the
remainder are geographically dispersed throughout other states. With respect
to all Mortgage Loans, the weighted average LTV is not greater than 78.22% at
origination, with each such LTV determined at the respective date of
origination for each Mortgage Loan;
(l) 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 Seller 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;
(m) Full Disbursement of Proceeds. The proceeds of the Mortgage Loan
-----------------------------
have been fully disbursed and there is no requirement for future advances
thereunder, and any and all requirements as to completion of any on-site or
off-site improvement and as to disbursements of any escrow funds therefor have
been complied with. All costs, fees and expenses incurred in making or closing
the Mortgage Loan and the recording of the Mortgage were paid, and the
Mortgagor is not entitled to any refund of any amounts paid or due under the
Mortgage Note or Mortgage;
(n) Ownership. The applicable Seller is the sole owner of record and
---------
holder of the Mortgage Loan. The Mortgage Loan is not assigned or pledged, and
such Seller 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;
(o) 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 Mortgaged Property is located, and (2) either (a)
organized under the laws of such state, or (b) qualified to do business in
such state, or (c) federal savings and loan associations or national banks
having principal offices in such state, or (d) not doing business in such
state;
(p) LTV, PMI Policy. No Mortgage Loan has a LTV greater than 95%.
----------------
The original LTV of the Mortgage Loan either was not more than 80% or until
the LTV of such Mortgage Loan is reduced to 80%, there is a PMI Policy in
effect which shall insure payment defaults and which satisfies all of FNMA's
requirements therefor for the amount over 75% of the Appraised Value and such
PMI Policy is issued by a primary mortgage insurer having a claims paying
ability rate acceptable to FNMA. All provisions of such PMI Policy have been
and are being complied with, such policy is in full force and effect, and all
premiums due thereunder have been paid. No action, inaction, or event has
occurred and no state of facts exists that has, or will result in the
exclusion from, denial of, or defense to coverage. Any Mortgage Loan subject
to a PMI Policy obligates the Mortgagor thereunder to maintain the PMI Policy,
subject to applicable law, and to pay all premiums and charges in connection
therewith. The Mortgage Interest Rate for the Mortgage Loan as set forth on
the Mortgage Loan Schedule is net of any such insurance premium;
(q) Title Insurance. 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 Seller, 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
contained in clauses (1), (2) and (3) of paragraph (j) of this Section 3.02
and against any loss by reason of the invalidity or unenforceability of the
lien 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. The
Seller is the sole insured of such lender's title insurance policy, and such
lender's title insurance policy is in full force and effect and will be in
force and effect upon the consummation of the transactions contemplated by
this Agreement. No claims have been made under such lender's title insurance
policy, and no prior holder of the Mortgage, including the Seller, 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 Seller;
(r) 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 Seller nor its predecessors have waived any
default, breach, violation or event of acceleration;
(s) 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
related Mortgaged Property which are or may be liens prior to, or equal or
coordinate with, the lien of the related Mortgage;
(t) 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 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;
(u) 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 was supervised and examined by a
Federal or State authority. The Mortgage Interest Rate is fixed. The Mortgage
Note is payable on the first day of each month in equal monthly installments
of principal and interest, 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 years from commencement of
amortization, with a principal balance at origination of no more than $999,999
and no less than $50,800. Each Mortgage Loan has a Mortgage Interest Rate of
not less than 6.00% and not more than 8.75%;
(v) 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 and
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;
(w) Conformance with Underwriting Standards. The Mortgage Loans were
---------------------------------------
underwritten in accordance with the Sales Manual Guidelines and the Mortgage
Note and Mortgage are on forms acceptable to FHLMC or FNMA;
(x) Occupancy of the Mortgaged Property. The Mortgaged Property is
------------------------------------
lawfully occupied under applicable law and all inspections, licenses and
certificates required by applicable law to be made or issued with respect to
all occupied portions of the Mortgaged Property and, with respect to the use
and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities if required by such authorities for the use and
occupancy of the Mortgaged Property;
(y) No Additional Collateral. The Mortgage Note is not and has not
-------------------------
been secured by any collateral except the lien of the corresponding Mortgage
and the security interest of any applicable security agreement or chattel
mortgage referred to in (j) above;
(z) 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 Purchasers to the
trustee under the deed of trust, except in connection with a trustee's sale
after default by the Mortgagor;
(aa) Acceptable Investment. The Seller has no knowledge of any
----------------------
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that can reasonably
be expected to cause private institutional investors to regard the Mortgage
Loan as an unacceptable investment, cause the Mortgage Loan to become
delinquent, or adversely affect the value or marketability of the Mortgage
Loan;
(bb) Delivery of Mortgage Loan Documents. The Mortgage Note, the
------------------------------------
Mortgage, the Assignment of Mortgage and any other Mortgage Loan Documents
listed in Exhibit B-1 have been delivered to the Custodian. The Servicer is in
possession of a complete, true and accurate Servicing File in compliance with
Exhibit B-2;
(cc) Condominiums/Planned Unit Developments. If the Mortgaged
----------------------------------------
Property is a condominium unit or a planned unit development (other than a de
minimus planned unit development) such condominium or planned unit development
project meets the Sales Manual Guidelines;
(dd) 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 is located;
(ee) 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;
(ff) No Buydown Provisions; No Graduated Payments or Contingent
---------------------------------------------------------------
Interests. Except with respect to the Mortgage Loans identified by the numbers
- ---------
0218446 and 4767513, the Mortgage Loan does not contain provisions pursuant to
which Monthly Payments are paid or partially paid with funds deposited in any
separate account established by the Seller, the Mortgagor or anyone on behalf
of the Mortgagor, or paid by any source other than the Mortgagor nor does it
contain any other similar provisions currently in effect which may constitute
a "buydown" provision. The Mortgage Loan is not a graduated payment mortgage
loan and the Mortgage Loan does not have a shared appreciation or other
contingent interest feature;
(gg) Consolidation of Future Advances. 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. The lien
of the Mortgage securing the consolidated principal amount is expressly
insured as having first lien priority by a title insurance policy, an
endorsement to the policy insuring the mortgagee's consolidated interest or by
other title evidence acceptable to FNMA and FHLMC. The consolidated principal
amount does not exceed the original principal amount of the Mortgage Loan;
(hh) Mortgaged Property Undamaged. There is no proceeding, pending
----------------------------
or 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;
(ii) Collection Practices; Escrow Deposits. 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. With respect to escrow
deposits and Escrow Payments, all such payments are in the possession of the
Servicer and there exist no deficiencies in connection therewith for which
customary arrangements for repayment thereof have not been made. All Escrow
Payments have been collected in full compliance with state and federal law. An
escrow of funds is not prohibited by applicable law and has been established
in an amount sufficient to pay for every item which the Servicer is
responsible for which remains unpaid and has been assessed, but is not yet due
and payable. No escrow deposits or Escrow Payments or other charges or
payments due the Seller have been capitalized under the Mortgage or the
Mortgage Note;
(jj) Appraisal. The Servicing File contains an appraisal of the
---------
related Mortgage Property signed prior to the approval of the Mortgage Loan
application by a qualified appraiser, duly appointed by the Seller, 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 Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 and the regulations promulgated
thereunder, all as in effect on the date the Mortgage Loan was originated;
(kk) Soldiers' and Sailors' Relief Act. The Mortgagor has not
------------------------------------
notified the Seller, and the Seller has no knowledge of any relief requested
or allowed to the Mortgagor under the Soldiers' and Sailors' Civil Relief Act
of 1940;
(ll) Environmental Matters. 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. There is no
pending action or proceeding directly involving any Mortgaged Property of
which the Seller is aware in which compliance with any environmental law, rule
or regulation is an issue; and to the best of the Seller's knowledge, nothing
further remains to be done to satisfy in full all requirements of each such
law, rule or regulation constituting a prerequisite to use and enjoyment of
said property;
(mm) REMIC Qualification. Each Mortgage Loan is a "qualified
--------------------
mortgage" within the meaning of Section 860G of the Code and Treas. Reg. Sec.
1.860G-2;
(nn) No Construction Loans. No Mortgage Loan was made in connection
----------------------
with facilitating the trade-in or exchange of a Mortgaged Property, and no
Mortgage Loan is currently being used to provide interim financing for
construction or rehabilitation of a Mortgaged Property;
(oo) No Denial of Insurance. No action, inaction, or event has
------------------------
occurred and no state of fact exists or has existed that has resulted or will
result in the exclusion from, denial of, or defense to coverage under any
applicable pool insurance policy, special hazard insurance policy, PMI Policy
or bankruptcy bond, irrespective of the cause of such failure of coverage. In
connection with the placement of any such insurance, no unlawful commission,
fee, or other compensation has been or will be received by the Seller or any
designee of the Seller or any corporation in which the Seller had a financial
interest at the time of placement of such insurance; and
(pp) Regarding the Mortgagor. The Mortgagor is one or more natural
------------------------
persons and/or trustees for an Illinois land trust or a trustee under a
"living trust" and such "living trust" is in compliance with FNMA guidelines
for such trusts.
(qq) Regarding Mortgage Loans Sold to Purchaser by CRMT. In addition
--------------------------------------------------
to, and without limitation of, the foregoing, CMC hereby represents and
warrants, with respect to all of the Mortgage Loans being sold to the
Purchaser by CRMT, that (i) CRMT is the sole owner of record and holder of
such Mortgage Loans at the time of such sale to the Purchaser and (ii) such
Mortgage Loans were purchased by CRMT from CMC and such purchase by CRMT
vested in CRMT good and marketable title to such Mortgage Loans.
Section 3.04 Remedies for Breach of Representations and Warranties.
-----------------------------------------------------
It is understood and agreed that the representations and warranties
set forth in Sections 3.01, 3.02 and 3.03 shall survive the sale of the
Mortgage Loans to the Purchaser, any subsequent sale of the Mortgage Loans by
the Purchaser to the Depositor and by the Depositor to the Trustee, or
otherwise, and the delivery of the Mortgage Files to the Custodian and shall
inure to the benefit of the Purchaser, notwithstanding any restrictive or
qualified endorsement on any Mortgage Note or Assignment of Mortgage or the
examination or failure to examine any Mortgage File or Servicing File. Upon
discovery by either of the Sellers, the Servicer 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 therein, 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 (in the case of any of the
foregoing, a "Breach"), the party discovering such Breach shall give prompt
written notice to the other parties hereto. In the event that the title policy
insuring the lien of any Mortgage does not run to the benefit of the Purchaser
and its successors and assigns; upon notice thereof, the Sellers shall pay for
any necessary title policy endorsement to provide that such title policy
covers the purchase and its successors and assigns.
Within 60 days of the earlier of either discovery by or notice to
the applicable Seller or the Servicer, as the case may be, of any Breach of
any of their respective representations or warranties, such Seller or the
Servicer, as the case may be, shall use its best efforts promptly to cure such
Breach in all material respects and, if such Breach cannot be cured, such
Seller shall 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 such Breach cannot be cured within 60 days of the earlier of
either discovery by or notice to the applicable Seller of such Breach, all of
the affected Mortgage Loans shall, at the Purchaser's option, be repurchased
by such Seller at the Repurchase Price. However, if the Breach shall involve a
representation or warranty set forth in Section 3.03 and the applicable Seller
discovers or receives notice of any such Breach within two years of the
Closing Date, such Seller may, 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 any such substitution shall be effected not later than two years
after the Closing Date. Notwithstanding the foregoing, no such substitution
shall be made unless the Purchaser has received an Opinion of Counsel (at the
expense of the related Seller) that such substitution will not adversely
affect the status of any REMIC as a REMIC or cause any such REMIC to be deemed
to have engaged in a "prohibited transaction" under the REMIC provisions. Any
repurchase of a Mortgage Loan or Loans pursuant to the foregoing provisions of
this Section 3.04 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
related Seller shall arrange for the reassignment of the Deleted Mortgage Loan
to such Seller and the delivery to such Seller of any documents held by the
Custodian relating to the Deleted Mortgage Loan. In the event of a repurchase
or substitution, the related Seller 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
related Seller 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
related Seller shall effect such substitution by delivering to the Custodian
for such Qualified Substitute Mortgage Loan the documents required by Section
2.03, with the Mortgage Note endorsed as required by Section 2.03. No
substitution will be made in any calendar month after the Determination Date
for such month. The related Seller 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 related Seller. For the
month of substitution, distributions to Purchaser shall include the Monthly
Payment due on any Deleted Mortgage Loan in the month of substitution, and the
related Seller shall thereafter be entitled to retain all amounts subsequently
received by such Seller in respect of such Deleted Mortgage Loan.
For any month in which the related Seller substitutes a Qualified
Substitute Mortgage Loan for a Deleted Mortgage Loan, such Seller 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 such
Seller in the month of substitution pursuant to Section 5.01. Accordingly, on
the date of such substitution, the related Seller 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
applicable Seller (or, if Section 12.12 is applicable, the Sellers jointly and
severally) or the Servicer, as the case may be, 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
representations and warranties of such Seller or the Servicer, as the case may
be, contained in this Agreement.
It is understood and agreed that the obligations of the Sellers and
the Servicer set forth in this Section 3.04 to cure, or, with respect to the
Sellers, to substitute for or repurchase a defective Mortgage Loan, and to
indemnify the Purchaser as provided herein constitute the sole remedies of the
Purchaser respecting a Breach of the representations and warranties contained
in Sections 3.01, 3.02 and 3.03.
Any cause of action against a Seller or the Servicer, as the case
may be, relating to or arising out of the Breach of any representations and
warranties made in Sections 3.01, 3.02 and 3.03 shall accrue as to any
Mortgage Loan upon (i) discovery of such Breach by the Purchaser or notice
thereof by the related Seller or the Servicer to the Purchaser, (ii) failures
by the related Seller or the Servicer, as the case may be, to cure such Breach
or, with respect to a Seller, to repurchase such Mortgage Loan as specified
above, and (iii) demand upon such Seller or the Servicer, as the case may be,
by the Purchaser for compliance with this Agreement.
