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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 29, 1998
MERRILL LYNCH MORTGAGE INVESTORS, INC. (as company under a pooling and servicing
agreement, dated as of October 1, 1998, providing for, inter alia, the issuance
of Golden National Mortgage Loan Asset Backed Certificates, Series 1998-GN3)
Merrill Lynch Mortgage Investors, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 333-39127 33-3416059
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(State or Other Juris- (Commission (I.R.S. Employer
diction of Incorporation) File Number) Identification No.)
250 Vesey Street
World Financial Center, North Tower
New York, New York 10281
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(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number, including area code, is (212) 449-1000
<PAGE>
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Not applicable
(b) Not applicable
(c) Exhibits:
1. Pooling and servicing agreement, dated as of October 1,
1998, among Merrill Lynch Mortgage Investors, Inc., as company, Golden National
Mortgage Banking Corp., as initial master servicer, Litton Loan Servicing LP, as
subsequent master servicer, and The Chase Manhattan Bank, as trustee.
<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 thereunto duly authorized.
MERRILL LYNCH MORTGAGE
INVESTORS, INC.
By: /s/ Peter Cerwin
-----------------------
Name: Peter Cerwin
Title: Authorized Signatory
Dated: November 13, 1998
<PAGE>
EXHIBITS
Pooling and Servicing Agreement
MERRILL LYNCH MORTGAGE INVESTORS, INC.,
Depositor
GOLDEN NATIONAL MORTGAGE BANKING CORP.,
Initial Master Servicer
LITTON LOAN SERVICING LP,
Subsequent Master Servicer
and
THE CHASE MANHATTAN BANK,
Trustee
-----------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of October 1, 1998
-----------------------------------
Golden National Mortgage Loan Asset Backed Certificates
Series 1998-GN3
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
<S> <C> <C>
SECTION 1.01. Defined Terms..........................................................................4
SECTION 1.02. Allocation of Certain Interest Shortfalls.............................................41
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans..........................................................42
SECTION 2.02. Acceptance of REMIC I by Trustee......................................................45
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by the Mortgage
Loan Seller...........................................................................46
SECTION 2.04. Representations and Warranties of the Depositor.......................................49
SECTION 2.05. Representations, Warranties and Covenants of the Master
Servicer..............................................................................49
SECTION 2.06. Issuance of Class R-I Certificates....................................................51
SECTION 2.07. Conveyance of REMIC I Regular Interests; Acceptance of
REMIC II by the Trustee...............................................................51
SECTION 2.08. Issuance of Class R-II Certificates...................................................51
SECTION 2.09. Conveyance of REMIC II Regular Interests; Acceptance of
REMIC III by the Trustee..............................................................52
SECTION 2.10. Issuance of REMIC III Certificates....................................................52
SECTION 2.11. Conveyance of the Subsequent Mortgage Loans...........................................52
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
SECTION 3.01. Master Servicer to Act as Servicer....................................................56
SECTION 3.02. Subservicing Agreements Between Master Servicer and
Subservicers..........................................................................57
SECTION 3.03. Successor Subservicers................................................................58
SECTION 3.04. Liability of the Master Servicer......................................................59
SECTION 3.05. No Contractual Relationship Between Subservicers and Trustee or
Certificateholders....................................................................59
SECTION 3.06. Assumption or Termination of Subservicing Agreements by
Trustee...............................................................................60
</TABLE>
i
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 3.07. Collection of Certain Mortgage Loan Payments..........................................60
SECTION 3.08. Sub-Servicing Accounts................................................................60
SECTION 3.09. Collection of Taxes, Assessments and Similar Items; Servicing
Accounts..............................................................................61
SECTION 3.10. Collection Account and Distribution Account...........................................61
SECTION 3.11. Withdrawals from the Collection Account...............................................63
SECTION 3.12. Investment of Funds in the Investment Accounts........................................65
SECTION 3.13. Maintenance of Hazard Insurance and Errors and Omissions and
Fidelity Coverage.....................................................................66
SECTION 3.14. Enforcement of Due-On-Sale Clauses; Assumption Agreements
......................................................................................67
SECTION 3.15. Realization Upon Defaulted Mortgage Loans.............................................69
SECTION 3.16. Trustee to Cooperate; Release of Mortgage Files.......................................71
SECTION 3.17. Servicing Compensation................................................................72
SECTION 3.18. Reports to the Trustee; Collection Account Statements.................................72
SECTION 3.19. Statement as to Compliance............................................................73
SECTION 3.20. Independent Public Accountants' Servicing Report......................................73
SECTION 3.21. Access to Certain Documentation.......................................................74
SECTION 3.22. Title, Management and Disposition of REO Property.....................................74
SECTION 3.23. Obligations of the Master Servicer in Respect of Prepayment
Interest Shortfalls...................................................................77
SECTION 3.24. Obligations of the Master Servicer in Respect of Mortgage Rates
and Monthly Payments..................................................................77
SECTION 3.25. Year 2000 Compliance..................................................................78
SECTION 3.26. Maintenance of the Primary Insurance Policy Collections
Thereunder............................................................................78
ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.........................................................................80
SECTION 4.02. Statements to Certificateholders......................................................85
SECTION 4.03. Remittance Reports; Monthly Advances..................................................88
SECTION 4.04. Allocation of Realized Losses.........................................................89
SECTION 4.05. Compliance with Withholding Requirements..............................................90
SECTION 4.06. SEC Reporting.........................................................................91
SECTION 4.07. Funding Account.......................................................................91
SECTION 4.08. Interest Coverage Account.............................................................92
</TABLE>
ARTICLE V
THE CERTIFICATES
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 5.01. The Certificates......................................................................94
SECTION 5.02. Registration of Transfer and Exchange of Certificates.................................95
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates....................................100
SECTION 5.04. Persons Deemed Owners................................................................101
SECTION 5.05. Certain Available Information........................................................101
ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
SECTION 6.01. Liability of the Depositor and the Master Servicer...................................103
SECTION 6.02. Merger or Consolidation of the Depositor or the Master Servicer
....................................................................................103
SECTION 6.03. Limitation on Liability of the Depositor, the Master Servicer and
Others...............................................................................103
SECTION 6.04. Limitation on Resignation of the Master Servicer.....................................104
SECTION 6.05. Rights of the Depositor and Others in Respect of the Master
Servicer.............................................................................105
ARTICLE VII
DEFAULT
SECTION 7.01. Servicing Termination Events.........................................................107
SECTION 7.02. Trustee to Act; Appointment of Successor.............................................109
SECTION 7.03. Notification to Certificateholders...................................................111
SECTION 7.04. Waiver of Servicing Termination Events...............................................111
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee....................................................................112
SECTION 8.02. Certain Matters Affecting the Trustee................................................113
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans................................115
SECTION 8.04. Trustee May Own Certificates.........................................................115
SECTION 8.05. Trustee's Fees and Expenses..........................................................115
SECTION 8.06. Eligibility Requirements for Trustee.................................................116
SECTION 8.07. Resignation and Removal of the Trustee...............................................116
SECTION 8.08. Successor Trustee....................................................................117
SECTION 8.09. Merger or Consolidation of Trustee...................................................118
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee........................................118
SECTION 8.11. Appointment of Office or Agency......................................................119
SECTION 8.12. Representations and Warranties of the Trustee........................................119
SECTION 8.13. Appointment of Custodians............................................................120
</TABLE>
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<PAGE>
ARTICLE IX
[RESERVED]
ARTICLE X
<TABLE>
<CAPTION>
TERMINATION
<S> <C> <C>
SECTION 10.01 Termination Upon Repurchase or Liquidation of All Mortgage Loans.
....................................................................................122
SECTION 10.02 Additional Termination Requirements..................................................124
ARTICLE XI
REMIC PROVISIONS
SECTION 11.01. REMIC Administration........................................................125
SECTION 11.02. Prohibited Transactions and Activities......................................128
SECTION 11.03. Master Servicer and Trustee Indemnification.................................128
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01. Amendment...................................................................129
SECTION 12.02. Recordation of Agreement; Counterparts......................................130
SECTION 12.03. Limitation on Rights of Certificateholders..................................130
SECTION 12.04. GOVERNING LAW...............................................................131
SECTION 12.05. Notices.....................................................................131
SECTION 12.06. Severability of Provisions..................................................132
SECTION 12.07. Notice to Rating Agencies...................................................133
SECTION 12.08. Article and Section References..............................................133
SECTION 12.09. Confirmation of Intent......................................................134
</TABLE>
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<PAGE>
EXHIBITS
EXHIBIT A-1 FORM OF CLASS A CERTIFICATE
EXHIBIT A-2 FORM OF CLASS M-1 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS M-2 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS B CERTIFICATE
EXHIBIT A-5 FORM OF CLASS C CERTIFICATE
EXHIBIT A-6 FORM OF CLASS [R-I] [R-II] [R-III] CERTIFICATE
EXHIBIT B-1 FORM OF TRUSTEE'S INITIAL CERTIFICATION
EXHIBIT B-2 FORM OF TRUSTEE FINAL CERTIFICATION
EXHIBIT C MORTGAGE LOAN PURCHASE AGREEMENT
EXHIBIT D-1 REQUEST FOR RELEASE (for Trustee/Custodian)
EXHIBIT D-2 REQUEST FOR RELEASE (Mortgage Loans Paid in Full)
EXHIBIT E-1 FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
EXHIBIT E-2 FORM OF TRANSFEROR CERTIFICATE
EXHIBIT F FORM OF INVESTOR REPRESENTATION LETTER
EXHIBIT G FORM OF TRANSFEROR REPRESENTATION LETTER
EXHIBIT H FORM OF RULE 144A INVESTMENT REPRESENTATION LETTER
EXHIBIT I CUSTODIAL AGREEMENT
EXHIBIT J FORM OF LOST NOTE AFFIDAVIT
EXHIBIT K FORM OF REMITTANCE REPORT
EXHIBIT L FORM OF SUBSEQUENT TRANSFER INSTRUMENT
EXHIBIT M FORM OF ADDITION NOTICE
EXHIBIT N FORM OF ACCOUNTANT'S LETTER
SCHEDULES
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SCHEDULE 1 MORTGAGE LOAN SCHEDULE
v
<PAGE>
This Pooling and Servicing Agreement, is dated and effective
as of October 1, 1998 among MERRILL LYNCH MORTGAGE INVESTORS, INC., as
Depositor, GOLDEN NATIONAL MORTGAGE BANKING CORP., as Initial Master Servicer,
LITTON LOAN SERVICING LP, as Subsequent Master Servicer, and THE CHASE MANHATTAN
BANK, as Trustee.
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates
(collectively, the "Certificates"), to be issued hereunder in multiple classes,
which in the aggregate will evidence the entire beneficial ownership interest in
each REMIC (as defined herein) created hereunder and in the Pre-Funding Account
and the Interest Coverage Account (each as defined herein).
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the Mortgage Loans and certain other
related assets subject to this Agreement (other than the Pre-Funding Account and
the Interest Coverage Account) as a REMIC for federal income tax purposes, and
such segregated pool of assets will be designated as "REMIC I." The Class R-I
Certificates will be the sole class of "residual interests" in REMIC I for
purposes of the REMIC Provisions. The following table irrevocably sets forth the
designation, the REMIC I Remittance Rate, the initial Uncertificated Balance
and, solely for purposes of satisfying Treasury regulation Section
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC I
Regular Interests. None of the REMIC I Regular Interests will be certificated.
REMIC I Initial Latest Possible
Designation Remittance Rate Uncertificated Balance Maturity Date(1)
----------- --------------- ---------------------- ----------------
I-LT1 Variable(2) $102,709,741.82 December 25, 2028
I-LT2 Variable(2) $852,880.00 December 25, 2028
I-LT3 Variable(2) $58,910.00 December 25, 2028
I-LT4 Variable(2) $58,340.00 December 25, 2028
I-LT5 Variable(2) $56,347.27 December 25, 2028
I-LT6 Variable(2) $1,071,639.91 December 25, 2028
- -----------------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each REMIC I Regular Interest.
(2) Calculated in accordance with the definition of "REMIC I Remittance Rate"
herein.
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC I Regular Interests as a REMIC
for federal income tax purposes, and such segregated pool of assets will be
designated as "REMIC II." The Class R-II Certificates will evidence the sole
class of "residual interests" in REMIC II for purposes of the REMIC Provisions.
The following table irrevocably sets forth the designation, the REMIC II
Remittance Rate, the initial Uncertificated Balance and, solely for purposes of
satisfying Treasury regulation Section
1
<PAGE>
1.860G-1(a)(4)(iii), the "latest possible maturity date" for each of the REMIC
II Regular Interests. None of the REMIC II Regular Interests will be
certificated.
REMIC II Initial Latest Possible
Designation Remittance Rate Uncertificated Balance Maturity Date(1)
----------- --------------- ---------------------- ----------------
II-LT1 Variable(2) $102,709,741.82 December 25, 2028
II-LT2 Variable(2) $852,880.00 December 25, 2028
II-LT3 Variable(2) $58,910.00 December 25, 2028
II-LT4 Variable(2) $58,340.00 December 25, 2028
II-LT5 Variable(2) $56,347.27 December 25, 2028
II-LT6 Variable(2) $1,071,639.91 December 25, 2028
II-LT2S Variable(2) (3) December 25, 2028
II-LT3S Variable(2) (3) December 25, 2028
II-LT4S Variable(2) (3) December 25, 2028
II-LT5S Variable(2) (3) December 25, 2028
- -----------------------------
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date
for the Mortgage Loan with the latest maturity date has been designated as
the "latest possible maturity date" for each REMIC II Regular Interest.
(2) Calculated in accordance with the definition of "REMIC II Remittance Rate"
herein.
(3) This REMIC II Regular Interest has no Uncertificated Principal Balance but
will accrue interest at the related REMIC II Remittance Rate on the related
Uncertificated Notional Amount, which is equal to the Uncertificated
Principal Balance of the Uncertificated Corresponding Component.
As provided herein, the Trustee will elect to treat the
segregated pool of assets consisting of the REMIC II Regular Interests as a
REMIC for federal income tax purposes, and such segregated pool of assets will
be designated as "REMIC III." The Class R-III Certificates will evidence the
sole class of "residual interests" in REMIC III for purposes of the REMIC
Provisions under federal income tax law. The following table irrevocably sets
forth the designation, the Pass- Through Rate, the initial aggregate Certificate
Principal Balance and, solely for purposes of satisfying Treasury regulation
Section 1.860G-1(a)(4)(iii), the "latest possible maturity date" for the
indicated Classes of Certificates.
<TABLE>
<CAPTION>
Initial Aggregate Latest Possible
Designation Pass-through Rate Certificate Principal Balance Maturity Date(1)
----------- ----------------- ----------------------------- ----------------
<S> <C> <C> <C>
Class A 6.675% $ 85,288,000.00 December 25, 2028
Class M-1 Variable(2) $ 5,891,000.00 December 25, 2028
Class M-2 Variable(2) $ 5,634,000.00 December 25, 2028
Class B Variable(2) $ 5,634,727.00 December 25, 2028
Class C Variable(2) $ 2,358,132.00(3) December 25, 2028
- -----------------------------
</TABLE>
2
<PAGE>
(1) Solely for purposes of Section 1.860G-1(a)(4)(iii) of the Treasury
regulations, the Distribution Date immediately following the maturity date
for the Mortgage Loans with the latest maturity date has been designated as
the "latest possible maturity date" for each Class of Certificates.
(2) Calculated in accordance with the definition of "Pass-Through Rate" herein.
(3) The Class C Certificates will accrue interest at their variable
Pass-Through Rate on the Notional Amount of the Class C Certificates
outstanding from time to time which shall equal the Uncertificated Balance
of the REMIC II Regular Interests. The Class C Certificates will not accrue
interest on their Certificate Principal Balance.
(4) Calculated in accordance with the definition of "Certificate Principal
Balance" herein.
As of the Cut-off Date, the Initial Mortgage Loans had an
aggregate Stated Principal Balance equal to $79,067,157.00. The amount deposited
by the Depositor in the Pre- Funding Account on the Closing Date is
$25,738,702.00.
In consideration of the mutual agreements herein contained,
the Depositor, the Master Servicer and the Trustee agree as follows:
3
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, including, without
limitation, in the Preliminary Statement hereto, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article. Unless otherwise specified, all calculations
described herein shall be made on the basis of a 360-day year consisting of
twelve 30-day months.
"Accrued Certificate Interest": With respect to each
Distribution Date, and any Class of Certificates, one month's interest accrued
at the related Pass-Through Rate on the Certificate Principal Balance thereof,
in the case of the Senior Certificates and Subordinate Certificates, or on the
Notional Amount thereof, in the case of the Class C Certificates, immediately
prior to such Distribution Date. Accrued Certificate Interest will be calculated
on the basis of a 360-day year consisting of twelve 30-day months. Accrued
Certificate Interest with respect to each Distribution Date, as to any Class A
Certificate, Subordinate Certificate or Class C Certificate, shall be reduced by
an amount equal to the portion allocable to such Certificate pursuant to Section
1.02 hereof of the sum of (a) the aggregate Prepayment Interest Shortfall, if
any, for such Distribution Date to the extent not covered by Compensating
Interest and (b) the aggregate amount of any Relief Act Interest Shortfall, if
any, for such Distribution Date. In addition, Accrued Certificate Interest with
respect to each Distribution Date, as to any Class C Certificate, shall be
reduced by an amount equal to the portion allocable to such Class C Certificate
of Realized Losses, if any, pursuant to Section 1.02 and Section 4.04 hereof.
"Addition Notice": With respect to the transfer of Subsequent
Mortgage Loans to the Trust Fund pursuant to Section 2.11, a notice of the
Depositor's designation of the Subsequent Mortgage Loans to be sold to the Trust
Fund and the aggregate principal balance of such Subsequent Mortgage Loans as of
the Subsequent Cut-off Date. The Addition Notice shall be given not later than
six Business Days prior to the related Subsequent Transfer Date and shall be
substantially in the form of Exhibit M.
"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.
"Agreement": This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
4
<PAGE>
"Assignment": An assignment of Mortgage, notice of transfer or
equivalent instrument, in recordable form, which is sufficient under the laws of
the jurisdiction wherein the related Mortgaged Property is located to reflect of
record the sale of the Mortgage.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title
11 of the United States Code), as amended.
"Book-Entry Certificate": The Class A Certificates, for so
long as the Certificates of such Class shall be registered in the name of the
Depository or its nominee.
"Business Day": Any day other than a Saturday, a Sunday or a
day on which banking or savings and loan institutions in the States of Texas,
Delaware or California, or in the city in which the Corporate Trust Office of
the Trustee is located, is authorized or obligated by
law or executive order to be closed.
"Cash-Out Refinancing": A Refinanced Mortgage Loan the
proceeds of which were more than the lesser of (i) $1,000, and (ii) 1%, of the
principal balance of any existing first mortgage or subordinate mortgage being
refinanced on the related Mortgaged Property and related
closing costs.
"Certificate": Any one of the Depositor's Mortgage Loan Asset
Backed Certificates, Series 1998-GN3, Class A, Class M-1, Class M-2, Class B,
Class C, Class R-I, Class R-II or Class R-III, issued under this Agreement.
"Certificate Factor": With respect to any Class of Regular
Certificates as of any Distribution Date, a fraction, expressed as a decimal
carried to six places, the numerator of which is the aggregate Certificate
Principal Balance (and in the case of the Class C Certificates, the Notional
Amount) of such Class of Certificates on such Distribution Date (after giving
effect to any distributions of principal and allocations of Realized Losses in
reduction of the Certificate Principal Balance (and in the case of the Class C
Certificates, the Notional Amount) of such Class of Certificates to be made on
such Distribution Date), and the denominator of which is the initial aggregate
Certificate Principal Balance (and in the case of the Class C Certificates, the
Notional Amount) of such Class of Certificates as of the Closing Date.
"Certificate Owner": With respect to a Book-Entry Certificate,
the Person who is the beneficial owner of such Certificate as reflected on the
books of the Depository or on the books of a Depository Participant or on the
books of an indirect participating brokerage firm for which a Depository
Participant acts as agent.
"Certificate Principal Balance": With respect to each Senior
Certificate, on any date of determination, an amount equal to (i) the initial
Certificate Principal Balance of such Certificate as specified on the face
thereof, minus (ii) the sum of (x) the aggregate of all amounts previously
distributed with respect to such Certificate (or any predecessor Certificate)
and applied to reduce the Certificate Principal Balance thereof pursuant to
Section 4.01 and (y) the aggregate of all reductions in Certificate Principal
Balance deemed to have occurred in connection with
5
<PAGE>
Realized Losses which were previously allocated to such Certificate (or any
predecessor Certificate) pursuant to Section 4.04. With respect to each
Subordinate Certificate, on any date of determination, an amount equal to (i)
the initial Certificate Principal Balance of such Certificate as specified on
the face thereof, minus (ii) the sum of (x) the aggregate of all amounts
previously distributed with respect to such Certificate (or any predecessor
Certificate) and applied to reduce the Certificate Principal Balance thereof
pursuant to Section 4.01 and (y) the aggregate of all reductions in Certificate
Principal Balance deemed to have occurred in connection with Realized Losses
which were previously allocated to such Certificate (or any predecessor
Certificate) pursuant to Section 4.04. With respect to each Class C Certificate,
on any date of determination, an amount equal to the Percentage Interest
evidenced by such Certificate times the excess, if any, of (A) the then
aggregate Uncertificated Balances of the REMIC II Regular Interests over (B) the
then aggregate Certificate Principal Balance of all Senior Certificates and
Subordinate Certificates then outstanding. The Class R Certificates have no
Certificate Principal Balance.
"Certificate Register" and "Certificate Registrar": The
register maintained and the registrar appointed pursuant to Section 5.02.
"Certificateholder" or "Holder": The Person in whose name a
Certificate is registered in the Certificate Register, except that a
"disqualified organization" (as defined in Section 860E(e)(5) of the Code) or a
Non-United States Person shall not be a Holder of a Residual Certificate for any
purposes hereof and, solely for the purposes of giving any consent pursuant to
this Agreement, any Certificate registered in the name of the Master Servicer or
any Affiliate thereof shall be deemed not to be outstanding and the Voting
Rights to which it is entitled shall not be taken into account in determining
whether the requisite percentage of Voting Rights necessary to effect any such
consent has been obtained, except as otherwise provided in Section 12.01. The
Trustee may conclusively rely upon a certificate of the Master Servicer in
determining whether a Certificate is held by an Affiliate thereof. All
references herein to "Holders" or "Certificateholders" shall reflect the rights
of Certificate Owners as they may indirectly exercise such rights through the
Depository and participating members thereof, except as otherwise specified
herein; PROVIDED, HOWEVER, that the Trustee shall be required to recognize as a
"Holder" or "Certificateholder" only the Person in whose name a Certificate is
registered in the Certificate Register.
"Class": Collectively, all of the Certificates bearing the
same class designation.
"Class A Certificate": Any one of the Class A Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-1 and
evidencing a Regular Interest in REMIC III for purposes of the REMIC Provisions.
"Class B Certificate": Any one of the Class B Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-4 and
evidencing a regular interest in REMIC III for purposes of the REMIC Provisions.
6
<PAGE>
"Class C Certificate": Any one of the Class C Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-5 and
evidencing a Regular Interest in REMIC III for purposes of the REMIC Provisions.
"Class Certificate Balance": As to any Class of Certificates
and any date of determination, the aggregate of the Certificate Principal
Balances of all Certificates of such Class as of such date of determination.
"Class M Certificate": Any one of the Class M-1 Certificates
and Class M-2 Certificates executed by the Trustee, and authenticated by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit A-3
and Exhibit A-4, respectively, and evidencing a Regular Interest in REMIC III
for purposes of the REMIC Provisions.
"Class R Certificate": Any one of the Class R-I, Class R-II
and Class R-III Certificates.
"Class R-I Certificate": Any one of the Class R-I Certificates
executed by the Trustee, and authenticated and delivered by the Certificate
Registrar, substantially in the form annexed hereto as Exhibit A-6 and
evidencing the Residual Interest in REMIC I for purposes of the REMIC
Provisions.
"Class R-II Certificate": Any one of the Class R-II
Certificates executed by the Trustee, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit A-6
and evidencing the Residual Interest in REMIC II for purposes of
the REMIC Provisions.
"Class R-III Certificates": Any one of the Class R-III
Certificates executed by the Trustee, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit A-6
and evidencing the Residual Interest in REMIC III for purposes of
the REMIC Provisions.
"Closing Date": October 30, 1998.
"Code": The Internal Revenue Code of 1986.
"Collection Account": The account or accounts created and
maintained by the Master Servicer pursuant to Section 3.10(a), which shall be
entitled "Litton Loan Servicing LP, as Master Servicer for The Chase Manhattan
Bank, as Trustee, in trust for registered holders of Golden National Mortgage
Loan Asset Backed Certificates, Series 1998-GN3," and which must be an Eligible
Account.
"Collection Period": With respect to any Mortgage Loan and
Distribution Date, the calendar month preceding any such Distribution Date.
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<PAGE>
"Compensating Interest ": On any Distribution Date, payments
made by the Master Servicer in satisfaction of its obligation to offset any
Prepayment Interest Shortfall on such Distribution Date pursuant to Section
3.23.
"Corporate Trust Office": The corporate trust office of the
Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is set forth in Section 12.05 hereof, or at
such other address as the Trustee may designate from time to time by notice to
the Certificateholders, the Depositor and the Master Servicer.
"Corresponding Certificate": With respect to REMIC I Regular
Interests I-LT2, REMIC I Regular Interests I-LT3, REMIC I Regular Interests
I-LT4 and REMIC I Regular Interests I-LT5, the Class A Certificates, Class M-1
Certificates, Class M-2 Certificates and Class B Certificates, respectively.
With respect to REMIC II Regular Interest II-LT2, REMIC II Regular Interest
II-LT3, REMIC II Regular Interest II-LT4 and REMIC II Regular Interest II-LT5,
the Class A Certificates, Class M-1 Certificates, Class M-2 Certificates and
Class B Certificates, respectively.
"Credit Bureau Risk Score": As to any Mortgage Loan, the
statistical rating of likely future credit performance of such Mortgage Loan
determined on the basis of the methodology developed by either Fair, Issac &
Company or Beacon.
"Curtailment": Any Principal Prepayment made by a Mortgagor
which is not a Principal Prepayment in Full.
"Custodial Agreement": An agreement that may be entered into
among the Initial Master Servicer, the Subsequent Master Servicer, the Trustee
and a Custodian in substantially the form of Exhibit I hereto.
"Custodian": A custodian appointed pursuant to a Custodial
Agreement.
"Cut-off Date": With respect to each Initial Mortgage Loan,
the later of the close of business on October 1, 1998 and the date of the
related Mortgage Note. With respect to all Qualified Substitute Mortgage Loans,
the close of business on the first day of the calendar month in which the
substitution occurs. References herein to the "Cut-off Date," when used with
respect to more than one Mortgage Loan, shall be to the respective Cut-off Dates
for such Mortgage Loans.
"Cut-off Date Pool Principal Balance": The sum of the Stated
Principal Balances of the Initial Mortgage Loans as of their respective Cut-off
Dates.
"Cut-off Date Principal Balance": As to any Mortgage Loan, the
unpaid principal balance thereof at the Cut-off Date after giving effect to all
installments of principal due on or prior thereto, whether or not received.
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"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction resulting from a Deficient Valuation.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.
"Definitive Certificates": As defined in Section 5.01(b).
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be
replaced by a Qualified Substitute Mortgage Loan.
"Delinquency Event": On any Distribution Date a Delinquency
Event is in effect if the Three-Month Rolling Delinquency Average is greater
than the Overcollateralization Amount as of such date.
"Delinquent": A Mortgage Loan is Delinquent if the Monthly
Payment due on a Due Date is not paid on or before the next succeeding Due Date,
at which time, such Mortgage Loan is 30 days Delinquent. If the Monthly Payment
due on a Due Date is not paid on or before the second or third succeeding Due
Date, such Mortgage Loan is 60 or 90 days Delinquent, respectively.
"Depositor": Merrill Lynch Mortgage Investors, Inc., a
Delaware corporation, or its successor in interest.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository, for purposes
of registering those Certificates that are to be Book-Entry Certificates, is
CEDE & Co. The Depository shall at all times be a "clearing corporation" as
defined in Section 8-102(3) of the Uniform Commercial Code of the State of New
York and a "clearing agency" registered pursuant to the provisions of Section
17A of the Securities Exchange Act of 1934, as amended.
"Depository Institution": Any depository institution or trust
company, including the Trustee, that (a) is incorporated under the laws of the
United States of America or any State thereof, (b) is subject to supervision and
examination by federal or state banking authorities and (c) has outstanding
unsecured commercial paper or other short-term unsecured debt obligations (or,
in the case of a depository institution that is the principal subsidiary of a
holding company, such holding company has unsecured commercial paper or other
short-term unsecured debt obligations) that are rated at least A-1 by S&P (or
comparable ratings if S&P are not the Rating Agencies).
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"Depository Participant": A broker, dealer, bank or other
financial institution or other Person for whom from time to time a Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
"Determination Date": With respect to each Distribution Date,
the 18th day of the calendar month in which such Distribution Date occurs or, if
such 18th day is not a Business Day, the Business Day immediately preceding such
18th day.
"Directly Operate": With respect to any REO Property, the
furnishing or rendering of services to the tenants thereof, the management or
operation of such REO Property, the holding of such REO Property primarily for
sale to customers, the performance of any construction work thereon or any use
of such REO Property in a trade or business conducted by REMIC I other than
through an Independent Contractor; PROVIDED, HOWEVER, that the Trustee (or the
Master Servicer on behalf of the Trustee) shall not be considered to Directly
Operate an REO Property solely because the Trustee (or the Master Servicer on
behalf of the Trustee) establishes rental terms, chooses tenants, enters into or
renews leases, deals with taxes and insurance, or makes decisions as to repairs
or capital expenditures with respect to such REO Property.
"Disqualified Organization": Any of the following: (i) the
United States, any State or political subdivision thereof, any possession of the
United States, or any agency or instrumentality of any of the foregoing (other
than an instrumentality which is a corporation if all of its activities are
subject to tax and, except for the FHLMC, a majority of its board of directors
is not selected by such governmental unit), (ii) any foreign government, any
international organization, or any agency or instrumentality of any of the
foregoing, (iii) any organization (other than certain farmers' cooperatives
described in Section 521 of the Code) which is exempt from the tax imposed by
Chapter 1 of the Code (including the tax imposed by Section 511 of the Code on
unrelated business taxable income), (iv) rural electric and telephone
cooperatives described in Section 1381(a)(2)(C) of the Code and (v) any other
Person so designated by the Trustee based upon an Opinion of Counsel, which
Opinion of Counsel shall not be an expense of the Trust Fund or the Trustee,
that the holding of an Ownership Interest in a Residual Certificate by such
Person may cause REMIC I, REMIC II or REMIC III or any Person having an
Ownership Interest in any Class of Certificates (other than such Person) to
incur a liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the Transfer of an Ownership Interest in a Residual
Certificate to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code or successor provisions.
"Distribution Account": The trust account or accounts created
and maintained by the Trustee pursuant to Section 3.10(b) which shall be
entitled "The Chase Manhattan Bank, as Trustee, in trust for registered holders
of Golden National Mortgage Loan Asset Backed Certificates, Series 1998-GN3,"
which must be an Eligible Account.
"Distribution Date": The 25th day of any month beginning in
the month immediately following the month of the initial issuance of the
Certificates or, if such 25th day is not a Business Day, the Business Day
immediately following such 25th day.
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"Due Date": With respect to any Mortgage Loan, the day of the
month the Monthly Payment is due as set forth in the related Mortgage Note and
which date is during the Collection Period related to such Distribution Date.
"Due Period": With respect to any Distribution Date, the
period commencing on the opening of business on the second day of the month
preceding the month in which such Distribution Date occurs and ending on the
close of business on the first day of the month in which
such Distribution Date occurs.
"Eligible Account": Any of (i) an account or accounts
maintained with a federal or state chartered depository institution or trust
company the short-term unsecured debt obligations of which (or, in the case of a
depository institution or trust company that is the principal subsidiary of a
holding company, the short-term unsecured debt obligations of such holding
company) are rated at least A-1 by S&P and at least P-1 (or, in the case of
long-term unsecured debt obligations, at least A-2) by Moody's (or comparable
ratings if S&P and Moody's are not the Rating Agencies) at the time any amounts
are held on deposit therein, (ii) an account or accounts the deposits in which
are fully insured by the FDIC or (iii) a trust account or accounts maintained
with the trust department of a federal or state chartered depository institution
or trust company acting in its fiduciary capacity. Eligible Accounts may bear
interest.
"Estate in Real Property": A fee simple estate in a parcel of
land.
"Excess Overcollateralization Amount": With respect to the
Class A Certificates and Subordinate Certificates and any Distribution Date, the
excess if any of (i) the Overcollateralization Amount for such Distribution Date
over (ii) the Required Overcollateralization Amount for such Distribution Date.
"Extra Principal Distribution Amount": As of any Distribution
Date, the lesser of (x) the Net Monthly Excess Cash Flow for such Distribution
Date and (y) the excess, if any, of (i) the Required Overcollateralization
Amount for such Distribution Date over (ii) the Overcollateralization Amount
(calculated for this purpose after taking into account the reduction on such
Distribution Date of the Certificate Principal Balances of all Classes of
Certificates resulting from the distribution of the Principal Remittance Amount)
for such Distribution Date.
"FDIC": Federal Deposit Insurance Corporation or any
successor thereto.
"FHLMC": Federal Home Loan Mortgage Corporation or any
successor thereto.
"Final Recovery Determination": With respect to any defaulted
Mortgage Loan or any REO Property (other than a Mortgage Loan or REO Property
purchased by the Mortgage Loan Seller, the Depositor or the Master Servicer
pursuant to or as contemplated by Section 2.03, 3.15(c) or 10.01), a
determination made by the Master Servicer that all Insurance Proceeds,
Liquidation Proceeds and other payments or recoveries which the Master Servicer,
in its reasonable good faith judgment, expects to be finally recoverable in
respect thereof have been so
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recovered. The Master Servicer shall maintain records, prepared by a Servicing
Officer of the Master Servicer, of each Final Recovery Determination made
thereby.