Section 3.05 Restrictions and Requirements Applicable in the Event
------------------------------------------------------
that a Mortgage Loan is Acquired by a REMIC.
-------------------------------------------
In the event that any Mortgage Loan is held by a REMIC,
notwithstanding any contrary provision of this Agreement, the following
provisions shall apply:
The related Seller shall dispose of any 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 Master
Servicer and the related Seller shall have been supplied with an Opinion of
Counsel to the effect that the holding by the REMIC 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 REMIC as
defined in Section 860F of the Code, or cause the REMIC to fail to qualify as
a REMIC, in which case the REMIC may continue to hold such Mortgaged Property
(subject to any conditions contained in such Opinion of Counsel), or (ii) the
Master Servicer or the related Seller 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, the related Seller shall report monthly to
the Master Servicer as to the progress being made in selling such REO
Property.
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 REMIC 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 the meaning of Section 860G(a)(8) of the Code, (ii) subject the REMIC
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 860G(c) of the Code, or (iii) cause the sale of such Mortgaged
Property to result in the receipt by the Trust of any income from
non-permitted assets as described in section 860F(a)(2)(B) of the Code, unless
the related Seller has agreed to indemnify and hold harmless the Trust with
respect to the imposition of any taxes.
Section 3.06 Purchaser Representations and Warranties.
----------------------------------------
The Purchaser represents and warrants to the Sellers that as of the
Closing Date:
(a) Due Organization and Authority. The Purchaser is a corporation
-------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all licenses necessary to carry on its business as
now being conducted; the Purchaser 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 by the Purchaser and
the consummation of the transactions contemplated hereby to be performed by
the Purchaser have been duly and validly authorized; this Agreement evidences
the valid, binding and enforceable obligation of the Purchaser, subject, as to
enforceability, to bankruptcy, insolvency, reorganization or other similar
laws affecting creditors' rights and to general principles of equity
(regardless of whether the enforceability of this Agreement is considered in a
proceeding in equity or at law); and all requisite corporate action has been
taken by the Purchaser to make this Agreement valid and binding upon the
Purchaser 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 Purchaser;
(c) No Conflicts. Neither the execution and delivery of this
-------------
Agreement, nor the fulfillment of or compliance with the terms and conditions
of this Agreement, will conflict with or result in a breach of any of the
terms, conditions or provisions of the Purchaser's charter or by-laws or any
legal restriction or any agreement or instrument to which the Purchaser is now
a party or by which it is bound, or constitute a default or result in an
acceleration under any of the foregoing, or result in the violation of any
law, rule, regulation, order, judgment or decree to which the Purchaser or its
property is subject.
ARTICLE IV
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 4.01 CMC to Act as Servicer.
---------------------
Servicer, 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 Servicer 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 Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Servicer's reasonable and prudent determination such
waiver, modification, postponement or indulgence is not materially adverse to
the Purchasers, provided, however, that the Servicer 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 Servicer, imminent) the Servicer shall not permit any modification with
respect to any Mortgage Loan 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 or would constitute an
alteration, substitution or release of any of the collateral securing a
Mortgage Loan other than in connection with a payment in full of the Mortgage
Loan. In the event of any such modification which permits the deferral of
interest or principal payments on any Mortgage Loan, the Servicer 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 Servicer 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 Servicer shall continue, and is hereby authorized and
empowered, to execute and deliver on behalf of itself and the Purchasers, all
instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the Mortgage
Loans and with respect to the Mortgaged Properties. If reasonably required by
the Servicer, the Purchaser shall furnish the Servicer with any powers of
attorney and other documents necessary or appropriate to enable the Servicer
to carry out its servicing and administrative duties under this Agreement.
In servicing and administering the Mortgage Loans, the Servicer
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 Servicer.
The Mortgage Loans may be subserviced by the Subservicer on behalf
of the Servicer in accordance with the servicing provisions of this Agreement,
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 Servicer 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 Servicer of the Subservicer
shall not release the Servicer from any of its obligations hereunder and the
Servicer shall remain responsible hereunder for all acts and omissions of the
Subservicer as fully as if such acts and omissions were those of the Servicer.
Any amounts received by any Subservicer in respect of any Mortgage Loan shall
be deemed to have been received by the Servicer whether or not actually
received by the Servicer. The Servicer shall pay all fees and expenses of the
Subservicer from its own funds, and the Subservicer's fee shall not exceed the
Servicing Fee.
At the cost and expense of the Servicer, without any right of
reimbursement from the Custodial Account, the Servicer 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 preceding paragraph, provided, however, that
nothing contained herein shall be deemed to prevent or prohibit the Servicer,
at the Servicer's option, from electing to service the related Mortgage Loans
itself. In the event that the Servicer's responsibilities and duties under
this Agreement are terminated pursuant to Section 9.01 or 10.01, and if
requested to do so by the Purchaser, the Servicer shall at its own cost and
expense terminate the rights and responsibilities of the Subservicer as soon
as is reasonably possible. The Servicer shall pay all fees, expenses or
penalties necessary in order to terminate the rights and responsibilities of
the Subservicer from the Servicer's own funds without reimbursement from the
Purchaser.
Notwithstanding any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer and the Subservicer or any
reference herein to actions taken through the Subservicer or otherwise, the
Servicer 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 Servicer
shall be entitled to enter into an agreement with the Subservicer for
indemnification of the Servicer 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 Servicer 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 Servicer
pursuant to this Agreement, the Servicer shall be deemed to have received a
payment on a Mortgage Loan when the Subservicer has received such payment.
The Servicer shall maintain with respect to each Mortgage Loan and
shall make available for inspection during normal business hours upon
reasonable notice by the Purchaser or its designee the related Servicing File
during the time the Purchaser retains ownership of a Mortgage File and
thereafter in accordance with applicable laws and regulations.
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 Servicer shall take such action as (1) the
Servicer 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, (3) the Servicer shall determine prudently
to be in the best interest of Purchaser, and (4) is consistent with any
related PMI Policy. 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 90 days or any other default continues for a period of 90 days beyond the
expiration of any grace or cure period, the Servicer shall commence
foreclosure proceedings or initiate such other collection procedures in
accordance with Accepted Servicing Practices as the Servicer shall determine
using its best judgment and exercising the same care that it would exercise
with respect to its own property. In such connection, the Servicer shall from
its own funds make all necessary and proper Servicing Advances, provided,
however, that the Servicer shall not be required to expend its own funds in
connection with any foreclosure or towards the restoration or preservation of
any Mortgaged Property, unless it shall determine (a) that such preservation,
restoration and/or foreclosure will increase the proceeds of liquidation of
the Mortgage Loan to Purchaser after reimbursement to itself for such expenses
and (b) that such expenses will be recoverable by it either through
Liquidation Proceeds (respecting which it shall have priority for purposes of
withdrawals from the Custodial Account pursuant to Section 4.05) or through
Insurance Proceeds (respecting which it shall have similar priority).
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 Servicer 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 or review of such
Mortgaged Property conducted by a qualified inspector shall be arranged for by
Servicer. Upon completion of the inspection, the Servicer shall promptly
provide the Purchaser with a written report of the environmental inspection.
After reviewing the environmental inspection report, the Purchaser
shall determine how the Servicer shall proceed with respect to the Mortgaged
Property. In the event (a) the environmental inspection report indicates that
the Mortgaged Property is contaminated by hazardous or toxic substances or
wastes and (b) the Purchaser directs the Servicer to proceed with foreclosure
or acceptance of a deed in lieu of foreclosure, the Servicer shall be
reimbursed for all reasonable costs associated with such foreclosure or
acceptance of a deed in lieu of foreclosure and any related environmental
clean up costs, as applicable, from the related Liquidation Proceeds, or if
the Liquidation Proceeds are insufficient to fully reimburse the Servicer, the
Servicer shall be entitled to be reimbursed from amounts in the Custodial
Account pursuant to Section 4.05 hereof. In the event the Purchaser directs
the Servicer not to proceed with foreclosure or acceptance of a deed in lieu
of foreclosure, the Servicer 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 Servicer 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 Mortgagors 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 Servicer 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 as
instructed by Purchaser. The Custodial Account shall be established with a
Qualified Depository acceptable to the Purchaser. 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 Servicer 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 Servicer,
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 Servicer. A copy of such
certification or letter agreement shall be furnished to the Purchaser and,
upon request, to any subsequent Purchaser.
The Servicer shall deposit in the Custodial Account on a daily
basis, and retain therein, the following collections received by the Servicer
and payments made by the Servicer after the Cut-off Date, other than payments
of principal and interest due on or before the Cut-off Date, or received by
the Servicer prior to the Cut-off Date but allocable to a period subsequent
thereto:
(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),
Section 4.11 and Section 4.15;
(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, 4.09, 5.03 or 6.02;
(vii) any amounts payable in connection with the repurchase of
any Mortgage Loan pursuant to Section 3.04 and all amounts required to be
deposited by the Servicer in connection with a shortfall in principal amount
of any Qualified Substitute Mortgage Loan pursuant to Section 3.04;
(viii) with respect to each Principal Prepayment in full or in
part, the Prepayment Interest Shortfall Amount, if any, for the Prepayment
Period. Such deposit shall be made from the Servicer's own funds, without
reimbursement therefor, up to a maximum amount per month of the aggregate of
the Servicing Fees actually received for such month for the Mortgage Loans;
(ix) any amounts required to be deposited by the Servicer
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 4.16.
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, Ancillary Income need not be
deposited by the Servicer 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 Servicer and the Servicer 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 Servicer 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 Servicer's
funds made pursuant to Section 5.03, the Servicer's right to reimburse itself
pursuant to this subclause (ii) being limited to amounts received on 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 Servicer's right thereto shall be
prior to the rights of Purchaser except where a Seller or Servicer is required
to repurchase a Mortgage Loan pursuant to Section 3.04 or 6.02, as the case
may be, in which case the Servicer's right to such reimbursement shall be
subsequent to the payment to the Purchasers of the Repurchase Price pursuant
to such sections and all other amounts required to be paid to the Purchasers
with respect to such Mortgage Loan;
(iii) to reimburse itself for unreimbursed Servicing Advances,
and for any unpaid Servicing Fees, the Servicer'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 Servicer from the
Mortgagor or otherwise relating to the Mortgage Loan, it being understood
that, in the case of any such reimbursement, the Servicer's right thereto
shall be prior to the rights of Purchaser, except that where a Seller or
Servicer is required to repurchase a Mortgage Loan pursuant to Section 3.04 or
6.02, as the case may be, in which case the Servicer's right to such
reimbursement shall be subsequent to the payment to the Purchasers of the
Repurchase Price pursuant to such sections and all other amounts required to
be paid to the Purchasers with respect to such Mortgage Loan;
(iv) to reimburse itself, following a final liquidation of a
Mortgage Loan, for any outstanding Nonrecoverable Advances with respect to
such Mortgage Loan, not previously reimbursed pursuant to clause (ii) or
clause (iii) above, it being understood, in the case of any such
reimbursement, that such right thereto shall be prior to the rights of the
Purchaser;
(v) to pay itself interest on funds deposited in the Custodial
Account;
(vi) to reimburse itself for expenses incurred and reimbursable
to it pursuant to Section 9.01;
(vii) to pay any amount required to be paid pursuant to Section
4.16 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;
(viii) to clear and terminate the Custodial Account upon the
termination of this Agreement.
In the event that the Custodial Account is interest bearing, on each
Remittance Date, the Servicer shall withdraw all funds from the Custodial
Account except for those amounts which, pursuant to Section 5.01, the Servicer
is not obligated to remit on such Remittance Date. The Servicer 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 Servicer 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 as instructed by Purchaser. The Escrow Accounts 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 Servicer 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 Servicer,
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 Servicer. A copy of such
certification shall be furnished to the Purchaser and, upon request, to any
subsequent Purchaser.
The Servicer 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 Servicer shall make withdrawals from the Escrow Account only to
effect such payments as are required under this Agreement, as set forth in
Section 4.07. The Servicer 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 Servicer 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
Servicer only:
(i) to effect timely payments of ground rents, taxes, assessments,
water rates, mortgage insurance premiums, condominium charges, fire and hazard
insurance premiums or other items constituting Escrow Payments for the related
Mortgage;
(ii) to reimburse the Servicer for any Servicing Advances made by
the Servicer 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 Servicer, or any Mortgagor to the extent required
by law, any interest paid on the funds deposited in the Escrow Account; and
(vii) to clear and terminate the Escrow Account on the termination
of this Agreement.
Section 4.08 Payment of Taxes, Insurance and Other Charges.
---------------------------------------------
With respect to each Mortgage Loan, the Servicer shall maintain
accurate records reflecting the status of ground rents, taxes, assessments,
water rates, sewer rents, and other charges which are or may become a lien
upon the Mortgaged Property and the status of PMI Policy premiums and fire and
hazard insurance coverage and shall obtain, from time to time, all bills for
the payment of such charges (including renewal premiums) and shall effect or
cause to be effected payment thereof prior to the applicable penalty or
termination date, employing for such purposes deposits of the Mortgagor in the
Escrow Account which shall have been estimated and accumulated by the Servicer
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 Servicer shall determine that any such payments are made by the Mortgagor
at the time they first become due. The Servicer assumes full responsibility
for (a) the timely payment of all such bills and shall effect timely payment
of all such charges irrespective of each Mortgagor's faithful performance in
the payment of same or the making of the Escrow Payments, and the Servicer
shall make Servicing Advances from its own funds to effect such payments and
(b) any penalties or late charges incurred in connection with such bills and
any other charges (including, without limitation, assessments, water rates or
sewer rents) which may become a lien against the Mortgaged Property without
reimbursement therefor.