"First Stepdown Date": The later to occur of (x) the
Distribution Date in November 2001 and (y) the first Distribution Date on which
the Senior Enhancement Percentage (calculated for this purpose only after taking
into account principal payments received on the Mortgage Loans that will be
distributed on such Distribution Date, but prior to any payment of the Principal
Distribution Amount to the Offered Certificates) is greater than or equal to the
Senior Specified Enhancement Percentage.
"First Union": First Union National Bank or any successor
thereto.
"FNMA": Fannie Mae or any successor thereto.
"Funding Period": The period beginning on the Closing Date and
ending on the earlier of (a) the date on which the amount on deposit in the
Pre-Funding Account is reduced to zero or (b) 2:00 p.m., New York City time, on
November 30, 1998.
"Independent": When used with respect to any specified
Person, any such Person who (a) is in fact independent of the Depositor, the
Master Servicer and their respective Affiliates, (b) does not have any direct
financial interest in or any material indirect financial interest in the
Depositor or the Master Servicer or any Affiliate thereof, and (c) is not
connected with the Depositor or the Master Servicer or any Affiliate thereof as
an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions; provided, however, that a Person shall not
fail to be Independent of the Depositor or the Master Servicer or any Affiliate
thereof merely because such Person is the beneficial owner of 1% or less of any
class of securities issued by the Depositor or the Master Servicer or any
Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than
the Master Servicer) that would be an "independent contractor" with respect to
REMIC I within the meaning of Section 856(d)(3) of the Code if REMIC I were a
real estate investment trust (except that the ownership tests set forth in that
section shall be considered to be met by any Person that owns, directly or
indirectly, 35 percent or more of any Class of Certificates), so long as REMIC I
does not receive or derive any income from such Person and provided that the
relationship between such Person and REMIC I is at arm's length, all within the
meaning of Treasury Regulation Section 1.856- 4(b)(5), or (ii) any other Person
(including the Master Servicer) if the Trustee has received an Opinion of
Counsel, which Opinion of Counsel shall not be at the expense of the Trust Fund
or the Trustee, to the effect that the taking of any action in respect of any
REO Property by such Person, subject to any conditions therein specified, that
is otherwise herein contemplated to be taken by an Independent Contractor will
not cause such REO Property to cease to qualify as "foreclosure property" within
the meaning of Section 860G(a)(8) of the Code (determined without regard to the
exception applicable for purposes of Section 860D(a) of the Code), or cause any
income realized in respect of such REO Property to fail to qualify as Rents from
Real Property.
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"Initial Certificate Principal Balance": With respect to each
Class of Certificates, the Certificate Principal Balance of such Class of
Certificates as of the Cut-off Date as set forth in the Preliminary Statement
hereto.
"Initial Master Servicer": Golden National Mortgage Banking
Corp., a New York corporation.
"Initial Mortgage Loan": Any of the Mortgage Loans included in
REMIC I as of the Closing Date, all of which shall be "qualified mortgages"
within the meaning of Section 860G(a)(3)(A) of the Code.
"Insurance Proceeds": Proceeds of any title policy, hazard
policy or other insurance policy covering a Mortgage Loan, to the extent such
proceeds are not to be applied to the restoration of the related Mortgaged
Property or released to the Mortgagor in accordance with the procedures that the
Master Servicer would follow in servicing mortgage loans held for its own
account, subject to the terms and conditions of the related Mortgage Note and
Mortgage.
"Interest Carry Forward Amount": With respect to each class of
Offered Certificates and each Distribution Date, the sum of (x) the amount, if
any, by which (i) the sum of the Accrued Certificate Interest and all prior
unpaid Interest Carry Forward Amounts for such Class as of the immediately
preceding Distribution Date exceeded (ii) the amount of the actual distribution
with respect to interest made to the Holders of such Class of Offered
Certificates on such immediately preceding Distribution Date plus (y) interest
on such amount calculated for the related calendar month at the related
Pass-Through Rate with respect to such Class of Offered Certificates.
"Interest Coverage Account": The account established and
maintained pursuant to Section 4.08, as defined therein.
"Interest Coverage Amount": The amount to be paid by the
Depositor to the Trustee for deposit into the Interest Coverage Account on the
Closing Date pursuant to Section 4.08, which amount is $97,612.60.
"Interest Remittance Amount": With respect to any
Distribution Date, the sum of the following:
(i) the interest portion of each Monthly Payment due on the related Due
Date and received on or prior to the related Determination Date,
together with all Monthly Advances relating to interest on each
Outstanding Mortgage Loan, after deduction of the related Master
Servicing Fees and Trustee's Fees;
(ii) the interest portion of all other unscheduled collections
(including, without limitation, Insurance Proceeds, Liquidation
Proceeds and REO Dispositions) received during the related Collection
Period (or deemed to have been so received) to the extent applied by
the Master Servicer as recoveries of interest on the related Mortgage
Loan; and
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(iii) any amount removed from the Interest Coverage Account pursuant to
Section 4.08 hereof.
"Late Collections": With respect to any Mortgage Loan, all
amounts received subsequent to the Determination Date immediately following any
Collection Period, whether as late payments of Monthly Payments or as Insurance
Proceeds, Liquidation Proceeds or otherwise, which represent late payments or
collections of principal and/or interest due (without regard to any acceleration
of payments under the related Mortgage and Mortgage Note) but delinquent for
such Collection Period and not previously recovered.
"Lender PMI Loans": Any Mortgage Loan for which the Primary
Insurance Policy is required to be paid by the originator or other party other
than the related Mortgagor, as indicated on the Mortgage Loan Schedule.
"Lender PMI Loan Rate": The rate per annum at which the
premium on the Primary Insurance Policy for the Lender PMI Loans accrues, as
indicated on the Mortgage Loan Schedule.
"Liquidation Event": With respect to any Mortgage Loan, any of
the following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such Mortgage
Loan is removed from REMIC I by reason of its being purchased, sold or replaced
pursuant to or as contemplated by Section 2.03, Section 3.15(c) or Section
10.01. With respect to any REO Property, either of the following events: (i) a
Final Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from the Trust Fund by reason of its being purchased
pursuant to Section 10.01.
"Liquidation Proceeds": The amount (other than Insurance
Proceeds or amounts received in respect of the rental of any REO Property prior
to REO Disposition) received by the Master Servicer in connection with (i) the
taking of all or a part of a Mortgaged Property by exercise of the power of
eminent domain or condemnation, (ii) the liquidation of a defaulted Mortgage
Loan by means of a trustee's sale, foreclosure sale or otherwise, or (iii) the
repurchase, substitution or sale of a Mortgage Loan or an REO Property pursuant
to or as contemplated by Section 2.03, Section 3.15(c), Section 3.22 or Section
10.01.
"Loan-to-Value Ratio": As of any date of determination, the
fraction, expressed as a percentage, the numerator of which is the principal
balance (including financing fees included in such principal balance) of the
related Mortgage Loan at such date and the denominator of which is the Value of
the related Mortgaged Property.
"Lost Note Affidavit": With respect to any Mortgage Loan as to
which the original Mortgage Note has been permanently lost or destroyed and has
not been replaced, an affidavit from the Mortgage Loan Seller certifying that
the original Mortgage Note has been lost, misplaced or destroyed (together with
a copy of the related Mortgage Note) in the form of Exhibit J hereto.
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"Majority Class R Certificateholder": Any single Holder of
Class R Certificates representing a greater than 50% Percentage Interest in such
Class.
"Master Servicer": From the Cut-off Date to the Master
Servicing Transfer Date, the Initial Master Servicer, or any successor master
servicer appointed as herein provided, in its capacity as Master Servicer
hereunder. Commencing on the Master Servicing Transfer Date, the Subsequent
Master Servicer, or any successor master servicer appointed as herein provided,
in its capacity as Master Servicer hereunder.
"Master Servicer Remittance Date": With respect to any
Distribution Date,12:00 p.m. New York time on the Business Day immediately prior
to such Distribution Date.
"Master Servicing Fee": With respect to each Mortgage Loan and
for any calendar month, an amount equal to one month's interest (or in the event
of any payment of interest which accompanies a Principal Prepayment in full made
by the Mortgagor during such calendar month, interest for the number of days
covered by such payment of interest) at the Master Servicing Fee Rate on the
same principal amount on which interest on such Mortgage Loan accrues for such
calendar month.
"Master Servicing Fee Rate": 0.25% per annum; PROVIDED,
HOWEVER, that if a successor to the Master Servicer (other than the Trustee) is
to be appointed as provided in Section 7.02, the Master Servicing Fee Rate shall
be reduced (but not below zero) to the extent that such reduction is necessary
to engage such successor to the Master Servicer (other than the Trustee).
"Master Servicing Transfer Date": The earlier of (i) the
close of business on November 11, 1998 and (ii) the first date on which a
Servicing Termination Event is in effect with respect to the Initial Master
Servicer.
"Maximum I-LT6 Uncertificated Interest Deferral Amount": With
respect to any Distribution Date, the excess of (i) accrued interest at the
REMIC I Remittance Rate applicable to REMIC I Regular Interest I-LT6 for such
Distribution Date on a balance equal to the Uncertificated Balance of REMIC I
Regular Interest I-LT6 minus the REMIC I Overcollateralized Amount, in each case
for such Distribution Date, over (ii) Uncertificated Interest on REMIC II
Regular Interest II-LT2, REMIC II Regular Interest II-LT3, REMIC II Regular
Interest II-LT4 and REMIC II Regular Interest II-LT5 for such Distribution Date.
"Monthly Advance": As to any Mortgage Loan or REO Property,
any advance made by the Master Servicer in respect of any Distribution Date
pursuant to Section 4.03.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation and/or
Debt Service Reduction with respect to such Mortgage Loan and (ii) any reduction
in the amount of interest collectible from the related Mortgagor pursuant to the
Relief Act; (b) without giving effect to any extension granted or agreed to by
the Master
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Servicer pursuant to Section 3.07; and (c) on the assumption that all other
amounts, if any, due under such Mortgage Loan are paid when due.
"Moody's": Moody's Investors Service, Inc., or its successor
in interests.
"Mortgage": The mortgage, deed of trust or other instrument
creating a first lien on, or first priority security interest in, a Mortgaged
Property securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section
2.01 pertaining to a particular Mortgage Loan and any additional documents
required to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned
to the Trustee pursuant to Section 2.01 or Section 2.03(b) or pursuant to a
Subsequent Transfer Instrument, as from time to time held as a part of the Trust
Fund, the Mortgage Loans so held being identified in the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The agreement between the
Mortgage Loan Seller and the Depositor, regarding the transfer of the Mortgage
Loans by the Mortgage Loan Seller to or at the direction of the Depositor,
substantially in the form of Exhibit C annexed hereto.
"Mortgage Loan Schedule": As of any date, the list of Mortgage
Loans included in REMIC I on such date as supplemented by each schedule of
Subsequent Mortgage Loans attached to a Subsequent Transfer Instrument. The
Mortgage Loan Schedule shall set forth the
following information with respect to each Mortgage Loan:
1. the Mortgage Loan Seller's Mortgage Loan identifying
number;
2. the Mortgagor's name;
3. the street address of the Mortgaged Property
including the state and zip code;
4. a code indicating whether the Mortgaged Property is
owner-occupied;
5. the Mortgage Rate set forth in the related Mortgage
Note;
6. the type of Residential Dwelling constituting the
Mortgaged Property;
7. the original months to maturity;
8. the remaining months to stated maturity from the
Cut-Off Date (or Subsequent Cut-off Date, with
respect to a Subsequent Mortgage Loan) based on the
original amortization schedule;
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9. the Loan-to-Value Ratio at origination;
10. (A) the date on which the first Monthly Payment was
due on the Mortgage Loan and, (B) if such date is not
consistent with the Due Date currently in effect,
such Due Date;
11. the stated maturity date;
12. the amount of the Monthly Payment;
13. the last Due Date on which a Monthly Payment was
actually applied to the unpaid Principal Balance;
14. the original principal amount of the Mortgage Loan;
15. the outstanding principal balance of the Mortgage
Loan as of the close of business on the Cut-off Date
(or Subsequent Cut-off Date, with respect to a
Subsequent Mortgage Loan);
16. a code indicating the purpose of the Mortgage Loan
(i.e., purchase financing, Rate/Term Refinancing,
Cash-Out Refinancing);
17. a code indicating the documentation style program;
18. the risk grade or Credit Bureau Risk Score;
19. the Value of the Mortgaged Property;
20. the prepayment penalty term;
21. whether the Mortgage Loan has a due-on-sale clause;
and
22. whether the Mortgage Loan is a Lender PMI Loan and
the related Lender PMI Loan Rate.
The Mortgage Loan Schedule shall set forth the following
information, as of the Cut-off Date (or Subsequent Cut-off Date, with respect to
the Subsequent Mortgage Loans) with respect to the Mortgage Loans in the
aggregate: (1) the number of Mortgage Loans; (2) the current principal balance
of the Mortgage Loans; (3) the weighted average Mortgage Rate of the Mortgage
Loans; and (4) the weighted average maturity of the Mortgage Loans. The Mortgage
Loan Schedule shall be amended from time to time by the Depositor in accordance
with the provisions of this Agreement. With respect to any Qualified Substitute
Mortgage Loan, Cut-off Date shall refer to the related Cut-off Date for such
Mortgage Loan, determined in accordance with the definition of Cut-off Date
herein.
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"Mortgage Loan Seller": Golden National Mortgage Banking
Corp., or its successor in interest, in its capacity as seller under the
Mortgage Loan Purchase Agreement and the Subsequent Mortgage Loan Purchase
Agreement.
"Mortgage Note": The original executed note or other evidence
of indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage
Loan.
"Mortgage Pool": The pool of Mortgage Loans, identified on the
Mortgage Loan Schedule from time to time, and any REO Properties acquired in
respect thereof.
"Mortgage Rate": With respect to each Mortgage Loan, the
annual rate at which interest accrues on such Mortgage Loan in accordance with
the provisions of the related Mortgage Note. With respect to each Mortgage Loan
that becomes an REO Property, as of any date of determination, the annual rate
determined in accordance with the immediately preceding sentence as of the date
such Mortgage Loan became an REO Property.
"Mortgaged Property": The underlying property securing a
Mortgage Loan, including any REO Property, consisting of an Estate in Real
Property improved by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Monthly Excess Cash Flow": For any Distribution Date, the
sum of the Net Monthly Excess Interest Amount as determined pursuant to Section
4.01(c)(v) and the Net Monthly Excess Principal Amount for such Distribution
Date as determined pursuant to Section 4.01(d)(v), 4.01(e)(v) or 4.01(f)(v). Net
Monthly Excess Cash Flow shall be allocated on each Distribution Date in
accordance with the priorities set forth in Section 4.01(g).
"Net Monthly Excess Interest Amount": For any Distribution
Date, the amount as defined in Section 4.01(c)(v).
"Net Monthly Excess Principal Amount": With respect to any
Distribution Date prior to the First Stepdown Date and the Second Stepdown Date
or for which a Trigger Event is in effect, the amount as defined in Section
4.01(d)(v). With respect to any Distribution Date on or after the First Stepdown
Date for which a Trigger Event is not in effect, the amount as defined in
Section 4.01(e)(v). With respect to any Distribution Date on or after the Second
Stepdown Date for which a Trigger Event is not in effect and so long as the
First Stepdown Date did not occur and is not continuing, the amount as defined
in Section 4.01(f)(v).
"Net Mortgage Rate": As to each Mortgage Loan (or the related
REO Property), a per annum rate of interest equal to the applicable Mortgage
Rate less the sum of (i) the Master Servicing Fee Rate, (ii) the Trustee's Fee
Rate and (iii) with respect to the Lender PMI Loans, the related Lender PMI Loan
Rate.
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"Net WAC Pass-Through Rate": With respect to the REMIC I
Regular Interests, REMIC II Regular Interests (other than REMIC II Regular
Interest II-LT2) and the Subordinate Certificates, and any Distribution Date,
the weighted average of the Net Mortgage Rates on the then outstanding Mortgage
Loans and REO Properties.
"New Lease": Any lease of REO Property entered into on behalf
of the Trust Fund, including any lease renewed or extended on behalf of the
Trust Fund if the Trust Fund has the right to renegotiate the terms of such
lease.
"Nonrecoverable Advance": Any Monthly Advance or Servicing
Advance previously made or proposed to be made in respect of a Mortgage Loan or
REO Property that, in the good faith business judgment of the Master Servicer,
will not or, in the case of a proposed Monthly Advance or Servicing Advance,
would not be ultimately recoverable from related late payments, Insurance
Proceeds or Liquidation Proceeds on such Mortgage Loan or REO Property as
provided herein.
"Nonsubserviced Mortgage Loan": Any Mortgage Loan that, at
the time of reference thereto, is not subject to a Subservicing Agreement.
"Notional Amount": With respect to the Class C Certificates,
for any Distribution Date, the aggregate Uncertificated Balance of the REMIC II
Regular Interests for such Distribution Date.
"Non-United States Person": Any Person other than a United
States Person.
"Offered Certificates": The Class A Certificates, the Class M
Certificates and the Class B Certificates.
"Officers' Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Master
Servicer, the Mortgage Loan Seller or the Depositor, as applicable.
"Opinion of Counsel": A written opinion of counsel, who may,
without limitation, be salaried counsel for the Depositor or the Master Servicer
acceptable to the Trustee, except that any opinion of counsel relating to (a)
the qualification of the Trust Fund as a REMIC or (b) compliance with the REMIC
Provisions must be an opinion of Independent counsel.
"Original Pre-Funded Amount": The amount deposited by the
Depositor in the Pre- Funding Account on the Closing Date, which amount is
$25,738,702.00.
"Outstanding Mortgage Loan": As to any Due Date, a Mortgage
Loan (including an REO Property) which was not the subject of a Principal
Prepayment in Full, Final Recovery Determination or REO Disposition and which
was not purchased, deleted or substituted for prior to such Due Date pursuant to
this Agreement.
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"Overcollateralization Amount": As of any Distribution Date,
the excess, if any, of (a) the sum of the aggregate Stated Principal Balance of
the Mortgage Loans and the Pre- Funded Amount as of the end of the immediately
preceding Due Period over (b) the Certificate Principal Balance of the Offered
Certificates as of such Distribution Date (after taking into account the payment
to the Offered Certificates of the Principal Distribution Amount).
"Overcollateralization Reduction Amount": With respect to any
Distribution Date, an amount equal to the lesser of (a) the Excess
Overcollateralization Amount and (b) the sum of the amounts available for
distribution specified in clauses (i) through (iii) of the definition of
Principal Remittance Amount.
"Ownership Interest": As to any Certificate, any ownership or
security interest in such Certificate, including any interest in such
Certificate as the Holder thereof and any other interest therein, whether direct
or indirect, legal or beneficial, as owner or as pledgee.
"Pass-Through Rate": With respect to the Class A Certificates
and any Distribution Date, the per annum rate set forth in the preliminary
statement hereto; and with respect to the Subordinate Certificates and any
Distribution Date, a rate per annum equal to the lesser of (i) in the case of
the Class M-1 Certificates, 7.645% per annum, in the case of the Class M-2
Certificates, 7.850% per annum, and in the case of the Class B Certificates,
7.850% per annum, and (ii) the Net WAC Pass-Through Rate for such Distribution
Date. With respect to the Class C Certificates and any Distribution Date, a rate
per annum equal to the percentage equivalent of a fraction, the numerator of
which is the sum of the amounts calculated pursuant to clauses (i) through (x)
below, and the denominator of which is the Uncertificated Balance of the REMIC
II Regular Interests. For purposes of calculating the Pass-Through Rate for the
Class C Certificates, the numerator is equal to the sum of the following
components:
(i) the REMIC II Remittance Rate for REMIC II Regular Interest
II-LT1 minus two (2) times the weighted average of the REMIC II
Remittance Rates for REMIC II Regular Interest II-LT2, REMIC II
Regular Interest II-LT3, REMIC II Regular Interest II-LT4, REMIC II
Regular Interest II-LT5 and REMIC II Regular Interest II-LT6, with the
rate on REMIC II Regular Interest II-LT6 equal to zero for the purpose
of this calculation, applied to an Uncertificated Notional Amount
equal to the Uncertificated Principal Balance of REMIC II Regular
Interest II-LT1;
(ii) the weighted average of the REMIC II Remittance Rates for
REMIC II Regular Interest II-LT2, REMIC II Regular Interest II-LT3,
REMIC II Regular Interest II-LT4 and REMIC II Regular Interest II-LT5
minus two (2) times the weighted average of the REMIC II Remittance
Rates for REMIC II Regular Interest II-LT2, REMIC II Regular Interest
II-LT3, REMIC II Regular Interest II-LT4, REMIC II Regular Interest
II-LT5 and REMIC II Regular Interest II-LT6, with the rate on REMIC II
Regular Interest II-LT6 equal to zero for the purpose of this
calculation, applied to an Uncertificated Notional Amount equal to the
sum of the Uncertificated Balances of REMIC II Regular Interest II-LT2,
REMIC II Regular Interest II-LT3, REMIC II Regular Interest II-LT4 and
REMIC II Regular Interest II-LT5;
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(iii) the REMIC II Remittance Rate for REMIC II Regular
Interest II-LT6 minus two (2) times the weighted average of the REMIC
II Remittance Rates for REMIC II Regular Interests II-LT2, REMIC II
Regular Interest II-LT3, REMIC II Regular Interest II-LT4, REMIC II
Regular Interest II-LT5 and REMIC II Regular Interest II-LT6, with the
rate on REMIC II Regular Interest II-LT6 equal to zero for the purpose
of this calculation, applied to an Uncertificated Notional Amount equal
to the Uncertificated Principal Balance of REMIC II Regular Interest
II-LT6;
(iv) 100% of the interest on REMIC II Regular Interest
II-LT2S;
(v) 100% of the interest on REMIC II Regular Interest
II-LT3S;
(vi) 100% of the interest on REMIC II Regular Interest
II-LT4S; and
(vii) 100% of the interest on REMIC II Regular Interest
II-LT5S.
"Percentage Interest": With respect to each Class of
Certificates, the undivided percentage ownership in such Class evidenced by such
Certificate, expressed as a percentage, the numerator of which is the initial
Certificate Principal Balance represented by such Certificate and the
denominator of which is the initial Class Certificate Balance of such Class. The
Class A Certificates, Class M Certificates, and Class B Certificates are
issuable only in minimum Percentage Interests corresponding to minimum initial
Certificate Principal Balances of $100,000 and increments of $1,000 in excess
thereof. The Class C Certificates are issuable only in minimum Percentage
Interests corresponding to minimum initial Notional Amounts of $1,000 and
increments of $1.00 in excess thereof; provided, however, that a single
certificate of such Class of Certificates may be issued having a Percentage
Interest corresponding to the remainder of the aggregate initial Notional Amount
of such Class or to an otherwise authorized denomination for such Class plus
such remainder. With respect to any Class R Certificate, the undivided
percentage ownership in such Class evidenced by such Certificate, as set forth
on the face of such Class R Certificate. The Class R Certificates are issuable
only in minimum Percentage Interests of 25%.
"Permitted Investments": Any one or more of the following
obligations or securities acquired at a purchase price of not greater than par,
regardless of whether issued by the Depositor, the Master Servicer, the Trustee
or any of their respective Affiliates:
(i) direct obligations of, or obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States, provided,
however, that any obligation of, or guaranteed by, FHLMC or FNMA, other
than a senior debt or a mortgage participation or pass-through
certificate guaranteed by FHLMC or FNMA shall be a Permitted
Investment.
(ii) demand and time deposits in, certificates of deposit of,
or bankers' acceptances issued by, any Depository Institution;
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(iii) repurchase obligations with respect to any security
described in clause (i) above entered into with a Depository
Institution (acting as principal);
(iv) securities bearing interest or sold at a discount that
are issued by any corporation incorporated under the laws of the United
States of America or any State thereof and that are rated by each
Rating Agency in its highest long-term unsecured rating categories at
the time of such investment or contractual commitment providing for
such investment;
(v) commercial paper (including both non-interest-bearing
discount obligations and interest-bearing obligations payable on demand
or on a specified date not more than 30 days after the date of
acquisition thereof) that is rated by each Rating Agency in its highest
short-term unsecured debt rating available at the time of such
investment;
(vi) units of money market funds that have been rated "AAA" by
S&P, including any such funds for which the Trustee or any Affiliate
thereof receives compensation with respect to such investment; and
(viii) if previously confirmed in writing to the Trustee, any
other demand, money market or time deposit, or any other obligation,
security or investment, as may be acceptable to the Rating Agencies as
a permitted investment of funds backing securities that
have been rated "AAA" by S&P;
provided that no instrument described hereunder shall either (i) be a swap
agreement or other notional principal contract or (ii) evidence either the right
to receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provide a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations.
"Permitted Transferee": Any Transferee of a Residual
Certificate other than a Disqualified Organization, an "electing large
partnership" (as described in Section 775(a) of the Code) or Non-United States
Person.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pre-Funded Amount": As of any date of determination, the
amount, if any, on deposit in the Pre-Funding Account.
"Pre-Funding Account": The account established and maintained
pursuant to Section 4.07, as defined therein.
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"Prepayment Assumption": A 100% Prepayment Assumption assumes
a constant prepayment rate ("CPR") of 4.0% per annum of the then outstanding
principal balance of such mortgage loans in the first month of the life of the
mortgage loans and an additional 1.090909% per annum in each month thereafter
until the twelfth month. Beginning in the twelfth month and in each month
thereafter during the life of the mortgage loans, a 100% Prepayment Assumption
assumes a CPR of 16.0% per annum each month. The Prepayment Assumption is used
solely for determining the accrual of original issue discount on the
Certificates for federal income tax purposes. A CPR (or Constant Prepayment
Rate) represents an annualized constant assumed rate of prepayment each month of
a pool of mortgage loans relative to its outstanding principal balance for the
life of such pool.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was the subject of a Principal
Prepayment in full or in part that was received and applied by the Master
Servicer to reduce the outstanding principal balance of such loan, an amount
equal to the interest shortfalls attributable to such Principal Prepayments. The
obligations of the Master Servicer in respect of any Prepayment Interest
Shortfall are set forth in Section 3.23.
"Primary Insurance Policy": Each primary policy of mortgage
guaranty insurance or any replacement policy therefor referred to in Section
3.26.
"Principal Distribution Amount": With respect to any
Distribution Date, the sum of (i) the Principal Remittance Amount for such
Distribution Date, minus, on any Distribution Date occurring on or after the
First Stepdown Date, the Overcollateralization Reduction Amount for such
Distribution Date, if any, and (ii) the Extra Principal Distribution Amount, if
any, for such Distribution Date.
"Principal Prepayment": Any payment of principal or other
recovery on a Mortgage Loan, including a recovery that takes the form of
Liquidation Proceeds or Insurance Proceeds, which is received in advance of its
scheduled Due Date and is not accompanied by an amount as to interest
representing scheduled interest on such payment due on any date or dates in any
month or months subsequent to the month of prepayment.
"Principal Prepayment in Full": Any Principal Prepayment made
by a Mortgagor of the entire principal balance of a Mortgage Loan.
"Principal Remittance Amount": With respect to any
Distribution Date, the sum of the following:
(i) the principal portion of each Monthly Payment due on the
related Due Date and received on or prior to the related Determination
Date, together with all Monthly Advances relating to principal on each
Outstanding Mortgage Loan;
(ii) the Stated Principal Balance of any Mortgage Loan
repurchased during the related Collection Period pursuant to Section
2.03 and the amount of any shortfall
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deposited in the Custodial Account in connection with the substitution
of a Deleted Mortgage Loan pursuant to Section 2.03 during the related
Collection Period; and
(iii) the principal portion of all other unscheduled
collections (including, without limitation, Principal Prepayments in
Full, Curtailments, Insurance Proceeds, Liquidation Proceeds and REO
Dispositions) received during the related Collection Period to the
extent applied by the Master Servicer as recoveries of principal of the
related Mortgage Loan pursuant to Section 3.15, and with respect to the
Distribution Date immediately following the end of the Funding Period,
any amounts in the Pre-Funding Account after giving effect to the
purchase of any Subsequent Mortgage Loans on such date;
minus
-----
(iv) expenses incurred by and reimbursable to Master Servicer
or the Depositor pursuant to Sections 3.13, 3.15, 6.03, 10.01 or
otherwise, or in connection with enforcing any repurchase, substitution
or indemnification obligation of the Mortgage Loan Seller pursuant to
the Mortgage Loan Purchase Agreement or Subsequent Mortgage Loan
Purchase Agreement; and
(v) amounts expended by the Master Servicer (a) pursuant to
Section 3.15 in good faith in connection with the restoration of
property damaged by an Uninsured Cause, and (b) in connection with the
liquidation of a Mortgage Loan or disposition of an REO Property to the
extent not otherwise reimbursed to the Master Servicer pursuant to
Section 3.11.
"Purchase Price": With respect to any Mortgage Loan or REO
Property to be purchased pursuant to or as contemplated by Section 2.03, 3.15(c)
or 10.01, and as confirmed by certificate signed by a Servicing Officer from the
Master Servicer to the Trustee, an amount equal to the sum of (i) 100% of the
Stated Principal Balance thereof as of the date of purchase (or such other price
as provided in Section 10.01), (ii) in the case of (x) a Mortgage Loan, accrued
interest on such Stated Principal Balance at the applicable Mortgage Rate in
effect from time to time from the Due Date as to which interest was last covered
by a payment by the Mortgagor or an advance by the Master Servicer, which
payment or advance had as of the date of purchase been distributed pursuant to
Section 4.01, through the end of the calendar month in which the purchase is to
be effected, and (y) an REO Property, the sum of (1) accrued interest on such
Stated Principal Balance at the applicable Mortgage Rate in effect from time to
time from the Due Date as to which interest was last covered by a payment by the
Mortgagor or an advance by the Master Servicer through the end of the calendar
month immediately preceding the calendar month in which such REO Property was
acquired, plus (2) REO Imputed Interest for such REO Property for each calendar
month commencing with the calendar month in which such REO Property was acquired
and ending with the calendar month in which such purchase is to be effected, net
of the total of all net rental income, Insurance Proceeds, Liquidation Proceeds
and Monthly Advances that as of the date of purchase had been distributed as or
to cover REO Imputed Interest pursuant to Section 4.01, (iii) any unreimbursed
Servicing Advances and Monthly Advances and any unpaid Master Servicing Fees
allocable to such Mortgage Loan or REO Property, (iv) any amounts previously
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withdrawn from the Collection Account in respect of such Mortgage Loan or REO
Property pursuant to Sections 3.11(ix) and 3.15(b), and (v) in the case of a
Mortgage Loan required to be purchased pursuant to Section 2.03, expenses
reasonably incurred or to be incurred by the Master Servicer or the Trustee in
respect of the breach or defect giving rise to the purchase obligation.
"Qualified Substitute Mortgage Loan": A mortgage loan
substituted for a Deleted Mortgage Loan pursuant to the terms of this Agreement
which must, on the date of such substitution, (i) have a Stated Principal
Balance, after application of all scheduled payments of principal and interest
due during or prior to the month of substitution, not in excess of the
outstanding principal balance of the Deleted Mortgage Loan as of the Due Date in
the calendar month during which the substitution occurs, (ii) have a Mortgage
Rate not less than (and not more than one percentage point in excess of) the
Mortgage 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) have the same Due Date as the Due Date on the
Deleted Mortgage Loan, (v) have a Loan-to-Value Ratio as of the date of
substitution equal to or lower than the Loan-to-Value Ratio of the Deleted
Mortgage Loan as of such date, (vi) have a risk grading or Credit Bureau Risk
Score determined by the Mortgage Loan Seller, at least equal to the risk grading
assigned on the Deleted Mortgage Loan, (vii) is a "qualified mortgage" as
defined in the REMIC Provisions and (viii) conform to each representation and
warranty set forth in Section 6 of the Mortgage Loan Purchase Agreement or
Subsequent Mortgage Loan Purchase Agreement applicable to the Deleted Mortgage
Loan. In the event that one or more mortgage loans are substituted for one or
more Deleted Mortgage Loans, the amounts described in clause (i) hereof shall be
determined on the basis of aggregate principal balances, the Mortgage Rates
described in clause (ii) hereof shall be determined on the basis of weighted
average Mortgage Rates, the risk gradings described in clause (x) hereof shall
be satisfied as to each such mortgage loan, the terms described in clause (vii)
hereof shall be determined on the basis of weighted average remaining term to
maturity, the Loan-to-Value Ratios described in clause (ix) hereof shall be
satisfied as to each such mortgage loan and, except to the extent otherwise
provided in this sentence, the representations and warranties described in
clause (xi) hereof must be satisfied as to each Qualified Substitute Mortgage
Loan or in the aggregate, as the case may be.
"Rate/Term Refinancing": A Refinanced Mortgage Loan, the
proceeds of which are not more than the lower of (i) $1000, and (ii) 1% of the
existing first mortgage loan and any subordinate mortgage loan on the related
Mortgaged Property and related closing costs, and were used exclusively (except
for up to the lower of (i) $1000, and (ii) 1%) to satisfy the then existing
first mortgage loan and any subordinate mortgage loan of the Mortgagor on the
related Mortgaged Property and to pay related closing costs.
"Rating Agency or Rating Agencies": S&P and Moody's or their
successors. If such agencies or their successors are no longer in existence,
"Rating Agencies" shall be such nationally recognized statistical rating
agencies, or other comparable Persons, designated by the Depositor, notice of
which designation shall be given to the Trustee and Master Servicer.
"Realized Loss": With respect to each Mortgage Loan as to
which a Final Recovery Determination has been made an amount (not less than
zero) equal to (i) the unpaid principal
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balance of such Mortgage Loan as of the commencement of the calendar month in
which the Final Recovery Determination was made, plus (ii) accrued interest from
the Due Date as to which interest was last paid by the Mortgagor through the end
of the calendar month in which such Final Recovery Determination was made,
calculated in the case of each calendar month during such period (A) at an
annual rate equal to the annual rate at which interest was then accruing on such
Mortgage Loan and (B) on a principal amount equal to the Stated Principal
Balance of such Mortgage Loan as of the close of business on the Distribution
Date during such calendar month, plus (iii) any amounts previously withdrawn
from the Collection Account in respect of such Mortgage Loan pursuant to
Sections 3.11(ix) and 3.15(b), minus (iv) the proceeds, if any, received in
respect of such Mortgage Loan during the calendar month in which such Final
Recovery Determination was made, net of amounts that are payable therefrom to
the Master Servicer or any Subservicer with respect to such Mortgage Loan
pursuant to clause (iii) of Section 3.11.