Section 4.09 Protection of Accounts.
----------------------
The Servicer 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 Servicer shall bear any expenses, losses or damages sustained by
the Purchaser because the Custodial Account and/or the Escrow Account are not
demand deposit accounts.
Amounts on deposit in the Custodial Account and the Escrow Account
may at the option of the Servicer be invested in Eligible Investments;
provided that in the event that amounts on deposit in the Custodial Account or
the Escrow Account exceed the amount fully insured by the FDIC (the "Insured
Amount") the Servicer shall be obligated to invest the excess amount over the
Insured Amount in Eligible Investments on the same Business Day as such excess
amount becomes present in the Custodial Account or the Escrow Account. Any
such Eligible Investment shall mature no later than the Determination Date
next following the date of such Eligible Investment, provided, however, that
if such Eligible Investment is an obligation of a Qualified Depository (other
than the Servicer) that maintains the Custodial Account or the Escrow Account,
then such Eligible Investment may mature on such Remittance Date. Any such
Eligible Investment shall be made in the name of the Servicer in trust for the
benefit of the Purchaser. All income on or gain realized from any such
Eligible Investment shall be for the benefit of the Servicer and may be
withdrawn at any time by the Servicer. Any losses incurred in respect of any
such investment shall be deposited in the Custodial Account or the Escrow
Account, by the Servicer out of its own funds immediately as realized.
Section 4.10. Maintenance of Hazard Insurance.
-------------------------------
The Servicer shall cause to be maintained for each Mortgage Loan
hazard insurance such that all buildings upon the Mortgaged Property are
insured by a generally acceptable insurer rated A:VI or better in the current
Best's Key Rating Guide ("Best's") 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 replacement 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 Insurance Administration
is in effect with a generally acceptable insurance carrier rated A:VI or
better in Best's 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 if replacement cost 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 at any time
during the term of the Mortgage Loan, the Servicer determines in accordance
with applicable law and pursuant to the FNMA Guides that a Mortgaged Property
is located in a special flood hazard area and is not covered by flood
insurance or is covered in an amount less than the amount required by the
Flood Disaster Protection Act of 1973, as amended, the Servicer shall notify
the related Mortgagor that the Mortgagor must obtain such flood insurance
coverage, and if said Mortgagor fails to obtain the required flood insurance
coverage within forty-five (45) days after such notification, the Servicer
shall immediately force place the required flood insurance on the Mortgagor's
behalf.
If a Mortgage is secured by a unit in a condominium project, the
Servicer shall verify that the coverage required of the owner's association,
including hazard, flood, liability, and fidelity coverage, is being maintained
in accordance with then current FNMA requirements, and secure from the owner's
association its agreement to notify the Servicer promptly of any change in the
insurance coverage or of any condemnation or casualty loss that may have a
material effect on the value of the Mortgaged Property as security.
The Servicer shall cause to be maintained on each Mortgaged Property
such earthquake or other additional special hazard insurance as may be
required pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance, or pursuant to the
requirements of any PMI Policy insurer, or as may be required to conform with
Accepted Servicing Practices.
In the event that any Purchaser or the Servicer shall determine that
the Mortgaged Property 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 Servicer 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 Servicer as loss
payee and shall be endorsed with standard or union mortgagee clauses, without
contribution, which shall provide for at least 30 days prior written notice of
any cancellation, reduction in amount or material change in coverage.
The Servicer shall not interfere with the Mortgagor's freedom of
choice in selecting either his insurance carrier or agent, provided, however,
that the Servicer shall not accept any such insurance policies from insurance
companies unless such companies are rated A:VI or better in Best's and are
licensed to do business in the jurisdiction in which the Mortgaged Property is
located. The Servicer 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 Servicer 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 Servicer
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 property acquired in liquidation of the Mortgage Loan, or to be
released to the Mortgagor, in accordance with the Servicer'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.
--------------------------------------------
In the event that the Servicer shall obtain and maintain a blanket
policy insuring against losses arising from fire and hazards covered under
extended coverage on all of the Mortgage Loans, then, 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 Servicer 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 Servicer 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 Servicer's funds,
without reimbursement therefor. Upon request of any Purchaser, the Servicer
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 30 days' prior written
notice to such Purchaser.
Section 4.12 Maintenance of Fidelity Bond and Errors and Omissions
------------------------------------------------------
Insurance.
- ---------
The Servicer shall maintain 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 ("Servicer 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 Servicer against
losses, including forgery, theft, embezzlement, fraud, errors and omissions
and negligent acts of such Servicer Employees. Such Fidelity Bond and Errors
and Omissions Insurance Policy also shall protect and insure the Servicer
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 Servicer
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. Upon the request of any Purchaser,
the Servicer shall cause to be delivered to such Purchaser a certificate of
insurance of the insurer and the surety including 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 30 days' prior written notice to
the Purchaser.
Section 4.13 Inspections.
-----------
The Servicer shall inspect the Mortgaged Property as often as deemed
necessary by the Servicer to assure itself that the value of the Mortgaged
Property is being preserved. In addition, if any Mortgage Loan is more than 60
days delinquent, the Servicer immediately shall inspect the Mortgaged Property
and shall conduct subsequent inspections in accordance with Accepted Servicing
Practices or as may be required by the primary mortgage guaranty insurer. The
Servicer shall keep a written or electronic report of each such inspection.
Section 4.14 Restoration of Mortgaged Property.
---------------------------------
The Servicer 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
Servicer shall comply with the following conditions in connection with any
such release of Insurance Proceeds or Condemnation Proceeds:
(i) the Servicer shall receive satisfactory independent verification
of completion of repairs and issuance of any required approvals with respect
thereto;
(ii) the Servicer 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;
(iii) the Servicer shall verify that the Mortgage Loan is not in
default; and
(iv) pending repairs or restoration, the Servicer shall place the
Insurance Proceeds or Condemnation Proceeds in the Escrow Account.
If the Purchaser is named as an additional loss payee, the Servicer
is hereby empowered to endorse any loss draft issued in respect of such a
claim in the name of the Purchaser.
Section 4.15 Maintenance of PMI Policy; Claims.
---------------------------------
With respect to each Mortgage Loan with a LTV in excess of 80%, the
Servicer shall, without any cost to the Purchaser, maintain or cause the
Mortgagor to maintain in full force and effect a PMI Policy insuring that
portion of the Mortgage Loan in excess of 75% of value, and shall pay or shall
cause the Mortgagor to pay the premium thereon on a timely basis, until the
LTV of such Mortgage Loan is reduced to 80%. In the event that such PMI Policy
shall be terminated, the Servicer shall obtain from another Qualified Insurer
a comparable replacement policy, with a total coverage equal to the remaining
coverage of such terminated PMI Policy. If the insurer shall cease to be a
Qualified Insurer, the Servicer shall determine whether recoveries under the
PMI Policy are jeopardized for reasons related to the financial condition of
such insurer, it being understood that the Servicer shall in no event have any
responsibility or liability for any failure to recover under the PMI Policy
for such reason. If the Servicer determines that recoveries are so
jeopardized, it shall notify the Purchaser and the Mortgagor, if required, and
obtain from another Qualified Insurer a replacement insurance policy. The
Servicer shall not take any action which would result in noncoverage under any
applicable PMI Policy of any loss which, but for the actions of the Servicer
would have been covered thereunder. In connection with any assumption or
substitution agreement entered into or to be entered into pursuant to Section
6.01, the Servicer shall promptly notify the insurer under the related PMI
Policy, if any, of such assumption or substitution of liability in accordance
with the terms of such PMI Policy and shall take all actions which may be
required by such insurer as a condition to the continuation of coverage under
such PMI Policy. If such PMI Policy is terminated as a result of such
assumption or substitution of liability, the Servicer shall obtain a
replacement PMI Policy as provided above.
In connection with its activities as servicer, the Servicer agrees
to prepare and present, on behalf of itself and the Purchaser, claims to the
insurer under any PMI Policy in a timely fashion in accordance with the terms
of such PMI Policy and, in this regard, to take such action as shall be
necessary to permit recovery under any PMI Policy respecting a defaulted
Mortgage Loan. Pursuant to Section 4.04, any amounts collected by the Servicer
under any PMI Policy shall be deposited in the Custodial Account, subject to
withdrawal pursuant to Section 4.05.
Section 4.16 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 Servicer 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 Purchaser shall furnish the Servicer, upon written request, with
any powers of attorney empowering the Servicer or any Subservicer to execute
and deliver instruments of satisfaction or cancellation or of partial or full
release or discharge or to foreclose upon or otherwise liquidate Mortgaged
Property in accordance with the provision hereof, and shall execute and
deliver such other documents as the Servicer may reasonably request and which
are necessary or appropriate to enable the Servicer to service and administer
the Mortgage Loans and to carry out its duties hereunder.
The Servicer shall manage, conserve, protect and operate each REO
Property for the Purchaser solely for the purpose of its prompt disposition
and sale. The Servicer, either itself or through an agent selected by the
Servicer, 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 Servicer 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 Servicer deems to be in the best interest of the Purchaser.
The Servicer 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 one year after title has been taken to such REO Property, unless (i)
(A) a REMIC election has not been made with respect to the arrangement under
which the Mortgage Loans and the REO Property are held, and (ii) the Servicer
determines, and gives an appropriate notice to the Purchaser to such effect,
that a longer period is necessary for the orderly liquidation of such REO
Property. If a period longer than one year is permitted under the foregoing
sentence and is necessary to sell any REO Property, (i) the Servicer shall
report monthly to the Purchaser as to the 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 Servicer as mortgagee, and such purchase money
mortgage shall not be held pursuant to this Agreement, but instead a separate
participation agreement among the Servicer and Purchaser shall be entered into
with respect to such purchase money mortgage.
The Servicer shall also maintain on each REO Property fire and
hazard insurance with extended coverage in amount which is at least equal to
the maximum insurable value of the improvements which are a 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 Servicer
at such price, and upon such terms and conditions, as the Servicer 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 Servicer
shall reimburse itself for any related unreimbursed Servicing Advances, unpaid
Servicing Fees and unreimbursed Monthly Advances made pursuant to Section
5.03. On the Remittance Date immediately following the 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 Servicer shall withdraw the Custodial Account funds necessary
for the proper operation, management and maintenance of the REO Property,
including the cost of maintaining any hazard insurance pursuant to Section
4.10 and the fees of any managing agent of the Servicer, a Subservicer, or the
Servicer itself. The REO management fee shall be an amount that is reasonable
and customary in the area where the Mortgaged Property is located. The
Servicer shall make monthly distributions on each Remittance Date to the
Purchasers 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
4.16 and of any reserves reasonably required from time to time to be
maintained to satisfy anticipated liabilities for such expenses).
Section 4.17 Real Estate Owned Reports.
-------------------------
Together with the statement furnished pursuant to Section 5.02, the
Servicer 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 Servicer'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 4.18 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 Servicer shall submit to the Purchaser a liquidation report
with respect to such Mortgaged Property.
Section 4.19 Reports of Foreclosures and Abandonments of Mortgaged
-------------------------------------------------------
Property.
--------
Following the foreclosure sale or abandonment of any Mortgaged
Property, the Servicer 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 Servicer shall remit by wire transfer of
immediately available funds to the Purchaser (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), plus (b) all Monthly Advances, if any, which the Servicer is
obligated to distribute pursuant to Section 5.03, minus (c) any amounts
attributable to Principal Prepayments, Liquidation Proceeds and Insurance
Proceeds received after the applicable Prepayment Period which amounts shall
be remitted on the following Remittance Date, together with any additional
interest required to be deposited in the Custodial Account in connection with
such Principal Prepayment in accordance with Section 4.04(viii), and minus (d)
any amounts attributable to Monthly Payments collected but due on a Due Date
or Dates subsequent to the first day of the month of the Remittance Date,
which amounts shall be remitted on the Remittance Date next succeeding the Due
Period for such amounts.
With respect to any remittance received by the Purchaser after the
second Business Day following the Business Day on which such payment was due,
the Servicer 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 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 Servicer 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 Servicer of any
such interest shall not be deemed an extension of time for payment or a waiver
of any Event of Default by the Servicer.
Section 5.02 Statements to Purchaser.
-----------------------
Not later than the Remittance Date, the Servicer shall furnish to
the Purchaser a Monthly Remittance Advice, with a trial balance report
attached thereto, in the form of Exhibit F annexed hereto in hard copy and
electronic medium mutually acceptable to the parties as to the preceding
remittance and the period ending on the preceding Determination Date.
In addition, not more than 60 days after the end of each calendar
year, the Servicer 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 Servicer shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Servicer pursuant to any requirements of the Internal Revenue
Code as from time to time are in force.
The Servicer shall prepare any and all tax, information statements
or other filings required to be delivered to any governmental taxing authority
or to any Purchaser pursuant to any applicable law with respect to the
Mortgage Loans and the transactions contemplated hereby. In addition, the
Servicer shall provide each Purchaser with such information concerning the
Mortgage Loans as is necessary for such Purchaser to prepare its federal
income tax return as any Purchaser may reasonably request from time to time.
Section 5.03 Monthly Advances by Servicer.
----------------------------
On the Business Day immediately preceding each Remittance Date, the
Servicer 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 Servicer's obligation to make such Monthly Advances as to
any Mortgage Loan will continue through the last Monthly Payment due prior to
the payment in full of the Mortgage Loan, or through the last Remittance Date
prior to the Remittance Date for the distribution of all Liquidation Proceeds
and other payments or recoveries (including Insurance Proceeds and
Condemnation Proceeds) with respect to the Mortgage Loan.
The Servicer shall be obligated to make Monthly Advances in
accordance with the provisions of this Agreement; provided however, that such
obligation with respect to any Mortgage Loan shall cease if the Servicer
determines, in its reasonable opinion, that Monthly Advances with respect to
such Mortgage Loan will not be ultimately recoverable by the Servicer from
Liquidation Proceeds, Insurance Proceeds or Condemnation Proceeds. In the
event that the Servicer determines that any such advances are Nonrecoverable
Advances, the Servicer shall provide the Purchaser with a certificate signed
by two Servicing Officers evidencing such determination.
If a Monthly Advance is required hereunder, the Servicer shall on
the Remittance Date immediately following the related Determination Date
either (i) deposit in the Custodial Account an amount equal to such Monthly
Advance, (ii) cause to be made an appropriate entry in the records of the
Custodial Account that funds in such account being held for future
distribution or withdrawal have been, as permitted by this Section 5.03, used
by the Servicer to make such Monthly Advance and remit such funds to the
Purchaser or (iii) make Monthly Advances in the form of any combination of
clauses (i) and (ii) aggregating the amount of such Monthly Advance. Any funds
being held in the Custodial Account for future distribution to Purchaser and
so used shall be replaced by the Servicer from its own funds by deposit in the
Custodial Account on or before any future Remittance Date in which such funds
would be due to the Purchaser.
ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.0l Transfers of Mortgaged Property.
-------------------------------
The Servicer 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 Servicer shall, to
the extent it has knowledge of such conveyance, exercise its rights to
accelerate the maturity of such Mortgage Loan under the "due-on-sale" clause
applicable thereto, provided, however, that the Servicer shall not exercise
such rights if prohibited by law from doing so or if the exercise of such
rights would impair or threaten to impair any recovery under the related PMI
Policy, if any.
If the Servicer reasonably believes it is unable under applicable
law to enforce such "due-on-sale" clause, the Servicer 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 Servicer is unable under applicable law to require that the original
Mortgagor remain liable under the Mortgage Note and the Servicer 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. 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 assumable, the Servicer
shall inquire diligently into the creditworthiness of the proposed transferee,
and shall use the underwriting criteria for approving the credit of the
proposed transferee which are used by FNMA with respect to underwriting
mortgage loans of the same type as the Mortgage Loans. If the credit of the
proposed transferee does not meet such underwriting criteria, the Servicer
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
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer shall notify the Purchaser in the
Monthly Remittance Advice as provided in Section 5.02, and upon deposit of
such payment in full in the Custodial Account may request the release of any
Mortgage Loan Documents.
If the Servicer satisfies or releases a Mortgage without first
having obtained payment in full of the indebtedness secured by the Mortgage or
should the Servicer otherwise prejudice any rights the Purchaser may have
under the mortgage instruments, upon written demand of the Purchaser, the
Servicer shall repurchase the related Mortgage Loan at the Repurchase Price by
deposit thereof in the Custodial Account within 2 Business Days of receipt of
such demand by the Purchaser. The Servicer shall maintain the Fidelity Bond
and Errors and Omissions Insurance Policy as provided for in Section 4.12
insuring the Servicer 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 Servicer 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, less any
amounts payable by the Servicer pursuant to Section 4.04 (viii). The Servicing
Fee shall be payable monthly and shall be computed on the basis of the same
unpaid principal balance and for the period respecting 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 Servicer or as otherwise provided in Section 4.05.
Additional servicing compensation in the form of Ancillary Income
shall be retained by the Servicer. The Servicer 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 Servicer shall deliver to the Purchaser, on or before March 31
each year beginning March 31, 1999, an Officer's Certificate, stating that (i)
a review of the activities of the Servicer during the preceding calendar year
and of performance under this Agreement has been made under such officer's
supervision, and (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and
the nature and status thereof and the action being taken by the Servicer 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
Servicer, 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 each Purchaser to the effect that such firm has
examined certain documents and records relating to the servicing of mortgage
loans which the servicer is servicing, including the Mortgage Loans, and that,
on the basis of such examination conducted substantially in compliance with
the Uniform Single Attestation Program for Mortgage Bankers, nothing has come
to their attention which would indicate that such servicing has not been
conducted in compliance with Accepted Servicing Practices, 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 Servicer Records.
---------------------------------
The Purchaser shall have the right to examine and audit any and all
of the books, records, or other information of the Servicer, whether held by
the Servicer 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
SECURITIZATION
Section 7.01 Securitization.
--------------
The Sellers and the Servicer acknowledge and agree that it is the
intention of the Purchaser to effect a securitization (the "Securitization")
of the Mortgage Loans, and that in connection with such Securitization, the
Purchaser intends (1) to sell some or all of the Mortgage Loans and other
property purchased by the Purchaser from the Sellers pursuant to this
Agreement and any related mortgage loan purchase agreement and (2) to assign
all of its rights and delegate all of its obligations under this Agreement.
The Sellers and the Servicer acknowledge and agree that (1) such sales,
assignments and delegations may be effected in a series of transactions, (2)
the ultimate beneficiary thereof will be the Trustee and (3) the Trustee shall
have the right to enforce all of the obligations of the Sellers and the
Servicer under this Agreement as if for such purpose the Trustee were the
Purchaser hereunder, including but not limited to the rights to enforce the
representations and warranties of the Sellers and the Servicer and the
servicing obligations of the Servicer. All references to the Purchaser herein
shall, unless otherwise specified, be deemed to refer to the initial Purchaser
hereunder and to each assignee thereof, and of such assignee, expressly
including, without limitation, the Trustee.
The Sellers and the Servicer shall cooperate with the Purchaser in
connection with the above-described transactions. In that connection, the
Sellers shall provide to the Trustee or a third party, as the case may be: any
and all information and appropriate verification of information which may be
reasonably available to the Sellers, whether through letters of its auditors
and counsel or otherwise, as the Purchaser shall reasonably request or as are
reasonably believed necessary by the Trustee, such third party, any master
servicer, or any rating agency, as the case may be, in connection with such
transactions, at reasonable out-of-pocket expense of the Purchaser (unless
such information is otherwise required to be provided by the Sellers
hereunder). In furtherance of the foregoing, each Seller and the Servicer
shall deliver, to the extent available, information as to its delinquency,
foreclosure and loss 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. In connection with the
Securitization, the Sellers shall indemnify the Purchaser if any information
furnished by the Sellers for use in any prospectus delivered with respect to
the Certificates issued in connection therewith is untrue in any material
respect or omits information necessary to make the statements contained
therein not misleading in any material respect in light of the circumstances
under which they were made.
In the event the Purchaser has elected to have the Sellers hold
record title to the Mortgages, prior to the Closing Date the Sellers or its
designee shall prepare an Assignment of Mortgage in blank from the Sellers,
acceptable to the Trustee, for each Mortgage Loan that is part of the
Securitization and shall pay all preparation and recording costs associated
therewith so long as such Assignment of Mortgage has not previously been
recorded at the expense of the Sellers. The Sellers shall execute each
Assignment of Mortgage, track such Assignments of Mortgage to ensure they have
been recorded and deliver them as required by the Trustee, upon the Seller's
receipt thereof. Additionally, the Sellers shall prepare and execute, at the
direction of the Purchaser, any note endorsements in connection with the
Securitization.
Section 7.02 Bring-down of Representations and Warranties.
--------------------------------------------
In connection with the Securitization, the Sellers and the Servicer
shall be deemed to have repeated each of the applicable representations and
warranties set forth in Sections 3.01, 3.02 and 3.03 as of the earlier of (i)
the closing date of the Securitization and (ii) November 20, 1998.
ARTICLE VIII
SELLERS AND THE SERVICER TO COOPERATE
Section 8.01 Provision of Information.
------------------------
During the term of this Agreement, the Sellers and the Servicer
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 Sellers and the Servicer 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 8.02 Financial Statements; Servicing Facility.
----------------------------------------
In connection with marketing the Mortgage Loans, the Purchaser may
make available to a prospective Purchaser a Consolidated Statement of
Operations of the Sellers for the most recently completed five fiscal years or
such lesser period the Sellers have been in existence 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 Sellers also shall make available the most recent comparable
interim statements to the extent any such statements have been prepared by or
on behalf of the Sellers (and are available upon request to members or
stockholders of the Sellers or to the public at large). If it has not already
done so, the Sellers shall furnish promptly to the Purchaser copies of the
statement specified above.
The Sellers also shall make available to Purchaser or prospective
Purchaser a knowledgeable financial or accounting officer for the purpose of
answering questions respecting recent developments affecting the Sellers or
the financial statements of the Sellers, and to permit any prospective
Purchaser to inspect the Servicer's servicing facilities or those of any
Subservicer for the purpose of satisfying such prospective Purchaser that the
Servicer and any Subservicer have the ability to service the Mortgage Loans as
provided in this Agreement.
ARTICLE IX
THE SELLERS AND THE SERVICER
Section 9.01 Indemnification; Third Party Claims.
-----------------------------------
The Sellers shall indemnify the Purchaser and hold it harmless
against any and all claims, losses, damages, penalties, fines, forfeitures,
reasonable and necessary legal fees and related costs, judgments, and any
other costs, fees and expenses that the Purchaser may sustain in any way
related to the failure of the Sellers or the Servicer to perform their
respective duties and service the Mortgage Loans in material compliance with
the terms of this Agreement. The Sellers immediately shall notify the
Purchaser if a claim is made by a third party with respect to this Agreement
or the Mortgage Loans, shall promptly notify FNMA, FHLMC, or the trustee with
respect to any claim made by a third party with respect to this Agreement, 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 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 Sellers shall follow any reasonable written instructions received
from the Purchaser in connection with such claim. The Purchaser promptly shall
reimburse the Sellers for all amounts advanced by it pursuant to the preceding
sentence except when the claim is in any way related to the Sellers' or the
Servicer's indemnification pursuant to Section 3.04, or the failure of the
Servicer to service and administer the Mortgage Loans in material compliance
with the terms of this Agreement.
Section 9.02 Merger or Consolidation of the Sellers or the Servicer.
------------------------------------------------------
The Sellers and the Servicer shall keep in full effect their
existence, rights and franchises as a corporation, and 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 either Seller or the Servicer may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which either Seller or the Servicer shall be a party, or any
Person succeeding to the business of either Seller or the Servicer, shall be
the successor of such Seller or the Servicer hereunder, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, provided, however,
that the successor or surviving Person shall be an institution (i) having a
net worth of not less than $25,000,000 and (ii) which is a FNMA-approved
company in good standing. If any such merger, conversion or consolidation
occurs after the Securitization, in addition to the foregoing, there must be
delivered to the Purchaser a letter from each of the Rating Agencies to the
effect that such merger, conversion or consolidation will not result in a
qualification, withdrawal or downgrade of the then-current rating of any of
the Certificates.
Section 9.03 Limitation on Liability of Servicer and Others.
----------------------------------------------
Neither the Servicer nor any of the directors, officers, employees
or agents of the Servicer 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 Servicer 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 Servicer and any
director, officer, employee or agent of the Servicer may rely in good faith on
any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising hereunder. The Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action which
is not incidental to its duties to service the Mortgage Loans in accordance
with this Agreement and which in its opinion may involve it in any expense or
liability, provided, however, that the Servicer 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 Servicer shall be entitled to reimbursement from the
Purchaser of the reasonable legal expenses and costs of such action unless
such action results from the Servicer's willful misconduct, bad faith or
negligence in the performance of its duties hereunder.
Section 9.04 Limitation on Resignation and Assignment by Servicer.
----------------------------------------------------
The Purchaser has entered into this Agreement with the Servicer and
subsequent Purchasers will purchase the Mortgage Loans in reliance upon the
independent status of the Servicer, and 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 Servicer shall neither assign this Agreement or the servicing
hereunder or, except as provided in Section 9.02, 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 not be
unreasonably withheld.
The Servicer shall not resign from the obligations and duties hereby
imposed on it except by mutual consent of the Sellers 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 Servicer. Any
such determination permitting the resignation of the Servicer 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 until a successor shall
have assumed the Servicer's responsibilities and obligations hereunder in the
manner provided in Section 12.01.
Without in any way limiting the generality of this Section 9.04, in
the event that the Servicer 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, except as provided in
Section 9.02, sell or otherwise dispose of all or substantially all of its
property or assets without the prior written consent of the Purchaser as
provided herein, then the Purchaser shall have the right to terminate this
Agreement upon notice given as set forth in Section 10.01, without any payment
of any penalty or damages and without any liability whatsoever to the Servicer
or any third party.
ARTICLE X
DEFAULT
Section 10.01 Events of Default.
-----------------
Each of the following shall constitute an Event of Default:
(i) any failure by the Servicer 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 days after the date upon which written notice
of such failure, requiring the same to be remedied, shall have been given to
the Servicer by the Purchaser; or
(ii) failure by either Seller or the Servicer duly to observe or
perform in any material respect any other of the covenants or agreements on
the part of the Sellers or the Servicer set forth in this Agreement or in the
Custodial Agreement which continues unremedied for a period of 30 days after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Sellers and the Servicer by the
Purchaser or by the Custodian; or
(iii) failure by the Servicer to maintain its license to do business
in any jurisdiction where the 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
either Seller or the Servicer and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 days; or
(v) either Seller or the Servicer 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 either Seller or the Servicer or of or relating to all or
substantially all of its property; or
(vi) either Seller or the Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a petition to
take advantage of any applicable 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 Business Days; or
(vii) the Servicer ceases to meet the qualifications of a FNMA
lender; or
(viii) CMC or the Servicer fails to maintain a minimum net worth of
$25,000,000, or CRMT fails to maintain a minimum net worth of $20,000,000; or
(ix) the Servicer attempts to assign its right to servicing
compensation hereunder or either Seller or the Servicer 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 in violation of Section 9.04.