With respect to any REO Property as to which a Final Recovery
Determination has been made an amount (not less than zero) equal to (i) the
unpaid principal balance of the related Mortgage Loan as of the date of
acquisition of such REO Property on behalf of the Trust Fund, plus (ii) accrued
interest from the Due Date as to which interest was last paid by the Mortgagor
in respect of the related Mortgage Loan through the end of the calendar month
immediately preceding the calendar month in which such REO Property was
acquired, calculated in the case of each calendar month during such period (A)
at an annual rate equal to the annual rate at which interest was then accruing
on the related Mortgage Loan and (B) on a principal amount equal to the Stated
Principal Balance of the related Mortgage Loan as of the close of business on
the Distribution Date during such calendar month, plus (iii) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such Final Recovery Determination was made, plus (iv)
any amounts previously withdrawn from the Collection Account in respect of the
related Mortgage Loan pursuant to Sections 3.11(ix) and 3.15(b), minus (v) the
aggregate of all Monthly Advances made by the Master Servicer in respect of such
REO Property or the related Mortgage Loan for which the Master Servicer has been
or, in connection with such Final Recovery Determination, will be reimbursed
pursuant to Section 3.22 out of rental income, Insurance Proceeds and
Liquidation Proceeds received in respect of such REO Property, minus (vi) the
total of all net rental income, Insurance Proceeds and Liquidation Proceeds
received in respect of such REO Property that has been, or in connection with
such Final Recovery Determination, will be transferred to the Distribution
Account pursuant to Section 3.22.
With respect to each Mortgage Loan which has become the
subject of a Deficient Valuation, the difference between the principal balance
of the Mortgage Loan outstanding immediately prior to such Deficient Valuation
and the principal balance of the Mortgage Loan as reduced by the Deficient
Valuation.
With respect to each Mortgage Loan which has become the
subject of a Debt Service Reduction, the portion, if any, of the reduction in
each affected Monthly Payment attributable to a reduction in the Mortgage Rate
imposed by a court of competent jurisdiction. Each such Realized Loss shall be
deemed to have been incurred on the Due Date for each affected
Monthly Payment.
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"Record Date": With respect to each Distribution Date, the
close of business on the last Business Day of the month next preceding the month
in which the related Distribution Date occurs.
"Refinanced Mortgage Loan": A Mortgage Loan the proceeds of
which were not used to purchase the related Mortgaged Property.
"Regular Certificate": Any of the Class A Certificates, Class
M Certificates, Class B Certificates and Class C Certificates.
"Regular Interest": A "regular interest" in a REMIC within the
meaning of Section 860G(a)(1) of the Code.
"Relief Act": The Soldiers' and Sailors' Civil Relief Act of
1940, as amended.
"Relief Act Interest Shortfall": With respect to any
Distribution Date and any Mortgage Loan, any reduction in the amount of interest
collectible on such Mortgage Loan for the most recently ended calendar month as
a result of the application of the Relief Act.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC I": The segregated pool of assets subject hereto,
constituting the primary trust created hereby and to be administered hereunder,
with respect to which a REMIC election is to be made, consisting of: (i) such
Mortgage Loans as from time to time are subject to this Agreement, together with
the Mortgage Files relating thereto, and together with all collections thereon
and proceeds thereof, (ii) any REO Property, together with all collections
thereon and proceeds thereof, (iii) the Trustee's rights with respect to the
Mortgage Loans under all insurance policies required to be maintained pursuant
to this Agreement and any proceeds thereof, (iv) the Depositor's rights under
the Mortgage Loan Purchase Agreement or Subsequent Mortgage Loan Purchase
Agreement (including any security interest created thereby but excluding the
rights under Sections 9 and 10 thereof) to the extent conveyed pursuant to
Section 2.01, and (v) the Collection Account, the Distribution Account, any REO
Account and such assets that are deposited therein from time to time and any
investments thereof, together with any and all income, proceeds and payments
with respect thereto. Notwithstanding the foregoing, REMIC I specifically
excludes the Pre-Funding Account, the Interest Coverage Account and all payments
and other collections of principal and interest due on the Mortgage Loans on or
before the Cut-off Date.
"REMIC I Interest Loss Allocation Amount": With respect to any
Distribution Date, an amount equal to (a) the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) the REMIC I Remittance Rate for REMIC I Regular Interest
I-LT1 minus two (2) times the weighted average of the REMIC I Remittance Rates
for REMIC I Regular Interest I-LT2, REMIC I Regular Interest I-LT3, REMIC I
Regular Interest I-LT4, REMIC I Regular Interest I-LT5 and REMIC I Regular
Interest I-LT6,
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with the rate on REMIC I Regular Interest I-LT6 equal to zero for purposes of
this calculation, divided by (b) 12.
"REMIC I Overcollateralized Amount": With respect to any date
of determination, (i) 1% of the aggregate Uncertificated Balances of the REMIC I
Regular Interests minus (ii) the Uncertificated Balances of REMIC I Regular
Interest I-LT2, REMIC I Regular Interest I-LT3, REMIC I Regular Interest I-LT4
and REMIC I Regular Interest I-LT5, in each case as of such date of
determination.
"REMIC I Principal Loss Allocation Amount": With respect to
any Distribution Date, an amount equal to the product of (i) the aggregate
Stated Principal Balance of the Mortgage Loans and REO Properties then
outstanding and (ii) 1 minus a fraction, the numerator of which is two times the
Uncertificated Balance of REMIC I Regular Interest I-LT2, REMIC I Regular
Interest I-LT3, REMIC I Regular Interest I-LT4 and REMIC I Regular Interest
I-LT5 and the denominator of which is the sum of the Uncertificated Balances of
REMIC I Regular Interest I- LT2, REMIC I Regular Interest I-LT3, REMIC I Regular
Interest I-LT4, REMIC I Regular Interest I-LT5 and REMIC I Regular Interest
I-LT6.
"REMIC I Regular Interest": Any of the six separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a "regular interest" in REMIC I. Each REMIC I Regular Interest
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto. The
designations for the respective REMIC I Regular Interests are set forth in the
Preliminary Statement hereto.
"REMIC I Regular Interest I-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT1
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT2
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT3": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT3
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms
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and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT4": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT4
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT5": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT5
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Regular Interest I-LT6": One of the separate
non-certificated beneficial ownership interests in REMIC I issued hereunder and
designated as a Regular Interest in REMIC I. REMIC I Regular Interest I-LT6
shall accrue interest at the related REMIC I Remittance Rate in effect from time
to time, and shall be entitled to distributions of principal, subject to the
terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC I Remittance Rate": With respect to each REMIC I
Regular Interest, the Net WAC Pass-Through Rate.
"REMIC I Required Overcollateralized Amount": 1% of the
Required Overcollateralization Amount.
"REMIC II": The segregated pool of assets consisting of all of
the REMIC I Regular Interests conveyed in trust to the Trustee for the benefit
of REMIC III, as holder of the REMIC II Regular Interests, and the Class R-II
Certificateholders pursuant to Section 2.07, and all amounts deposited therein,
with respect to which a separate REMIC election is to be made.
"REMIC II Regular Interest": Any of the ten separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a "regular interest" in REMIC II. Each REMIC II Regular Interest
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto. The
designations for the respective REMIC II Regular Interests are set forth in the
Preliminary Statement hereto.
"REMIC II Regular Interest II-LT1": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC
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II. REMIC II Regular Interest II-LT1 shall accrue interest at the related REMIC
II Remittance Rate in effect from time to time, and shall be entitled to
distributions of principal, subject to the terms and conditions hereof, in an
aggregate amount equal to its initial Uncertificated Balance as set forth in the
Preliminary Statement hereto.
"REMIC II Regular Interest II-LT2": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT2
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT3": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT3
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT4": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT4
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT5": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT5
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT6": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT6
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time, and shall be entitled to distributions of principal, subject to
the terms and conditions hereof, in an aggregate amount equal to its initial
Uncertificated Balance as set forth in the Preliminary Statement hereto.
"REMIC II Regular Interest II-LT2S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT2S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
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"REMIC II Regular Interest II-LT3S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT3S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Regular Interest II-LT4S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT4S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Regular Interest II-LT5S": One of the separate
non-certificated beneficial ownership interests in REMIC II issued hereunder and
designated as a Regular Interest in REMIC II. REMIC II Regular Interest II-LT5S
shall accrue interest at the related REMIC II Remittance Rate in effect from
time to time on its related Uncertificated Notional Amount.
"REMIC II Remittance Rate": With respect to REMIC II Regular
Interest II-LT1 and REMIC II Regular Interest II-LT6 and any Distribution Date,
the Net WAC Pass-Through Rate. With respect to REMIC II Regular Interest II-LT2
and any Distribution Date, the per annum rate set forth on in the preliminary
statement hereto. With respect to REMIC II Regular Interest II-LT3, REMIC II
Regular Interest II-LT4 and REMIC II Regular Interest II-LT5 and any
Distribution Date, the lesser of (i) in the case of the corresponding Class M-1
Certificates, 7.645% per annum, in the case of the corresponding Class M-2
Certificates, 8.100% per annum, and in the case of the corresponding Class B
Certificates, 8.100% per annum, and (ii) the Net WAC Pass-Through Rate. With
respect to REMIC II Regular Interest II-LT2S, REMIC II Regular Interest II-LT3S,
REMIC II Regular Interest II-LT4S and REMIC II Regular Interest II-LT5S, a rate
per annum equal to excess of the REMIC I Remittance Rate for the related
Uncertificated Corresponding Component over the REMIC II Remittance Rate for
REMIC II Regular Interest II- LT2, REMIC II Regular Interest II-LT3, REMIC II
Regular Interest II-LT4 and REMIC II Regular Interest II-LT5, respectively.
"REMIC III": The segregated pool of assets consisting of all
of the REMIC II Regular Interests conveyed in trust to the Trustee for the
benefit of the REMIC III Certificateholders pursuant to Section 2.09, and all
amounts deposited therein, with respect to which a separate REMIC election is to
be made.
"REMIC III Certificate": Any Regular Certificate or Class
R-III Certificate.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Section
860A-860G of the Code, and related provisions, and proposed, temporary and final
regulations and published rulings, notices and announcements promulgated
thereunder, as the foregoing may be in effect from time to time.
"Remittance Report": A report on a magnetic disk or tape
prepared by the Master Servicer pursuant to Section 4.03 with such additions,
deletions and modifications as agreed to by the Trustee and the Master Servicer,
substantially in the form of Exhibit K hereto.
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"Rents from Real Property": With respect to any REO Property,
gross income of the character described in Section 856(d) of the Code as being
included in the term "rents from real property."
"REO Account": The account or accounts maintained by the
Master Servicer in respect of an REO Property pursuant to Section 3.22.
"REO Disposition": The sale or other disposition of an REO
Property on behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any
calendar month during which such REO Property was at any time part of REMIC I,
one month's interest at the applicable Net Mortgage Rate on the Stated Principal
Balance of such REO Property (or, in the case of the first such calendar month,
of the related Mortgage Loan if appropriate) as of the close of business on the
Distribution Date in such calendar month.
"REO Principal Amortization": With respect to any REO
Property, for any calendar month, the excess, if any, of (a) the aggregate of
all amounts received in respect of such REO Property during such calendar month,
whether in the form of rental income, sale proceeds (including, without
limitation, that portion of the Termination Price paid in connection with a
purchase of all of the Mortgage Loans and REO Properties pursuant to Section
10.01 that is allocable to such REO Property) or otherwise, net of any portion
of such amounts (i) payable pursuant to Section 3.22(c) in respect of the proper
operation, management and maintenance of such REO Property or (ii) payable or
reimbursable to the Master Servicer pursuant to Section 3.22(d) for unpaid
Master Servicing Fees in respect of the related Mortgage Loan and unreimbursed
Servicing Advances and Monthly Advances in respect of such REO Property or the
related Mortgage Loan, over (b) the REO Imputed Interest in respect of such REO
Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the Master
Servicer on behalf of the Trust Fund through foreclosure or deed-in-lieu of
foreclosure, as described in Section 3.22.
"Request for Release": A release signed by a Servicing
Officer, in the form of Exhibit D-1 or Exhibit D-2 attached hereto.
"Required Overcollateralization Amount": With respect to any
Distribution Date (i) prior to the First Stepdown Date, $3,668,205.00, and (ii)
on or after the First Stepdown Date, so long as no Trigger Event or Delinquency
Event is in effect, the greater of (x) 7.00% of the sum of the then current
aggregate Stated Principal Balance of the Mortgage Loans and any Pre-Funded
Amount as of the end of the related Due Period and (y) $524,029.00; provided,
however, that if a Trigger Event or Delinquency Event has occurred and is
continuing, the Required Overcollateralization Amount with respect to such
Distribution Date will remain equal to the amount required as of the
Distribution Date immediately preceding the date on which such Trigger Event or
Delinquency Event occurred.
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"Residential Dwelling": Any one of the following: (i) a
detached one-family dwelling, (ii) a detached two- to four-family dwelling,
(iii) a one-family dwelling unit in a condominium project, (iv) a detached
one-family dwelling in a planned unit development, or (v) manufactured home
treated as real property under local law none of which is a co-operative or
mobile home (as defined in 42 United States Code, Section 5402(6)).
"Residual Certificate": Any one of the Class R Certificates.
"Residual Interest": The sole class of "residual interests" in
a REMIC within the meaning of Section 860G(a)(2) of the Code.
"Responsible Officer": When used with respect to the Trustee,
the Chairman or Vice Chairman of the Board of Directors or Trustees, the
Chairman or Vice Chairman of the Executive or Standing Committee of the Board of
Directors or Trustees, the President, the Chairman of the Committee on Trust
Matters, any vice president, any assistant vice president, the Secretary, any
assistant secretary, the Treasurer, any assistant treasurer, the Cashier, any
assistant cashier, any trust officer or assistant trust officer, the Controller
and any assistant controller or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above designated
officers and, with respect to a particular matter, to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
"Second Stepdown Date": So long as a Trigger Event is not in
effect and so long as the First Stepdown Date has not occurred and is not
continuing, the Distribution Date in November 2003.
"Senior Certificates": The Class A Certificates.
"Senior Distribution Percentage" for any Distribution Date
occurring after the first five years following the Closing Date will be as
follows:
(i) for any Distribution Date during the sixth year after the
Closing Date, the Senior Percentage for such Distribution Date plus 70%
of the Subordinate Percentage for such Distribution Date;
(ii) for any Distribution Date during the seventh year after
the Closing Date, the Senior Percentage for such Distribution Date plus
60% of the Subordinate Percentage for such Distribution Date;
(iii) for any Distribution Date during the eighth year after
the Closing Date, the Senior Percentage for such Distribution Date plus
40% of the Subordinate Percentage for such Distribution Date;
(iv) for any Distribution Date during the ninth year after the
Closing Date, the Senior Percentage for such Distribution Date plus 20%
of the Subordinate Percentage for such Distribution Date; and
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(v) for any Distribution Date thereafter, the Senior
Percentage for such Distribution Date.
"Senior Enhancement Percentage": On any Distribution Date, the
percentage obtained by dividing (x) the sum of (i) the aggregate Certificate
Principal Balance of the Subordinate Certificates immediately prior to such
Distribution Date and (ii) the Overcollateralization Amount (prior to any
payment of the Principal Distribution Amount to the Offered Certificates on such
Distribution Date), by (y) the sum of the aggregate Stated Principal Balance of
the Mortgage Loans and the Pre-Funded Amount as of the last day of the related
Due Period.
"Senior Percentage": With respect to any Distribution Date,
the lesser of 100% and a fraction, expressed as a percentage, the numerator of
which is the Certificate Principal Balance of the Class A Certificates
immediately prior to such Distribution Date and the denominator of which is the
sum of the aggregate Stated Principal Balance of the Mortgage Loans and the Pre-
Funded Amount, in each case immediately prior to such Distribution Date.
Initially the Senior Percentage will be approximately 81.38%.
"Senior Principal Distribution Amount": With respect to any
Distribution Date prior to the First Stepdown Date and the Second Stepdown Date
or for which a Trigger Event is in effect, the amount as defined in Section
4.01(d)(i). With respect to any Distribution Date on or after the First Stepdown
Date for which a Trigger Event is not in effect, the amount as defined in
Section 4.01(e)(i). With respect to any Distribution Date on or after the Second
Stepdown Date for which a Trigger Event is not in effect and so long as the
First Stepdown Date has not occurred and is not continuing, the amount as
defined in Section 4.02(f)(i).
"Senior Specified Enhancement Percentage": On any date of
determination thereof means 40.50%.
"Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.
"Servicing Advances": The reasonable "out-of-pocket" costs and
expenses incurred by the Master Servicer in connection with a default,
delinquency or other event unanticipated by the Master Servicer in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration and protection of a Mortgaged
Property, (ii) any enforcement or judicial proceedings, including foreclosures,
in respect of a particular Mortgage Loan, (iii) the management (including
reasonable fees in connection therewith) and liquidation of any REO Property,
and (iv) the performance of its obligations under Sections 3.01, 3.09, 3.13,
3.15 and 3.22. The Master Servicer shall not be required to make any Servicing
Advance in respect of a Mortgage Loan or REO Property that, in the good faith
business judgment of the Master Servicer, would not be ultimately recoverable
from related Insurance Proceeds or Liquidation Proceeds on such Mortgage Loan or
REO Property as provided herein.
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"Servicing Officer": Any officer of the Master Servicer
involved in, or responsible for, the administration and servicing of Mortgage
Loans, whose name and specimen signature appear on a list of servicing officers
furnished by the Master Servicer to the Trustee and the Depositor on the Closing
Date, as such list may from time to time be amended.
"Servicing Termination Event": One or more of the events
described in Section 7.01(i)-(vii).
"Servicing Termination Trigger": A Servicing Termination
Trigger has occurred (i) with respect to a Distribution Date occurring between
the Cut-Off Date and the fifth anniversary of the Cut-Off Date if on such
Distribution Date (X) the sum of (a) the product of (1) the percentage obtained
by dividing the balance of Mortgage Loans which are Delinquent 30 days or more
but less than 60 days Delinquent by the aggregate outstanding Stated Principal
Balance of the Mortgage Loans, (2) 25.00% and (3) 43.21%; plus (b) the product
of (1) the percentage obtained by dividing the balance of the Mortgage Loans
which are Delinquent 60 days or more but less than 90 days Delinquent by the
aggregate outstanding Stated Principal Balance of the Mortgage Loans, (2) 50.00%
and (3) 43.21%; plus (c) the product of (1) the percentage obtained by dividing
the balance of the Mortgage Loans which are Delinquent 90 days or more by the
aggregate outstanding Stated Principal Balance of the Mortgage Loans and (2)
43.21%; plus (d) the percentage obtained by dividing the sum of Realized Losses
as of such Distribution Date by the aggregate initial Stated Principal Balance
of the Mortgage Loans on the Cut-Off Date, in each case as of the last day of
the calendar month preceding such Distribution Date, exceeds (Y) 11.75% and (ii)
with respect to a Distribution Date occurring after the fifth anniversary of the
CutOff Date and on or before the tenth anniversary of the Cut-Off Date if on
such Distribution Date the sum set forth in (X) above, in each case as of the
last day of the calendar month preceding such Distribution Date, exceeds 17.75%.
"Single Certificate": With respect to any Class of Offered
Certificates, a hypothetical Certificate of such Class evidencing a Percentage
Interest for such Class corresponding to an initial Certificate Principal
Balance of $1,000. With respect to the Class C Certificates, a hypothetical
Certificate of such Class evidencing a Percentage Interest for such Class
corresponding to an initial Notional Amount of $1,000. With respect to the
Residual Certificates, a hypothetical Certificate of such Class evidencing a
100% Percentage Interest in such Class.
"Sixty-Day Delinquency Amount": With respect to any Due
Period, an amount equal to the aggregate Principal Balance of the Mortgage Loans
that are sixty or more days delinquent in payment of principal and interest as
of the immediately preceding Determination Date (including Mortgage Loans that
are in foreclosure and Mortgage Loans which are REO Properties).
"S&P": Standard & Poor's Ratings Services, a division of
McGraw-Hill Inc., or its successor in interest.
"Startup Day": The day designated as such pursuant to Section
11.01(b) hereof.
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"Stated Principal Balance": With respect to any Mortgage Loan:
(a) as of any date of determination up to but not including the Distribution
Date on which the proceeds, if any, of a Liquidation Event with respect to such
Mortgage Loan would be distributed, the outstanding principal balance of such
Mortgage Loan as of the Cut-off Date (or Subsequent Cut-off Date with respect to
a Subsequent Mortgage Loan), after giving effect to all Monthly Payments due
thereon on or before the Cut-off Date (or Subsequent Cut-off Date with respect
to a Subsequent Mortgage Loan) whether or not received and as shown in the
Mortgage Loan Schedule, minus the sum of (i) the principal portion of each
Monthly Payment due on a Due Date subsequent to the Cut-off Date (or Subsequent
Cut-off Date with respect to a Subsequent Mortgage Loan), to the extent received
from the Mortgagor or included in a Monthly Advance and distributed pursuant to
Section 4.01 on or before such date of determination, (ii) all Principal
Prepayments received after the Cut-off Date (or Subsequent Cut-off Date with
respect to a Subsequent Mortgage Loan), to the extent distributed pursuant to
Section 4.01 on or before such date of determination, (iii) all Liquidation
Proceeds and Insurance Proceeds applied by the Master Servicer as recoveries of
principal in accordance with the provisions of Section 3.15, to the extent
distributed pursuant to Section 4.01 on or before such date of determination,
and (iv) any Realized Loss incurred with respect thereto as a result of a
Deficient Valuation made during or prior to the Collection Period for the most
recent Distribution Date coinciding with or preceding such date of
determination; and (b) as of any date of determination coinciding with or
subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such Mortgage Loan would be distributed, zero.
With respect to any REO Property: (a) as of any date of determination up to but
not including the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, an
amount (not less than zero) equal to the Stated Principal Balance of the related
Mortgage Loan as of the date on which such REO Property was acquired on behalf
of REMIC I, minus the sum (i) if such REO Property was acquired before the
Distribution Date in any calendar month, the principal portion of the Monthly
Payment due on the Due Date in the calendar month of acquisition, to the extent
advanced by the Master Servicer and distributed pursuant to Section 4.01 on or
before such date of determination, and (ii) the aggregate amount of REO
Principal Amortization in respect of such REO Property for all previously ended
calendar months, to the extent distributed pursuant to Section 4.01 on or before
such date of determination; and (b) as of any date of determination coinciding
with or subsequent to the Distribution Date on which the proceeds, if any, of a
Liquidation Event with respect to such REO Property would be distributed, zero.
"Stayed Funds": As defined in Section 7.02(b).
"Subordinate Certificates": The Class M Certificates or the
Class B Certificates.
"Subordinate Percentage": With respect to any Distribution
Date, 100% minus the Senior Percentage as of such Distribution Date.
"Subsequent Cut-off Date": With respect to those Subsequent
Mortgage Loans sold to the Trust Fund pursuant to a Subsequent Transfer
Instrument, the first day of the month in which the related Subsequent Transfer
Date occurs.
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"Subsequent Master Servicer": Litton Loan Servicing LP, a
Delaware limited partnership, or any successor master servicer appointed as
herein provided, in its capacity as Master Servicer hereunder.
"Subsequent Mortgage Loan": A Mortgage Loan sold by the
Depositor to the Trust Fund pursuant to Section 2.11, such Mortgage Loan being
identified on the Mortgage Loan Schedule attached to a Subsequent Transfer
Instrument, all of which shall be "qualified mortgages" within the meaning of
Section 860G(a)(3)(A) of the Code.
"Subsequent Mortgage Loan Purchase Agreement": The agreement
between the Depositor and the Mortgage Loan Seller regarding the transfer of the
Subsequent Mortgage Loans by the Mortgage Loan Seller to the Depositor,
substantially in the form of Exhibit 5 attached to the Mortgage Loan Purchase
Agreement.
"Subsequent Transfer Date": With respect to each Subsequent
Transfer Instrument, the date on which the related Subsequent Mortgage Loans are
sold to the Trust Fund.
"Subsequent Transfer Instrument": Each Subsequent Transfer
Instrument, dated as of a Subsequent Transfer Date, executed by the Trustee and
the Depositor substantially in the form of Exhibit L, by which Subsequent
Mortgage Loans are sold to the Trust Fund.
"Subserviced Mortgage Loan": Any Mortgage Loan that, at the
time of reference thereto, is subject to a Subservicing Agreement.
"Subservicer": Any Person with whom the Master Servicer has
entered into a Subservicing Agreement.
"Subservicing Account": An account established by a
Subservicer in accordance with Section 3.08.
"Subservicing Agreement": The written contract between the
Master Servicer and any Subservicer relating to servicing and administration of
certain Mortgage Loans as provided in Section 3.02.
"Subservicing Fee": As to any Mortgage Loan, the fee payable
monthly to the related Subservicer (or, in the case of a Nonsubserviced Mortgage
Loan, to the Master Servicer) in respect of subservicing and other compensation
that accrues with respect to each Distribution Date.
"Substitution Shortfall Amount": As defined in Section 2.03(b)
hereof.
"Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to its classification
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as a REMIC under the REMIC Provisions, together with any and all other
information reports or returns that may be required to be furnished to the
Certificateholders or filed with the Internal Revenue Service or any other
governmental taxing authority under any applicable provisions of
federal, state or local tax laws.
"Termination Price": As defined in Section 10.01.
"Terminator": As defined in Section 10.01.
"Three-Month Rolling Delinquency Average:" With respect to
each Distribution Date, the average of the Sixty-Day Delinquency Amounts for
each of the three immediately preceding Due Periods.
"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation, or other form of assignment of any Ownership Interest in a
Certificate.
"Transferee": Any Person who is acquiring by Transfer any
Ownership Interest in a Certificate.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Certificate.
"Trigger Event": A Trigger Event is in effect on any
Distribution Date on or after the First Stepdown Date or the Second Stepdown
Date if, on such Distribution Date, the percentage obtained by dividing (x) the
Three-Month Rolling Delinquency Average, by (y) the aggregate Stated Principal
Balance of all of the Mortgage Loans immediately preceding such Distribution
Date, equals or exceeds 50% of the Senior Specified Enhancement Percentage.
"Trust Fund": Collectively, all of the assets of REMIC I,
REMIC II and REMIC III, the Pre-Funding Account and the Interest Coverage
Account.
"Trustee": The Chase Manhattan Bank, a New York State banking
corporation, or its successor in interest, or any successor trustee appointed as
herein provided.
"Trustee's Fee": The amount payable to the Trustee on each
Distribution Date pursuant to Section 8.05 as compensation for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties of the Trustee hereunder, which
amount shall equal one twelfth of the product of (i) the Trustee's Fee Rate,
multiplied by (ii) the aggregate Stated Principal Balance of the Mortgage Loans
and any REO Properties and any amount in the Pre-Funding Account as of the
preceding Distribution Date (or, in the case of the initial Distribution Date,
as of the Cut-off Date).
"Trustee's Fee Rate": 0.0125% per annum.
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"Uncertificated Balance": The amount of any REMIC I Regular
Interest or REMIC II Regular Interest outstanding as of any date of
determination. As of the Closing Date, the Uncertificated Balance of each REMIC
I Regular Interest and each REMIC II Regular Interest shall equal the amount set
forth in the Preliminary Statement hereto as its initial uncertificated balance.
On each Distribution Date, the Uncertificated Balance of each REMIC I Regular
Interest and each REMIC II Regular Interest shall be reduced by all
distributions of principal made on such REMIC I Regular Interest or such REMIC
II Regular Interest, as applicable, on such Distribution Date pursuant to
Section 4.01 and, if and to the extent necessary and appropriate, shall be
further reduced on such Distribution Date by Realized Losses as provided in
Section 4.04. The Uncertificated Balance of each REMIC I Regular Interest and
each REMIC II Regular Interest shall never be less than zero.
"Uncertificated Corresponding Component": With respect to:
REMIC II Regular Interest II-LT1, REMIC I Regular Interest I-LT1; REMIC II
Regular Interest II-LT2 and REMIC II Regular Interest II-LT2S, REMIC I Regular
Interest I-LT2; REMIC II Regular Interest II-LT3 and REMIC II Regular Interest
II-LT3S, REMIC I Regular Interest I-LT3; REMIC II Regular Interest II-LT4 and
REMIC II Regular Interest II-LT4S, REMIC I Regular Interest I-LT4; REMIC II
Regular Interest II-LT5 and REMIC II Regular Interest II-LT5S, REMIC I Regular
Interest I- LT5; and REMIC II Regular Interest II-LT6, REMIC I Regular Interest
I-LT6.
"Uncertificated Interest": With respect to any REMIC I Regular
Interest for any Distribution Date, one month's interest at the REMIC I
Remittance Rate applicable to such REMIC I Regular Interest for such
Distribution Date, accrued on the Uncertificated Balance thereof immediately
prior to such Distribution Date. With respect to any REMIC II Regular Interest
for any Distribution Date, one month's interest at the REMIC II Remittance Rate
applicable to such REMIC II Regular Interest for such Distribution Date, accrued
on the Uncertificated Balance thereof immediately prior to such Distribution
Date. Uncertificated Interest shall accrue on the basis of a 360-day year
consisting of twelve 30-day months. Uncertificated Interest with respect to each
Distribution Date, as to any REMIC I Regular Interest or REMIC II Regular
Interest, shall be reduced by an amount equal to a pro rata portion of the sum
of (a) the aggregate Prepayment Interest Shortfall, if any, for such
Distribution Date to the extent not covered by Compensating Interest and (b) the
aggregate amount of any Relief Act Interest Shortfall, if any, for such
Distribution Date. In addition, Uncertificated Interest with respect to each
Distribution Date, as to any REMIC I Regular Interest or REMIC II Regular
Interest, shall be reduced by Realized Losses, if any, allocated to such REMIC I
Regular Interest or REMIC II Regular Interest pursuant to Section 1.02 and
Section 4.04.
"Uncertificated Notional Amount": With respect to REMIC II
Regular Interest II-LT2S, REMIC II Regular Interest II-LT3S, REMIC II Regular
Interest II-LT4S and REMIC II Regular Interest II-LT5S, the Uncertificated
Principal Balance of REMIC I Regular Interest I- LT2, REMIC I Regular Interest
I-LT3, REMIC I Regular Interest I-LT4 and REMIC I Regular Interest I-LT5,
respectively.
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"Uninsured Cause": Any cause of damage to a Mortgaged Property
such that the complete restoration of such property is not fully reimbursable by
the hazard insurance policies required to be maintained pursuant to Section
3.13.
"United States Person": A citizen or resident of the United
States, a corporation or partnership (including an entity treated as a
corporation or partnership for federal income tax purposes) or other entity
created or organized in, or under the laws of, the United States or any State
thereof or the District of Columbia (except, in the case of a partnership, to
the extent provided in regulations), an estate whose income is subject to United
States federal income tax regardless of its source, 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 Persons have the
authority to control all substantial decisions of the trust. To the extent
prescribed in regulations by the Secretary of the Treasury, which have not yet
been issued, a trust which was in existence on August 20, 1996 (other than a
trust treated as owned by the grantor under subpart E of part I of subchapter J
of chapter 1 of the Code), and which was treated as a United States Person on
August 20, 1996 may elect to continue to be treated as a United States Person
notwithstanding the previous sentence. The term "United States" shall have the
meaning set forth in Section 7701 of the Code.
"Value": With respect to any Mortgaged Property, the lesser of
(i) the lesser of (a) the value thereof as determined by an appraisal made for
the originator of the Mortgage Loan at the time of origination of the Mortgage
Loan by an appraiser who met the minimum requirements of FNMA and FHLMC, and (b)
the value thereof as determined by a review appraisal conducted by the Mortgage
Loan Seller in the event any such review appraisal determines an appraised value
ten percent or more lower than the value thereof as determined by the appraisal
referred to in clause (i)(a) above and (ii) the purchase price paid for the
related Mortgaged Property by the Mortgagor with the proceeds of the Mortgage
Loan, provided, however, in the case of a Refinanced Mortgage Loan, such value
of the Mortgaged Property is based solely upon the lesser of (1) the value
determined by an appraisal made for the originator of such Refinanced Mortgage
Loan at the time of origination of such Refinanced Mortgage Loan by an appraiser
who met the minimum requirements of FNMA and FHLMC and (2) the value thereof as
determined by a review appraisal conducted by the Mortgage Loan Seller in the
event any such review appraisal determines an appraised value ten percent or
more lower than the value thereof as determined by the appraisal referred to in
clause (ii)(1) above.
"Voting Rights": The portion of the voting rights of all of
the Certificates which is allocated to any Certificate. With respect to any date
of determination, the percentage of all the Voting Rights allocated among
Holders of each Class of Certificates shall be the fraction, expressed as a
percentage, the numerator of which is the aggregate Certificate Principal
Balance of all the Certificates of such Class then outstanding and the
denominator of which is the aggregate Stated Principal Balance of the Mortgage
Loans then outstanding and any Pre-Funded Amount. The Voting Rights allocated to
each Class of Certificate shall be allocated among Holders of each such Class in
accordance with their respective Percentage Interests as of the most recent
Distribution Date. The Class R Certificates do not have any Voting Rights.
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SECTION 1.02. Allocation of Certain Interest Shortfalls.
For purposes of calculating the amount of Accrued Certificate
Interest and the amount of the Interest Distribution Amount for the Class A
Certificates, the Subordinate Certificates and the Class C Certificates for any
Distribution Date, the aggregate amount of any Prepayment Interest Shortfalls
(to the extent not covered by Compensating Interest) and Relief Act Interest
Shortfalls incurred in respect of the Mortgage Loans for any Distribution Date
shall be allocated first, to the Class C Certificates, in reduction of the
Accrued Certificate Interest thereon, to the extent of one month's interest at
the then applicable Pass-Through Rate thereof on the Notional Amount of such
Certificate and thereafter, among the Class A Certificates and the Subordinate
Certificates, in reduction of the Accrued Certificate Interest thereon on a PRO
RATA basis. The interest portion of Realized Losses will be allocated in
accordance with Section 4.04.
For purposes of calculating the amount of Uncertificated
Interest for the REMIC I Regular Interests for any Distribution Date, the
aggregate amount of any Prepayment Interest Shortfalls (to the extent not
covered by Compensating Interest) and Relief Act Interest Shortfalls incurred in
respect of the Mortgage Loans for any Distribution Date shall be allocated
first, to Uncertificated Interest payable to REMIC I Regular Interest I-LT1 and
REMIC I Regular Interest I-LT6 up to an aggregate amount equal to the REMIC I
Interest Loss Allocation Amount, 98% and 2%, respectively, and thereafter among
REMIC I Regular Interest I-LT1, REMIC I Regular Interest I-LT2, REMIC I Regular
Interest I-LT3, REMIC I Regular Interest I-LT4, REMIC I Regular Interest I-LT5
and REMIC I Regular Interest I-LT6 PRO RATA based on, and to the extent of, one
month's interest at the then applicable respective Pass-Through Rate on the
respective Uncertificated Balance of each such REMIC I Regular Interest.
All Prepayment Interest Shortfalls and Relief Act Interest Shortfalls
on the REMIC II Regular Interests shall be allocated by the Trustee on each
Distribution Date among the REMIC II Regular Interests in the proportion that
Prepayment Interest Shortfalls and Relief Act Interest Shortfalls are allocated
to the related Uncertificated Corresponding Component.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
(a) The Depositor, concurrently with the execution and
delivery hereof, does hereby transfer, assign, set over and otherwise convey to
the Trustee without recourse for the benefit of the Certificateholders all the
right, title and interest of the Depositor, including any security interest
therein for the benefit of the Depositor, in and to the Initial Mortgage Loans
(and the Subsequent Mortgage Loans on the Subsequent Transfer Date) identified
on the Mortgage Loan Schedule, the rights of the Depositor under the Mortgage
Loan Purchase Agreement or Subsequent Mortgage Loan Purchase Agreement (other
than the rights under Sections 9 and 10 thereof) and all other assets included
or to be included in REMIC I, including all interest and principal received on
or with respect to the Mortgage Loans after the Cut-off Date (other than
payments of principal and interest due on the Mortgage Loans on or before the
Cut-off Date).
In connection with such transfer and assignment, the Depositor
will cause the Mortgage Loan Seller to deliver to, and deposit with, the
Trustee, or to and with the Custodian, as the duly appointed agent of the
Trustee for such purpose, with respect to each Initial Mortgage Loan so
transferred and assigned, and the Depositor shall, in accordance with Section
2.11, deliver or cause to be delivered to the Trustee or to and with the
Custodian, as the duly appointed agent of the Trustee for this purpose, with
respect to each Subsequent Mortgage Loan, the following documents or instruments
(with respect to a Mortgage Loan, a "Mortgage File"):
(i) the original Mortgage Note, endorsed in
the following form: "Pay to the order of The Chase Manhattan
Bank, as Trustee for the registered holders of Golden National
Mortgage Loan Asset Backed Certificates, Series 1998- GN3,
without recourse," with all prior and intervening endorsements
showing a complete chain of endorsement from the originator to
the Person so endorsing to the Trustee;
(ii) the original Mortgage with evidence of
recording thereon, and the original recorded power of
attorney, if the Mortgage was executed pursuant to a power of
attorney, with evidence of recording thereon or, if such
Mortgage or power of attorney has been submitted for recording
but has not been returned from the applicable public recording
office or is not otherwise available, a copy of such Mortgage
or power of attorney, as the case may be, certified by the
Mortgage Loan Seller to be a true and complete copy of the
original submitted for recording with the recorded original to
be delivered by the Mortgage Loan Seller to the Custodian (or,
if no Custodial Agreement is then in effect, to the Trustee)
promptly after receipt thereof;
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(iii) an original Assignment of the
Mortgage executed in the following form: "The Chase
Manhattan Bank, as Trustee for the registered holders of
Golden National Mortgage Loan Asset Backed Certificates,
Series 1998-GN3";
(iv) the original recorded Assignment or
Assignments of the Mortgage showing a complete chain of
assignment from the originator to the Person assigning the
Mortgage to the Trustee as contemplated by the immediately
preceding clause (iii) or, if any such Assignment has been
submitted for recording but has not been returned from the
applicable public recording office or is not otherwise
available, a copy of such Assignment certified by the Mortgage
Loan Seller to be a true and complete copy of the original
submitted for recording with the recorded original to be
delivered by the Mortgage Loan Seller to the Custodian (or, if
no Custodial Agreement is then in effect, to the Trustee)
promptly after receipt thereof;
(v) the original or copies of each
assumption, modification, extension or guarantee agreement, if
any;
(vi) the original lender's title insurance
policy, together with all endorsements or riders that were
issued with or subsequent to the issuance of such policy,
insuring the priority of the Mortgage as a first lien on the
Mortgaged Property represented therein as a fee interest
vested in the Mortgagor, or in the event such original title
policy is unavailable, a written commitment or uniform binder
or preliminary report of title issued by the title insurance
or escrow company with the original title policy to be
delivered by the Mortgage Loan Seller to the Custodian (or, if
no Custodial Agreement is then in effect, to the Trustee), or
within 120 days of the Closing Date (or 120 days of the
Subsequent Transfer Date, with respect to a Subsequent
Mortgage Loan); and
(vii) with respect to each Lender PMI
Loan, the related Primary Insurance Policy.
(b) The Depositor shall cause the Mortgage Loan Seller to
promptly (and in no event later than five Business Days following the Closing
Date (or Subsequent Transfer Date, with respect to the Subsequent Mortgage
Loans)) submit or cause to be submitted for recording, at no expense to the
Trust Fund or the Trustee or the Custodian, in the appropriate public office for
real property records, each Assignment referred to in Sections 2.01(iii) and
(iv) above. In the event that any such Assignment is lost or returned unrecorded
because of a defect therein, the Depositor shall promptly prepare or cause to be
prepared a substitute Assignment or cure or cause to be cured such defect, as
the case may be, and thereafter cause each such Assignment to be duly recorded.
(c) If any original Mortgage Note referred to in Section
2.01(i) cannot be located, the obligations of the Depositor to cause the
Mortgage Loan Seller to deliver such documents shall be deemed to be satisfied
upon delivery to the Custodian (or, if no Custodial
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Agreement is then in effect, to the Trustee), of a photocopy of the original of
such Mortgage Note, with a Lost Note Affidavit to follow within one Business
Day. If any of the documents referred to in Sections 2.01(ii), (iii) or (iv)
above has as of the Closing Date (or Subsequent Transfer Date, with respect to
the Subsequent Mortgage Loans) been submitted for recording but either (x) has
not been returned from the applicable public recording office or (y) such public
recording office has retained the original of such document, the obligations of
the Depositor to cause the Mortgage Loan Seller to deliver such documents shall
be deemed to be satisfied upon (1) delivery to the Custodian (or, if no
Custodial Agreement is then in effect, to the Trustee), of a copy of each such
document certified by the Mortgage Loan Seller in the case of (x) above or the
applicable public recording office in the case of (y) above to be a true and
complete copy of the original that was submitted for recording and (2) if such
copy is certified by the Mortgage Loan Seller, delivery to the Custodian (or, if
no Custodial Agreement is then in effect, to the Trustee), promptly upon receipt
thereof of either the original or a copy of such document certified by the
applicable public recording office to be a true and complete copy of the
original. Notice shall be provided to the Trustee and the Rating Agencies by the
Mortgage Loan Seller if delivery pursuant to clause (2) above will be made more
than 180 days after the Closing Date (or Subsequent Transfer Date, with respect
to the Subsequent Mortgage Loans). If the original lender's title insurance
policy was not delivered pursuant to Section 2.01(vi) above, the Depositor shall
cause the Mortgage Loan Seller to deliver to the Custodian (or, if no Custodial
Agreement is then in effect, to the Trustee), promptly after receipt thereof,
the original lender's title insurance policy. The Depositor shall cause the
Mortgage Loan Seller to deliver to the Custodian (or, if no Custodial Agreement
is then in effect, to the Trustee), promptly upon receipt thereof any other
original documents constituting a part of a Mortgage File received with respect
to any Mortgage Loan, including, but not limited to, any original documents
evidencing an assumption or modification of any Mortgage Loan.
(d) All original documents relating to the Mortgage Loans that
are not delivered to the Custodian as Agent of the Trustee (or, if no Custodial
Agreement is then in effect, to the Trustee), are and shall be held by or on
behalf of the Mortgage Loan Seller, the Depositor or the Master Servicer, as the
case may be, in trust for the benefit of the Trustee on behalf of the
Certificateholders. In the event that any such original document is required
pursuant to the terms of this Section to be a part of a Mortgage File, such
document shall be delivered promptly to the Custodian as agent of the Trustee
(or, if no Custodial Agreement is then in effect, to the Trustee). Any such
original document delivered to or held by the Depositor or the Mortgage Loan
Seller that is not required pursuant to the terms of this Section to be a part
of a Mortgage File, shall be delivered promptly to the Master Servicer.
(e) The Depositor herewith delivers to the Trustee an executed
copy of the Mortgage Loan Purchase Agreement.
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SECTION 2.02. Acceptance of REMIC I by Trustee.
(a) Subject to the provisions of Section 2.01 and subject to
the review described below and any exceptions noted on the exception report
described in the next paragraph below, the Trustee acknowledges receipt (or,
with respect to Mortgage Loans subject to a Custodial Agreement, and based
solely upon receipt or certification executed by the Custodian, receipt by the
respective Custodian as the duly appointed agent of the Trustee) of the
documents referred to in Section 2.01 (other than such documents described in
Section 2.01(v)) above and all other assets included in the definition of REMIC
I under clauses (i), (iii), (iv) and (v) (to the extent of amounts deposited
into the Distribution Account) and declares that it, or a Custodian as its
agent, holds and will hold such documents and the other documents delivered to
it, or a Custodian as its agent, constituting a Mortgage File, and that it holds
or will hold all such assets and such other assets included in the definition of
"REMIC I" in trust for the exclusive use and benefit of all present and future
Certificateholders.
(b) The Custodian (such Custodian being so obligated under a
Custodial Agreement) (or, if no Custodial Agreement is then in effect, to the
Trustee), agrees, for the benefit of the Certificateholders, to review each
Mortgage File within 30 days after the Closing Date (or Subsequent Transfer
Date, with respect to the Subsequent Mortgage Loans) and to certify (or, with
respect to Mortgage Loans subject to a Custodial Agreement, and based solely
upon a receipt or certification executed by the Custodian, receipt by the
respective Custodian as the duly appointed agent of the Trustee) in
substantially the form attached hereto as Exhibit B-1 that, as to each Initial
Mortgage Loan or Subsequent Mortgage Loan, as the case may be, listed in the
Mortgage Loan Schedule (other than any Mortgage Loan which has been certified as
having been paid in full or any Mortgage Loan specifically identified in the
exception report annexed thereto as not being covered by such certification),
(i) all documents constituting part of such Mortgage File (other than such
documents described in Section 2.01(v)) required to be delivered to it pursuant
to this Agreement are in its possession, (ii) such documents have been reviewed
by it and appear regular on their face and relate to such Mortgage Loan, (iii)
based on its examination and only as to the foregoing, the information set forth
in the Mortgage Loan Schedule that corresponds to items (1) through (3), (5) and
(14) of the definition of "Mortgage Loan Schedule" accurately reflects
information set forth in the Mortgage File. It is herein acknowledged that, in
conducting such review, neither the Trustee nor the Custodian was under no duty
or obligation (i) to inspect, review or examine any such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they have actually been recorded
or that they are other than what they purport to be on their face, or (ii) to
determine whether any Mortgage File should include any of the documents
specified in clause (v) of Section 2.01.
(c) Prior to the first anniversary date of this Agreement the
Custodian (such Custodian being so obligated under a Custodial Agreement) (or,
if no Custodial Agreement is then in effect, the Trustee), shall deliver to the
Depositor and the Master Servicer a final certification in the form annexed
hereto as Exhibit B-2 evidencing the completeness of the Mortgage Files, with
any applicable exceptions noted thereon, with respect to all of the Initial
Mortgage Loans and the Subsequent Mortgage Loans.
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(d) If in the process of reviewing the Mortgage Files and
making or preparing, as the case may be, the certifications referred to above,
the Custodian, as the Trustee's agent, finds any document or documents
constituting a part of a Mortgage File to be missing or defective in any
material respect, at the conclusion of its review the Custodian, or if no
Custodial Agreement is then in effect, the Trustee shall so notify the
Depositor, the Trustee and the Master Servicer. In addition, upon the discovery
by the Depositor, the Master Servicer or the Trustee of a breach of any of the
representations and warranties made by the Mortgage Loan Seller in the related
Mortgage Loan Purchase Agreement or Subsequent Mortgage Loan Purchase Agreement
in respect of any Mortgage Loan which materially adversely affects such Mortgage
Loan or the interests of the related Certificateholders in such Mortgage Loan,
the party discovering such breach shall give prompt written notice to the other
parties. Pursuant to the Custodial Agreement, the Custodian will notify the
Master Servicer, the Depositor and the Trustee of any such omission or defect
found by it in respect of any Mortgage File held by it.
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by
the Mortgage Loan Seller.
(a) Upon discovery or receipt of notice of any
materially defective document in, or that a document is missing from, a
Mortgage File or of the breach by the Mortgage Loan Seller of any
representation, warranty or covenant under the Mortgage Loan Purchase
Agreement or the Subsequent Mortgage Loan Purchase Agreement in respect
of any Mortgage Loan which materially adversely affects the value of
such Mortgage Loan or the interest therein of the Certificateholders,
the Trustee shall promptly notify the Mortgage Loan Seller, the Master
Servicer, the Trustee and the Depositor of such defect, missing
document or breach and request that the Mortgage Loan Seller deliver
such missing document or cure such defect or breach within 60 days from
the date the Mortgage Loan Seller was notified of such missing
document, defect or breach, and if the Mortgage Loan Seller does not
deliver such missing document or cure such defect or breach in all
material respects during such period, the Trustee shall enforce the
Mortgage Loan Seller's obligation under the Mortgage Loan Purchase
Agreement or Subsequent Mortgage Loan Purchase Agreement (i) in
connection with any such breach that could not reasonably have been
cured within such 60 day period, if the Mortgage Loan Seller shall have
commenced to cure such breach within such 60 day period, to proceed
thereafter diligently and expeditiously to cure the same within the
additional period provided under the Mortgage Loan Purchase Agreement
or Subsequent Mortgage Loan Purchase Agreement and (ii) in connection
with any such breach (subject to clause (i) above) or in connection
with any missing document or defect, to repurchase such Mortgage Loan
from REMIC I at the Purchase Price within 90 days after the date on
which the Mortgage Loan Seller was notified (subject to Section
2.03(c)) of such missing document, defect or breach, if and to the
extent that the Mortgage Loan Seller is obligated to do so under the
Mortgage Loan Purchase Agreement or Subsequent Mortgage Loan Purchase
Agreement. The Purchase Price for the repurchased Mortgage Loan shall
be deposited in the Collection Account and the Custodian, or if no
Custodial Agreement is then in effect, the Trustee, upon receipt of
written certification from the Master Servicer of such deposit, shall
release the related Mortgage File to the Mortgage Loan Seller and shall
execute and deliver such
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instruments of transfer or assignment, in each case without recourse,
as the Mortgage Loan Seller shall furnish to it and as shall be
necessary to vest in the Mortgage Loan Seller any Mortgage Loan
released pursuant hereto and neither the Custodian nor the Trustee
shall have no further responsibility with regard to such Mortgage File.
In lieu of repurchasing any such Mortgage Loan as provided above, if so
provided in the Mortgage Loan Purchase Agreement or Subsequent Mortgage
Loan Purchase Agreement, the Mortgage Loan Seller may cause such
Mortgage Loan to be removed from REMIC I (in which case it shall become
a Deleted Mortgage Loan) and substitute one or more Qualified
Substitute Mortgage Loans in the manner and subject to the limitations
set forth in Section 2.03(b). It is understood and agreed that the
obligation of the Mortgage Loan Seller to cure or to repurchase (or to
substitute for) any Mortgage Loan as to which a document is missing, a
material defect in a constituent document exists or as to which such a
breach has occurred and is continuing shall constitute the sole remedy
respecting such omission, defect or breach available to the Trustee on
behalf of the Certificateholders.
(b) Any substitution of Qualified Substitute Mortgage Loans
for Deleted Mortgage Loans made pursuant to Section 2.03(a), must be effected
prior to the date which is two years after the Startup Day for REMIC I.
As to any Deleted Mortgage Loan for which the Mortgage Loan
Seller substitutes a Qualified Substitute Mortgage Loan or Loans, such
substitution shall be effected by the Mortgage Loan Seller delivering to the
Custodian, as the Trustee's agent (or, if no Custodial Agreement is then in
effect, the Trustee), for such Qualified Substitute Mortgage Loan or Loans, the
Mortgage Note, the Mortgage, the Assignment to the Custodian, as the Trustee's
agent (or, if no Custodial Agreement is then in effect, the Trustee), and such
other documents and agreements, with all necessary endorsements thereon, as are
required by Section 2.01, together with an Officers' Certificate providing that
each such Qualified Substitute Mortgage Loan satisfies the definition thereof
and specifying the Substitution Shortfall Amount (as described below), if any,
in connection with such substitution. The Custodian, as the Trustee's agent (or,
if no Custodial Agreement is then in effect, the Trustee), shall acknowledge
receipt for such Qualified Substitute Mortgage Loan or Loans and, within ten
Business Days thereafter, review such documents as specified in Section 2.02 and
deliver to the Depositor and the Master Servicer, with respect to such Qualified
Substitute Mortgage Loan or Loans, a certification substantially in the form
attached hereto as Exhibit B-1, with any applicable exceptions noted thereon.
Within one year of the date of substitution, the Custodian, as the Trustee's
agent (or, if no Custodial Agreement is then in effect, the Trustee), shall
deliver to the Depositor and the Master Servicer a certification substantially
in the form of Exhibit B-2 hereto with respect to such Qualified Substitute
Mortgage Loan or Loans, with any applicable exceptions noted thereon. Monthly
Payments due with respect to Qualified Substitute Mortgage Loans in the month of
substitution are not part of REMIC I and will be retained by the Mortgage Loan
Seller. For the month of substitution, distributions to Certificateholders will
reflect the collections and recoveries in respect of such Deleted Mortgage Loan
in the Collection Period preceding the month of substitution and the Mortgage
Loan Seller shall thereafter be entitled to retain all amounts subsequently
received in respect of such Deleted Mortgage Loan. The Master Servicer shall
amend the Mortgage Loan Schedule to reflect the removal of such Deleted Mortgage
Loan from the terms of this Agreement
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and the substitution of the Qualified Substitute Mortgage Loan or Loans and
shall deliver a copy of such amended Mortgage Loan Schedule to the Trustee and
the Custodian. Upon such substitution, such Qualified Substitute Mortgage Loan
or Loans shall constitute part of the Mortgage Pool and shall be subject in all
respects to the terms of this Agreement and, in the case of a substitution
effected by the Mortgage Loan Seller, the Mortgage Loan Purchase Agreement, or
Subsequent Mortgage Loan Purchase Agreement including, in the case of a
substitution effected by the Mortgage Loan Seller all applicable representations
and warranties thereof included in the Mortgage Loan Purchase Agreement or
Subsequent Mortgage Loan Purchase Agreement as of the date of substitution.
For any month in which the Mortgage Loan Seller substitutes
one or more Qualified Substitute Mortgage Loans for one or more Deleted Mortgage
Loans, the Master Servicer will determine the amount (the "Substitution
Shortfall Amount"), if any, by which the aggregate Purchase Price of all such
Deleted Mortgage Loans exceeds the aggregate, as to each such Qualified
Substitute Mortgage Loan, of the Stated Principal Balance thereof as of the
related CutOff Date, together with one month's interest on such principal
balance at the applicable Net Mortgage Rate. On the date of such substitution,
the Mortgage Loan Seller will deliver or cause to be delivered to the Master
Servicer for deposit in the Collection Account an amount equal to the
Substitution Shortfall Amount, if any, and the Trustee, upon receipt of the
related Qualified Substitute Mortgage Loan or Loans and certification by the
Master Servicer of such deposit, shall release to the Mortgage Loan Seller the
related Mortgage File or Files and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Mortgage Loan
Seller shall deliver to it and as shall be necessary to vest therein any Deleted
Mortgage Loan released pursuant hereto.
In addition, the Mortgage Loan Seller shall obtain at its own
expense and deliver to the Trustee an Opinion of Counsel to the effect that such
substitution will not cause (a) any federal tax to be imposed on any of REMIC I,
REMIC II or REMIC III, including without limitation, any federal tax imposed on
"prohibited transactions" under Section 860F(a)(1) of the Code or on
"contributions after the startup date" under Section 860G(d)(1) of the Code, or
(b) REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC at any time
that any Certificate is outstanding.
(c) Upon discovery by the Depositor, the Mortgage Loan Seller,
the Master Servicer or the Trustee that any Mortgage Loan does not constitute a
"qualified mortgage" within the meaning of Section 860G(a)(3) of the Code, the
party discovering such fact shall within two Business Days give written notice
thereof to the other parties. In connection therewith, the Mortgage Loan Seller
shall repurchase or, subject to the limitations set forth in Section 2.03(b),
substitute one or more Qualified Substitute Mortgage Loans for the affected
Mortgage Loan within 90 days of the earlier of discovery or receipt of such
notice with respect to such affected Mortgage Loan. Any such repurchase or
substitution shall be made in the same manner as set forth in Sections 2.03(a)
The Trustee shall reconvey to the Mortgage Loan Seller the Mortgage Loan to be
released pursuant hereto in the same manner, and on the same terms and
conditions, as it would a Mortgage Loan repurchased for breach of a
representation or warranty.
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SECTION 2.04. Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants to the
Trustee for the benefit of the Certificateholders that as of the Closing Date
the assignment of the Depositor's rights, but none of its obligations, under the
Mortgage Loan Purchase Agreement and any Subsequent Mortgage Loan Purchase
Agreement is valid, enforceable and effective to permit the Trustee to enforce
the obligations of the Mortgage Loan Seller thereunder.
(b) It is understood and agreed that the representations and
warranties set forth in this Section 2.04 shall survive delivery of the Mortgage
Files to the Trustee or any Custodian and shall inure to the benefit of the
Certificateholders notwithstanding any restrictive or qualified endorsement or
assignment. Upon discovery by any of the Depositor, the Master Servicer or the
Trustee of a breach of any of the foregoing representations and warranties which
materially and adversely affects the value of any Mortgage Loan or the interests
therein of the Certificateholders, the party discovering such breach shall give
prompt written notice to the other parties, and in no event later than two
Business Days from the date of such discovery.
SECTION 2.05. Representations, Warranties and Covenants of the
Master Servicer.
The Initial Master Servicer and the Subsequent Master Servicer
each hereby represent, warrant and covenant on behalf of itself to the Trustee,
for the benefit of each of the Trustee, the Certificateholders and to the
Depositor that as of the Closing Date or as of such date
specifically provided herein:
(i) The Initial Master Servicer or
Subsequent Master Servicer, as applicable, is duly organized,
validly existing and in good standing as a corporation or as a
limited partnership under the laws of the state of its
incorporation or creation and is and will remain duly licensed
under and in compliance with the laws of each state in which
any Mortgaged Property is located to the extent necessary to
ensure the enforceability of each Mortgage Loan and the
servicing of the Mortgage Loan in accordance with the terms of
this Agreement;
(ii) The Initial Master Servicer or
Subsequent Master Servicer, as applicable, has the full power
and authority to conduct its business as presently conducted
by it and to execute, deliver and perform, and to enter into
and consummate, all transactions contemplated by this
Agreement. The Initial Master Servicer or Subsequent Master
Servicer, as applicable, has duly authorized the execution,
delivery and performance of this Agreement, has duly executed
and delivered this Agreement, and this Agreement, assuming due
authorization, execution and delivery by the Depositor and the
Trustee, constitutes a legal, valid and binding obligation of
the Initial Master Servicer or Subsequent Master Servicer, as
applicable, enforceable against it in accordance with its
terms except as the enforceability thereof may be limited by
bankruptcy, insolvency,
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reorganization or similar laws affecting the enforcement of
creditors' rights generally and by general principles of
equity;
(iii) The execution and delivery of this
Agreement by the Initial Master Servicer or Subsequent Master
Servicer, as applicable, and the performance of and compliance
with the terms of this Agreement will not (a) violate the
Initial Master Servicer's or Subsequent Master Servicer's, as
applicable, charter or by-laws or any law, rule, regulation,
order, judgment, award, administrative interpretation,
injunction, writ, decree or the like affecting the Initial
Master Servicer or Subsequent Master Servicer, as applicable,
or by which the Initial Master Servicer or Subsequent Master
Servicer, as applicable, is bound or (b) result in a breach of
or constitute a default under any indenture or other material
agreement to which the Initial Master Servicer or Subsequent
Master Servicer, as applicable, is a party or by which the
Initial Master Servicer or Subsequent Master Servicer, as
applicable, is bound, which in the case of either clause (a)
or (b) will have a material adverse effect on the Initial
Master Servicer's or Subsequent Master Servicer's, as
applicable, ability to perform its obligations under this
Agreement;
(iv) The Initial Master Servicer or
Subsequent Master Servicer, as applicable, is an approved
servicer for FHLMC or FNMA in good standing and is a HUD
approved mortgagee pursuant to Section 203 of the National
Housing Act; no event has occurred, including but not limited
to a change in insurance coverage, which would make the
Initial Master Servicer or Subsequent Master Servicer, as
applicable, unable to comply with FHLMC or FNMA or HUD
eligibility requirements or which would require notification
to FHLMC or FNMA or HUD;
(v) The Initial Master Servicer or
Subsequent Master Servicer, as applicable, does not believe,
nor does it have any reason or cause to believe, that it
cannot perform each and every covenant of it contained in this
Agreement;
(vi) There are no actions or proceedings
against, investigations known to it of, the Initial Master
Servicer or Subsequent Master Servicer, as applicable, before
any court, administrative or other tribunal (A) that might
prohibit its entering into this Agreement, (B) seeking to
prevent the consummation of the transactions contemplated by
this Agreement or (C) that might prohibit or materially and
adversely affect the performance by the Initial Master
Servicer or Subsequent Master Servicer, as applicable, of its
obligations under, or validity or enforceability of, this
Agreement; and
(vii) No consent, approval, authorization or
order of any court or governmental agency or body is required
for the execution, delivery and performance by the Initial
Master Servicer or Subsequent Master Servicer, as applicable,
of, or compliance by the Initial Master Servicer or Subsequent
Master Servicer, as applicable, with, this Agreement or the
consummation of the
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transactions contemplated by this Agreement, except for such
consents, approvals, authorizations or orders, if any, that
have been obtained prior to the Closing Date.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.05(a) shall survive
delivery of the Mortgage Files to the Trustee or any Custodian and shall inure
to the benefit of the Trustee, the Depositor and the
Certificateholders.
Upon discovery by any of the Depositor, the Master Servicer or the Trustee of a
breach of any of the foregoing representations, warranties and covenants which
materially and adversely affects the value of any Mortgage Loan or the interests
therein of the Certificateholders, the party discovering such breach shall give
prompt written notice (but in no event later than two Business Days following
such discovery) to the other parties.
SECTION 2.06. Issuance of Class R-I Certificates.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery to it, or any Custodian on its behalf, of the Mortgage
Files, subject to the provisions of Sections 2.01 and 2.02, together with the
assignment to it of all other assets included in
REMIC
I, receipt of which is hereby acknowledged. Concurrently with such assignment
and delivery and in exchange therefor, the Trustee, pursuant to the written
request of the Depositor executed by an officer of the Depositor, has executed,
authenticated and delivered to or upon the order of the Depositor, the Class R-I
Certificates in authorized denominations. The interests evidenced by the Class
R-I Certificates, together with the REMIC I Regular Interests, constitute the
entire beneficial ownership interest in REMIC I. The rights of the Class R-I
Certificateholders and REMIC II (as holder of the REMIC I Regular Interests) to
receive distributions from the proceeds of REMIC I in respect of the Class R-I
Certificates and the REMIC I Regular Interests, respectively, and all ownership
interests evidenced or constituted by the Class R-I Certificates and the REMIC I
Regular Interests, shall be as set forth in this Agreement.
SECTION 2.07. Conveyance of REMIC I Regular Interests;
Acceptance of REMIC II by the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC I Regular Interests for the benefit of the Class R-II
Certificateholders and REMIC III Certificateholders. The Trustee acknowledges
receipt of the REMIC I Regular Interests and declares that it holds and will
hold the same in trust for the exclusive use and benefit of all present and
future Class R-II Certificateholders and REMIC III Certificateholders. The
rights of the Class R-II Certificateholders and REMIC III (as holder of the
REMIC II Regular Interests) to receive distributions from the proceeds of REMIC
II in respect of the Class R-II Certificates and REMIC II Regular Interests,
respectively, and all ownership interests evidenced or constituted by the Class
R-II Certificates and the REMIC II Regular Interests, shall be as set forth in
this Agreement.
SECTION 2.08. Issuance of Class R-II Certificates.
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The Trustee acknowledges the assignment to it of the REMIC I
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trustee has executed, authenticated and delivered to or upon the order of
the Depositor, the Class R-II Certificates in authorized denominations. The
interests evidenced by the Class R-II Certificates, together with the REMIC II
Regular Interests, constitute the entire beneficial ownership interest in REMIC
II.
SECTION 2.09. Conveyance of REMIC II Regular Interests;
Acceptance of REMIC III by the Trustee.
The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse all the right, title and interest of the Depositor in
and to the REMIC II Regular Interests for the benefit of the REMIC III
Certificateholders. The Trustee acknowledges receipt of the REMIC II Regular
Interests and declares that it holds and will hold the same in trust for the
exclusive use and benefit of all present and future REMIC III
Certificateholders. The rights of the REMIC III Certificateholders to receive
distributions from the proceeds of REMIC III in respect of the REMIC III
Certificates, and all ownership interests evidenced or constituted by the REMIC
III Certificates, shall be as set forth in this Agreement.
SECTION 2.10. Issuance of REMIC III Certificates.
The Trustee acknowledges the assignment to it of the REMIC II
Regular Interests and, concurrently therewith and in exchange therefor, pursuant
to the written request of the Depositor executed by an officer of the Depositor,
the Trustee has executed, authenticated and delivered to or upon the order of
the Depositor, the REMIC III Certificates in authorized denominations evidencing
the entire beneficial ownership interest in REMIC III.
SECTION 2.11. Conveyance of the Subsequent Mortgage Loans.
(a) Subject to the conditions set forth in paragraph (b)
below, in consideration of the Trustee's delivery on each Subsequent Transfer
Date to or upon the order of the Depositor of all or a portion of the balance of
funds in the Pre-Funding Account, the Depositor shall on such Subsequent
Transfer Date sell, transfer, assign, set over and convey without recourse to
the Trust Fund all of the right, title and interest of the Depositor in and to
(i) the Subsequent Mortgage Loans identified on the Mortgage Loan Schedule
attached to the related Subsequent Transfer Instrument delivered by the
Depositor on such Subsequent Transfer Date, (ii) principal due and interest
accruing on the Subsequent Mortgage Loans after the related Subsequent Cut-off
Date and (iii) all items with respect to such Subsequent Mortgage Loans to be
delivered pursuant to Section 2.01; PROVIDED, HOWEVER, that the Depositor
reserves and retains all right, title and interest in and to principal received
and interest accruing on the Subsequent Mortgage Loans prior to the related
Subsequent Cut-off Date. The transfer to the Trustee for deposit in the Mortgage
Pool by the Depositor of the Subsequent Mortgage Loans identified on the
Mortgage Loan Schedule shall be absolute and is intended by the Depositor, the
Master Servicer, the Trustee and the Certificateholders to constitute and to be
treated as a sale of the Subsequent Mortgage Loans by
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the Depositor to the Trust Fund. The related Mortgage File for each Subsequent
Mortgage Loan shall be delivered to the Trustee or to the Custodian (as the duly
appointed agent of the Trustee) at least three Business Days prior to the
related Subsequent Transfer Date.
The purchase price paid by the Trustee for the Subsequent
Mortgage Loans on each Subsequent Transfer Date shall be one-hundred percent
(100%) of the aggregate Stated Principal Balance of the Subsequent Mortgage
Loans so transferred (as identified on the Mortgage Loan Schedule provided by
the Depositor). On each Subsequent Transfer Date, the aggregate purchase price
for all Subsequent Mortgage Loans purchased on such date shall be withdrawn by
the Trustee from the Pre-Funding Account and paid to the Depositor. This
Agreement shall constitute a fixed-price purchase contract in accordance with
Section 860G(a)(3)(A)(ii) of the Code.
(b) The Depositor shall transfer to the Trustee for deposit in
the Mortgage Pool the Subsequent Mortgage Loans and the other property and
rights related thereto as described in paragraph (a) above, and the Trustee
shall release funds from the Pre-Funding Account, only upon the satisfaction of
each of the following conditions on or prior to the related Subsequent Transfer
Date:
(i) the Depositor shall have provided the Trustee and the
Custodian with a timely Addition Notice;
(ii) the Depositor shall have delivered to the Trustee a duly
executed Subsequent Transfer Instrument, which shall include a Mortgage
Loan Schedule listing the Subsequent Mortgage Loans, and the Mortgage
Loan Seller shall have delivered a computer file containing such
Mortgage Loan Schedule to the Depositor, the Trustee and the Custodian
at least three Business Days prior to the related Subsequent Transfer
Date;
(iii) as of each Subsequent Transfer Date, as evidenced by
delivery of the Subsequent Transfer Instrument, substantially in the
form of Exhibit L, the Depositor shall not be insolvent nor shall it
have been rendered insolvent by such transfer nor shall it be
aware of any pending insolvency;
(iv) the Funding Period shall not have terminated;
(v) the Depositor shall have delivered to the Trustee a
Subsequent Transfer Instrument confirming the satisfaction of the
conditions precedent specified in this Section 2.11 and, pursuant to
the Subsequent Transfer Instrument, assigned to the Trustee without
recourse for the benefit of the Certificateholders all the right, title
and interest of the Depositor, in, to and under the Subsequent Mortgage
Loan Purchase Agreement, to the extent of the Subsequent Mortgage
Loans;
(vi) the Depositor shall have delivered to the Trustee a
letter, which the Trustee may rely on, including for purposes of
paragraph (c) and (d), from an Independent accountant (with copies
provided to each Rating Agency) in a form attached hereto as
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Exhibit N stating that the characteristics of the Subsequent Mortgage
Loans conform to the characteristics set forth in paragraphs (c) and
(d) below;
(vii) the Depositor shall have delivered to the Trustee an
Opinion of Counsel addressed to the Trustee and the Rating Agencies
with respect to the transfer of the Subsequent Mortgage Loans
substantially in the form of the Opinion of Counsel delivered to the
Trustee on the Closing Date regarding the true sale of the Subsequent
Mortgage Loans; and
(viii) the Trustee shall have delivered to the Depositor an
Opinion of Counsel addressed to the Depositor and the Rating Agencies
with respect to the Subsequent Transfer Instrument substantially in the
form of the Opinion of Counsel delivered to the Depositor on the
Closing Date regarding certain corporate matters relating to the
Trustee.