In each and every such case, so long as an Event of Default shall
not have been remedied, 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 Servicer, may
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the Mortgage Loans and the proceeds thereof.
Upon receipt by the Servicer of such written notice, all authority
and power of the Servicer 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 12.01. Upon written request from any Purchaser,
the Servicer 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 Servicing 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
Servicer's sole expense. The Servicer shall cooperate with the Purchaser and
such successor in effecting the termination of the Servicer's responsibilities
and rights hereunder, including without limitation, the transfer to such
successor for administration by it of all cash amounts which shall at the time
be credited by the Servicer to the Custodial Account or Escrow Account or
thereafter received with respect to the Mortgage Loans.
Section 10.02 Waiver of Defaults.
------------------
By a written notice, the Purchaser may waive any default by either
Seller or the Servicer 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 XI
TERMINATION
Section 11.01 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 Servicer and the Purchaser in writing.
Section 11.02 Termination Without Cause.
-------------------------
With respect to any Mortgage Loans not subject to the
Securitization, the Purchaser may terminate, at its sole option, any rights
the Servicer may have hereunder, without cause as provided in this Section
11.02, upon written notice of such termination delivered to the Servicer by
registered mail as provided in Section 12.05.
Upon the termination of the rights of the Servicer in accordance
with this Section 11.02, the Purchaser shall pay to the Servicer a termination
fee equal to three percent (3%) of the aggregate outstanding principal balance
of the Mortgage Loans, as liquidated damages, subject to any claims of the
Purchaser for moneys due pursuant to this Agreement.
Notwithstanding and in addition to the foregoing, in the event that
(i) a Mortgage Loan becomes delinquent for a period of 120 days or more (a
"Delinquent Mortgage Loan") or (ii) a Mortgage Loan becomes an REO Property,
the Purchaser may at its election terminate this Agreement with respect to
such Delinquent Mortgage Loan or REO Property without payment of a termination
fee therefor, upon 15 days' written notice to the Servicer.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Servicer.
---------------------
Prior to termination of the Servicer's responsibilities and duties
under this Agreement pursuant to Sections 9.04, 10.01, 11.01 (ii) or 11.02,
the Purchaser shall, (i) succeed to and assume all of the Servicer'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 9.02 and which shall succeed to all rights and assume
all of the responsibilities, duties and liabilities of the Servicer under this
Agreement prior to the termination of Servicer's responsibilities, duties and
liabilities under this Agreement; provided that in the event of a termination
pursuant to Section 11.02, such successor shall be approved by the Servicer,
which approval shall not be unreasonably withheld. In connection with such
appointment and assumption, the Purchaser may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and
such successor shall agree (not to exceed the Servicing Fee). In the event
that the Servicer's duties, responsibilities and liabilities under this
Agreement should be terminated pursuant to the aforementioned sections, the
Servicer 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 is
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 Servicer pursuant to the
aforementioned sections shall not become effective until a successor shall be
appointed pursuant to this Section 12.01 and shall in no event relieve the
Servicer of the representations and warranties made pursuant to Sections 3.02
and the remedies available to the Purchaser under Section 3.04, it being
understood and agreed that the provisions of such Sections 3.02 and 3.04 shall
be applicable to the Servicer notwithstanding any such sale, assignment,
resignation or termination of the Servicer, or the termination of this
Agreement.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Servicer and to the Purchaser an instrument
accepting such appointment, wherein the successor shall make the
representations and warranties set forth in Section 3.02, except for
subsections (i) and (k) thereof, whereupon such successor shall become fully
vested with all the rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer, with like effect as if originally named as a
party to this Agreement. Any termination or resignation of the Servicer or
termination of this Agreement pursuant to Section 9.04, 10.01, 11.01 or 11.02
shall not affect any claims that any Purchaser may have against the Servicer
arising out of the Servicer's actions or failure to act prior to any such
termination or resignation.
The Servicer shall deliver promptly to the successor servicer the
Funds in the Custodial Account and Escrow Account and all Servicing Files and
related documents and statements held by it hereunder and the Servicer 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 Servicer.
Upon a successor's acceptance of appointment as such, the Servicer
shall notify by mail the Purchaser of such appointment in accordance with the
procedures set forth in Section 12.05.
Section 12.02 Amendment.
---------
This Agreement may be amended from time to time by the Sellers, the
Servicer and the Purchaser by written agreement signed by the Sellers, the
Servicer and the Purchaser.
Section 12.03 Governing Law.
-------------
This Agreement shall be construed in accordance with the laws of the
State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 12.04 Duration of Agreement.
---------------------
This Agreement shall continue in existence and effect until
terminated as herein provided. This Agreement shall continue notwithstanding
transfers of the Mortgage Loans by the Purchaser.
Section 12.05 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, postage prepaid, addressed as follows:
(i) if to CMC:
Cendant Mortgage Corporation
6000 Atrium Way
Mt. Laurel, NJ 08054
Attn: Phil McGoldrick
or such other address as may hereafter be furnished to the Purchaser in writing
by CMC;
(ii) if to CRMT:
Cendant Residential Mortgage Trust
6000 Atrium Way
Mt. Laurel, NJ 08054
Attn: Phil McGoldrick
or such other address as may hereafter be furnished to the Purchaser in writing
by CRMT;
(iii) if to Purchaser:
Lehman Capital, a Division of
Lehman Brothers Holdings Inc.
3 World Financial Center
8th Floor
200 Vesey Street,
New York, New York 10285-0800
Attention: Contract Finance
or such other address as may hereafter be furnished to the Sellers in writing
by the Purchaser;
Section 12.06 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 12.07 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 Seller and the Servicer shall be rendered as an independent contractor and
not as agent for the Purchaser.
Section 12.08 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. Subject to Section 8.04, this
Agreement shall inure to the benefit of and be binding upon the Sellers, the
Servicer and the Purchaser and their respective successors and assigns.
Section 12.09 Recordation of Assignments of Mortgage.
--------------------------------------
To the extent permitted by applicable law, each of the Assignments
of Mortgage is subject to recordation in all appropriate public offices for
real property records in all the counties or other comparable jurisdictions in
which any or all of the Mortgaged Properties are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected at the Sellers' expense in the event recordation is either necessary
under applicable law or requested by the Purchaser at its sole option.
Section 12.10 Assignment by Purchaser.
-----------------------
The Purchaser shall have the right, without the consent of the
Sellers or the Servicer 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 and assume obligations of the Purchaser hereunder with
respect to such Mortgage Loans, by executing an assignment and assumption
agreement or other instrument of transfer to such effect. Upon such assignment
of rights and assumption of obligations, the assignee or designee shall accede
to the rights and obligations hereunder of the Purchaser with respect to such
Mortgage Loans and the Purchaser as assignor shall be released from all
obligations hereunder with respect to such Mortgage Loans from and after the
date of such assignment and assumption. All references to the Purchaser in
this Agreement shall be deemed to include its assignee or designee, and any
assignee or designee thereof.
Section 12.11 No Personal Solicitation.
------------------------
From and after the Closing Date, each of the Sellers and the
Servicer hereby agree 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 its behalf, to personally, by telephone or mail, solicit
the borrower or obligor under any Mortgage Loan for any purpose whatsoever,
including to refinance a Mortgage Loan, in whole or in part, without the prior
written consent of the Purchaser. 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 Closing Date and neither of
the Sellers nor the Servicer shall take any action to undermine these rights
and benefits. Notwithstanding the foregoing, it is understood and agreed that
promotions undertaken by the either of the Sellers or the Servicer or any
their affiliates which are directed to the general public at large, including,
without limitation, mass mailing based on commercially acquired mailing lists,
newspaper, radio and television advertisements shall not constitute
solicitation under this Section 12.11.
Section 12.12 Joint and Several Liability.
---------------------------
Each Seller hereby acknowledges and agrees that, except with respect
to the representations and warranties set forth in Section 3.01, such Seller
shall be jointly and severally liable to the Purchaser for all
representations, warranties, covenants, obligations and indemnities of the
Sellers hereunder, including, without limitation, the related remedies for any
breach thereof; provided, that each Seller shall be liable for the
representations set forth in Section 3.03(n) only with respect to the Mortgage
Loans being sold to the Purchaser by such Seller.
[Signature Page Follows]
<PAGE>
IN WITNESS WHEREOF, the Sellers 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.
(Purchaser)
By:
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
CENDANT MORTGAGE CORPORATION
(Seller and Servicer)
By:
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
CENDANT RESIDENTIAL MORTGAGE TRUST
(Seller)
By:
--------------------------------
Name:
-------------------------------
Title:
-----------------------------
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On the __ day of ________, 1998 before me, a Notary Public in and
for said State, personally appeared ___________________________, known to me
to be Vice President of Lehman Capital, A Division of Lehman Brothers Holdings
Inc., 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 ________
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
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 ________
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
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 ________
<PAGE>
EXHIBIT A-1
MORTGAGE LOAN SCHEDULE
CENDANT MORTGAGE CORPORATION
<PAGE>
EXHIBIT A-2
MORTGAGE LOAN SCHEDULE
CENDANT RESIDENTIAL MORTGAGE TRUST
<PAGE>
EXHIBIT B-1
CONTENTS OF EACH MORTGAGE FILE
With respect to each Mortgage Loan, the Mortgage File shall include
each of the following Mortgage Loan Documents, which shall be available for
inspection by the Purchaser and any prospective Purchaser, and which shall be
delivered to the Custodian pursuant to Sections 2.01 and 2.03 of the Seller's
Warranties and Servicing Agreement to which this Exhibit is attached (the
"Agreement"):
1. The original Mortgage Note bearing all intervening endorsements,
endorsed "Pay to the order of _________ without recourse" and signed
in the name of the related Seller by an authorized officer (in the
event that the Mortgage Loan was acquired by such Seller in a
merger, the signature must be in the following form: "[Seller],
successor by merger to [name of predecessor]"; and in the event that
the Mortgage Loan was acquired or originated by such Seller while
doing business under another name, the signature must be in the
following form: "[Seller], formerly known as [previous name]").
2. The original of any guarantee executed in connection with the
Mortgage Note (if any).
3. The original Mortgage, with evidence of recording thereon. If in
connection with any Mortgage Loan, the related Seller cannot deliver
or cause to be delivered the original Mortgage with evidence of
recording thereon on or prior to the Closing Date because of a delay
caused by the public recording office where such Mortgage has been
delivered for recordation or because such Mortgage has been lost or
because such public recording office retains the original recorded
Mortgage, such Seller shall deliver or cause to be delivered to the
Custodian, a photocopy of such Mortgage, together with (i) in the
case of a delay caused by the public recording office, an Officer's
Certificate of such Seller stating that such Mortgage has been
dispatched to the appropriate public recording office for
recordation and that the original recorded Mortgage or a copy of
such Mortgage certified by such public recording office to be a true
and complete copy of the original recorded Mortgage will be promptly
delivered to the Custodian upon receipt thereof by such Seller; or
(ii) in the case of a Mortgage where a public recording office
retains the original recorded Mortgage or in the case where a
Mortgage is lost after recordation in a public recording office, a
copy of such Mortgage certified by such 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 Mortgage.
4. The originals of all assumption, modification, consolidation or
extension agreements, with evidence of recording thereon.
5. The original Assignment of Mortgage for each Mortgage Loan, in form
and substance acceptable for recording, delivered in blank. If the
Mortgage Loan was acquired by the related Seller in a merger, the
Assignment of Mortgage must be made by "[Seller], successor by
merger to [name of predecessor]." If the Mortgage Loan was acquired
or originated by such Seller while doing business under another
name, the Assignment of Mortgage must be by "[Seller], formerly
known as [previous name]."
6. Originals of all intervening 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 related Seller shall deliver
or cause to be delivered to the Custodian, a photocopy of such
intervening assignment, together with (i) in the case of a delay
caused by the public recording office, an Officer's Certificate of
such Seller 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 such Seller; 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.
7. The original PMI Policy or certificate of insurance, or policy
number in lieu thereof, where required pursuant to the Agreement.
8. The original mortgagee policy of title insurance or attorney's
opinion of title and abstract of title, or a title committment
provided that the original mortgagee policy of title insurance is
delivered within ninety (90) days after the Closing Date.
9. The original of any security agreement, chattel mortgage or
equivalent executed in connection with the Mortgage.
10. Such other documents as the Purchaser may require.
<PAGE>
EXHIBIT B-2
CONTENTS OF EACH SERVICING FILE
With respect to each Mortgage Loan, the Servicing File shall include
each of the following items, which shall be available for inspection by the
Purchaser and any prospective Purchaser, and which shall be retained by the
Servicer in the Servicing File (or other file or electronic media) pursuant to
the Seller's Warranties and Servicing Agreement to which this Exhibit is
attached (the "Agreement"):
1. A copy of each Mortgage Loan Document contained in the Mortgage
File.
2. Residential loan application.
3. Mortgage Loan closing statement.
4. Verification of employment and income.
5. Verification of acceptable evidence of source and amount of
downpayment.
6. Credit report on the Mortgagor.
7. Residential appraisal report.
8. Photograph of the Mortgaged Property.
9. Survey of the Mortgaged Property, when required by the company
issuing the title policy.
10. 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
association declarations, etc.
11. All required disclosure statements.
12. If available, termite report, structural engineer's report, water
potability and septic certification.
13. Sales contract.
14. Tax receipts, insurance premium receipts, ledger sheets, payment
history from 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.
In the event an Officer's Certificate of the applicable Seller is
delivered to the Custodian because of a delay caused by the public recording
office in returning any recorded document, such Seller 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. Such Seller 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.
<PAGE>
EXHIBIT C
CUSTODIAL AGREEMENT
<PAGE>
EXHIBIT D-1
CUSTODIAL ACCOUNT CERTIFICATION
_____________________, 199__
Cendant Mortgage Corporation hereby certifies that it has
established the account described below as a Custodial Account pursuant to
Section 4.04 of the Seller's Warranties and Servicing Agreement, dated as of
November 1, 1998, Conventional Residential Fixed Rate Mortgage Loans, Group
_________.
Title of Account: Cendant Mortgage Corporation in trust for the Purchaser,
Group 1998-CD-01.
Account Number:___
Address of office or branch
of the Servicer at
which Account is maintained:
-----------------------------------------
-----------------------------------------
-----------------------------------------
CENDANT MORTGAGE CORPORATION
Servicer
By:______________________________________
Name:____________________________________
Title:___________________________________
<PAGE>
EXHIBIT D-2
CUSTODIAL ACCOUNT LETTER AGREEMENT
___________, 1998
To:
-----------------------------
-----------------------------
-----------------------------
(the "Depository")
As Servicer under the Seller's Warranties and Servicing Agreement,
dated as of November 1, 1998, Conventional Residential Fixed 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 "Cendant Mortgage Corporation, in trust for
the Purchaser - Conventional Residential Fixed Rate Mortgage Loans - Group
1998-CD-01." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. 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.
CENDANT MORTGAGE CORPORATION
Servicer
By:________________________________
Name:______________________________
Title:_____________________________
Date:______________________________
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:______________________________
<PAGE>
EXHIBIT E-1
ESCROW ACCOUNT CERTIFICATION
__________________, 1998
Cendant Mortgage Corporation hereby certifies that it has
established the account described below as an Escrow Account pursuant to
Section 4.06 of the Seller's Warranties and Servicing Agreement, dated as of
November 1, 1998, Conventional Residential Fixed Rate Mortgage Loans, Group
1998-CD-01.
Title of Account: Cendant Mortgage Corporation in trust for the Purchaser,
Group 1998-CD-01.
Account Number:____________
Address of office or branch
of the Servicer at
which Account is maintained:
--------------------------------
--------------------------------
--------------------------------
November 1, 1998
CENDANT MORTGAGE CORPORATION
Servicer
By:_____________________________
Name:___________________________
Title:__________________________
<PAGE>
EXHIBIT E-2
ESCROW ACCOUNT LETTER AGREEMENT
___________________, 199__
To:
-----------------------------
-----------------------------
-----------------------------
(the "Depository")
As Servicer under the Seller's Warranties and Servicing Agreement,
dated as of November 1, 1998, Conventional Residential Fixed Rate Mortgage
Loans, Group 1998-CD-01 (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 "Cendant Mortgage Corporation, in trust for the
Purchaser - Conventional Residential Fixed Rate Mortgage Loans - Group
1998-CD-01." All deposits in the account shall be subject to withdrawal
therefrom by order signed by the Servicer. 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.
CENDANT MORTGAGE CORPORATION
Servicer
By:_________________________________
Name:_______________________________
Title:______________________________
Date:_______________________________
<PAGE>
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:______________________________
<PAGE>
EXHIBIT F
MONTHLY REMITTANCE ADVICE
<PAGE>
EXHIBIT G
EXCEPTIONS TO SALES MANUAL GUIDELINES
<PAGE>
EXHIBIT H
SELLER-PAID PMI MORTGAGE LOANS
Loan Identification Number PMI Fee Rate
-------------------------- ------------
01350404 8.75 basis points
08292807 8.75 basis points
01669795 5.00 basis points
01746858 5.00 basis points
01963800 5.00 basis points
04642872 5.00 basis points
04784500 5.00 basis points
04797700 5.00 basis points
07321276 5.00 basis points
08104374 5.00 basis points
09671702 5.00 basis points
<PAGE>
EXECUTION COPY
MORTGAGE LOAN PURCHASE AGREEMENT
--------------------------------
This is a Purchase Agreement (the "Agreement"), dated as of November
1, 1998, by and between Lehman Capital, a Division of Lehman Brothers Holdings
Inc., having an office at 8th Floor, 3 World Financial Center, 200 Vesey
Street, New York, New York 10285 (the "Purchaser") and Cendant Mortgage
Corporation, having an office at 6000 Atrium Way, Mt. Laurel, New Jersey 08054
("CMC" or "Seller" or, in its role as servicer, the "Servicer") and Cendant
Residential Mortgage Trust, having an office at 6000 Atrium Way, Mt. Laurel,
New Jersey 08054 ("CRMT" or "Seller", together with CMC, the "Sellers").
W I T N E S S E T H
- - - - - - - - - -
WHEREAS, the Sellers agree to sell, and the Purchaser agrees to
purchase, certain conventional residential fixed rate mortgage loans (the
"Mortgage Loans") described on the Closing Schedule (as defined herein) on a
servicing retained basis as described herein;
WHEREAS, the Mortgage Loans shall be delivered as whole loans;
WHEREAS, the parties intend hereby to set forth the terms and
conditions upon which the proposed transactions will be effected;
NOW THEREFORE, in consideration of the promises and the mutual
agreements set forth herein, the parties hereto agree as follows:
SECTION 1. All capitalized terms not otherwise defined herein have
the respective meanings set forth in the Seller's Warranties and Servicing
Agreement, dated as of the date herewith (the "Seller's Warranties and
Servicing Agreement").
SECTION 2. Agreement to Purchase. The Sellers agree to sell, and the
---------------------
Purchaser agrees to purchase on a servicing retained basis, Mortgage Loans
having an aggregate principal balance on the Cut-off Date in an amount as set
forth in the Purchase Price and Terms Letter, from the Purchaser to the
Seller, dated as of October 22, 1998 (the "Purchase Price and Terms Letter"),
or in such other amount as agreed by the Purchaser and the Seller as evidenced
by the actual aggregate principal balance of the Mortgage Loans accepted by
the Purchaser on the Closing Date. The Mortgage Loans will be delivered
pursuant to a Seller's Warranties and Servicing Agreement, Group 1998-CD-01
between the Purchaser and the Sellers.
SECTION 3. Mortgage Schedules. The Sellers have provided the
-------------------
Purchaser with certain information constituting a preliminary listing of the
Mortgage Loans to be purchased under this Agreement (the "Preliminary Mortgage
Schedule"). The Purchaser shall select from among the Mortgage Loans listed on
the Preliminary Mortgage Schedule such Mortgage Loans that satisfy the pool
parameters for Group 1998-CD-01 as set forth in the Purchase Price and Terms
Letter and shall create a schedule for Group 1998-CD-01 listing such Mortgage
Loans substantially in the form attached hereto as Exhibit 5-1 and Exhibit
5-2. Following such selection and any additional adjustments as specified in
the following paragraph, and prior to the Closing Date, the Sellers and the
Purchaser shall agree upon a final mortgage schedule for Group 1998-CD-01 (the
"Closing Schedule"), setting forth all of the Mortgage Loans to be purchased
under this Agreement. The Closing Schedule shall include, for each Mortgage
Loan, the information contained in the definition of "Mortgage Loan Schedule"
under the Seller's Warranties and Servicing Agreement. The Closing Schedule
shall be used as the Mortgage Loan Schedule under the Seller's Warranties and
Servicing Agreement.
The Sellers shall deliver the Closing Schedule to the Purchaser
three (3) Business Days prior to the Closing Date. The Closing Schedule shall
be adjusted on or before the Closing Date as follows: (a) the Sellers shall
delete (i) those Mortgage Loans identified by the Purchaser prior to the
Closing Date as not conforming to its requirements (ii) those Mortgage Loans
which have been prepaid in full prior to the Cut-off Date, or as to which the
representations and warranties of the Sellers (as described in Section 6
hereof) cannot be made as of the Closing Date; and (b) the Sellers shall
substitute, for those Mortgage Loans deleted in (a) above, those Mortgage
Loans acceptable to the Purchaser to the extent necessary to comply with
Section 2 of the Purchase Price and Terms Letter.
SECTION 4. Purchase Price. The purchase price for the Mortgage Loans
--------------
(the "Purchase Price") shall be the percentage of par as stated in the
Purchase Price and Terms Letter, multiplied by the aggregate principal
balance, as of the Cut-off Date, of the Mortgage Loans listed on the final
Closing Schedule (as adjusted pursuant to Section 3), after application of
scheduled payments of principal due on or before the Cut-off Date whether or
not collected.
In addition to the Purchase Price as described above, the Purchaser
shall pay to the Sellers, at closing, accrued interest on the aggregate
principal amount of the Mortgage Loans as of the Cut-off Date at the weighted
average Mortgage Loan Remittance Rate from the Cut-off Date through the day
prior to the Closing Date, inclusive.
The Purchaser shall be entitled to (1) all scheduled principal due
after the Cut-off Date, (2) all other recoveries of principal collected after
the Cut-off Date (provided, however, that all scheduled payments of principal
due on or before the Cut-off Date and collected by the Sellers after the
Cut-off Date shall belong to the Sellers), and (3) all payments of interest on
the Mortgage Loans at the Mortgage Loan Remittance Rate (minus that portion of
any such payment which is allocable to the period prior to the Cut-off Date).
The principal balance of each Mortgage Loan as of the Cut-off Date is
determined after application of payments of principal due on or before the
Cut-off Date whether or not collected. Therefore, payments of scheduled
principal and interest prepaid for a due date beyond the Cut-off Date shall
not be applied to the principal balance as of the Cut-off Date. Such prepaid
amounts (minus interest at the Servicing Fee Rate) shall be the property of
the Purchaser. The Sellers shall deposit any such prepaid amounts into the
Custodial Account, which account is established under the Seller's Warranties
and Servicing Agreement for the benefit of the Purchaser for subsequent
remittance by the Sellers to the Purchaser. All payments of principal and
interest, minus interest at the Servicing Fee Rate, due on the first day of
the month after the Cut-off Date shall belong to the Purchaser.
SECTION 5. Examination of Mortgage Files. At least seven (7)
--------------------------------
Business Days prior to the Closing Date, the Sellers shall (a) deliver to the
Purchaser in escrow, for examination, for each Mortgage Loan, the Mortgage
Loan Documents described on Exhibit B-1 to the Seller's Warranties and
Servicing Agreement, and (b) make the Servicing Files available to the
Purchaser for examination at the Servicer's offices or such other location as
shall otherwise be agreed upon by the Purchaser, the Sellers and the Servicer.
Such examination may be made by the Purchaser, or by any prospective purchaser
of the Mortgage Loans from the Purchaser, at any time before or after the
Closing Date upon prior reasonable notice to the Sellers. If the Purchaser
makes such examination prior to the Closing Date and identifies any Mortgage
Loans which do not conform to its requirements, such Mortgage Loans shall be
deleted from the Closing Schedule, and, pursuant to Section 3 of this
Agreement, may be replaced by substitute Mortgage Loans acceptable to the
Purchaser. The Purchaser may, at its option and without notice to the Sellers,
purchase all or part of the Mortgage Loans without conducting any partial or
complete examination. The fact that the Purchaser or any prospective purchaser
of the Mortgage Loans has conducted or has failed to conduct any partial or
complete examination of the Mortgage Files shall not affect the Purchaser's
(or any of its successor's) rights to demand repurchase, substitution or other
relief as provided under related Seller's Warranties and Servicing Agreement.
SECTION 6. Representations, Warranties and Agreements of Sellers.
-------------------------------------------------------
The Sellers agree and acknowledge that they shall, as a condition to the
consummation of the transactions contemplated hereby, make the representations
and warranties specified in Section 3.01 and 3.03 of the Seller's Warranties
and Servicing Agreement, as of the date specified in the Seller's Warranties
and Servicing Agreement. Each Seller, without conceding that the Mortgage
Loans are securities, hereby makes the following additional representations,
warranties and agreements which shall be deemed to have been made as of the
Closing Date:
a) neither the Seller nor anyone acting on its behalf has offered,
transferred, pledged, sold or otherwise disposed of any Mortgage Loans, any
interest in any Mortgage Loans or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of any
Mortgage Loans, any interest in any Mortgage Loans or any other similar
security from, or otherwise approached or negotiated with respect to any
Mortgage Loans, any interest in any Mortgage Loans or any other similar
security with, any person, other than the Purchaser or, with respect to CMC,
CRMT, in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action which would
constitute a distribution of the Mortgage Loans under the Securities Act of
1933 (the "1933 Act") or which would render the disposition of any Mortgage
Loans a violation of Section 5 of the 1933 Act or require registration
pursuant thereto, nor will it act, nor has it authorized or will it authorize
any person to act, in such manner with respect to the Mortgage Loans; and
b) the Seller has not dealt with any broker or agent or anyone else
who might be entitled to a fee or commission in connection with this
transaction other than the Purchaser.
SECTION 7. Representations, Warranties and Agreement of Purchaser.
-------------------------------------------------------
The Purchaser, without conceding that the Mortgage Loans are securities,
hereby makes the following representations, warranties and agreements, which
shall have been deemed to have been made as of the Closing Date:
a) the Purchaser understands that the Mortgage Loans have not been
registered under the 1933 Act or the securities laws of any state;
b) the Purchaser is acquiring the Mortgage Loans for its own account
only and not for any other person;
c) the Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of
investment in the Mortgage Loans;
d) the Purchaser has been furnished with all information regarding
the Mortgage Loans which it has requested from the Sellers; and
e) neither the Purchaser nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of any Mortgage
Loan, any interest in any Mortgage Loan or any other similar security to, or
solicited any offer to buy or accept a transfer, pledge or other disposition
of any Mortgage Loan, any interest in any Mortgage Loan or any other similar
security from, or otherwise approached or negotiated with respect to any
Mortgage Loan, any interest in any Mortgage Loan or any other similar security
with, any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action which
would constitute a distribution of the Mortgage Loans under the 1933 Act or
which would render the disposition of any Mortgage Loan a violation of Section
5 of the 1933 Act or require registration pursuant thereto, nor will it act,
nor has it authorized or will it authorize any person to act, in such manner
with respect to the Mortgage Loans.