(c) The obligation of the Trust Fund to purchase a Subsequent
Mortgage Loan on any Subsequent Transfer Date is subject to the satisfaction of
the conditions set forth in paragraph (d) below and the accuracy of the
following representations and warranties with respect to such Subsequent
Mortgage Loan determined as of the Subsequent Cut-off Date: (i) the Subsequent
Mortgage Loan may not be 30 or more days delinquent as of the related Subsequent
Cut-off Date (except with respect to 1.00% of the Subsequent Mortgage Loans, by
aggregate principal balance as of the related Subsequent Cut-off Date, which may
be 30 or more days delinquent but less than 60 days delinquent as of the related
Subsequent Cut-off Date); (ii) the stated term to maturity of the Subsequent
Mortgage Loan will not be less than 60 months and will not exceed 360 months;
(iii) the Subsequent Mortgage Loan may not provide for negative amortization;
(iv) the Subsequent Mortgage Loan will not have a Loan-to-Value Ratio greater
than 100%; (v) the Subsequent Mortgage Loans will have as of the Subsequent
Cut-off Date, a weighted average term since origination not in excess of 6
months; (vi) no Subsequent Mortgage Loan shall have a Mortgage Rate less than
7.125% or greater than 10.50%; (vii) the Subsequent Mortgage Loan will have been
serviced by the Master Servicer since origination or purchased by the Depositor;
(viii) the Subsequent Mortgage Loan must have a first Monthly Payment due on or
before January 1, 1999; (ix) the servicer with respect to such Subsequent
Mortgage Loan is the Subsequent Master Servicer; and (x) the Subsequent Mortgage
Loan will be underwritten in accordance with the criteria set forth under the
section "The Mortgage Pool--Underwriting Standards; Representations" in the
Prospectus Supplement.
(d) Following the purchase of the Subsequent Mortgage Loans by
the Trust Fund, the Mortgage Loans (including the Subsequent Mortgage Loans)
will, as of the Subsequent Cut-off Date: (i) have a weighted average original
term to stated maturity of not more than 360 months; (ii) have a weighted
average Mortgage Rate of not less than 8.25% and not more than 9.00%; (iii) have
a weighted average Loan-to-Value Ratio of not more than 92.00%; (iv) have no
Mortgage Loan with a principal balance in excess of $500,000; and (v) of the
Mortgage Loans with Loan-to-Value Ratios in excess of 80.00% and less than or
equal to 97.00%, at least 70.00% of such Mortgage Loans will be covered by a
primary mortgage insurance policy, in each case, as applicable, by aggregate
principal balance of the Mortgage Loans as of the Subsequent Cut-off Date.
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(e) Notwithstanding the foregoing, any Subsequent Mortgage
Loan may be rejected by either Rating Agency if the inclusion of any such
Subsequent Mortgage Loan would adversely affect the ratings of any Class of
Certificates. At least one Business Day prior to the Subsequent Transfer Date,
each Rating Agency shall notify the Trustee as to which Subsequent Mortgage
Loans, if any, shall not be included in the transfer on the Subsequent Transfer
Date; provided, however, that the Mortgage Loan Seller shall have delivered to
each Rating Agency at least three Business Days prior to such Subsequent
Transfer Date a computer file acceptable to each Rating Agency describing the
characteristics specified in paragraphs (c) and (d) above.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
SECTION 3.01. Master Servicer to Act as Servicer.
The Master Servicer shall service and administer the Mortgage
Loans on behalf of the Trustee and in the best interests of and for the benefit
of the Certificateholders (as determined by the Master Servicer in its
reasonable judgment) in accordance with the terms of this Agreement and the
respective Mortgage Loans and, to the extent consistent with such terms, in the
same manner in which it services and administers similar mortgage loans for its
own portfolio, giving due consideration to customary and usual standards of
practice of prudent mortgage lenders and loan servicers administering similar
mortgage loans but without regard to:
(i) any relationship that the Master
Servicer or any Affiliate of the Master Servicer may have
with the related Mortgagor;
(ii) the ownership of any Certificate by
the Master Servicer or any Affiliate of the Master Servicer;
(iii) the Master Servicer's obligation to
make Monthly Advances or Servicing Advances; or
(iv) the Master Servicer's right to receive
compensation for its services hereunder or with respect to any
particular transaction.
To the extent consistent with the foregoing, the Master Servicer shall also seek
to maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and the
terms of this Agreement and of the respective Mortgage Loans, the Master
Servicer shall have full power and authority, to do or cause to be done any and
all things in connection with such servicing and administration which it may
deem necessary or desirable. Without limiting the generality of the foregoing,
the Master Servicer in its own name or in the name of a Subservicer is hereby
authorized and empowered by the Trustee when the Master Servicer or the
Subservicer believes it appropriate in its best judgment, to execute and
deliver, on behalf of the Certificateholders and the Trustee or any of them, and
upon notice to the Trustee, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Mortgage Loans and the Mortgaged
Properties and to institute foreclosure proceedings or obtain a deed-in-lieu of
foreclosure so as to convert the ownership of such properties, and to hold or
cause to be held title to such properties, on behalf of the Trustee and
Certificateholders. The Master Servicer shall service and administer the
Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Master Servicer shall also comply in the performance of this Agreement with
all reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.16,
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the Trustee shall execute, at the written request of the Master Servicer, and
furnish to the Master Servicer any special or limited powers of attorney and
other documents necessary or appropriate to enable the Master Servicer to carry
out its servicing and administrative duties hereunder and the Trustee shall not
be liable for the actions of the Master Servicer under such powers of attorney.
In accordance with the standards of the preceding paragraph,
the Master Servicer shall advance or cause to be advanced funds as necessary for
the purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.09, and further as
provided in Section 3.11. Any cost incurred by the Master Servicer in effecting
the payment of taxes and assessments on a Mortgaged Property shall not, for the
purpose of calculating the Stated Principal Balance of a Mortgage Loan or
distributions to Certificateholders, be added to the unpaid principal balance of
the related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan
so permit.
Notwithstanding anything in this Agreement to the contrary,
the Master Servicer may not make any future advances with respect to a Mortgage
Loan and the Master Servicer shall not (unless the Mortgagor is in default with
respect to the Mortgage Loan or such default is, in the judgment of the Master
Servicer, reasonably foreseeable) permit any modification with respect to any
Mortgage Loan that would change the Mortgage Rate, reduce or increase the
principal balance (except for reductions resulting from actual payments of
principal) or change the final maturity date on such Mortgage Loan or any
modification, waiver or amendment of any term of any Mortgage Loan that would
both (A) effect an exchange or reissuance of such Mortgage Loan under Section
1001 of the Code (or final, temporary or proposed Treasury regulations
promulgated thereunder) and (B) cause any of REMIC I, REMIC II or REMIC III to
fail to qualify as a REMIC under the Code or the imposition of any tax on
"prohibited transactions" or "contributions after the startup date" under the
REMIC Provisions.
The Master Servicer may delegate its responsibilities under
this Agreement; provided, however, that no such delegation shall release the
Master Servicer from the responsibilities or liabilities arising under this
Agreement.
SECTION 3.02. Subservicing Agreements Between Master Servicer
and Subservicers.
(a) The Master Servicer may continue in effect Subservicing
Agreements entered into by the Master Servicer and Subservicers prior to the
execution and delivery of this Agreement, and may enter into new Subservicing
Agreements with Subservicers, for the servicing and administration of all or
some of the Mortgage Loans. Each Subservicer shall be either (i) an institution
the accounts of which are insured by the FDIC or (ii) another entity that
engages in the business of originating or servicing mortgage loans, and in
either case shall be authorized to transact business in the state or states in
which the related Mortgaged Properties it is to service are situated, if and to
the extent required by applicable law to enable the Subservicer to perform its
obligations hereunder and under the Subservicing Agreement, and in either case
shall be a
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FHLMC, FNMA or HUD approved mortgage servicer. Each Subservicer of a Mortgage
Loan shall be entitled to receive and retain, as provided in the related
Subservicing Agreement and in Section 3.07, the related Subservicing Fee from
payments of interest received on such Mortgage Loan after payment of all amounts
required to be remitted to the Master Servicer in respect of such Mortgage Loan.
For any Mortgage Loan that is a Nonsubserviced Mortgage Loan, the Master
Servicer shall be entitled to receive and retain an amount equal to the
Subservicing Fee from payments of interest. Unless the context otherwise
requires, references in this Agreement to actions taken or to be taken by the
Master Servicer in servicing the Mortgage Loans include actions taken or to be
taken by a Subservicer on behalf of the Master Servicer. Each Subservicing
Agreement will be upon such terms and conditions as are not inconsistent with
this Agreement and as the Master Servicer and the Subservicer have agreed. With
the approval of the Master Servicer, a Subservicer may delegate its servicing
obligations to third-party servicers, but such Subservicer will remain obligated
under the related Subservicing Agreement. The Master Servicer and a Subservicer
may enter into amendments thereto or a different form of Subservicing Agreement;
provided, however, that any such amendments or different forms shall be
consistent with and not violate the provisions of this Agreement in a manner
which would materially and adversely affect the interests of the
Certificateholders. Each Subservicing Agreement shall contain a provision that
in the event the Master Servicer shall no longer be the master servicer
hereunder, the Trustee, at its sole option, without any termination fee paid to
the Subservicer, may terminate any Subservicing Agreement.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall use
its best reasonable efforts to enforce the obligations of each Subservicer under
the related Subservicing Agreement, to the extent that the non-performance of
any such obligation would have a material and adverse effect on a Mortgage Loan,
including, without limitation, the obligation to purchase a Mortgage Loan on
account of a breach of a representation or warranty, as described in Section
2.03. Such enforcement, including, without limitation, the legal prosecution of
claims, termination of Subservicing Agreements as appropriate, and the pursuit
of other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer would employ in its good faith
business judgment and which are normal and usual in its general mortgage
servicing activities. The Master Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from a
general recovery resulting from such enforcement to the extent, if any, that
such recovery exceeds all amounts due in respect of the related Mortgage Loan or
(ii) from a specific recovery of costs, expenses or attorneys fees against the
party against whom such enforcement is directed.
SECTION 3.03. Successor Subservicers.
The Master Servicer shall be entitled to terminate any
Subservicing Agreement that may exist in accordance with the terms and
conditions of such Subservicing Agreement and without any limitation by virtue
of this Agreement; provided, however, that in the event of termination of any
Subservicing Agreement by the Master Servicer or the Subservicer, the Master
Servicer shall either act as servicer of the related Mortgage Loan or enter into
a Subservicing Agreement with a successor Subservicer which will be bound by the
terms of the related
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Subservicing Agreement. If the Master Servicer or any Affiliate of the Master
Servicer acts as servicer, it will not assume liability for the representations
and warranties of the Subservicer which it replaces. If the Master Servicer
enters into a Subservicing Agreement with a successor Subservicer, the Master
Servicer shall use reasonable efforts to have the successor Subservicer assume
liability for the representations and warranties made by the terminated
Subservicer in respect of the related Mortgage Loans and, in the event of any
such assumption by the successor Subservicer, the Master Servicer may, in the
exercise of its business judgment, release the terminated Subservicer from
liability for such representations and warranties.
SECTION 3.04. Liability of the Master Servicer.
Notwithstanding any Subservicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Master Servicer or a Subservicer or reference to actions taken through a
Subservicer or otherwise, the Master Servicer shall remain obligated and liable
to the Trustee and Certificateholders for the servicing and administering of the
Mortgage Loans in accordance with the provisions of Section 3.01 without
diminution of such obligation or liability by virtue of such Subservicing
Agreements or arrangements or by virtue of indemnification from the Subservicer
or the Depositor and to the same extent and under the same terms and conditions
as if the Master Servicer alone were servicing and administering the Mortgage
Loans. The Master Servicer shall be entitled to enter into any agreement with a
Subservicer or Seller for indemnification of the Master Servicer and nothing
contained in this Agreement shall be deemed to limit or modify such
indemnification.
The Initial Master Servicer and the Subsequent Master
Servicer, and any director, officer, employee or agent of the Initial Master
Servicer and the Subsequent Master Servicer shall be indemnified and held
harmless by the other party against any loss, liability or expense incurred in
connection with this Agreement or the Certificates, other than any loss,
liability or expense relating to any specific Mortgage Loan or Mortgage Loans
(except as any such loss, liability or expense shall be otherwise reimbursable
pursuant to this Agreement) or any loss, liability or expense incurred by reason
of willful misfeasance, bad faith or gross negligence in the performance of
duties hereunder or by reason of reckless disregard of obligations and duties
hereunder; provided, that the Initial Master Servicer shall only indemnify the
Subsequent Master Servicer with respect to actions taken (or required actions
not taken) prior to the Master Servicing Termination Date, and the Subsequent
Master Servicer shall only indemnify the Initial Master Servicer with respect to
actions taken (or required actions not taken) following the Master Servicing
Termination Date.
SECTION 3.05. No Contractual Relationship Between Subservicers
and Trustee or Certificateholders.
Any Subservicing Agreement that may be entered into and any
other transactions or services relating to the Mortgage Loans involving a
Subservicer in its capacity as such and not as an originator shall be deemed to
be between the Subservicer and the Master Servicer alone and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
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rights, obligations, duties or liabilities with respect to the Subservicer in
its capacity as such except as set forth in Section 3.06.
SECTION 3.06. Assumption or Termination of Subservicing
Agreements by Trustee.
(a) In the event the Master Servicer shall for any reason no
longer be the master servicer (including by reason of an Event of Default), the
Trustee, its designee or its successor shall thereupon assume all of the rights
and obligations of the Master Servicer under each Subservicing Agreement that
may have been entered into or, at its sole option terminate each Subservicing
Agreement. The Trustee, its designee or the successor servicer for the Trustee
shall be deemed to have assumed all of the Master Servicer's interest therein
and to have replaced the Master Servicer as a party to the Subservicing
Agreement to the same extent as if the Subservicing Agreement had been assigned
to the assuming party except that the Master Servicer shall not thereby be
relieved of any liability or obligations under the Subservicing Agreement.
(b) The Master Servicer shall, upon request of the Trustee but
at the expense of the Master Servicer, deliver to the assuming party all
documents and records relating to each Subservicing Agreement and the Mortgage
Loans then being serviced and an accounting of amounts collected and held by it
and otherwise use its best efforts to effect the orderly and efficient transfer
of each Subservicing Agreement to the assuming party.
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
The Master Servicer shall make reasonable efforts to collect
all payments called for under the terms and provisions of the Mortgage Loans,
and shall, to the extent such procedures shall be consistent with this
Agreement, follow such collection procedures as it would follow with respect to
mortgage loans comparable to the Mortgage Loans and held for its own account.
Consistent with the foregoing, the Master Servicer may in its discretion (i)
waive any late payment charge or, if applicable, penalty interest or (ii) extend
the due dates for the Monthly Payments due on a Mortgage Note for a period of
not greater than 90 days, extend the due dates for Monthly Payments due on a
Mortgage Loan for a period of not greater than 180 days; provided that any
extension pursuant to clause (ii) or clause (iii) above shall not affect the
amortization schedule of any Mortgage Loan for purposes of any computation
hereunder.
SECTION 3.08. Sub-Servicing Accounts.
In those cases where a Subservicer is servicing a Mortgage
Loan pursuant to a Subservicing Agreement, the Master Servicer shall cause the
Subservicer, pursuant to the Subservicing Agreement, to establish and maintain
one or more Subservicing Accounts which shall be an Eligible Account. The
Subservicer will be required thereby to deposit into the Subservicing Account on
a daily basis all proceeds of Mortgage Loans received by the Subservicer, less
its unreimbursed advances and expenses, to the extent permitted by the
Subservicing Agreement. The Master Servicer shall be deemed to have received
such monies upon receipt thereof by the Subservicer. On or before the
Determination Date, the Master Servicer shall cause the
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Subservicer, pursuant to the Subservicing Agreement, to remit to the Master
Servicer for deposit in the Collection Account all funds held in the
Subservicing Account with respect to each Mortgage Loan serviced by such
Subservicer that are required to be remitted to the Master Servicer. The
Subservicer will also be required, pursuant to the Subservicing Agreement, to
advance on such scheduled date of remittance amounts equal to any scheduled
monthly installments of principal and interest for which payment was not
received by the Subservicer. This obligation to advance with respect to each
Mortgage Loan will continue up to and including the first of the month following
the date on which the related Mortgaged Property is sold at a foreclosure sale
or is acquired by the Trust Fund by deed in lieu of foreclosure or otherwise.
All such advances received by the Master Servicer shall be deposited promptly by
it in the Collection Account.
SECTION 3.09. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts.
The Master Servicer shall establish and maintain one or more
accounts (the "Servicing Accounts"), into which all collections from the
Mortgagors (or related advances from Subservicers) for the payment of taxes,
assessments, hazard insurance premiums, and comparable items for the account of
the Mortgagors ("Escrow Payments") shall be deposited and retained. Servicing
Accounts shall be Eligible Accounts. The Master Servicer shall deposit in the
Servicing Accounts on a daily basis and in no event later than the second
Business Day after receipt, and retain therein, all Escrow Payments collected on
account of the Mortgage Loans, for the purpose of effecting the timely payment
of any such items as required under the terms of this Agreement. Withdrawals of
amounts from a Servicing Account may be made only to (i) effect timely payment
of taxes, assessments, hazard insurance premiums, and comparable items; (ii)
reimburse the Master Servicer out of related collections for any advances made
pursuant to Section 3.01 (with respect to taxes and assessments) and Section
3.13 (with respect to hazard insurance); (iii) refund to Mortgagors any sums as
may be determined to be overages; (iv) pay interest, if required and as
described below, to Mortgagors on balances in the Servicing Account; (v) a
successor Master Servicer (including the Successor Master Servicer) in
connection with the transfer of the Master Servicer's obligations under this
Agreement or (vi) clear and terminate the Servicing Account at the termination
of the Master Servicer's obligations and responsibilities in respect of the
Mortgage Loans under this Agreement in accordance with Article X. As part of its
servicing duties, the Master Servicer shall pay to the Mortgagors interest on
funds in Servicing Accounts, to the extent required by law and, to the extent
that interest earned on funds in the Servicing Accounts is insufficient, to pay
such interest from its or their own funds, without any reimbursement therefor.
Notwithstanding the foregoing, the Master Servicer shall not be obligated to
collect Escrow Payments if the related Mortgage Loan does not require such
payments but the Master Servicer shall nevertheless be obligated to make
Servicing Advances as provided in Section 3.01.
SECTION 3.10. Collection Account and Distribution Account.
(a) On behalf of the Trust Fund, the Master Servicer shall
establish and maintain an account or accounts (such account or accounts, the
"Collection Account"), held in trust for the benefit of the Trustee and the
Certificateholders. On behalf of the Trust Fund, the Master Servicer shall
deposit or cause to be deposited in the Collection Account on a daily basis and
in
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no event later than two Business Days after receipt, as and when received or as
otherwise required hereunder, the following payments and collections received or
made by it on or subsequent to the Cut-off Date with respect to the Initial
Mortgage Loans, or Subsequent Cut-off Date with respect to the Subsequent
Mortgage Loans (other than payments of principal and interest due on the
Mortgage Loans on or before the Cut-off Date or Subsequent Cut-Off Date, as
applicable):
(i) all payments on account of principal,
including Principal Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest
(net of the related Master Servicing Fee) on each Mortgage
Loan;
(iii) all Insurance Proceeds and Liquidation
Proceeds (other than proceeds collected in respect of any
particular REO Property and amounts paid by the Master
Servicer in connection with a purchase of Mortgage Loans and
REO Properties pursuant to Section 10.01);
(iv) any amounts required to be deposited
pursuant to Section 3.12 in connection with any losses
realized on Permitted Investments with respect to funds held
in the Collection Account;
(v) any amounts required to be deposited by
the Master Servicer pursuant to the second paragraph of
Section 3.13(a) in respect of any blanket policy deductibles;
and
(vi) any Purchase Price or Substitution
Shortfall Amount delivered to the Master Servicer;
The foregoing requirements for deposit in the Collection
Accounts shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, payments in the nature of late payment
charges, prepayment charges that are not prepayment penalties, assumption fees
or other similar fees need not be deposited by the Master Servicer in the
Collection Account. In the event the Master Servicer shall deposit in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from the Collection Account, any provision herein
to the contrary notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish
and maintain one account (such account, the "Distribution Account"), held in
trust for the benefit of the Certificateholders. On behalf of the Trust Fund,
the Master Servicer shall deliver to the Trustee in immediately available funds
for deposit in the Distribution Account on or before 12:00 p.m. New York time on
the Master Servicer Remittance Date, that portion of the Interest Remittance
Amount and Principal Remittance Amount for the related Distribution Date then on
deposit in the Collection Account.
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(c) Funds in the Collection Account may be invested in
Permitted Investments in accordance with the provisions set forth in Section
3.12. The Master Servicer shall give notice to the Master Servicer and the
Trustee of the location of the Collection Account maintained by it when
established and prior to any change thereof. The Trustee shall give notice to
the Master Servicer and the Depositor of the location of the Distribution
Account when established and prior to any change thereof.
(d) Funds held in the Collection Account at any time may be
delivered by the Master Servicer to the Trustee for deposit in the Distribution
Account. In the event the Master Servicer shall deliver to the Trustee for
deposit in the Distribution Account any amount not required to be deposited
therein, it may at any time request that the Trustee withdraw such amount from
the Distribution Account and remit to it any such amount, any provision herein
to the contrary notwithstanding. In addition, the Master Servicer shall deliver
to the Trustee from time to time for deposit the amounts set forth in clauses
(i) through (v) below:
(i) any Monthly Advances, as required
pursuant to Section 4.03;
(ii) any amounts required to be deposited
pursuant to Section 3.22(d) or (f) in connection with any REO
Property;
(iii) any amounts to be paid by the
Terminator in connection with a purchase of Mortgage Loans and
REO Properties pursuant to Section 10.01;
(iv) any amounts required to be deposited
pursuant to Section 3.23 in connection with any Prepayment
Interest Shortfalls; and
(v) any Stayed Funds, as soon as permitted
by the federal bankruptcy court having jurisdiction in such
matters.
(e) Promptly upon receipt of any Stayed Funds, whether from
the Master Servicer, a trustee in bankruptcy, or federal bankruptcy court or
other source, the Trustee shall deposit such funds in the Distribution Account,
subject to withdrawal thereof pursuant to Section 7.02(b) or as otherwise
permitted hereunder. In addition, the Master Servicer shall deposit in the
Distribution Account any amounts required to be deposited pursuant to Section
3.12 in connection with losses realized on Permitted Investments with respect to
funds held in the Distribution Account.
SECTION 3.11. Withdrawals from the Collection Account.
The Master Servicer shall, from time to time, make withdrawals
from the Collection Account for any of the following purposes or as described in
Section 4.03:
(i) to remit to the Trustee for deposit in
the Distribution Account the amounts required to be so
remitted pursuant to Section 3.10(b) or permitted to be so
remitted pursuant to the first sentence of Section 3.10(d);
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(ii) subject to Section 3.15(d), to
reimburse itself or the related Subservicer for Monthly
Advances, but only to the extent of amounts received which
represent Late Collections (net of the related Master
Servicing Fees) of Monthly Payments on Mortgage Loans with
respect to which such Monthly Advances were made in accordance
with the provisions of Section 4.03;
(iii) subject to Section 3.15(d), to pay
itself any unpaid Master Servicing Fees and reimburse itself
for any unreimbursed Servicing Advances with respect to each
Mortgage Loan, but only to the extent of any Liquidation
Proceeds and Insurance Proceeds received with respect to such
Mortgage Loan;
(iv) to pay to (a) itself as servicing
compensation (in addition to the Master Servicing Fee) on the
Master Servicer Remittance Date any interest or investment
income earned on funds deposited in the Collection Account and
(b) itself on the Master Servicer Remittance Date, the Master
Servicing Fee and all late payment charge and assumption fees;
(v) to pay to itself, the Depositor or the
Mortgage Loan Seller, as the case may be, with respect to each
Mortgage Loan that has previously been purchased or replaced
pursuant to Section 2.03 or Section 3.15(c) all amounts
received thereon not included in the Purchase Price or the
Substitution Shortfall Amount;
(vi) to reimburse itself for any Monthly
Advance or Servicing Advance previously made which it has
determined to be a Nonrecoverable Advance
in accordance with the provisions of Section 4.03;
(vii) to reimburse itself or the Depositor
for expenses incurred by or reimbursable to the Master
Servicer or the Depositor, as the case may be, pursuant to
Section 6.03;
(viii) to reimburse itself or the Trustee,
as the case may be, for expenses reasonably incurred in
respect of the breach or defect giving rise to the purchase
obligation under Section 2.03 or Section 2.04 of this
Agreement that were included in the Purchase Price of the
Mortgage Loan, including any expenses arising out of the
enforcement of the purchase obligation;
(ix) to pay, or to reimburse itself for
advances in respect of, expenses incurred in connection with
any Mortgage Loan pursuant to Section 3.15(b);
(x) to pay the premium on the Lender PMI
Loans in accordance with Section 3.26(c);
(xi) to reimburse the Trustee in
connection with Section 11.01(c);
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(xii) to transfer any amount in the
Collection Account to a successor Master Servicer (including
the Successor Master Servicer) in connection with the transfer
of the obligations of the Master Servicer in accordance with
this Agreement; and
(xiii) to clear and terminate the Collection
Account pursuant to Section 10.01.
The Master Servicer shall keep and maintain separate
accounting, on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Collection Account, to the extent held by or
on behalf of it, pursuant to subclauses (ii), (iii), (v), (vi), (viii), (ix) and
(x) above. The Master Servicer shall provide written notification to the
Trustee, on or prior to the next succeeding Master Servicer Remittance Date,
upon making any withdrawals from the Collection Account pursuant to subclauses
(vi) and (vii) above.
SECTION 3.12. Investment of Funds in the Investment Accounts.
(a) The Master Servicer may direct, by means of written
directions (which may be standing directions), any depository institution
maintaining the Interest Coverage Account, the Pre-Funding Account or the
Collection Account (for purposes of this Section 3.12, an "Investment Account"),
to invest the funds in such Investment Account in one or more Permitted
Investments bearing interest or sold at a discount, and maturing, unless payable
on demand, (i) no later than the Business Day immediately preceding the date on
which such funds are required to be withdrawn from such account pursuant to this
Agreement, if a Person other than the Trustee is the obligor thereon, and (ii)
no later than the date on which such funds are required to be withdrawn from
such account pursuant to this Agreement, if the Trustee is the obligor thereon.
All such Permitted Investments shall be held to maturity, unless payable on
demand. Any investment of funds in an Investment Account shall be made in the
name of the Trustee (in its capacity as such) or in the name of a nominee of the
Trustee. The Trustee shall be entitled to sole possession over each such
investment and the income thereon, and any certificate or other instrument
evidencing any such investment shall be delivered directly to the Trustee or its
agent, together with any document of transfer necessary to transfer title to
such investment to the Trustee or its nominee. In the event amounts on deposit
in an Investment Account are at any time invested in a Permitted Investment
payable on demand, the Trustee shall at the direction of the Master Servicer:
(x) consistent with any notice required to be given
thereunder, demand that payment thereon be made on
the last day such Permitted Investment may otherwise
mature hereunder in an amount equal to the lesser of
(1) all amounts then payable thereunder and (2) the
amount required to be withdrawn on such date; and
(y) demand payment of all amounts due thereunder
promptly upon determination by a Responsible Officer
of the Trustee that such Permitted Investment would
not constitute a Permitted Investment in respect of
funds thereafter on deposit in the Investment
Account.
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(b) All income and gain realized from the investment of funds
deposited in the Collection Account held by or on behalf of the Master Servicer
or the Trustee, shall be for the benefit of the Master Servicer and shall be
subject to its withdrawal in accordance with Section 3.11. The Master Servicer
shall deposit in the Collection Account, the amount of any loss incurred in
respect of any such Permitted Investment made with funds in such accounts
immediately upon realization of such loss.
(c) Except as otherwise expressly provided in this Agreement,
if any default occurs in the making of a payment due under any Permitted
Investment, or if a default occurs in any other performance required under any
Permitted Investment, the Trustee may and, subject to Section 8.01 and Section
8.02(v), shall take such action as may be appropriate to enforce such payment or
performance, including the institution and prosecution of appropriate
proceedings.
SECTION 3.13. Maintenance of Hazard Insurance and Errors and
Omissions and Fidelity Coverage.
(a) The Master Servicer shall cause to be maintained for each
Mortgaged Property fire and hazard insurance with extended coverage as is
customary in the area where the Mortgaged Property is located in an amount which
is at least equal to the lesser of the current principal balance of such
Mortgage Loan and the amount necessary to fully compensate for any damage or
loss to the improvements which are a part of such property on a replacement cost
basis, in each case in an amount not less than such amount as is necessary to
avoid the application of any coinsurance clause contained in the related hazard
insurance policy. To the extent it may do so without breaching the related
Subservicing Agreement, the Master Servicer shall replace any Subservicer that
does not cause such insurance, to the extent it is available, to be maintained.
The Master Servicer shall also cause to be maintained fire and hazard insurance
on each REO Property with extended coverage as is customary in the area where
the Mortgaged Property is located in an amount which is at least equal to the
lesser of (i) the maximum insurable value of the improvements which are a part
of such property and (ii) the outstanding principal balance of the related
Mortgage Loan at the time it became an REO Property. The Master Servicer will
comply in the performance of this Agreement with all reasonable rules and
requirements of each insurer under any such hazard policies. Any amounts to be
collected by the Master Servicer under any such policies (other than amounts to
be applied to the restoration or repair of the property subject to the related
Mortgage or amounts to be released to the Mortgagor in accordance with the
procedures that the Master Servicer would follow in servicing loans held for its
own account, subject to the terms and conditions of the related Mortgage and
Mortgage Note) shall be deposited in the Collection Account, subject to
withdrawal pursuant to Section 3.11, if received in respect of a Mortgage Loan,
or in the REO Account, subject to withdrawal pursuant to Section 3.22, if
received in respect of an REO Property. Any cost incurred by the Master Servicer
in maintaining any such insurance shall not, for the purpose of calculating
distributions to Certificateholders, be added to the unpaid principal balance of
the related Mortgage Loan, notwithstanding that the terms of such Mortgage Loan
so permit. It is understood and agreed that no earthquake or other additional
insurance is to be required of any Mortgagor other than pursuant to such
applicable laws and regulations as shall at any time be in force and as shall
require such additional insurance. If the Mortgaged Property or REO Property is
at any time in an area identified in the Federal
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Register by the Federal Emergency Management Agency as having special flood
hazards, the Master Servicer will cause to be maintained a flood insurance
policy in respect thereof. Such flood insurance shall be in an amount equal to
the lesser of (i) the unpaid principal balance of the related Mortgage Loan and
(ii) the maximum amount of such insurance available for the related Mortgaged
Property under the national flood insurance program (assuming that the area in
which such Mortgaged Property is located is participating in such program).
In the event that the Master Servicer shall obtain and
maintain a blanket policy with an insurer having a General Policy Rating of A:X
or better in Best's Key Rating Guide insuring against hazard losses on all of
the Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first two sentences of this Section 3.13, it
being understood and agreed that such policy may contain a deductible clause, in
which case the Master Servicer shall, in the event that there shall not have
been maintained on the related Mortgaged Property or REO Property a policy
complying with the first two sentences of this Section 3.13, and there shall
have been one or more losses which would have been covered by such policy,
deposit to the Collection Account from its own funds the amount not otherwise
payable under the blanket policy because of such deductible clause. In
connection with its activities as administrator and servicer of the Mortgage
Loans, the Master Servicer agrees to prepare and present, on behalf of itself,
the Trustee and the Certificateholders, claims under any such blanket policy in
a timely fashion in accordance with the terms of such policy.
(b) The Master Servicer shall each keep in force during the
term of this Agreement a policy or policies of insurance covering errors and
omissions for failure in the performance of its obligations under this
Agreement, which policy or policies shall be in such form and amount that would
meet the requirements of FNMA or FHLMC if it were the purchaser of the Mortgage
Loans, unless the Master Servicer has obtained a waiver of such requirements
from FNMA or FHLMC. The Master Servicer shall also maintain a fidelity bond in
the form and amount that would meet the requirements of FNMA or FHLMC, unless
the Master Servicer has obtained a waiver of such requirements from FNMA or
FHLMC. The Master Servicer shall be deemed to have complied with this provision
if an Affiliate of the Master Servicer has such errors and omissions and
fidelity bond coverage and, by the terms of such insurance policy or fidelity
bond, the coverage afforded thereunder extends to the Master Servicer. Any such
errors and omissions policy and fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee.