SECTION 8. Closing. The closing for the purchase and sale of the
-------
Mortgage Loans, shall take place on the Closing Date. At the Purchaser's
option, the Closing shall be either: by telephone, confirmed by letter or wire
as the parties shall agree; or conducted in person, at such place as the
parties shall agree.
The closing shall be subject to each of the following conditions:
a) all of the representations and warranties of the Sellers under
this Agreement and under the Seller's Warranties and Servicing
Agreement shall be true and correct as of the Closing Date and
no event shall have occurred which constitutes, or with notice
or the passage of time, would constitute, a default under this
Agreement or an Event of Default under the Seller's Warranties
and Servicing Agreement;
b) the Purchaser and the Sellers shall have received, or the
Purchaser's attorneys shall have received in escrow, all
Closing Documents as specified in Section 9 of this Agreement,
in such forms as are agreed upon and acceptable to the
Purchaser, duly executed by all signatories other than the
Purchaser as required pursuant to the respective terms thereof;
c) the Sellers shall have delivered and released to the Custodian
under the Seller's Warranties and Servicing Agreement all
documents required pursuant to the Custodial Agreement; and
d) all other terms and conditions of this Agreement shall have
been complied with.
Subject to the foregoing conditions, the Purchaser shall pay to the
Sellers on the Closing Date the Purchase Price, plus accrued interest pursuant
to Section 4 of this Agreement, by wire transfer of immediately available
funds to the account designated by the Seller.
SECTION 9. Closing Documents. With respect to Group 1998-CD-01 the
------------------
Closing Documents shall consist of fully executed originals of the following
documents:
1. this Agreement, in three counterparts;
2. the Seller's Warranties and Servicing Agreement for Group
1998-CD-01, dated as of the Cut-off Date, in three
counterparts;
3. a Custodian's Certification, as required under the
Custodial Agreement;
4. a Custodial Account Certification or Custodial Account
Letter Agreement as required under the Seller's Warranties
and Servicing Agreement;
5. an Escrow Account Certification or Escrow Account Letter
Agreement, as required under the Seller's Warranties and
Servicing Agreement (if required); and
6. an Officer's Certificate for each Seller, in the form of
Exhibit 1 hereto, including all attachments thereto;
7. an Opinion of Counsel for each Seller, in the form of
Exhibit 2 hereto;
8. if applicable, a Security Release Certification, in the
form of Exhibit 3 hereto (for a Seller which is a member
of the Federal Home Loan Bank System), executed by the
applicable regional Federal Home Loan Bank and, if
applicable, in the form of Exhibit 4 hereto executed by
any other person, as requested by the Purchaser, if any of
the Mortgage Loans have at any time been subject to any
security interest, pledge or hypothecation for the benefit
of such person;
9. Mortgage Loan Schedules, in the form of Exhibit 5-1 and
Exhibit 5-2 to the Purchase Agreement;
10. a Certificate of other evidence of merger or change of
name, signed or stamped by the applicable regulatory
authority, if any of the Mortgage Loans were acquired by a
Seller by merger or acquired or originated by a Seller
while conducting business under a name other than its
present name;
11. The Escrow Agreement, dated as of November 1, 1998,
executed among the Purchaser, the Sellers and Cadwalader,
Wickersham & Taft, as the Escrow Agent; and
12. The Assignment and Assumption Agreement, dated as of
November 12, 1998, between the Purchaser, as the Assignor,
and the Servicer, as the Assignee, duly acknowledged by
the Custodian.
SECTION 10. Costs. The Purchaser shall pay any commissions due its
-----
salesmen and the legal fees and expenses of its attorneys, all due diligence
fees and expenses, and the fees and expenses of the Custodian. All other costs
and expenses incurred in connection with the transfer and delivery of the
Mortgage Loans, including recording fees for the initial recordation of
assignment of mortgage to Purchaser or its designee and the Sellers'
attorney's fees, shall be paid by the Sellers.
SECTION 11. Servicing. The Mortgage Loans shall be serviced by the
---------
Servicer in accordance with the terms of the Seller's Warranties and Servicing
Agreement. The Servicer shall be entitled to servicing fees calculated as
provided therein.
SECTION 12. Mandatory Delivery, Grant of Security Interest. The sale
----------------------------------------------
and delivery on the Closing Date of the Mortgage Loans described on the
Closing Schedule is mandatory, it being specifically understood and agreed
that each Mortgage Loan is unique and identifiable on the date hereof and that
an award of money damages would be insufficient to compensate the Purchaser
for the losses and damages incurred by the Purchaser (including damages to
prospective purchasers of the Mortgage Loans) in the event of the Sellers'
failure to deliver the Mortgage Loans on or before the Closing Date. The
Sellers hereby grant to the Purchaser a lien on and a continuing security
interest in each Mortgage Loan and each document and instrument evidencing
each such Mortgage Loan to secure the performance by the Sellers of their
obligation hereunder, and the Sellers agree that they hold such Mortgage Loans
in custody for the Purchaser subject to the Purchaser's (i) right to reject
any Mortgage Loan under the terms of this Agreement and to require another
Mortgage Loan to be substituted therefor, and (ii) obligation to pay the
Purchase Price for the Mortgage Loans. All rights and remedies of the
Purchaser under this Agreement are distinct from, and cumulative with, any
other rights or remedies under this Agreement or afforded by law or equity and
all such rights and remedies may be exercised concurrently, independently or
successively.
SECTION 13. Protection of Confidential Information. Each Seller, the
--------------------------------------
Servicer and the Purchaser shall keep confidential and shall not divulge to
any other person, without the prior written consent of the other parties
hereto, the price paid by the Purchaser for the Mortgage Loans, except to the
extent that it is appropriate for the Sellers to do so in working with legal
counsel, courts, auditors, taxing authorities or other governmental agencies.
SECTION 14. Notices. All demands, notices and communications
-------
hereunder shall be in writing and shall be deemed to have been duly given if
mailed, by registered or certified mail, return receipt requested, or, if by
other means, when received by the other party at the address in Section 12.05
of the Seller's Warranties and Servicing Agreement, or such other address as
may hereafter be furnished to the other party by like notice. Any such demand,
notice or communication hereunder shall be deemed to have been received on the
date delivered to or received at the premises of the addressee (as evidenced,
in the case of registered or certified mail, by the date noted on the return
receipt).
SECTION 15. Severability Clause. Any part, provision, representation
-------------------
or warranty of this Agreement which is prohibited or which is held to be void
or unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
part, provision, representation or warranty of this Agreement which is
prohibited or unenforceable or is held to be void or unenforceable in any
jurisdiction shall be ineffective, as to such jurisdiction, to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Mortgage Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent
permitted by applicable law, the parties hereto waive any provision of law
which prohibits or renders void or unenforceable any provision hereof. If the
invalidity of any part, provision, representation or warranty of this
Agreement shall deprive any party of the economic benefit intended to be
conferred by this Agreement, the parties shall negotiate, in good-faith, to
develop a structure the economic effect of which is as close as possible to
the economic effect of this Agreement without regard to such invalidity.
SECTION 16. Counterparts. This Agreement may be executed
------------
simultaneously in any number of counterparts. Each counterpart shall be deemed
to be an original, and all such counterparts shall constitute one and the same
instrument.
SECTION 17. Place of Delivery and Governing Law. This Agreement
-------------------------------------
shall be deemed in effect when a fully executed counterpart thereof is
received by the Purchaser in the State of New York and shall be deemed to have
been made in the State of New York. The 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
the laws of the State of New York, except to the extent preempted by Federal
law.
SECTION 18. Further Agreements. The Purchaser and the Sellers each
-------------------
agree to execute and deliver to the other such additional documents,
instruments or agreements as may be necessary or appropriate to effectuate the
purposes of this Agreement.
SECTION 19. Intention of the Parties. It is the intention of the
-------------------------
parties that the Purchaser is purchasing, and the Sellers are selling on a
servicing retained basis, an undivided 100% ownership interest in the Mortgage
Loans and not a debt instrument of the Sellers or another security.
Accordingly, the parties hereto each intend to treat the transaction for
Federal income tax purposes as a sale by the Sellers, and a purchase by the
Purchaser, of the Mortgage Loans. Moreover, the arrangement under which the
Mortgage Loans are held shall be consistent with classification of such
arrangement as a grantor trust in the event it is not found to represent
direct ownership of the Mortgage Loans. The Purchaser shall have the right to
review the Mortgage Loans and the related Mortgage Files to determine the
characteristics of the Mortgage Loans which shall affect the Federal income
tax consequences of owning the Mortgage Loans and the Sellers shall cooperate
with all reasonable requests made by the Purchaser in the course of such
review.
SECTION 20. Successors and Assigns; Assignment of Purchase
-----------------------------------------------------
Agreement. This Agreement shall bind and inure to the benefit of and be
- ---------
enforceable by the Sellers and the Purchaser and the respective successors and
assigns of the Sellers and the Purchaser. This Agreement shall not be
assigned, pledged or hypothecated by the Sellers to a third party without the
consent of the Purchaser.
SECTION 21. Waivers; Other Agreements. No term or provision of this
-------------------------
Agreement may be waived or modified unless such waiver or modification is in
writing and signed by the party against whom such waiver or modification is
sought to be enforced.
SECTION 22. Exhibits. The exhibits to this Agreement are hereby
--------
incorporated and made a part hereof and are an integral part of this
Agreement.
SECTION 23. General Interpretive Principles. For purposes of this
---------------------------------
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned
to them in this Agreement and include the plural as well as the singular, and
the use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles;
(c) references herein to "Articles", "Sections", "Subsections",
"Paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, Paragraphs and other subdivisions
of this Agreement;
(d) a reference to a Subsection without further reference to a
Section is a reference to such Subsection as contained in the same Section in
which the reference appears, and this rule shall also apply to Paragraphs and
other subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation
by reason of enumeration.
SECTION 24. Reproduction of Documents. This Agreement and all
---------------------------
documents relating thereto, including, without limitation, (a) consents,
waivers and modifications which may hereafter be executed, (b) documents
received by any party at the closing, and (c) financial statements,
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process. The parties agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
SECTION 25. Entire Agreement. This Agreement and the Seller's
-----------------
Warranties and Servicing Agreement contain the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof and thereof, 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 and thereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms
hereof.
<PAGE>
IN WITNESS WHEREOF, the Sellers and the Purchaser have caused their
names to be signed hereto by their respective officers thereunto duly
authorized as of the date first above written.
LEHMAN CAPITAL, A DIVISION OF LEHMAN
BROTHERS HOLDINGS INC.
(Purchaser)
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CENDANT MORTGAGE CORPORATION
(Seller and Servicer)
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CENDANT RESIDENTIAL MORTGAGE TRUST
(Seller)
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE>
EXHIBIT 1
OFFICER'S CERTIFICATE
I, ____________________, hereby certify that I am the duly elected
[Vice] President of [Cendant Mortgage Corporation][[TRUST COMPANY], as trustee
for Cendant Residential Mortgage Trust], a [corporation] [statutory business
trust] organized under the laws of the state of [New Jersey] [Delaware], (the
"Company") and further as follows:
1. Attached hereto as Exhibit A is a true, correct and complete copy
of the [charter] [trust documents] of the Company which is in full force
and effect on the date hereof and which has been in effect without
amendment, waiver, rescission or modification.
2. Attached hereto as Exhibit B is a true, correct and complete copy
of the [bylaws] of the Company which are in effect on the date hereof and
which have been in effect without amendment, waiver, rescission or
modification.
3. Attached hereto as Exhibit C is an original certificate of good
standing of the Company, issued within ten days of the date hereof, and
no event has occurred since the date thereof which would impair such
standing.
4. Attached hereto as Exhibit D is a true, correct and complete copy
of the [corporate resolutions of the Board of Directors] [RELEVANT
ENABLING INSTRUMENT OF THE TRUST] of the Company authorizing the Company
to execute and deliver each of the Purchase Agreement, the Seller's
Warranties and Servicing Agreement, [INCLUDE IN CERTIFICATE OF CENDANT
MORTGAGE CORPORATION ONLY: and the Assignment and Assumption Agreement]
by original signature, and to endorse the Mortgage Notes and execute the
Assignments of Mortgages by original [or facsimile] signature, and such
resolutions are in effect on the date hereof and have been in effect
without amendment, waiver rescission or modification.
5. Either (i) 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 compliance by the Company
with the Purchase Agreement, dated as of November 1, 1998 (the "Purchase
Agreement"), by and between the Company, the other Seller named therein
and Lehman Capital, a Division of Lehman Brothers Holdings Inc. (the
"Purchaser"), the Seller's Warranties and Servicing Agreement, dated as
of November 1, 1998, by and between the Company, the other Seller named
therein and the Purchaser (the "Seller's Warranties and Servicing
Agreement") and the assignment pursuant to the Assignment and Assumption
Agreement, dated as of November 12, 1998, between the Purchaser and [the
Company] [Cendant Mortgage Corporation] of the Purchaser's rights as
Initial Servicer under that certain Custodial Agreement dated as of
February 1, 1993, as amended by (a) that certain Amendment to Custodial
Agreement with respect to Mortgage Loans secured by Co-op shares; (b)
that certain Amendment to Custodial Agreement with respect to FHA insured
Mortgage Loans; and (c) that certain Amendment Number 3 to Custodial
Agreement dated as of July 7, 1995 (the "Custodial Agreement") by and
between the Purchaser and U.S. Bank Trust National Association (formerly
known as First Trust National Association) (the "Custodian") or the sale
of the mortgage loans or the consummation of the transactions
contemplated by the Agreements; or (ii) any required consent, approval,
authorization or order has been obtained by the Company.