SECTION 3.14. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
The Master Servicer will, to the extent it has knowledge of
any conveyance or prospective conveyance of any Mortgaged Property by any
Mortgagor (whether by absolute conveyance or by contract of sale, and whether or
not the Mortgagor remains or is to remain liable under the Mortgage Note and/or
the Mortgage), exercise its rights to accelerate the maturity of such Mortgage
Loan under the "due-on-sale" clause, if any, applicable thereto; PROVIDED,
HOWEVER, that the Master Servicer shall not exercise any such rights if
prohibited by law from doing so. If the Master Servicer reasonably believes it
is unable under applicable law to enforce such "due-on-
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sale" clause, or if any of the other conditions set forth in the proviso to the
preceding sentence apply, the Master Servicer will enter into an assumption and
modification agreement from or with the person to whom such property has been
conveyed or is proposed to be conveyed, pursuant to which such person becomes
liable under the Mortgage Note and, to the extent permitted by applicable state
law, the Mortgagor remains liable thereon. The Master Servicer is also
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as the Mortgagor and becomes liable under the Mortgage
Note, provided that no such substitution shall be effective unless such person
satisfies the underwriting criteria of the Mortgage Loan Seller and has a credit
risk rating or Credit Bureau Risk Score at least equal to that of the original
Mortgagor, as certified to the Master Servicer by the Mortgage Loan Seller. In
connection with any assumption or substitution, the Master Servicer shall apply
such underwriting standards and follow such practices and procedures as shall be
normal and usual in its general mortgage servicing activities and as it applies
to other mortgage loans owned solely by it. The Master Servicer shall not take
or enter into any assumption and modification agreement, however, unless (to the
extent practicable in the circumstances) it shall have received confirmation, in
writing, of the continued effectiveness of any applicable hazard insurance
policy. Any fee collected by the Master Servicer in respect of an assumption or
substitution of liability agreement will be retained by the Master Servicer as
additional servicing compensation. In connection with any such assumption, no
material term of the Mortgage Note (including but not limited to the related
Mortgage Rate and the amount of the Monthly Payment) may be amended or modified,
except as otherwise required pursuant to the terms thereof. The Master Servicer
shall notify the Trustee and the Custodian that any such substitution or
assumption agreement has been completed by forwarding to the Trustee or the
Custodian the executed original of such substitution or assumption agreement,
which document shall be added to the related Mortgage File and shall, for all
purposes, be considered a part of such Mortgage File to the same extent as all
other documents and instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Master Servicer shall not be deemed to be in default,
breach or any other violation of its obligations hereunder by reason of any
assumption of a Mortgage Loan by operation of law or by the terms of the
Mortgage Note or any assumption which the Master Servicer may be restricted by
law from preventing, for any reason whatever. For purposes of this Section 3.14,
the term "assumption" is deemed to also include a sale (of the Mortgaged
Property) subject to the Mortgage that is not accompanied by an assumption or
substitution of liability agreement.
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SECTION 3.15. Realization Upon Defaulted Mortgage Loans.
(a) The Master Servicer shall use its best efforts, consistent
with the servicing standard set forth in Section 3.01, to foreclose upon or
otherwise comparably convert the ownership of properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07. The Master Servicer shall be responsible for all costs
and expenses incurred by it in any such proceedings; PROVIDED, HOWEVER, that
such costs and expenses will be recoverable as Servicing Advances by the Master
Servicer as contemplated in Section 3.11 and 3.22. The foregoing is subject to
the provision that, in any case in which Mortgaged Property shall have suffered
damage from an Uninsured Cause, the Master Servicer shall not be required to
expend its own funds toward the restoration of such property unless it shall
determine in its discretion that such restoration will increase the proceeds of
liquidation of the related Mortgage Loan after reimbursement to itself for such
expenses.
(b) Notwithstanding the foregoing provisions of this Section
3.15 or any other provision of this Agreement, with respect to any Mortgage Loan
as to which the Master Servicer has received actual notice of, or has actual
knowledge of, the presence of any toxic or hazardous substance on the related
Mortgaged Property, the Master Servicer shall not, on behalf of the Trustee,
either (i) obtain title to such Mortgaged Property as a result of or in lieu of
foreclosure or otherwise, or (ii) otherwise acquire possession of, or take any
other action with respect to, such Mortgaged Property, if, as a result of any
such action, the Trustee, the Trust Fund or the Certificateholders would be
considered to hold title to, to be a "mortgagee-in-possession" of, or to be an
"owner" or "operator" of such Mortgaged Property within the meaning of the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended from time to time, or any comparable law, unless the Master Servicer has
also previously determined and received the consent of the Majority Class R
Certificateholder, based on its reasonable judgment and a prudent report
prepared by a Person who regularly conducts environmental audits using customary
industry standards, that:
(1) such Mortgaged Property is in compliance
with applicable environmental laws or, if not, that it would
be in the best economic interest of the Trust Fund to take
such actions as are necessary to bring the Mortgaged Property
into compliance therewith; and
(2) there are no circumstances present at
such Mortgaged Property relating to the use, management or
disposal of any hazardous substances, hazardous materials,
hazardous wastes or petroleum-based materials for which
investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or
local law or regulation, or that if any such materials are
present for which such action could be required, that it would
be in the best economic interest of the Trust Fund to take
such actions with respect to the affected Mortgaged Property.
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The cost of the environmental audit report contemplated by
this Section 3.15 shall be advanced by the Master Servicer, subject to the
Master Servicer's right to be reimbursed therefor from the Collection Account as
provided in Section 3.11(ix), such right of reimbursement being prior to the
rights of Certificateholders to receive any amount in the Collection Account
received in respect of the affected Mortgage Loan or other Mortgage Loans.
If the Master Servicer determines, as described above, that it
is in the best economic interest of the Trust Fund to take such actions as are
necessary to bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials, hazardous
wastes, or petroleum-based materials affecting any such Mortgaged Property, then
the Master Servicer shall take such action as it deems to be in the best
economic interest of such Trust Fund. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Master Servicer,
subject to the Master Servicer's right to be reimbursed therefor from the
Collection Account as provided in Section 3.11(ix), such right of reimbursement
being prior to the rights of Certificateholders to receive any amount in the
Collection Account received in respect of the affected Mortgage Loan or other
Mortgage Loans.
(c) The Master Servicer may at its option purchase from REMIC
I any Mortgage Loan that is 90 days or more delinquent, which the Master
Servicer determines in good faith will otherwise become subject to foreclosure
proceedings (evidence of such determination to be delivered in writing, and in
form and substance satisfactory to the Trustee prior to purchase), at a price
equal to the Purchase Price. The Purchase Price for any Mortgage Loan purchased
hereunder shall be deposited in the Collection Account, and the Trustee, upon
receipt of written certification from the Master Servicer of such deposit, shall
release or cause to be released to the Master Servicer the related Mortgage File
and shall execute and deliver such instruments of transfer or assignment, in
each case without recourse, as the Master Servicer shall furnish and as shall be
necessary to vest in the Master Servicer title to any Mortgage Loan released
pursuant hereto.
(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: FIRST, to reimburse the
Master Servicer for any related unreimbursed Servicing Advances and Monthly
Advances, pursuant to Section 3.11(ii) or (iii); SECOND, to accrued and unpaid
interest on the Mortgage Loan, to the date of the Final Recovery Determination,
or to the Due Date prior to the Distribution Date on which such amounts are to
be distributed if not in connection with a Final Recovery Determination; and
THIRD, as a recovery of principal of the Mortgage Loan. If the amount of the
recovery so allocated to interest is less than the full amount of accrued and
unpaid interest due on such Mortgage Loan, the amount of such recovery will be
allocated by the Master Servicer as follows: FIRST, concurrently and on a pro
rata basis to unpaid Master Servicing Fees; and SECOND, to the balance of the
interest then due and owing. The portion of the recovery so allocated to unpaid
Master Servicing Fees shall be reimbursed to the Master Servicer pursuant to
Section 3.11(iii). The portion of the recovery allocated to interest (net of
unpaid Master Servicing Fees) and the portion of the recovery allocated to
principal of the Mortgage Loan shall be applied
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as follows: FIRST, to reimburse the Master Servicer for any related unreimbursed
Monthly Advances in accordance with Section 3.11(ii), and SECOND, as part of the
amounts to be transferred to the Distribution Account in accordance with Section
3.10(b).
SECTION 3.16. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt
by the Master Servicer of a notification that payment in full shall be escrowed
in a manner customary for such purposes, the Master Servicer will notify the
Custodian (or, if no Custodial Agreement is in effect, the Trustee) by a
certification in the form of Exhibit D-2 (which certification shall include a
statement to the effect that all amounts received or to be received in
connection with such payment which are required to be deposited in the
Collection Account pursuant to Section 3.10 have been or will be so deposited)
of a Servicing Officer, with a copy to the Trustee, and shall request delivery
to it of the Mortgage File. Upon receipt of such certification and request, the
Custodian (or, if no Custodial Agreement is in effect, the Trustee) shall
promptly release the related Mortgage File to the Master Servicer. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account or the Distribution
Account.
From time to time and as appropriate for the servicing or
foreclosure of any Mortgage Loan, including, for this purpose, collection under
any insurance policy relating to the Mortgage Loans, the Custodian (or, if no
Custodial Agreement is in effect, the Trustee) shall, upon request of the Master
Servicer and delivery to the Custodian (or, if no Custodial Agreement is in
effect, the Trustee) of a Request for Release in the form of Exhibit D-l, with a
copy to the Trustee, release the related Mortgage File to the Master Servicer,
and the Trustee shall, at the direction of the Master Servicer, execute such
documents as shall be necessary to the prosecution of any such proceedings. Such
Request for Release shall obligate the Master Servicer to return each and every
document previously requested from the Mortgage File to the Custodian (or, if no
Custodial Agreement is in effect, the Trustee) when the need therefor by the
Master Servicer no longer exists, unless the Mortgage Loan has been liquidated
and the Liquidation Proceeds relating to the Mortgage Loan have been deposited
in the Collection Account or the Mortgage File or such document has been
delivered to an attorney, or to a public trustee or other public official as
required by law, for purposes of initiating or pursuing legal action or other
proceedings for the foreclosure of the Mortgaged Property either judicially or
non-judicially, and the Master Servicer has delivered to the Custodian (or, if
no Custodial Agreement is in effect, the Trustee) a certificate of a Servicing
Officer of the Master Servicer certifying as to the name and address of the
Person to which such Mortgage File or such document was delivered and the
purpose or purposes of such delivery, with a copy to the Trustee. Upon receipt
of a certificate of a Servicing Officer of the Master Servicer stating that such
Mortgage Loan was liquidated and that all amounts received or to be received in
connection with such liquidation that are required to be deposited into the
Collection Account have been so deposited, or that such Mortgage Loan has become
an REO property, a copy of the Request for Release shall be released by the
Custodian (or, if no Custodial Agreement is in effect, the Trustee) to the
Master Servicer.
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Upon written certification of a Servicing Officer of the
Master Servicer, the Trustee shall execute and deliver to the Master Servicer,
any court pleadings, requests for trustee's sale or other documents necessary to
the foreclosure or trustee's sale in respect of a Mortgaged Property or to any
legal action brought to obtain judgment against any Mortgagor on the Mortgage
Note or Mortgage or to obtain a deficiency judgment, or to enforce any other
remedies or rights provided by the Mortgage Note or Mortgage or otherwise
available at law or in equity. Each such certification shall include a request
that such pleadings or documents be executed by the Trustee and a statement as
to the reason such documents or pleadings are required and that the execution
and delivery thereof by the Trustee will not invalidate or otherwise affect the
lien of the Mortgage, except for the termination of such a lien upon completion
of the foreclosure or trustee's sale.
SECTION 3.17. Servicing Compensation.
As compensation for the activities of the Master Servicer
hereunder, the Master Servicer shall be entitled to the Master Servicing Fee
with respect to each Mortgage Loan payable solely from payments of interest in
respect of such Mortgage Loan, subject to Section 3.23. In addition, the Master
Servicer shall be entitled to recover unpaid Master Servicing Fees out of
Insurance Proceeds or Liquidation Proceeds to the extent permitted by Section
3.11(iii) and out of amounts derived from the operation and sale of an REO
Property to the extent permitted by Section 3.22. Subject to the provisions of
Section 6.04, the right to receive the Master Servicing Fee may not be
transferred in whole or in part except in connection with the transfer of all of
the Master Servicer's responsibilities and obligations under this Agreement to
the extent permitted herein.
Additional servicing compensation in the form of prepayment
fees shall be paid to the Master Servicer, and assumption fees, late payment
charges and other miscellaneous fees shall be retained by the Master Servicer
(subject to Section 3.23) only to the extent such fees or charges are received
by the Master Servicer. The Master Servicer shall also be entitled pursuant to
Section 3.11(iv) to withdraw from the Collection Account, and pursuant to
Section 3.22(b) to withdraw from any REO Account, as additional servicing
compensation, interest or other income earned on deposits therein, subject to
Section 3.12 and Section 3.23. The Master Servicer shall be required to pay all
expenses incurred by it in connection with its servicing activities hereunder
(including premiums for the insurance required by Section 3.13, to the extent
such premiums are not paid by the related Mortgagors, and to the extent provided
herein in Section 8.05, the fees and expenses of the Trustee) and shall not be
entitled to reimbursement therefor except as specifically provided herein.
SECTION 3.18. Reports to the Trustee; Collection Account
Statements.
Not later than fifteen days after each Distribution Date, the
Master Servicer shall forward to the Trustee and the Depositor a statement
prepared by the institution at which the Collection Account is maintained
setting forth the status of the Collection Account as of the close of business
on such Distribution Date and showing, for the period covered by such statement,
the aggregate amount of deposits into and withdrawals from the Collection
Account of each category of deposit specified in Section 3.10(a) and each
category of withdrawal specified in Section 3.11.
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Copies of such statement shall be provided by the Trustee to any
Certificateholder and to any Person identified to the Trustee as a prospective
transferee of a Certificate, upon request at the expense of the requesting
party, provided such statement is delivered by the Master Servicer to the
Trustee.
SECTION 3.19. Statement as to Compliance.
The Master Servicer will deliver to the Trustee and the
Depositor not later than 90 days following the end of the fiscal year of the
Master Servicer, which as of the Closing Date ends on the last day in December,
an Officers' Certificate stating, as to each signatory thereof, that (i) a
review of the activities of the Master Servicer during the preceding year and of
performance under this Agreement has been made under such officers' supervision,
(ii) to the best of such officers' knowledge, based on such review, the Master
Servicer has fulfilled all of its obligations under this Agreement throughout
such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof, and (iii) to the best of such officers' knowledge, each
Subservicer has fulfilled its material obligations under its Subservicing
Agreement in all material respects, or if there has been a material default in
the fulfillment of such obligations relating to this Agreement, specifying such
default known to such officer and the nature and status thereof. Copies of any
such statement shall be provided by the Trustee to any Certificateholder and to
any Person identified to the Trustee as a prospective transferee of a
Certificate, upon request at the expense of the requesting party, provided such
statement is delivered by the Master Servicer to the Trustee.
SECTION 3.20. Independent Public Accountants' Servicing
Report.
Not later than 90 days following the end of each fiscal year
of the Master Servicer, the Master Servicer, at its expense, shall cause a
nationally recognized firm of independent certified public accountants to
furnish to the Master Servicer a report stating that (i) it has obtained a
letter of representation regarding certain matters from the management of the
Master Servicer which includes an assertion that the Master Servicer has
complied with certain minimum residential mortgage loan servicing standards,
identified in the Uniform Single Attestation Program for Mortgage Bankers
established by the Mortgage Bankers Association of America, with respect to the
servicing of residential mortgage loans during the most recently completed
fiscal year and (ii) on the basis of an examination conducted by such firm in
accordance with standards established by the American Institute of Certified
Public Accountants, such representation is fairly stated in all material
respects, subject to such exceptions and other qualifications that may be
appropriate. In rendering such statement, such firm may rely, as to matters
relating to direct servicing of mortgage loans by Subservicers, upon comparable
statements for examinations conducted substantially in compliance with the
Uniform Single Audit Program for Mortgage Bankers or the Audit Program for
Mortgages serviced for FHLMC (rendered within one year of such statement) of
Independent public accountants with respect to the related Subservicer.
Immediately upon receipt of such report, the shall furnish a copy of such report
to the Trustee and each Rating Agency. Copies of such statement shall be
provided by the Trustee to any Certificateholder upon request at the Master
Servicer's expense, provided that such statement is delivered by the Master
Servicer to the Trustee.
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SECTION 3.21. Access to Certain Documentation.
The Master Servicer shall provide, or cause the Subservicers
to provide, to the Office of Thrift Supervision, the FDIC, and any other federal
or state banking or insurance regulatory authority that may exercise authority
over any Certificateholder, access to the documentation regarding the Mortgage
Loans required by applicable laws and regulations. Such access shall be afforded
without charge, but only upon reasonable request and during normal business
hours at the offices of the Master Servicer designated by it. In addition,
access to the documentation regarding the Mortgage Loans will be provided to any
Certificateholder, the Trustee and to any Person identified to the Master
Servicer as a prospective transferee of a Certificate, upon reasonable request
during normal business hours at the offices of the Master Servicer designated by
it at the expense of the Person requesting such access.
SECTION 3.22. Title, Management and Disposition of REO
Property.
(a) The deed or certificate of sale of any REO Property
shall be taken in the name of the Trustee, or its nominee, on behalf of the
Certificateholders. The Master Servicer, on behalf of the Trust Fund, shall
either sell any REO Property within three years after the Trust Fund acquires
ownership of such REO Property for purposes of Section 860G(a)(8) of the Code or
request from the Internal Revenue Service, more than 60 days before the day on
which the three-year grace period would otherwise expire an extension of the
grace period, unless the Master Servicer shall have delivered to the Trustee an
Opinion of Counsel, addressed to the Trustee and the Depositor, which Opinion of
Counsel shall not be at the expense of the Trust Fund or Trustee, to the effect
that the holding by REMIC I of such REO Property subsequent to such period after
its acquisition will not result in the imposition on REMIC I, REMIC II or REMIC
III of taxes on "prohibited transactions" thereof, as defined in Section 860F of
the Code, or cause REMIC I, REMIC II or REMIC III to fail to qualify as a REMIC
under Federal law at any time that any Certificates are outstanding. The Master
Servicer shall manage, conserve, protect and operate each REO Property for the
Certificateholders solely for the purpose of its prompt disposition and sale in
a manner which does not cause such REO Property to fail to qualify as
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code or
result in the receipt by REMIC I, REMIC II or REMIC III of any "income from
non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the Code,
or any "net income from foreclosure property" which is subject to taxation under
the REMIC Provisions.
(b) The Master Servicer shall segregate and hold all funds
collected and received in connection with the operation of any REO Property
separate and apart from its own funds and general assets and shall establish and
maintain with respect to REO Properties an account held in trust for the Trustee
for the benefit of the Certificateholders (the "REO Account"), which shall be an
Eligible Account. The Master Servicer shall be permitted to allow the Collection
Account to serve as the REO Account, subject to separate ledgers for each REO
Property. The Master Servicer shall be entitled to retain or withdraw any
interest income paid on funds deposited in the REO Account.
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(c) The Master Servicer shall have full power and authority,
subject only to the specific requirements and prohibitions of this Agreement, to
do any and all things in connection with any REO Property as are consistent with
the manner in which the Master Servicer manages and operates similar property
owned by the Master Servicer or any of its Affiliates, all on such terms and for
such period as the Master Servicer deems to be in the best interests of
Certificateholders. In connection therewith, the Master Servicer shall deposit,
or cause to be deposited, on a daily basis in the REO Account all revenues
received by it with respect to an REO Property and shall withdraw therefrom
funds necessary for the proper operation, management and maintenance of such REO
Property including, without limitation:
(i) all insurance premiums due and
payable in respect of such REO Property;
(ii) all real estate taxes and assessments
in respect of such REO Property that may result in the
imposition of a lien thereon; and
(iii) all costs and expenses necessary to
maintain such REO Property.
To the extent that amounts on deposit in the REO Account with respect to an REO
Property are insufficient for the purposes set forth in clauses (i) through
(iii) above with respect to such REO Property, the Master Servicer shall advance
from its own funds such amount as is necessary for such purposes if, but only
if, the Master Servicer would make such advances if the Master Servicer owned
the REO Property and if in the Master Servicer's judgment, the payment of such
amounts will be recoverable from the rental or sale of the REO Property.
Notwithstanding the foregoing, the Master Servicer shall not:
(i) permit the Trust Fund to enter into, renew or extend any
New Lease with respect to any REO Property, if the New Lease by its terms will
give rise to any income that does
not constitute Rents from Real Property;
(ii) permit any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real Property;
(iii) authorize or permit any construction on any REO
Property, other than the completion of a building or other improvement thereon,
and then only if more than ten percent of the construction of such building or
other improvement was completed before default on the related Mortgage Loan
became imminent, all within the meaning of Section 856(e)(4)(B) of the Code; or
(iv) allow any Person to Directly Operate any REO Property on
any date more than 90 days after its date of acquisition by the Trust Fund;
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unless, in any such case, the Master Servicer has obtained an Opinion of
Counsel, which Opinion of Counsel shall not be at the expense of the Trust Fund
or Trustee, provided to the Trustee, to the effect that such action will not
cause such REO Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code at any time that it is held by REMIC
I, in which case the Master Servicer may take such actions as are specified in
such Opinion of Counsel.
The Master Servicer may contract with any Independent
Contractor for the operation and management of any REO Property, provided that:
(i) the terms and conditions of any such
contract shall not be inconsistent herewith;
(ii) any such contract shall require, or
shall be administered to require, that the Independent
Contractor pay all costs and expenses incurred in connection
with the operation and management of such REO Property,
including those listed above and remit all related revenues
(net of such costs and expenses) to the Master Servicer as
soon as practicable, but in no event later than thirty days
following the receipt thereof by such Independent Contractor;
(iii) none of the provisions of this Section
3.22(c) relating to any such contract or to actions taken
through any such Independent Contractor shall be deemed to
relieve the Master Servicer of any of its duties and
obligations to the Trustee on behalf of the Certificateholders
with respect to the operation and management of any such REO
Property; and
(iv) the Master Servicer shall be obligated
with respect thereto to the same extent as if it alone were
performing all duties and obligations in connection with the
operation and management of such REO Property.
The Master Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Master Servicer by such
Independent Contractor, and nothing in this Agreement shall be deemed to limit
or modify such indemnification. The Master Servicer shall be solely liable for
all fees owed by it to any such Independent Contractor, irrespective of whether
the Master Servicer's compensation pursuant to Section 3.17 is sufficient to pay
such fees.
(d) In addition to the withdrawals permitted under Section
3.22(c), the Master Servicer may from time to time make withdrawals from the REO
Account for any REO Property: (i) to pay itself unpaid Master Servicing Fees in
respect of the related Mortgage Loan; and (ii) to reimburse itself for
unreimbursed Servicing Advances and Monthly Advances made in respect of such REO
Property or the related Mortgage Loan. On the Master Servicer Remittance Date,
the Master Servicer shall withdraw from each REO Account maintained by it and
deposit into the Distribution Account in accordance with Section 3.10(d)(ii),
for distribution on the related Distribution Date in accordance with Section
4.01, the income from the related REO Property
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received during the prior calendar month, net of any withdrawals made pursuant
to Section 3.22(c) or this Section 3.22(d).
(e) Subject to the time constraints set forth in Section
3.22(a), each REO Disposition shall be carried out by the Master Servicer at
such price and upon such terms and conditions as the Master Servicer shall deem
necessary or advisable, as shall be normal and usual in its general servicing
activities and as are in accordance with general FNMA guidelines.
(f) The proceeds from the REO Disposition, net of any amount
required by law to be remitted to the Mortgagor under the related Mortgage Loan
and net of any payment or reimbursement to the Master Servicer as provided
above, shall be deposited in the Distribution Account in accordance with Section
3.10(d)(ii) on the Master Servicer Remittance Date in the month following the
receipt thereof for distribution on the related Distribution Date in accordance
with Section 4.01. Concurrently with the foregoing deposit, the Master Servicer
shall provide the Trustee an Officer's Certificate certifying the proceeds and
deposit from the REO Disposition. Any REO Disposition shall be for cash only
(unless changes in the REMIC Provisions made subsequent to the Startup Day allow
a sale for other consideration).
(g) The Master Servicer shall file information returns with
respect to the receipt of mortgage interest received in a trade or business,
reports of foreclosures and abandonments of any Mortgaged Property and
cancellation of indebtedness income with respect to any Mortgaged Property as
required by Sections 6050H, 6050J and 6050P of the Code, respectively. Such
reports shall be in form and substance sufficient to meet the reporting
requirements imposed by such Sections 6050H, 6050J and 6050P of the Code.
SECTION 3.23. Obligations of the Master Servicer in Respect of
Prepayment Interest Shortfalls.
The Master Servicer shall deliver to the Trustee for deposit
into the Distribution Account on or before 12:00 p.m. New York time on the
Master Servicer Remittance Date from its own funds an amount equal to the lesser
of (i) the aggregate of the Prepayment Interest Shortfalls for the related
Distribution Date resulting solely from Principal Prepayments received by the
Master Servicer during the related Collection Period and (ii) 50% of the total
amount of its Master Servicing Fee for the most recently ended Collection
Period.
SECTION 3.24. Obligations of the Master Servicer in Respect of
Mortgage Rates and Monthly Payments.
In the event that a shortfall in any collection on or
liability with respect to any Mortgage Loan results from or is attributable to
adjustments to Mortgage Rates, Monthly Payments or Stated Principal Balances
that were made by the Master Servicer in a manner not consistent with the terms
of the related Mortgage Note and this Agreement, the Master Servicer, upon
discovery or receipt of notice thereof, immediately shall deliver to the Trustee
for deposit in the Distribution Account from its own funds the amount of any
such shortfall and shall indemnify and hold harmless the Trust Fund, the
Trustee, the Master Servicer, the Depositor and
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any successor servicer in respect of any such liability. Such indemnities shall
survive the termination or discharge of this Agreement.
SECTION 3.25. Year 2000 Compliance.
The Master Servicer covenants that its computer and other
systems used in servicing the Mortgage Loans will be modified to the extent
necessary to operate in a manner such that on and after January 1, 2000 (i) the
Master Servicer can service the Mortgage Loans in accordance with the terms of
this Agreement and (ii) the Master Servicer can conduct its servicing operations
substantially in the same manner as it is conducting such operations on the date
hereof.
SECTION 3.26. Maintenance of the Primary Insurance Policy
Collections Thereunder.
(a) The Master Servicer shall not take, or permit any
Subservicer to take, any action which would result in non-coverage under any
applicable Primary Insurance Policy of any loss which, but for the actions of
the Master Servicer or Subservicer, would have been covered thereunder. To the
extent coverage is available, the Master Servicer shall keep or cause to be kept
in full force and effect each such Primary Insurance Policy until the principal
balance of the related Mortgage Loan secured by a Mortgaged Property is reduced
to 80% or less of the Value in the case of such a Mortgage Loan having a
Loan-to-Value Ratio at origination in excess of 80%, provided that such Primary
Insurance Policy was in place as of the Cut-off Date and the Master Servicer had
knowledge of such Primary Insurance Policy. The Master Servicer shall be
entitled to cancel or permit the discontinuation of any Primary Insurance Policy
as to any Mortgage Loan, if the Stated Principal Balance of the Mortgage Loan is
reduced below an amount equal to 80% of the appraised value of the related
Mortgaged Property as determined in any appraisal thereof after the Closing
Date, or if the Loan-to-Value Ratio is reduced below 80% as a result of
principal payments on the Mortgage Loan after the Closing Date. The Master
Servicer shall not cancel or refuse to renew any such Primary Insurance Policy
applicable to a Nonsubserviced Mortgage Loan, or consent to any Subservicer
canceling or refusing to renew any such Primary Insurance Policy applicable to a
Mortgage Loan subserviced by it, that is in effect at the date of the initial
issuance of the Certificates and is required to be kept in force hereunder
unless the replacement Primary Insurance Policy for such canceled or non-renewed
policy is maintained with an insurer whose claims-paying ability is acceptable
to each Rating Agency for mortgage pass-through certificates having a rating
equal to or better than the lower of the then-current rating or the rating
assigned to the Certificates as of the Closing Date by such Rating Agency.
(b) In connection with its activities as administrator and
servicer of the Mortgage Loans, the Master Servicer agrees to present or to
cause the related Subservicer to present, on behalf of the Master Servicer, the
Subservicer, if any, the Trustee and Certificateholders, claims to the insurer
under any Primary Insurance Policies, in a timely manner in accordance with such
policies, and, in this regard, to take or cause to be taken such reasonable
action as shall be necessary to permit recovery under any Primary Insurance
Policies respecting defaulted Mortgage Loans. Pursuant to Section 3.07, any
Insurance Proceeds collected by or
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remitted to the Master Servicer under any Primary Insurance Policies shall be
deposited in the Collection Account, subject to withdrawal pursuant to Section
3.11.
(c) The premium with respect to the related Primary Insurance
Policy on the Lender PMI Loans shall be paid by the Master Servicer from amounts
in the Custodial Account pursuant to Section 3.11(x). The Master Servicer is
required to pay the premium with respect to each such Primary Insurance Policy
in accordance with the terms thereof, and each such Primary Insurance Policy
shall be canceled solely in accordance with the terms thereof.
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ARTICLE IV
PAYMENTS TO CERTIFICATEHOLDERS
SECTION 4.01. Distributions.
(a)(1)(A) On each Distribution Date, the following amounts, in
the following order of priority, shall be distributed by REMIC I to REMIC II on
account of the REMIC I
Regular Interests:
(i) to the Holders of REMIC I Regular Interests, in
an amount equal to (A) the Uncertificated Interest for such
Distribution Date, plus (B) any amounts in respect thereof
remaining unpaid from previous Distribution Dates. Amounts
payable as Uncertificated Interest in respect of REMIC I
Regular Interest I-LT6 shall be reduced when the REMIC I
Overcollateralized Amount is less than the REMIC I Required
Overcollateralized Amount, by the lesser of (x) the amount of
such difference and (y) the Maximum I-LT6 Uncertificated
Interest Deferral Amount; and
(ii) on each Distribution Date, to the Holders of
REMIC I Regular Interests, in an amount equal to the remainder
after the distributions made pursuant to clause (i) above,
allocated as follows (except as provided below):
(a) to the Holders of the REMIC I Regular
Interest I-LT1, 98.00% of such remainder;
(b) to the Holders of the REMIC I Regular
Interest I-LT2, REMIC I Regular Interest I-LT3, REMIC
I Regular Interest I-LT4 and REMIC I Regular Interest
I-LT5, 1.00% of such remainder, in the same
proportion as principal payments are allocated to the
Corresponding Certificates; and
(c) to the Holders of the REMIC I Regular
Interest I-LT6, 1.00% of such remainder;
provided, however, that 98.00% and 2.00% of any principal payments that are
attributable to an Overcollateralization Reduction Amount shall be allocated to
Holders of the REMIC I Regular Interest I-LT1 and REMIC I Regular Interest
I-LT6, respectively.
(B) On each Distribution Date, the following amounts shall be
distributed by REMIC II to REMIC III on account of the REMIC II Regular
Interests:
(i) any amounts paid as either Uncertificated
Interest paid or accrued to the REMIC I Regular Interests
shall be deemed to have been paid to the related
Uncertificated Corresponding Component in REMIC II in
accordance with the REMIC II Remittance Rates; and
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(ii) any amounts paid as principal on the REMIC I
Regular Interests shall be deemed to have been paid to the
related Uncertificated Corresponding Component in REMIC II in
accordance with the same priorities and conditions.
(C) Notwithstanding the distributions on the REMIC I Regular
Interests and REMIC II Regular Interests described in this Section 4.01(a),
distribution of funds from the Distribution Account shall be made only in
accordance with Section 4.01(b) through (j).
(b) On each Distribution Date, the Trustee shall distribute to
each Certificateholder of record on the next preceding Record Date (other than
as provided in Section 10.01 respecting the final distribution) either (i) by
check mailed to the address of each such Certificateholder as it appears in the
Certificate Register or (ii) upon written request to the Trustee at least five
business days prior to the relevant Record Date by any Holder of Offered
Certificates having an aggregate initial Certificate Principal Balance that is
in excess of $1,000,000 by wire transfer in immediately available funds to the
account of such Certificateholder at a bank or other entity having appropriate
facilities therefor specified in the request, such Certificateholder's share
(based on the aggregate of the Percentage Interests represented by Certificates
of the applicable Class held by such Holder) of the sum of the amounts specified
below in 4.01(c) - 4.01(g).
(c) On each Distribution Date, the Interest Remittance Amount
shall be distributed as follows, in each case to the extent of the Interest
Remittance Amount:
(i) first, to the Senior Certificateholders,
Accrued Certificate Interest thereon for such Distribution Date, plus
any Interest Carry Forward Amount thereon remaining unpaid from any
previous Distribution Date;
(ii) second, from the balance, if any, remaining of
the Interest Remittance Amount after the distribution described in
clause (i) above, to the Class M-1 Certificateholders, Accrued
Certificate Interest thereon for such Distribution Date;
(iii) third, from the balance, if any, remaining of
the Interest Remittance Amount after the distributions described in
clauses (i) and (ii) above, to the Class M-2 Certificateholders,
Accrued Certificate Interest thereon for such Distribution Date;
(iv) fourth, from the balance, if any, remaining of
the Interest Remittance Amount after the distributions described in
clauses (i) through (iii) above, to the Class B Certificateholders,
Accrued Certificate Interest thereon for such Distribution Date; and
(v) fifth, any amount remaining (such amount, the
"Net Monthly Excess Interest Amount") for such Distribution Date shall
be included in the Net Monthly Excess Cash Flow and distributed as
provided in 4.01(g).
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(d) On each Distribution Date prior to the First Stepdown Date
or the Second Stepdown Date and on or after the First Stepdown Date or the
Second Stepdown Date if a Trigger Event is in effect, the Principal Distribution
Amount shall be distributed as follows:
(i) first, to the Senior Certificateholders, until
the aggregate Certificate Principal Balance of the Senior Certificates
has been reduced to zero (any amount so distributed, the "Senior
Principal Distribution Amount");
(ii) second, the balance, if any, remaining of the
Principal Distribution Amount, to the Class M-1 Certificates, until the
Certificate Principal Balance of the Class M-1 Certificates has been
reduced to zero;
(iii) third, the balance, if any, remaining of the
Principal Distribution Amount, to the Class M-2 Certificates, until the
Certificate Principal Balance of the Class M-2 Certificates has been
reduced to zero;
(iv) fourth, the balance, if any, remaining of the
Principal Distribution Amount, to the Class B Certificates, until the
Certificate Principal Balance of the Class B Certificates has been
reduced to zero;
(v) fifth, any remaining amount (such amount, the
"Net Monthly Excess Principal Amount") shall be included in the Net
Monthly Excess Cash Flow and distributed as described in Section
4.01(g).
(e) On each Distribution Date on or after the First Stepdown
Date, so long as no Trigger Event is in effect, the Principal Distribution
Amount shall be distributed as follows:
(i) first, to the Senior Certificates, until the
Certificate Principal Balances of the Senior Certificates have been
reduced to zero, an amount (the "Senior Principal Distribution Amount")
equal to the excess, if any, of (x) the aggregate Certificate Principal
Balance of the Senior Certificates immediately prior to such
Distribution Date over (y) the lesser of (a) the product of (1) 59.50%
and (2) the sum of the aggregate outstanding Stated Principal Balance
of the Mortgage Loans and the Pre-Funded Amount as of the last day of
the related Due Period and (b) the sum of the aggregate outstanding
Stated Principal Balance of the Mortgage Loans and the Pre-Funded
Amount as of the last day of the related Due Period minus $524,029;
(ii) second, from the balance, if any, remaining of
the Principal Distribution Amount after the distribution described in
clause (i) above, to the Class M-1 Certificates, until the Certificate
Principal Balance of the Class M-1 Certificates has been reduced to
zero, the excess, if any, of (x) the sum of (a) the aggregate
Certificate Principal Balance of the Senior Certificates (after taking
into account distributions pursuant to clause (i) above on such
Distribution Date) and (b) the aggregate Certificate Principal Balance
of the Class M-1 Certificates immediately prior to such Distribution
Date over (y) the lesser of (a) the product of (1) 71.00% and (2) the
sum of the aggregate outstanding Stated
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Principal Balance of the Mortgage Loans and the Pre-Funded Amount as of
the last day of the related Due Period and (b) the sum of the aggregate
outstanding Stated Principal Balance of the Mortgage Loans and the
Pre-Funded Amount as of the last day of the related Due Period minus
$524,029;
(iii) third, from the balance, if any, remaining of
the Principal Distribution Amount after the distributions described in
clauses (i) and (ii) above, to the Class M-2 Certificates, until the
Certificate Principal Balance of the Class M-2 Certificates has been
reduced to zero, the excess, if any, of (x) the sum of (a) the
aggregate Certificate Principal Balance of the Senior Certificates and
Class M-1 Certificates (after taking into account distributions
pursuant to clauses (i) and (ii) above on such Distribution Date) and
(b) the aggregate Certificate Principal Balance of the Class M-2
Certificates immediately prior to such Distribution Date over (y) the
lesser of (a) the product of (1) 82.00% and (2) the sum of the
aggregate outstanding Stated Principal Balance of the Mortgage Loans
and the Pre-Funded Amount as of the last day of the related Due Period
and (b) the sum of the aggregate outstanding Stated Principal Balance
of the Mortgage Loans and the Pre-Funded Amount as of the last day of
the related Due Period minus $524,029;
(iv) fourth, from the balance, if any, remaining of
the Principal Distribution Amount after the distributions described in
clauses (i) through (iii) above, to the Class B Certificates, until the
Certificate Principal Balance of the Class B Certificates has been
reduced to zero, the excess, if any, of (x) the sum of (a) the
aggregate Certificate Principal Balance of the Senior Certificates and
Class M Certificates (after taking into account distributions pursuant
to clauses (i) though (iii) above on such Distribution Date) and (b)
the aggregate Certificate Principal Balance of the Class B Certificates
immediately prior to such Distribution Date over (y) the lesser of (a)
the product of (1) 93.00% and (2) the sum of the aggregate outstanding
Stated Principal Balance of the Mortgage Loans and the Pre-Funded
Amount as of the last day of the related Due Period and (b) the sum of
the aggregate outstanding Stated Principal Balance of the Mortgage
Loans and the Pre-Funded Amount as of the last day of the related Due
Period minus $524,029; and
(v) fifth, any amount remaining (such amount, the
"Net Monthly Excess Principal Amount") shall be included in the Net
Monthly Excess Cash Flow as described in Section 4.01(g) and applied as
described therein.
(f) On each Distribution Date after the Second Stepdown Date,
so long as the First Stepdown Date has not occurred and is not continuing (in
which case distributions of principal on the Offered Certificates shall continue
as provided in Section 4.02(e)), and so long as no Trigger Event is in effect,
the Principal Distribution Amount shall be distributed as
follows:
(i) first, to the Senior Certificateholders, an
amount (the "Senior Principal Distribution Amount") equal to the Senior
Distribution Percentage of the Principal Distribution Amount until the
Certificate Principal Balance of the Senior certificates has been
reduced to zero;
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(ii) second, from the balance of the Principal
Distribution Amount after the distribution described in clause (i)
above shall be distributed to the Subordinate Certificates, on a pro
rata basis, based on the then outstanding Certificate Principal
Balances thereof, until the Certificate Principal Balances thereof have
been reduced to zero; and
(iii) third, any remaining amount (such amount, the
"Net Monthly Excess Principal Amount") shall be included in the Net
Monthly Excess Cash Flow and distributed as described in Section
4.01(g).
(g) On each Distribution Date, the Net Monthly Excess Cash
Flow will be distributed as follows:
(i) first, to pay any Interest Carry Forward Amount on the
Senior Certificates until reduced to zero;
(ii) second, to reimburse the Senior Certificates for Realized
Losses previously allocated thereto pursuant to Section 4.04
until fully reimbursed;
(iii) third, to fund the Extra Principal Distribution Amount
for such Distribution Date which is paid out above as part of
the Principal Distribution Amount;
(iv) fourth, to pay any Interest Carry Forward Amount on the
Class M-1 Certificates until reduced to zero;
(v) fifth, to reimburse the Class M-1 Certificates for
Realized Losses previously allocated thereto pursuant to
Section 4.04 until fully reimbursed;
(vi) sixth, to pay any Interest Carry Forward Amount on the
Class M-2 Certificates until reduced to zero;
(vii) seventh, to reimburse the Class M-2 Certificates for
Realized Losses previously allocated thereto pursuant to
Section 4.04 until fully reimbursed;
(viii) eighth, to pay any Interest Carry Forward Amount on the
Class B Certificates until reduced to zero;
(ix) ninth, to reimburse the Class B Certificates for Realized
Losses previously allocated thereto pursuant to Section 4.04
until fully reimbursed;
(x) tenth, to the Class C Certificates, Accrued Certificate
Interest thereon for such Distribution Date and any
Overcollateralization Reduction Amount for such Distribution
Date; and
(xi) eleventh, to the Class R-III Certificates, any remaining
amount.
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(h) Each distribution with respect to a Offered Certificate
shall be paid to the Depository, as Holder thereof, and the Depository shall be
responsible for crediting the amount of such distribution to the accounts of its
Depository Participants in accordance with its normal procedures. Each
Depository Participant shall be responsible for disbursing such distribution to
the Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing funds
to the Certificate Owners that it represents. None of the Trustee, the
Certificate Registrar, the Depositor or the Master Servicer shall have any
responsibility therefor except as otherwise provided by this Agreement or
applicable law.
(i) Except as otherwise provided in Section 10.01, if the
Master Servicer anticipates that a final distribution with respect to any Class
of Certificates will be made on the next Distribution Date, the Master Servicer
shall, no later than the Determination Date in the month of such final
distribution, notify the Trustee and the Trustee shall, no later than two (2)
Business Days after such Determination Date, mail on such date to each Holder of
such Class of Certificates a notice to the effect that: (i) the Trustee
anticipates that the final distribution with respect to such Class of
Certificates will be made on such Distribution Date but only upon presentation
and surrender of such Certificates at the office of the Trustee or as otherwise
specified therein, and (ii) no interest shall accrue on such Certificates from
and after the end of the prior calendar month.
(j) Notwithstanding anything to the contrary herein, (i) in no
event shall the Certificate Principal Balance of a Class A Certificate or a
Subordinate Certificate be reduced more than once in respect of any particular
amount both (a) allocated to such Certificate in respect of Realized Losses
pursuant to Section 4.04 and (b) distributed to the Holder of such Certificate
in reduction of the Certificate Principal Balance thereof pursuant to this
Section 4.01 from Net Monthly Excess Cashflow and (ii) in no event shall the
Uncertificated Balance of a REMIC I Regular Interest or REMIC II Regular
Interest be reduced more than once in respect of any particular amount both (a)
allocated to such REMIC I Regular Interest or REMIC II Regular Interest in
respect of Realized Losses pursuant to Section 4.04 and (b) distributed on such
REMIC I Regular Interest or REMIC II Regular Interest in reduction of the
Uncertificated Balance thereof pursuant to this Section 4.01.
SECTION 4.02. Statements to Certificateholders.
(a) On each Distribution Date, the Trustee shall, based on the
Remittance Report received from the Master Servicer, prepare and forward by mail
to each Holder and the Depositor a statement setting forth the following
information as to each Class of Certificates (other than the Class C
Certificates and Class R Certificates) to the extent applicable:
(i) (a) the amount of such distribution to the
Certificateholders of such Class applied to reduce the Certificate
Principal Balance thereof, and (b) the aggregate amount included
therein representing Principal Prepayments;
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(ii) the amount of such distribution to Holders of
such Class of Certificates allocable to interest;
(iii) if the distribution to the Holders of such Class
of Certificates is less than the full amount that would be
distributable to such Holders if there were sufficient funds available
therefor, the amount of the shortfall;
(iv) the number and Stated Principal Balance of the
Mortgage Loans after giving effect to the distribution of principal on
such Distribution Date and the number and aggregate principal balance
of all Subsequent Mortgage Loans added during the preceding Due Period;
(v) the aggregate Certificate Principal Balance of
each Class of the Certificates, after giving effect to the amounts
distributed on such Distribution Date, separately identifying any
reduction thereof due to Realized Losses other than pursuant to
an actual distribution of principal;
(vi) (x) the number and aggregate principal balances
of Mortgage Loans that are Delinquent (A) one month, (B) two months and
(C) three or more months and the number and aggregate principal balance
of Mortgage Loans that are in foreclosure and (y) the Three-Month
Rolling Delinquency Average and the Sixty-Day Delinquency Amount;
(vii) the number, aggregate principal balance of any
REO Properties;
(viii) the aggregate Accrued Certificate Interest
remaining unpaid, if any, for each Class of Certificates, after giving
effect to the distribution made on such Distribution Date;
(ix) the Required Overcollateralization Amount and
Overcollateralization Amount, after giving effect to distributions made
on such Distribution Date;
(x) the aggregate amount of Realized Losses for such
Distribution Date and the aggregate amount of Realized Losses on the
Mortgage Loans incurred since the Cut-off Date and the aggregate
percentage of Realized Losses on the Mortgage Loans incurred since the
Cut-off Date;
(xi) the aggregate amount of any recoveries on
previously foreclosed loans due to a breach of representation or
warranty;
(xii) the weighted average remaining term to stated
maturity of the Mortgage Loans after giving effect to the amounts
distributed on such Distribution Date;
(xiii) the weighted average Net Mortgage Rates of the
Mortgage Loans after giving effect to the amounts distributed on such
Distribution Date;
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(xiv) the Pass-Through Rate on the Senior Certificates
and the Subordinate Certificates for such Distribution Date;
(xv) the servicing fee payable to the Master
Servicer;
(xvi) the Interest Remittance Amount for such
Distribution Date;
(xvii) the Principal Remittance Amount for such
Distribution Date;
(xviii) whether a Servicing Termination Trigger has
occurred;
(xix) the aggregate amount of Monthly Advances for
such Distribution Date;
(xx) the number and aggregate principal balance of
any Mortgage Loans repurchased by the Mortgage Loan Seller due to a
breach of a representation or warranty;
(xxi) the amount on deposit in the Pre-Funding Account
and the Interest Coverage Account; and
(xxii) for the distribution occurring on the
Distribution Date immediately following the end of the Funding Period,
the current balance on deposit in the Pre-Funding Account that has not
been used to purchase Subsequent Mortgage Loans and that is being
distributed to the Certificateholders as a mandatory prepayment of
principal, if any, on such Distribution Date.
In the case of information furnished pursuant to clauses (i) and (ii) above, the
amounts shall be expressed as a dollar amount per Single Certificate.
(b) Within a reasonable period of time after the end of each
calendar year, the Master Servicer shall prepare, or cause to be prepared, and
the Trustee shall forward, or cause to be forwarded, to each Person who at any
time during the calendar year was the Holder of a Certificate, other than a
Class C Certificate and a Residual Certificate, a statement containing the
information set forth in clauses (i) and (ii) of subsection (a) above aggregated
for such calendar year or applicable portion thereof during which such Person
was a Certificateholder. Such obligation of the Master Servicer shall be deemed
to have been satisfied to the extent that substantially comparable information
shall be provided by the Master Servicer and the Trustee pursuant to any
requirements of the Code.
(c) Within a reasonable period of time after the end of each
calendar year, the Master Servicer shall prepare, or cause to be prepared, and
the Trustee shall forward, or cause to be forwarded, to each Person who at any
time during the calendar year was the Holder of a Class C Certificate and a
Residual Certificate, a statement containing the applicable distribution
information provided pursuant to this Section 4.03 aggregated for such calendar
year or applicable portion thereof during which such Person was the Holder of a
Class C Certificate and a Residual Certificate. Such obligation of the Master
Servicer shall be deemed to have been satisfied to the
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extent that substantially comparable information shall be provided by the Master
Servicer and the Trustee pursuant to any requirements of the Code.
(d) Upon the written request of any Subordinate, Class C or
Residual Certificateholder, the Master Servicer, as soon as reasonably
practicable, shall provide such requesting Certificateholder with such
information as is necessary and appropriate, in the Master Servicer's sole
discretion, for purposes of satisfying applicable reporting requirements under
Rule 144A.
SECTION 4.03. Remittance Reports; Monthly Advances.
(a) On the second Business Day following each Determination
Date, the Master Servicer shall forward to the Trustee by overnight mail, a
diskette or hardcopy or by fax (or by such other means as the Trustee may agree
from time to time) containing the Remittance Report with respect to the related
Distribution Date. The Trustee shall not be responsible to recompute,
recalculate or verify any information provided to it by the Master Servicer.
(b) The amount of Monthly Advances to be made by the Master
Servicer for any Distribution Date shall equal, subject to Section 4.03(d), the
sum of (i) the aggregate amount of Monthly Payments (with each interest portion
thereof net of the related Master Servicing Fee), due on the immediately
preceding Due Date in respect of the Mortgage Loans, which Monthly Payments were
delinquent as of the close of business on the related Determination Date and
(ii) with respect to each REO Property, which REO Property was acquired during
or prior to the related Collection Period and as to which REO Property an REO
Disposition did not occur during the related Collection Period, an amount equal
to the excess, if any, of the REO Imputed Interest on such REO Property for the
most recently ended calendar month, over the net income from such REO Property
transferred to the Distribution Account pursuant to Section 3.22 for
distribution on such Distribution Date.
On or before 12:00 p.m. New York time on the Master Servicer
Remittance Date, the Master Servicer shall remit in immediately available funds
to the Trustee for deposit in the Distribution Account an amount equal to the
aggregate amount of Monthly Advances, if any, to be made in respect of the
Mortgage Loans and REO Properties for the related Distribution Date either (i)
from its own funds or (ii) from the Collection Account, to the extent of funds
held therein for future distribution (in which case it will cause to be made an
appropriate entry in the records of the Collection Account that amounts held for
future distribution have been, as permitted by this Section 4.03, used by the
Master Servicer in discharge of any such Monthly Advance) or (iii) in the form
of any combination of (i) and (ii) aggregating the total amount of Monthly
Advances to be made by the Master Servicer with respect to the Mortgage Loans
and REO Properties. Any amounts held for future distribution and so used shall
be appropriately reflected in the Master Servicer's records and replaced by the
Master Servicer by deposit in the Collection Account on or before any future
Master Servicer Remittance Date to the extent that the Interest Remittance
Amount and Principal Remittance Amount for the related Distribution Date
(determined without regard to Monthly Advances to be made on the Master Servicer
Remittance Date) shall be less than the total amount that would be distributed
to the Classes of Certificateholders pursuant to Section
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4.01 on such Distribution Date if such amounts held for future distributions had
not been so used to make Monthly Advances. The Trustee will provide notice to
the Master Servicer by telecopy by the close of business on any Master Servicer
Remittance Date in the event that the amount remitted by the Master Servicer to
the Trustee on such date is less than the Monthly Advances required to be made
by the Master Servicer for the related Distribution Date.
(c) The obligation of the Master Servicer to make such Monthly
Advances is mandatory, notwithstanding any other provision of this Agreement but
subject to (d) below, and, with respect to any Mortgage Loan or REO Property,
shall continue until a Final Recovery Determination in connection therewith or
the removal thereof from the Trust Fund pursuant to any applicable provision of
this Agreement, except as otherwise provided in this Section.
(d) Notwithstanding anything herein to the contrary, no
Monthly Advance or Servicing Advance shall be required to be made hereunder by
the Master Servicer if such Monthly Advance or Servicing Advance would, if made,
constitute a Nonrecoverable Advance. The determination by the Master Servicer
that it has made a Nonrecoverable Advance or that any proposed Monthly Advance
or Servicing Advance, if made, would constitute a Nonrecoverable Advance, shall
be evidenced by an Officers' Certificate of the Master Servicer delivered to the
Depositor and the Trustee.
SECTION 4.04. Allocation of Realized Losses.
(a) Prior to each Determination Date, the Master Servicer
shall determine as to each Mortgage Loan and REO Property: (i) the total amount
of Realized Losses, if any, incurred in connection with any Final Recovery
Determinations made during the related Collection Period; and (ii) the
respective portions of such Realized Losses allocable to interest and allocable
to principal. Prior to each Determination Date, the Master Servicer shall also
determine as to each Mortgage Loan: (i) the total amount of Realized Losses, if
any, incurred in connection with any Deficient Valuations made during the
related Collection Period; and (ii) the total amount of Realized Losses, if any,
incurred in connection with Debt Service Reductions in respect of Monthly
Payments due during the related Collection Period. The information described in
the two preceding sentences that is to be supplied by the Master Servicer shall
be evidenced by a certificate of a Servicing Officer of the Master Servicer
delivered to the Trustee by the Master Servicer at the time of delivery of the
Remittance Report.
(b) On any Distribution Date, following all distributions made
on such date, Realized Losses shall be allocated as specified below, to the
extent the aggregate Certificate Principal Balance of the Class A and
Subordinate Certificates is less than the aggregate Stated Principal Balance of
the Mortgage Loans and the Pre-Funded Amount. All Realized Losses allocated to
REMIC I Regular Interest I-LT1 pursuant to Section 4.04(c), on the Mortgage
Loans shall be allocated by the Trustee on each Distribution Date as follows:
first, to the Class C Certificates, until the Certificate Principal Balance
thereof has been reduced to zero; second, to the Class B Certificates, until the
Certificate Principal Balance thereof has been reduced to zero; third, to the
Class M-2 Certificates, until the Certificate Principal Balance thereof has been
reduced to zero; and fourth, to the Class M-1 Certificates, until the
Certificate Principal Balance
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thereof has been reduced to zero. All Realized Losses to be allocated to the
Certificate Principal Balances of all Classes on any Distribution Date shall be
so allocated after the actual distributions to be made on such date as provided
above. All references above to the Certificate Principal Balance of any Class of
Certificates shall be to the Certificate Principal Balance of such Class
immediately prior to the relevant Distribution Date, before reduction thereof by
any Realized Losses, in each case to be allocated to such Class of Certificates,
on such Distribution Date.
Any allocation of Realized Losses to a Class A, Class M-1,
Class M-2, Class B or Class C Certificate on any Distribution Date shall be made
by reducing the Certificate Principal Balance thereof by the amount so
allocated.
As used herein, an allocation of a Realized Loss on a "PRO
RATA basis" among two or more specified Classes of Certificates means an
allocation on a PRO RATA basis, among the various Classes so specified, to each
such Class of Certificates on the basis of their then outstanding Certificate
Principal Balances prior to giving effect to distributions to be made on such
Distribution Date. All Realized Losses and all other losses allocated to a Class
of Certificates hereunder will be allocated among the Certificates of such Class
in proportion to the Percentage Interests evidenced thereby.
(c) All Realized Losses on the Mortgage Loans shall be
allocated by the Trustee on each Distribution Date to the following REMIC I
Regular Interests in the specified percentages, as follows: first, to the
Uncertificated Balances of the REMIC I Regular Interest I-LT1 and REMIC I
Regular Interest I-LT6 up to an aggregate amount equal to the REMIC I Principal
Loss Allocation Amount, 98% and 2%, respectively; second, to the Uncertificated
Balances of REMIC I Regular Interest I-LT1, REMIC I Regular Interest I-LT5 and
REMIC I Regular Interest I-LT6, 98%, 1% and 1%, respectively, until the
Uncertificated Balance of REMIC I Regular Interest I- LT5 has been reduced to
zero; third, to the Uncertificated Balances of REMIC I Regular Interest I-LT1,
REMIC I Regular Interest I-LT4 and REMIC I Regular Interest I-LT6, 98%, 1% and
1%, respectively, until the Uncertificated Balance of REMIC I Regular Interest
I-LT4 has been reduced to zero; fourth, to the Uncertificated Balances of REMIC
I Regular Interest I-LT1, REMIC I Regular Interest I-LT3 and REMIC I Regular
Interest I-LT6, 98%, 1% and 1%, respectively, until the Uncertificated Balance
of REMIC I Regular Interest I-LT3 has been reduced to zero; and fifth, to the
Uncertificated Balances of REMIC I Regular Interest I-LT1, REMIC I Regular
Interest I- LT2 and REMIC I Regular Interest I-LT6, 98%, 1% and 1%,
respectively.
(d) All Realized Losses on the REMIC II Regular Interests
shall be allocated by the Trustee on each Distribution Date among the REMIC II
Regular Interests in the proportion that Realized Losses are allocated to the
related Uncertificated Corresponding Component.
As used herein, an allocation of a Realized Loss on a "PRO
RATA basis" among the REMIC I Regular Interests means an allocation on a PRO
RATA basis among the REMIC I Regular Interests on the basis of their then
outstanding Uncertificated Balances, in each case prior to giving effect to
distributions to be made on such Distribution Date.
SECTION 4.05. Compliance with Withholding Requirements.
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Notwithstanding any other provision of this Agreement, the
Trustee shall comply with all federal withholding requirements respecting
payments to Certificateholders of interest or original issue discount that the
Trustee reasonably believes are applicable under the Code. The consent of
Certificateholders shall not be required for such withholding. In the event the
Trustee does withhold any amount from interest or original issue discount
payments or advances thereof to any Certificateholder pursuant to federal
withholding requirements, the Trustee shall indicate the amount withheld to such
Certificateholders.
SECTION 4.06. SEC Reporting.
Within 15 days after each Distribution Date, the Trustee shall
file with the Securities Exchange Commission, via the Electronic Data Gathering
and Retrieval System, a Form 8-K with a copy of the statement to
Certificateholders for such Distribution Date as an exhibit thereto. Prior to
March 30, 1999 the Trustee shall file a Form 10-K in substance conforming to the
Depositor's no-action letter and Form 15D (if applicable) with respect to the
Trust Fund. The Depositor hereby grants to the Trustee a limited power of
attorney to execute and file each such Form 8-K on behalf of the Depositor. Such
power of attorney shall continue until the earlier of (i) receipt by the Trustee
from the Depositor of written termination of such power of attorney and (ii) the
termination of the Trust Fund. At least three Business Days prior to filing any
Form 8-K or Form 10-K pursuant to this Section 4.06, the Trustee shall deliver a
copy of such Form 8-K or Form 10-K, as the case may be, to the Depositor.
SECTION 4.07. Funding Account.
(a) No later than the Closing Date, the Trustee shall
establish and maintain a segregated trust account that is an Eligible Account,
which shall be titled "Pre-Funding Account, The Chase Manhattan Bank, as trustee
for the registered holders of Golden National Mortgage Loan Asset Backed
Certificates, Series 1998-GN3" (the "Pre-Funding Account"). The Trustee shall,
promptly upon receipt, deposit in the Pre-Funding Account and retain therein the
Original Pre-Funded Amount remitted on the Closing Date to the Trustee by the
Depositor. Funds deposited in the Pre-Funding Account shall be held in trust by
the Trustee for the Certificateholders for the uses and purposes set forth
herein.
(b) The Trustee will invest funds deposited in the Pre-Funding
Account in Permitted Investments of the kind described in clause (vi) of the
definition of Permitted Investments with a maturity date no later than the
second Business Day preceding each Distribution Date. For federal income tax
purposes, the Depositor shall be the owner of the Pre- Funding Account and shall
report all items of income, deduction, gain or loss arising therefrom. All
income and gain realized from investment of funds deposited in the Pre-Funding
Account shall be transferred to the Interest Coverage Account on the Business
Day immediately preceding each Distribution Date. The Initial Master Servicer
shall deposit in the Pre-Funding Account the amount of any net loss incurred in
respect of any such Permitted Investment immediately upon realization of such
loss without any right of reimbursement therefor. Prior to the Distribution Date
immediately following the end of the Funding Period or any earlier Subsequent
Transfer Date on which the entire balance of the Original Pre-Funded Amount is
applied to purchase Subsequent
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Mortgage Loans, the Pre-Funding Account will not be an asset of any of REMIC I,
REMIC II or REMIC III.
(c) Amounts on deposit in the Pre-Funding Account shall be
withdrawn by the Trustee as follows:
(i) On any Subsequent Transfer Date, the Trustee
shall withdraw from the Pre-Funding Account an amount equal to
100% of the Stated Principal Balances of the Subsequent
Mortgage Loans transferred and assigned to the Trustee for
deposit in the Mortgage Pool on such Subsequent Transfer Date
and pay such amount to or upon the order of the Depositor upon
satisfaction of the conditions set forth in Section 2.11 with
respect to such transfer and assignment;
(ii) If the amount on deposit in the Pre-Funding
Account has not been reduced to zero during the Funding
Period, on the day immediately following the termination of
the Funding Period, the Trustee shall deposit into the
Distribution Account any amounts remaining in the Pre-Funding
Account for distribution in accordance with the terms hereof;
(iii) To withdraw any amount not required to be
deposited in the Pre- Funding Account or deposited therein in
error; and
(iv) To clear and terminate the Pre-Funding Account
upon the earlier to occur of (A) the Distribution Date
immediately following the end of the Funding Period and (B)
the termination of this Agreement, with any amounts remaining
on deposit therein being paid to the Holders of the
Certificates then entitled to distributions in respect of
principal.
SECTION 4.08. Interest Coverage Account.
(a) No later than the Closing Date, the Trustee shall
establish and maintain a segregated trust account that is an Eligible Account,
which shall be titled "Interest Coverage Account, The Chase Manhattan Bank, as
trustee for the registered holders of Golden National Mortgage Loan Asset Backed
Certificates, Series 1998-GN3" (the "Interest Coverage Account"). The Trustee
shall, promptly upon receipt, deposit in the Interest Coverage Account and
retain therein the Interest Coverage Amount remitted on the Closing Date to the
Trustee by the Depositor. Funds deposited in the Interest Coverage Account shall
be held in trust by the Trustee for the Certificateholders for the uses and
purposes set forth herein.
(b) The Trustee will invest funds deposited in the Interest
Coverage Account in Permitted Investments of the kind described in clause (vi)
of the definition of Permitted Investments with a maturity date no later than
the second Business Day preceding each Distribution Date. For federal income tax
purposes, the Depositor shall be the owner of the Interest Coverage Account and
shall report all items of income, deduction, gain or loss arising therefrom. At
no time will the Interest Coverage Account be an asset of any of REMIC I, REMIC
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II or REMIC III. All income and gain realized from investment of funds deposited
in the Interest Coverage Account shall be for the sole and exclusive benefit of
the Initial Master Servicer and shall be remitted by the Trustee to the Initial
Master Servicer on the first Business Day following each Distribution Date. The
Initial Master Servicer shall deposit in the Interest Coverage Account the
amount of any net loss incurred in respect of any such Permitted Investment
immediately upon realization of such loss.
(c) With respect to each Distribution Date during the Funding
Period and on the Distribution Date immediately following the end of the Funding
Period, the Trustee shall withdraw from the Interest Coverage Account and
deposit in the Distribution Account an amount, as provided in the related
Remittance Report, equal to (i) 30 days' interest on the Original Pre- Funded
Amount calculated at an annual rate equal to sum of (1) the weighted average of
the Pass- Through Rates on the Class A, Class M-1, Class M-2 and Class B
Certificates and (2) 0.0125% per annum, minus (ii) the sum of (1) 1/12th of
3.00% of the Original Pre-Funded Amount, (2) any interest payments received on
Subsequent Mortgage Loans during the related Due Period and (3) any Monthly
Advance in respect of the interest portion of delinquent Monthly Payments on the
Subsequent Mortgage Loans conveyed to the Trustee during the related Due Period.
(d) Upon the earliest of (i) the Distribution Date immediately
following the end of the Funding Period, (ii) the reduction of the Certificate
Principal Balance of the Class A Certificates and the Mezzanine Certificates to
zero and (iii) the termination of this Agreement in accordance with Section
10.01, any amount remaining on deposit in the Interest Coverage Account after
distributions pursuant to paragraph (c) above shall be withdrawn by the Trustee
and paid to the Initial Master Servicer or its designee.
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ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
(a) The Certificates in the aggregate will represent the
entire beneficial ownership interest in the Mortgage Loans and all other assets
included in the Trust Fund. At the Closing Date, the Class Certificate Balance
of the Offered Certificates will equal 97.75% of the sum of the aggregate
principal balance of the Initial Mortgage Loans in the Mortgage Pool as of the
Cut-off Date and the Original Pre-Funded Amount.
The Certificates will be substantially in the forms annexed
hereto as Exhibits A-1 through A-6. The Certificates of each Class will be
issuable in registered form only, in denominations of authorized Percentage
Interests as described in the definition thereof. Each Certificate will share
ratably in all rights of the related Class.
Upon original issue, the Certificates shall be executed and
delivered by the Trustee and the Trustee shall cause the Certificates to be
authenticated by the Certificate Registrar to or upon the order of the
Depositor. The Certificates shall be executed by manual or facsimile signature
on behalf of the Trustee by an authorized signatory. Certificates bearing the
manual or facsimile signatures of individuals who were at any time the proper
officers of the Trustee shall bind the Trustee, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates. No Certificate shall be entitled to any benefit
under this Agreement or be valid for any purpose, unless there appears on such
Certificate a certificate of authentication substantially in the form provided
herein executed by the Certificate Registrar by manual signature, and such
certificate of authentication shall be conclusive evidence, and the only
evidence, that such Certificate has been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their authentication.
(b) Each Class of Offered Certificates shall initially be
issued as one or more Certificates registered in the name of the Depository or
its nominee and, except as provided below, registration of such Certificates may
not be transferred by the Trustee except to another Depository that agrees to
hold such Certificates for the respective Certificate Owners with Ownership
Interests therein. The Certificate Owners shall hold their respective Ownership
Interests in and to such Certificates through the book-entry facilities of the
Depository and, except as provided below, shall not be entitled to definitive,
fully registered Certificates ("Definitive Certificates") in respect of such
Ownership Interests. All transfers by Certificate Owners of their respective
Ownership Interests in the Book-Entry Certificates shall be made in accordance
with the procedures established by the Depository Participant or brokerage firm
representing such Certificate Owner. Each Depository Participant shall only
transfer the Ownership Interests in the Book-Entry Certificates of Certificate
Owners it represents or of brokerage firms for which it acts as agent in
accordance with the Depository's normal procedures.
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The Trustee, the Master Servicer, and the Depositor may for
all purposes (including the making of payments due on the Book-Entry
Certificates) deal with the Depository as the authorized representative of the
Certificate Owners with respect to the Book-Entry Certificates for the purposes
of exercising the rights of Certificateholders hereunder. The rights of
Certificate Owners with respect to the Book-Entry Certificates shall be limited
to those established by law and agreements between such Certificate Owners and
the Depository Participants and brokerage firms representing such Certificate
Owners. Multiple requests and directions from, and votes of, the Depository as
Holder of the Book-Entry Certificates with respect to any particular matter
shall not be deemed inconsistent if they are made with respect to different
Certificate Owners. The Trustee may establish a reasonable record date in
connection with solicitations of consents from or voting by Certificateholders
and shall give notice to the Depository of such record date.
If (i)(A) the Depositor or the Depository advises the Trustee
in writing that the Depository is no longer willing or able to properly
discharge its responsibilities as Depository, and (B) the Depositor is unable to
locate a qualified successor, (ii) the Depositor at its option advises the
Trustee in writing that it elects to terminate the book-entry system through the
Depository or (iii) after the occurrence of a Servicing Termination Event,
Certificate Owners representing in the aggregate not less than 51% of the
Ownership Interests of the Book-Entry Certificates advise the Trustee through
the Depository, in writing, that the continuation of a book-entry system through
the Depository is no longer in the best interests of the Certificate Owners, the
Trustee shall notify all Certificate Owners, through the Depository, of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Owners requesting the same. Upon surrender to the Trustee of the
Book-Entry Certificates by the Depository, accompanied by registration
instructions from the Depository for registration of transfer, the Trustee shall
issue the Definitive Certificates. Such Definitive Certificates will be issued
in minimum denominations of $100,000, except that any beneficial ownership that
was represented by a Book-Entry Certificate in an amount less than $100,000
immediately prior to the issuance of a Definitive Certificate shall be issued in
a minimum denomination equal to the amount represented by such Book-Entry
Certificate. None of the Depositor, the Master Servicer, or the Trustee shall be
liable for any delay in the 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 Depository 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.