6. Neither the consummation of the transactions contemplated by, nor
the fulfillment of the terms of the Purchase Agreement, the Seller's
Warranties and Servicing Agreement and the Assignment and Assumption
Agreement, conflicts or will conflict with or results or will result in a
breach of or constitutes or will constitute a default under the charter
or by-laws of the Company, the terms of any indenture or other agreement
or instrument to which the Company is a party or by which it is bound or
to which it is subject, or any statute or order, rule, regulations, writ,
injunction or decree of any court, governmental authority or regulatory
body to which the Company is subject or by which it is bound.
7. To the best of my knowledge, there is no action, suit, proceeding
or investigation pending or threatened against the Company which, in my
judgment, 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
the Purchase Agreement, the Seller's Warranties and Servicing Agreement,
the Assignment and Assumption Agreement or the mortgage loans or of any
action taken or to be taken in connection with the transactions
contemplated hereby, or which would be likely to impair materially the
ability of the Company to perform under the terms of the Purchase
Agreement, the Seller's Warranties and Servicing Agreement or the
Assignment and Assumption Agreement.
8. Each person listed on Exhibit E attached hereto who, as an
officer or representative of the Company, signed (a) the Purchase
Agreement, (b) the Seller's Warranties and Servicing Agreement, (c) the
Assignment and Assumption Agreement, and (d) any other document delivered
prior hereto or on the date hereof in connection with any purchase
described in the Agreements set forth above was, at the respective times
of such signing and delivery, and is now, a duly elected or appointed,
qualified and acting officer or representative of the Company, who holds
the office set forth opposite his or her name on Exhibit E, and the
signatures of such persons appearing on such documents are their genuine
signatures.
9. The Mortgage Loans are not subject to any security interest,
claim, pledge, hypothecation or lien.
10. The Company is duly authorized to engage in the transactions
described and contemplated in the Purchase Agreement, the Seller's
Warranties and Servicing Agreement and the Assignment and Assumption
Agreement.
<PAGE>
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the
seal of the Company.
Dated: By:
----------------------------- ---------------------------
Name:
---------------------------
[Seal] Title: [Vice] President
I, ________________________, an [Assistant] Secretary of [Cendant
Mortgage Corporation][[TRUST COMPANY], as trustee of Cendant Residential
Mortgage Trust], hereby certify that ____________ is the duly elected,
qualified and acting [Vice] President of [the Company] [[TRUST COMPANY], as
trustee of Cendant Residential Mortgage Trust] and that the signature
appearing above is [her] [his] genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated: By:
----------------------------- ---------------------------
Name:
---------------------------
Title: [Assistant] Secretary
<PAGE>
EXHIBIT E to
Company's Officer's Certificate
Name Title Signature
---- ----- ---------
-----------------------
-----------------------
-----------------------
-----------------------
-----------------------
-----------------------
-----------------------
-----------------------
<PAGE>
EXHIBIT 2
[FORM OF OPINION OF COUNSEL TO THE SELLER]
(date)
Lehman Capital, a Division of
Lehman Brothers Holdings Inc.
12th Floor
World Financial Center
200 Vesey Street New York, New York 10285-0800
Dear Sirs:
You have requested my opinion, as General Counsel to [Cendant
Mortgage Corporation] [Cendant Residential Mortgage Trust] (the "Company"),
with respect to certain matters in connection with the sale by the Company of
Mortgage Loans pursuant to that certain Purchase Agreement by and between the
Company, the other Seller named therein and Lehman Capital, a Division of
Lehman Brothers Holdings Inc. (the "Purchaser") dated as of November 1, 1998 ,
(the "Purchase Agreement") which sale is in the form of whole Mortgage Loans
delivered pursuant thereto, and to a Seller's Warranties and Servicing
Agreement, Group 1998-CD-01 dated as of November 1, 1998 by and between the
Company, the other Seller named therein and the Purchaser (the "Seller's
Warranties and Servicing Agreement") being executed contemporaneously with an
assignment pursuant to the Assignment and Assumption Agreement (the
"Assignment and Assumption Agreement"), dated as of November 12, 1998, between
the Purchaser and [the Company] [Cendant Mortgage Corporation] of the
Purchaser's rights as Initial Servicer under that certain Custodial Agreement
dated as of February 1, 1993, as amended by (a) that certain Amendment to
Custodial Agreement with respect to Mortgage Loans secured by Co-op shares;
(b) that certain Amendment to Custodial Agreement with respect to FHA insured
Mortgage Loans; and (c) that certain Amendment Number 3 to Custodial Agreement
dated as of July 7, 1995 (the "Custodial Agreement") by and between the
Purchaser and U.S. Bank Trust National Association (formerly known as First
Trust National Association) (the "Custodian"). Capitalized terms not otherwise
defined herein have the meanings set forth in the Purchase Agreement and the
Seller's Warranties and Servicing Agreement.
I have examined the following documents:
1. the Purchase Agreement;
2. the Seller's Warranties and Servicing Agreement;
3. the form of Assignment of Mortgage;
4. the form of endorsement of the Mortgage Notes;
5. the Assignment and Assumption Agreement and a copy of the
Custodial Agreement; and
6. such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.
To the extent I have deemed necessary and proper, I have relied upon
the representations and warranties of the Company contained in the Purchase
Agreement and in the Seller's Warranties and Servicing Agreement. I have
assumed the authenticity of all documents submitted to me as originals, the
genuineness of all signatures, the legal capacity of natural persons and the
conformity to the originals of all documents.
Based upon the foregoing, it is my opinion that:
1. [The Company is a corporation duly organized, validly existing and
in good standing under the laws of the state of New Jersey and is
qualified to transact business in, and is in good standing under,
the laws of the state[s] of [New York] and New Jersey.] [The Company
is a statutory Delaware business trust duly organized, validly
existing and in good standing under the laws of the state of
Delaware and is qualified to transact business in, and is in good
standing under, the laws of the state[s] of Delaware [, New York and
New Jersey]].
2. The Company has the power to engage in the transactions contemplated
by the Purchase Agreement and the Seller's Warranties and Servicing
Agreement and all requisite power, authority and legal right to
execute and deliver the Purchase Agreement, the Seller's Warranties
and Servicing Agreement [INCLUDE IN OPINION FOR CENDANT MORTGAGE
CORPORATION ONLY: and the Assignment and Assumption Agreement], and
to perform and observe the terms and conditions of such instruments.
3. Each of the Purchase Agreement, the Seller's Warranties and
Servicing Agreement [INCLUDE IN OPINION FOR CENDANT MORTGAGE
CORPORATION ONLY: and the Assignment and Assumption Agreement], has
been duly authorized, executed and delivered by the Company and is a
legal, valid and binding agreement enforceable in accordance with
its respective terms against the Company, subject to bankruptcy laws
and other similar laws of general application affecting rights of
creditors and subject to the application of the rules of equity,
including those respecting the availability of specific performance,
none of which will materially interfere with the realization of the
benefits provided thereunder or with the Purchaser's ownership of
the Mortgage Loans.
4. The Company has been duly authorized to allow any of its officers to
execute any and all documents by original signature in order to
complete the transactions contemplated by the Purchase Agreement,
the Seller's Warranties and Servicing Agreement, the Custodial
Agreement and the Assignment and Assumption Agreement and any of its
officers, by original signature in order to execute the endorsements
to the Mortgage Notes and the Assignments of Mortgages, and the
original signature of the officer at the Company executing the
endorsements to the Mortgage Notes and the Assignments of Mortgages
represents the legal and valid signature of said officer of the
Company.
5. Either (i) 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 compliance by the
Company with the Purchase Agreement, the Seller's Warranties and
Servicing Agreement, the Custodial Agreement or the sale and
delivery of the Mortgage Loans or the consummation of the
transactions contemplated by the Purchase Agreement and the Seller's
Warranties and Servicing Agreement; or (ii) any required consent,
approval, authorization or order has been obtained by the Company.
6. Neither the consummation of the transactions contemplated by, nor
the fulfillment of the terms of, the Purchase Agreement, the
Seller's Warranties and Servicing Agreement, the Custodial Agreement
or the Mortgage Loans conflicts or will conflict with or results or
will result in a breach of or constitutes or will constitute a
default under the charter or by-laws of the Company, the terms of
any indenture or other agreement or instrument to which the Company
is a party or by which it is bound or to which it is subject, or
violates any statute or order, rule, regulations, writ, injunction
or decree of any court, governmental authority or regulatory body to
which the Company is subject or by which it is bound.
7. There is no action, suit, proceeding or investigation pending or, to
the best of my knowledge, threatened against the Company which, in
my judgment, 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 the Purchase Agreement, the Mortgage Loans,
the Seller's Warranties and Servicing Agreement, the Custodial
Agreement or the Mortgage Loans or of any action taken or to be
taken in connection with the transactions contemplated thereby, or
which would be likely to impair materially the ability of the
Company to perform under the terms of the Purchase Agreement, the
Mortgage Loans, the Custodial Agreement or the Seller's Warranties
and Servicing Agreement.
8. The sale of each Mortgage Note and Mortgage as and in the manner
contemplated by the Purchase Agreement and the Seller's Warranties
and Servicing Agreement is sufficient fully to transfer to the
Purchaser all right, title and interest of the Company thereto as
noteholder and mortgagee.
9. The Mortgages have been duly assigned and the Mortgage Notes have
been duly endorsed as provided in the Custodial Agreement. The
Assignments of Mortgage are in recordable form, except for the
insertion of the name of the assignee, and upon the name of the
assignee being inserted, are acceptable for recording under the laws
of the state where each related Mortgaged Property is located. The
endorsement of the Mortgage Notes, the delivery to the Custodian of
the Assignments of Mortgage, and the delivery of the original
endorsed Mortgage Notes to the Custodian are sufficient to permit
the Purchaser to avail itself of all protection available under
applicable law against the claims of any present or future creditors
of the Company, and are sufficient to prevent any other sale,
transfer, assignment, pledge or hypothecation of the Mortgages and
the Mortgage Notes by the Company from being enforceable.
This opinion is given to you for your sole benefit, and no other
person or entity is entitled to rely hereon except that the purchaser or
purchasers to which you initially and directly resell the Mortgage Loans may
rely on this opinion as if it were addressed to them as of its date.
Very truly yours,
-----------------------------
[---------------------]
[General Counsel]
<PAGE>
EXHIBIT 3
SECURITY RELEASE CERTIFICATION
___________________, 199_
Federal Home Loan Bank of
- ---------------------------------
- ---------------------------------
- ---------------------------------
- ---------------------------------
Attention: ----------------------
----------------------
Re: Notice of Sale and Release of Collateral
----------------------------------------
Dear Sirs:
This letter serves as notice that [Cendant Mortgage Corporation]
[Cendant Residential Mortgage Trust], a [state] [federally] chartered savings
and loan association [in the state of ___________] (the "Association") has
committed to sell to Lehman Capital, a Division of Lehman Brothers Holdings
Inc. ("LCC") under a Purchase Agreement dated as of November 1, 1998, certain
mortgage loans originated by the Association. The Association warrants that
the mortgage loans to be sold to LCC are in addition to and beyond any
collateral required to secure advances made by you to the Association.
The Association acknowledges that the mortgage loans to be sold to
LCC shall not be used as additional or substitute collateral for advances made
by you. LCC understands that the balance of the Association's mortgage loan
portfolio may be used as collateral or additional collateral for advances made
by you, and confirms that it has no interest therein.
Execution of this letter by the Federal Home Loan Bank of
_________________________ shall constitute a full and complete release of any
security interest, claim, or lien which the Federal Home Loan Bank of
_____________________ may have against the mortgage loans to be sold to LCC.
Very truly yours,
[Cendant Mortgage Corporation] [Cendant
Residential Mortgage Trust]
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
----------------------------------
Acknowledged and approved:
FEDERAL HOME LOAN BANK OF
- --------------------------------
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
Date:
----------------------------
<PAGE>
EXHIBIT 4
SECURITY RELEASE CERTIFICATION
I. Release of Security Interest
The financial institution named below hereby relinquishes any and
all right, title and interest it may have in all Mortgage Loans to be
purchased by Lehman Capital, a Division of Lehman Brothers Holdings Inc. from
the Company named below pursuant to that certain Purchase Agreement, dated as
of November 1, 1998, and certifies that all notes, mortgages, assignments and
other documents in its possession relating to such Mortgage Loans have been
delivered and released to the Company named below or its designees, as of the
date and time of the sale of such Mortgage Loans to Lehman Capital, a Division
of Lehman Brothers Holdings Inc.
Name and Address of Financial Institution
---------------------------------
(name)
---------------------------------
(Address)
By:
------------------------------
<PAGE>
II. Certification of Release
The Company named below hereby certifies to Lehman Capital, a
Division of Lehman Brothers Holdings Inc. that, as of the date and time of the
sale of the above mentioned Mortgage Loans to Lehman Capital, a Division of
Lehman Brothers Holdings Inc., the security interests in the Mortgage Loans
released by the above named financial institution comprise all security
interests relating to or affecting any and all such Mortgage Loans. The
Company warrants that, as of such time, there are and will be no other
security interests affecting any or all of such Mortgage Loans.
[Cendant Mortgage Corporation] [Cendant
Residential Mortgage Trust]
By:
--------------------------------------
Title:
-----------------------------------
Date:
------------------------------------
<PAGE>
EXHIBIT 5-1
SCHEDULE OF MORTGAGE LOANS
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CENDANT MORTGAGE CORPORATION
----------------------------
<PAGE>
EXHIBIT 5-2
SCHEDULE OF MORTGAGE LOANS
--------------------------
CENDANT RESIDENTIAL MORTGAGE TRUST
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