SECTION 5.02. Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at one of the offices
or agencies to be appointed by the Trustee in accordance with the provisions of
Section 8.11 a Certificate Register for the Certificates in which, subject to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided. The Trustee will initially serve as Certificate Registrar
for the purpose of registering Certificates and transfers and exchanges of
Certificates as herein provided. The Certificate Registrar may appoint, by a
written instrument delivered to the Master Servicer
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and the Depositor, any other bank or trust company to act as Certificate
Registrar under such conditions as the predecessor Certificate Registrar may
prescribe, provided that the predecessor Certificate Registrar shall not be
relieved of any of its duties or responsibilities hereunder by reason of such
appointment. If the Trustee shall at any time not be the Certificate Registrar,
the Trustee shall have and maintain the right to inspect the Certificate
Register or to obtain a copy thereof at all reasonable times, and to rely
conclusively upon a certificate of the Certificate Registrar as to the
information set forth in the Certificate Register.
(b) No transfer of any Subordinate, Class C or Residual
Certificate shall be made unless such transfer, sale, pledge or other
disposition is exempt from the registration requirements of the Securities Act
of 1933, as amended, and any applicable state securities laws or is made in
accordance with said Act and laws. Except as provided in Section 5.02(c), in the
event that a transfer of a Subordinate, Class C or Residual Certificate is to be
made either (i)(A) the Trustee shall require a written Opinion of Counsel
acceptable to and in form and substance satisfactory to the Trustee and the
Depositor that such transfer may be made pursuant to an exemption, describing
the applicable exemption and the basis therefor, from said Act and laws or is
being made pursuant to said Act and laws, which Opinion of Counsel shall not be
an expense of the Trustee, the Depositor or the Master Servicer (except that if
such transfer is made by the Depositor or the Master Servicer or any Affiliate
thereof, the Depositor or the Master Servicer shall provide such Opinion of
Counsel at their own expense); provided that such Opinion of Counsel will not be
required in connection with the initial transfer of any such Certificate by the
Depositor or any Affiliate thereof to the Depositor or an Affiliate of the
Depositor and (B) the Trustee shall require the transferee to execute a
representation letter, substantially in the form of Exhibit F hereto, and the
Trustee shall require the transferor to execute a representation letter,
substantially in the form of Exhibit G hereto, each acceptable to and in form
and substance satisfactory to the Depositor and the Trustee certifying to the
Depositor and the Trustee the facts surrounding such transfer, which
representation letters shall not be an expense of the Trustee, the Depositor or
the Master Servicer; provided, however, that such representation letters will
not be required in connection with any transfer of any such Certificate by the
Depositor or any Affiliate thereof to the Depositor or an Affiliate of the
Depositor, and the Trustee shall be entitled to conclusively rely upon a
representation (which, upon the request of the Trustee, shall be written
representation) from the Depositor, of the status of such transferee as an
Affiliate of the Depositor or (ii) the prospective transferee of such a
Certificate shall be required to provide the Trustee, the Depositor and the
Master Servicer with an investment letter substantially in the form of Exhibit H
attached hereto (or such other form as the Depositor in its sole discretion
deems acceptable), which investment letter shall not be an expense of the
Trustee, the Depositor or the Master Servicer, and which investment letter
states that, among other things, such transferee (A) is a "qualified
institutional buyer" as defined under Rule 144A, acting for its own account or
the accounts of other "qualified institutional buyers" as defined under Rule
144A, and (B) is aware that the proposed transferor intends to rely on the
exemption from registration requirements under the Securities Act of 1933, as
amended, provided by Rule 144A. The Holder of any such Certificate desiring to
effect any such transfer, sale, pledge or other disposition shall, and does
hereby agree to, indemnify the Trustee, the Depositor, the Master Servicer and
the Certificate Registrar against any liability that may result if the transfer,
sale, pledge or other disposition is not so exempt or is not made in accordance
with such federal and state laws.
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(c) In the case of any Subordinate, Class C or Class R
Certificate presented for registration in the name of any Person, either (i) the
Trustee shall require an Opinion of Counsel acceptable to and in form and
substance satisfactory to the Trustee, the Depositor and the Master Servicer to
the effect that the purchase or holding of such Subordinate, Class C or Class R
Certificate is permissible under applicable law, will not constitute or result
in any non-exempt prohibited transaction under Section 406 of ERISA, or Section
4975 of the Code (or comparable provisions of any subsequent enactments), and
will not subject the Trustee, the Depositor or the Master Servicer to any
obligation or liability (including obligations or liabilities under ERISA or
Section 4975 of the Code) in addition to those undertaken in this Agreement,
which Opinion of Counsel shall not be an expense of the Trustee, the Depositor
or the Master Servicer or (ii) the prospective transferee shall be required to
provide the Trustee, the Depositor and the Master Servicer with a certification
to the effect set forth in paragraph six of Exhibit F or with a certification to
the effect set forth in paragraph fourteen of Exhibit E-1 (with respect to any
Class R Certificate), which the Trustee may rely upon without further inquiry or
investigation, or such other certifications as the Trustee may deem desirable or
necessary in order to establish that such transferee or the Person in whose name
such registration is requested is not an employee benefit plan or other plan
subject to the prohibited transaction provisions of ERISA or Section 4975 of the
Code, or any Person (including an investment manager, a named fiduciary or a
trustee of any such plan) who is using "plan assets" of any such plan to effect
such acquisition.
(d) (i) Each Person who has or who acquires any Ownership
Interest in a Class R Certificate shall be deemed by the acceptance or
acquisition of such Ownership Interest to have agreed to be bound by the
following provisions and to have irrevocably authorized the Trustee or its
designee under clause (iii)(A) below to deliver payments to a Person other than
such Person and to negotiate the terms of any mandatory sale under clause
(iii)(B) below and to execute all instruments of transfer and to do all other
things necessary in connection with any such sale. The rights of each Person
acquiring any Ownership Interest in a Class R Certificate are expressly subject
to the following provisions:
(c) Each Person holding or acquiring any Ownership Interest in
a Class R Certificate shall be a Permitted Transferee and shall
promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(d) In connection with any proposed Transfer of any Ownership
Interest in a Class R Certificate, the Trustee shall require delivery
to it, and shall not register the Transfer of any Class R Certificate
until its receipt of, (I) an affidavit and agreement (a "Transfer
Affidavit and Agreement," in the form attached hereto as Exhibit E-1)
from the proposed Transferee, in form and substance satisfactory to the
Master Servicer, representing and warranting, among other things, that
it is a Permitted Transferee, that it is not acquiring its Ownership
Interest in the Class R Certificate that is the subject of the proposed
Transfer as a nominee, trustee or agent for any Person who is not a
Permitted Transferee, that for so long as it retains its Ownership
Interest in a Class R Certificate, it will endeavor to remain a
Permitted Transferee, and that it has reviewed the provisions of this
Section 5.02(d) and agrees to be bound by them, and (II) a certificate,
in the form attached hereto as Exhibit E-2, from the Holder wishing to
transfer the Class R Certificate,
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in form and substance satisfactory to the Master Servicer, representing
and warranting, among other things, that no purpose of the proposed
Transfer is to impede the assessment
or collection of tax.
(e) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (B) above, if a
Responsible Officer of the Trustee who is assigned to this Agreement
has actual knowledge that the proposed Transferee is not a Permitted
Transferee, no Transfer of an Ownership Interest in a Class R
Certificate to such proposed Transferee shall be effected.
(f) Each Person holding or acquiring any Ownership Interest in
a Class R Certificate shall agree (x) to require a Transfer Affidavit
and Agreement from any other Person to whom such Person attempts to
transfer its Ownership Interest in a Class R Certificate and (y) not to
transfer its Ownership Interest unless it provides a certificate to the
Trustee in the form attached hereto as Exhibit E-2.
(g) Each Person holding or acquiring an Ownership Interest in
a Class R Certificate, by purchasing an Ownership Interest in such
Certificate, agrees to give the Trustee written notice that it is a
"pass-through interest holder" within the meaning of Temporary Treasury
Regulation Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an
Ownership Interest in a Class R Certificate, if it is, or is holding an
Ownership Interest in a Class R Certificate on behalf of, a
"pass-through interest holder."
(1) The Trustee will register the Transfer of any Class
R Certificate only if it shall have received the Transfer Affidavit and
Agreement, a certificate of the Holder requesting such transfer in the
form attached hereto as Exhibit E-2 and all of such other documents as
shall have been reasonably required by the Trustee as a condition to
such registration. Transfers of the Class R Certificates to Persons
other than Permitted Transferees are prohibited.
(2) (a) If any Person other than a Permitted Transferee
shall become a holder of a Class R Certificate, then the last preceding
Permitted Transferee shall be restored, to the extent permitted by law,
to all rights and obligations as Holder thereof retroactive to the date
of registration of such Transfer of such Class R Certificate. If a
transfer of a Class R Certificate is disregarded pursuant to the
provisions of Treasury Regulation Section 1.860E-1 or Section 1.860G-3,
then the last preceding Permitted Transferee shall be restored, to the
extent permitted by law, to all rights and obligations as Holder
thereof retroactive to the date of registration of such Transfer of
such Class R Certificate. The Trustee shall be under no liability to
any Person for any registration of Transfer of a Class R Certificate
that is in fact not permitted by this Section 5.02(d) or for making any
payments due on such Certificate to the holder thereof or for taking
any other action with respect to such holder under the provisions of
this Agreement.
(b) If any purported Transferee shall become a Holder
of a Class R Certificate in violation of the restrictions in
this Section 5.02(d) and to the extent
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that the retroactive restoration of the rights of the Holder
of such Class R Certificate as described in clause (iii)(A)
above shall be invalid, illegal or unenforceable, then the
Trustee shall have the right, without notice to the holder or
any prior holder of such Class R Certificate, to sell such
Class R Certificate to a purchaser selected by the Trustee on
such terms as the Trustee may choose. Such purported
Transferee shall promptly endorse and deliver each Class R
Certificate in accordance with the instructions of the
Trustee. Such purchaser may be the Trustee itself or any
Affiliate of the Trustee. The proceeds of such sale, net of
the commissions (which may include commissions payable to the
Trustee or its Affiliates), expenses and taxes due, if any,
will be remitted by the Trustee to such purported Transferee.
The terms and conditions of any sale under this clause
(iii)(B) shall be determined in the sole discretion of the
Trustee, and the Trustee shall not be liable to any Person
having an Ownership Interest in a Class R Certificate as a
result of its exercise of such discretion.
(3) The Trustee shall make available all information
necessary to compute any tax imposed (A) as a result of the Transfer of
an Ownership Interest in a Class R Certificate to any Person who is a
Disqualified Organization, including the information regarding "excess
inclusions" of such Class R Certificates required to be provided to the
Internal Revenue Service and certain Persons as described in Treasury
Regulations Sections 1.860D-1(b)(5) and 1.860E-2(a)(5), and (B) as a
result of any regulated investment company, real estate investment
trust, common trust fund, partnership, trust, estate or organization
described in Section 1381 of the Code that holds an Ownership Interest
in a Class R Certificate having as among its record holders at any time
any Person who is a Disqualified Organization. Reasonable compensation
for providing such information may be required by the Trustee from such
Person.
(4) The provisions of this Section 5.02(d) set forth
prior to this clause (v) may be modified, added to or eliminated,
provided that there shall have been delivered to the Trustee the
following:
(a) written notification from each Rating Agency to
the effect that the modification, addition to or elimination
of such provisions will not cause such Rating Agency to
downgrade its then-current ratings, if any, of any Class of
the Class A or Subordinate Certificates below the lower of the
then-current rating or the rating assigned to such
Certificates as of the Closing Date by such Rating Agency; and
(b) an Opinion of Counsel, in form and substance
satisfactory to the Trustee, to the effect that such
modification, addition to or absence of such provisions will
not cause REMIC I, REMIC II or REMIC III to cease to qualify
as a REMIC and will not cause (x) REMIC I, REMIC II or REMIC
III to be subject to an entity-level tax caused by the
Transfer of any Class R Certificate to a Person that is not a
Permitted Transferee or (y) a Certificateholder or another
Person to be
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subject to a REMIC-related tax caused by the Transfer of a
Class R Certificate to a Person that is not a Permitted
Transferee.
(e) Subject to the preceding subsections, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Trustee maintained for such purpose pursuant to Section 8.11, the Trustee shall
execute and the Certificate Registrar shall authenticate and deliver, in the
name of the designated Transferee or Transferees, one or more new Certificates
of the same Class of a like aggregate Percentage Interest.
(f) At the option of the Holder thereof, any Certificate may
be exchanged for other Certificates of the same Class with authorized
denominations and a like aggregate Percentage Interest, upon surrender of such
Certificate to be exchanged at any office or agency of the Trustee maintained
for such purpose pursuant to Section 8.11. Whenever any Certificates are so
surrendered for exchange the Trustee shall execute and cause the Certificate
Registrar to authenticate and deliver the Certificates which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for transfer or exchange shall (if so required by the
Trustee) be duly endorsed by, or be accompanied by a written instrument of
transfer in the form satisfactory to the Trustee and the Certificate Registrar
duly executed by, the Holder thereof or his attorney duly authorized in writing.
(g) No service charge to the Certificateholders shall be made
for any transfer or exchange of Certificates, but the Trustee may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Certificates.
(h) All Certificates surrendered for transfer and exchange
shall be canceled and destroyed by the Certificate Registrar in accordance with
its customary procedures.
(i) The Trustee will cause the Certificate Registrar (unless
the Trustee is acting as Certificate Registrar) to provide notice to the Trustee
of each transfer of a Certificate and to provide the Trustee with an updated
copy of the Certificate Register on the first Business Day in
January and June of each year, commencing January 1999.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen
Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee
or the Certificate Registrar, or the Trustee and the Certificate Registrar
receive evidence to their satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee and the Certificate
Registrar such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of actual knowledge by the Trustee or the
Certificate Registrar that such Certificate has been acquired by a bona fide
purchaser, the Trustee shall execute and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
the same Class and of like denomination and Percentage Interest. Upon the
issuance of any new Certificate under this Section, the Trustee may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any
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other expenses (including the fees and expenses of the Certificate Registrar)
connected therewith. Any replacement Certificate issued pursuant to this Section
shall constitute complete and indefeasible evidence of ownership in the Trust
Fund created hereunder, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
If, after the delivery of such replacement Certificate, a bona
fide purchaser of the original Certificate in lieu of which such replacement
Certificate was issued presents for payment or registration such original
Certificate, the Trustee or the Certificate Registrar shall be entitled to
recover such replacement Certificate from the person to whom it was delivered or
any person taking therefrom, except a bona fide purchaser, and shall be entitled
to recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expenses incurred by the Trustee or the Certificate
Registrar in connection therewith.
SECTION 5.04. Persons Deemed Owners.
The Depositor, the Master Servicer, the Trustee, the
Certificate Registrar and any agent of any of them may treat the Person in whose
name any Certificate is registered as the owner of such Certificate for the
purpose of receiving distributions pursuant to Section 4.01 and for all other
purposes whatsoever, and none of the Depositor, the Master Servicer, the
Trustee, the Certificate Registrar or any agent of any of them shall be affected
by notice to the contrary.
SECTION 5.05. Certain Available Information.
On or prior to the date of the first sale of any Subordinate
or Class C Certificate to an Independent third party, the Depositor shall
provide to the Trustee ten copies of any private placement memorandum or other
disclosure document used by the Depositor in connection with the offer and sale
of the Subordinate or Class C Certificates. In addition, if any such private
placement memorandum or disclosure document is revised, amended or supplemented
at any time following the delivery thereof to the Trustee, the Depositor
promptly shall inform the Trustee of such event and shall deliver to the Trustee
ten copies of the private placement memorandum or disclosure document, as
revised, amended or supplemented. The Trustee shall maintain at its Corporate
Trust Office and shall make available free of charge during normal business
hours for review by any Holder of a Certificate or any Person identified to the
Trustee as a prospective transferee of a Certificate, originals or copies of the
following items: (i) in the case of a Holder or prospective transferee of a
Subordinate or Class C Certificate, the private placement memorandum or other
disclosure document relating to the Subordinate or Class C Certificates, in the
form most recently provided to the Trustee; and (ii) in all cases, (A) this
Agreement and any amendments hereof entered into pursuant to Section 12.01, (B)
all monthly statements required to be delivered to Certificateholders of the
relevant Class pursuant to Section 4.02 since the Closing Date, and all other
notices, reports, statements and written communications delivered to the
Certificateholders of the relevant Class pursuant to this Agreement since the
Closing Date, (C) all certifications delivered by a Responsible Officer of the
Trustee since the Closing Date pursuant to Section 11.01(h), (D) any and all
Officers' Certificates delivered to the Trustee by the Master Servicer since the
Closing Date to evidence the Master Servicer's determination that any Monthly
Advance or Servicing Advance was, or if made, would be a Nonrecoverable Advance
and (E) any
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and all certificates of a Servicing Officer delivered to the Trustee by the
Master Servicer since the Closing Date pursuant to Section 4.04(a). Copies and
mailing of any and all of the foregoing items will be available from the Trustee
upon request at the expense of the Person requesting the
same.
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ARTICLE VI
THE DEPOSITOR AND THE MASTER SERVICER
SECTION 6.01. Liability of the Depositor and the Master
Servicer.
The Depositor and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
by this Agreement and undertaken
hereunder by the Depositor and the Master Servicer herein.
SECTION 6.02. Merger or Consolidation of the Depositor or the
Master Servicer.
Subject to the following paragraph, the Depositor will keep in
full effect its existence, rights and franchises as a corporation under the laws
of the jurisdiction of its incorporation. Subject to the following paragraph,
each of the Master Servicer will keep in full effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and its qualification as an approved conventional seller/servicer
for FNMA or FHLMC in good standing. The Depositor and the Master Servicer each
will obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, the
Certificates or any of the Mortgage Loans and to perform its respective duties
under this Agreement.
The Depositor or the Master Servicer may be merged or
consolidated with or into any Person, or transfer all or substantially all of
its assets to any Person, in which case any Person resulting from any merger or
consolidation to which the Depositor or the Master Servicer shall be a party, or
any Person succeeding to the business of the Depositor or the Master Servicer,
shall be the successor of the Depositor or the Master Servicer, as the case may
be, hereunder, without the execution or filing of any paper or any further act
on the part of any of the parties hereto, anything herein to the contrary
notwithstanding; PROVIDED, HOWEVER, that (i) the successor or surviving Person
to the Master Servicer shall be qualified to service mortgage loans on behalf of
FNMA or FHLMC; (ii) the Rating Agencies' ratings and shadow ratings of the Class
A Certificates in effect immediately prior to such merger or consolidation will
not be qualified, reduced or withdrawn as a result thereof (as evidenced by a
letter to such effect from the Rating Agencies) and (iii) in the case of the
Master Servicer, the Master Servicer delivers its written consent to such
successor.
SECTION 6.03. Limitation on Liability of the Depositor, the
Master Servicer and Others.
None of the Depositor, the Master Servicer or any of the
directors, officers, employees or agents of the Depositor or the Master Servicer
shall be under any liability to the Trust Fund or the Certificateholders for any
action taken or for refraining from the taking of any
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action in good faith pursuant to this Agreement, or for errors in judgment;
PROVIDED, HOWEVER, that this provision shall not protect the Depositor, the
Master Servicer or any such person against any breach of warranties,
representations or covenants made herein, or against any specific liability
imposed on the Master Servicer pursuant hereto, or against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Depositor, the Master Servicer and any
director, officer, employee or agent of the Depositor or the Master Servicer may
rely in good faith on any document of any kind which, PRIMA FACIE, is properly
executed and submitted by any Person respecting any matters arising hereunder.
The Depositor, the Master Servicer and any director, officer, employee or agent
of the Depositor or the Master Servicer shall be indemnified and held harmless
by the Trust Fund against any loss, liability or expense incurred in connection
with any legal action relating to this Agreement or the Certificates, other than
any loss, liability or expense relating to any specific Mortgage Loan or
Mortgage Loans (except as any such loss, liability or expense shall be otherwise
reimbursable pursuant to this Agreement) or any loss, liability or expense
incurred by reason of willful misfeasance, bad faith or gross negligence in the
performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. Neither the Depositor nor the Master Servicer
shall be under any obligation to appear in, prosecute or defend any legal action
unless such action is related to its respective duties under this Agreement and,
in its opinion, does not involve it in any expense or liability; PROVIDED,
HOWEVER, that each of the Depositor and the Master Servicer may in its
discretion undertake any such action which it may deem necessary or desirable
with respect to this Agreement and the rights and duties of the parties hereto
and the interests of the Certificateholders hereunder. In such event, unless the
Depositor or the Master Servicer acts without the consent of the Holders of
Certificates entitled to at least 51% of the Voting Rights, the legal expenses
and costs of such action and any liability resulting therefrom (except any loss,
liability or expense incurred by reason of willful misfeasance, bad faith or
negligence in the performance of duties hereunder or by reason of reckless
disregard of obligations and duties hereunder) shall be expenses, costs and
liabilities of the Trust Fund, and the Depositor and the Master Servicer shall
be entitled to be reimbursed therefor from the Collection Account as and to the
extent provided in Section 3.11, any such right of reimbursement being prior to
the rights of the Certificateholders to receive any amount in the Collection
Account.
SECTION 6.04. Limitation on Resignation of the Master
Servicer; Transfer of Master Servicing.
Except as otherwise provided herein, the Master Servicer shall
not resign from the obligations and duties hereby imposed on it except upon
determination that its duties hereunder are no longer permissible under
applicable law. Any such determination pursuant to the preceding sentence
permitting the resignation of the Master Servicer shall be evidenced by an
Opinion of Counsel to such effect obtained at the expense of the Master Servicer
and delivered to the Trustee. No resignation of the Master Servicer shall become
effective until the Trustee or a successor Master Servicer reasonably acceptable
to the Trustee shall have assumed the Master Servicer's responsibilities,
duties, liabilities (other than those liabilities arising prior to the
appointment of such successor) and obligations under this Agreement.
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Except as expressly provided herein, the Master Servicer shall
not assign or transfer any of its rights, benefits or privileges hereunder to
any other Person, or delegate to or subcontract with, or authorize or appoint
any other Person to perform any of the duties, covenants or obligations to be
performed by the Master Servicer hereunder. The Trustee and the Depositor hereby
specifically (i) consent to the pledge and assignment by the Subsequent Master
Servicer of all the Subsequent Master Servicer's right, title and interest in,
to and under this Agreement to First Union, for the benefit of certain lenders,
and (ii) provided that no Servicing Termination Event exists, agree that upon
delivery to the Trustee by First Union of a letter signed by the Subsequent
Master Servicer whereunder the Subsequent Master Servicer shall resign as Master
Servicer under this Agreement, the Trustee shall appoint First Union or its
designee as successor Master Servicer, provided that at the time of such
appointment, First Union or such designee meets the requirements of a successor
Master Servicer pursuant to Section 7.02(a) and agrees to be subject to the
terms of this Agreement. If, pursuant to any provision hereof, the duties of the
Master Servicer are transferred to a successor, the entire amount of the Master
Servicing Fee and other compensation payable to the Master Servicer pursuant
hereto shall thereafter be payable to such successor.
After the Master Servicing Transfer Date, the Subsequent
Master Servicer shall assume and hereby agrees to assume the rights and
obligations of the Master Servicer under this Agreement from the Initial Master
Servicer. Nothing contained in this Agreement shall be construed to mean that
the Subsequent Master Servicer is assuming liability for any action taken (or
not taken) by the Initial Master Servicer as Master Servicer. The parties hereto
hereby acknowledge that the Initial Master Servicer shall have no
responsibilities, duties, obligations or liabilities pursuant to this Agreement
following the Master Servicer Termination Date (other than liabilities arising
prior to the Master Servicer Termination Date).
On the Master Servicing Termination Date, the Initial Master
Servicer shall transfer to the Subsequent Master Servicer the servicing files
with respect to the Mortgage Loans, any amounts in the Servicing Accounts with
respect to the Mortgage Loans, and any amount in the Collection Account with
respect to the Mortgage Loans.
SECTION 6.05. Rights of the Depositor and Others in Respect of
the Master Servicer.
The Master Servicer shall afford the Depositor and the
Trustee, upon reasonable notice, during normal business hours, access to all
records maintained by the Master Servicer in respect of its rights and
obligations hereunder and access to officers of the Master Servicer responsible
for such obligations. Upon request, the Master Servicer shall furnish to the
Depositor and the Trustee its most recent financial statements and such other
information relating to its capacity to perform its obligations under this
Agreement it possesses. To the extent such information is not otherwise
available to the public, the Depositor and the Trustee shall not disseminate any
information obtained pursuant to the preceding two sentences without the Master
Servicer's written consent, except as required pursuant to this Agreement or to
the extent that it is appropriate to do so (i) in working with legal counsel,
auditors, taxing authorities or other governmental agencies or (ii) pursuant to
any law, rule, regulation, order, judgment, writ,
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injunction or decree of any court or governmental authority having jurisdiction
over the Depositor, the Trustee or the Trust Fund, and in either case, the
Depositor or the Trustee, as the case may be, shall use its best efforts to
assure the confidentiality of any such disseminated non-public information. The
Depositor may, but is not obligated to, enforce the obligations of the Master
Servicer under this Agreement and may, but is not obligated to, perform, or
cause a designee to perform, any defaulted obligation of the Master Servicer
under this Agreement or exercise the rights of the Master Servicer under this
Agreement; provided that the Master Servicer shall not be relieved of any of its
obligations under this Agreement by virtue of such performance by the Depositor
or its designee. The Depositor shall not have any responsibility or liability
for any action or failure to act by the Master Servicer and is not obligated to
supervise the performance of the Master Servicer under this Agreement or
otherwise.
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ARTICLE VII
DEFAULT
SECTION 7.01. Servicing Termination Events
"Servicing Termination Events" wherever used herein, means any
one of the following events:
(i) any failure by the Master Servicer to remit to
the Trustee for distribution to the Certificateholders any payment
(other than a Monthly Advance required to be made from its own funds on
any Master Servicer Remittance Date pursuant to Section 4.03) required
to be made under the terms of the Certificates and this Agreement which
continues unremedied for the later of (x) a period of one Business Day
after the date upon which written notice of such failure, requiring the
same to be remedied, shall have been given to the Master Servicer by
the Depositor or the Trustee (in which case notice shall be provided by
telecopy), or to the Depositor, the Master Servicer and the Trustee by
the Holders of Certificates entitled to at least 25% of the Voting
Rights or (y) 5 days; or
(ii) any failure (other than a failure identified in
clause (vi) below) on the part of the Master Servicer duly to observe
or perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in the
Certificates or in this Agreement which continues unremedied for a
period of 30 days after the earlier of (a) the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given to the Master Servicer by the Depositor or the Trustee, or
to the Master Servicer, the Depositor and the Trustee by the Holders of
Certificates entitled to at least 25% of the Voting Rights and (b)
actual knowledge of such failure by a Servicing Officer of the Master
Servicer; or
(iii) a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises in an
involuntary case under any present or future federal or state
bankruptcy, insolvency or similar law or the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceeding, or
for the winding-up or liquidation of its affairs, shall have been
entered against the Master Servicer and such decree or order shall have
remained in force undischarged or unstayed for a period of 90 days; or
(iv) the Master 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 it or of or relating to all or
substantially all of its property; or
(v) the Master Servicer shall admit in writing its
inability to pay its debts generally as they become due, file a
petition to take advantage of any applicable insolvency
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or reorganization statute, make an assignment for the benefit of its
creditors, or voluntarily suspend payment of its obligations; or
(vi) any failure of the Master Servicer to make any
Monthly Advance required to be made from its own funds pursuant to
Section 4.03 or failure to make any payment required pursuant to
Section 3.23 which continues unremedied until 12:00 p.m. New York time
on the Business Day immediately following the date on which such
Monthly Advance or payment is required to be made; or
(vii) a Servicing Termination Trigger has occurred
and is continuing.
If a Servicing Termination Event described in clauses (i)
through (v) and (vii) of this Section shall occur, then, and in each and every
such case, so long as such Servicing Termination Event shall not have been
remedied, the Depositor or the Trustee may, and at the written direction of the
Holders of Certificates entitled to at least 51% of Voting Rights, the Trustee
shall, by notice in writing to the Master Servicer (and to the Depositor if
given by the Trustee or to the Trustee if given by the Depositor), terminate all
of the rights and obligations of the Master Servicer in its capacity as Master
Servicer under this Agreement, to the extent permitted by law, and in and to the
Mortgage Loans and the proceeds thereof. If a Servicing Termination Event
described in clause (vi) hereof shall occur, the Trustee shall, by notice in
writing to the Master Servicer and the Depositor, terminate all of the rights
and obligations of the Master Servicer in its capacity as Master Servicer under
this Agreement and in and to the Mortgage Loans and the proceeds thereof. On or
after the receipt by the Master Servicer of such written notice, all authority
and power of the Master Servicer under this Agreement, whether with respect to
the Certificates (other than as a Holder of any Certificate) or the Mortgage
Loans or otherwise, shall pass to and be vested in the Trustee pursuant to and
under this Section, and, without limitation, the Trustee is hereby authorized
and empowered, as attorney-in-fact or otherwise, to execute and deliver, on
behalf of and at the expense of the Master Servicer, any and all documents and
other instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees promptly (and in any
event no later than ten Business Days subsequent to such notice) to provide the
Trustee with all documents and records requested by it to enable it to assume
the Master Servicer's functions under this Agreement, and to cooperate with the
Trustee in effecting the termination of the Master Servicer's responsibilities
and rights under this Agreement, including, without limitation, the transfer
within one Business Day to the Trustee for administration by it of all cash
amounts which at the time shall be or should have been credited by the Master
Servicer to the Collection Account held by or on behalf of the Master Servicer,
the Distribution Account or any REO Account or Servicing Account held by or on
behalf of the Master Servicer or thereafter be received with respect to the
Mortgage Loans or any REO Property serviced by the Master Servicer (provided,
however, that the Master Servicer shall continue to be entitled to receive all
amounts accrued or owing to it under this Agreement on or prior to the date of
such termination, whether in respect of Monthly Advances or otherwise, and shall
continue to be entitled to the benefits of Section 6.03 notwithstanding any such
termination). For purposes of this Section 7.01, the Trustee shall not be deemed
to have knowledge of a
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Servicing Termination Event (except for clause (vi) above) unless a Responsible
Officer of the Trustee assigned to and working in the Trustee's Corporate Trust
Office has actual knowledge thereof or unless written notice of any event which
is in fact such a Servicing Termination Event is received by the Trustee and
such notice references the Certificates, the Trust Fund or this
Agreement.
Furthermore, the Trustee, may by written notice to the Master
Servicer, terminate all rights and obligations of the Master Servicer as and
with the effect set forth in the second preceding paragraph, provided, the
Rating Agencies' ratings of the Offered Certificates in effect immediately prior
to such termination will not be qualified, reduced or withdrawn as a result
thereof (as evidenced by a letter to such effect from the Rating Agencies).
Notwithstanding the foregoing, in the event of a Servicing
Termination Event with respect to the Initial Master Servicer, the Subsequent
Master Servicer shall become Master Servicer automatically and without further
action by any of the parties hereto.
SECTION 7.02. Trustee to Act; Appointment of Successor.
(a) On and after the time the Master Servicer receives a
notice of termination or the Master Servicer's term is not extended pursuant to
Section 7.01, the Trustee shall be the successor in all respects to the Master
Servicer in its capacity as Master Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto and arising thereafter
placed on the Master Servicer (except for any representations or warranties of
the Master Servicer under this Agreement, the responsibilities, duties and
liabilities contained in Section 2.03(a) and its obligation to deposit amounts
in respect of losses pursuant to Section 3.12), by the terms and provisions
hereof including, without limitation, the Master Servicer's obligations to make
Monthly Advances pursuant to Section 4.03 and to make payments in respect of
Prepayment Interest Shortfalls pursuant to Section 3.23; PROVIDED, HOWEVER, that
if the Trustee is prohibited by law or regulation from obligating itself to make
advances regarding delinquent mortgage loans, then the Trustee shall not be
obligated to make Monthly Advances pursuant to Section 4.03; and PROVIDED
FURTHER, that any failure to perform such duties or responsibilities caused by
the Master Servicer's failure to provide information required by Section 7.01
shall not be considered a default by the Trustee as successor to the Master
Servicer hereunder. As compensation therefor, the Trustee shall be entitled to
the Master Servicing Fees and all funds relating to the Mortgage Loans to which
the Master Servicer would have been entitled if it had continued to act
hereunder. Notwithstanding the above, the Trustee may, if it shall be unwilling
to so act, or shall, if it is unable to so act or if it is prohibited by law
from making advances regarding delinquent mortgage loans or if the Holders of
Certificates entitled to at least 51% of the Voting Rights so request in writing
to the Trustee, promptly appoint, or petition a court of competent jurisdiction
to appoint, an established mortgage loan servicing institution acceptable to
each Rating Agency (as evidenced written notification from each Rating Agency to
the effect that the appointment of such institution will not cause such Rating
Agency to downgrade its then-current ratings, if any, of any Class of the Class
A or Subordinate Certificates below the lower of the then-current rating or the
rating assigned to such Certificates as of the Closing Date by such Rating
Agency) and having a net worth of not less
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than $15,000,000, as the successor to the Master Servicer under this Agreement
in the assumption of all or any part of the responsibilities, duties or
liabilities of the Master Servicer under this Agreement. No appointment of a
successor to the Master Servicer under this Agreement shall be effective until
the assumption by the successor of all of the Master Servicer's
responsibilities, duties and liabilities hereunder. In connection with such
appointment and assumption described herein, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; PROVIDED, HOWEVER, that no such
compensation shall be in excess of that permitted the Master Servicer as such
hereunder. The Depositor, the Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Pending appointment of a successor to the Master Servicer under this
Agreement, the Trustee shall act in such capacity as herein above provided.
In the event of a Servicing Termination Event, notwithstanding anything
to the contrary above, the Trustee and the Depositor hereby agree that upon
delivery to the Trustee by First Union of a letter signed by the Subsequent
Master Servicer within ten Business Days of when notification of such event
shall have been provided to the Trustee, whereunder the Subsequent Master
Servicer shall resign as Master Servicer under this Agreement, the Trustee shall
appoint First Union or its designee as successor Master Servicer, provided that
at the time of such appointment First Union or such designee meets the
requirements of a successor Master Servicer set forth above and First Union
agrees to be subject to the terms of this Agreement.
(b) If the Master Servicer fails to remit to the Trustee for
distribution to the Certificateholders any payment required to be made under the
terms of the Certificates and this Agreement (for purposes of this Section
7.02(b), a "Remittance") because the Master Servicer is the subject of a
proceeding under the federal Bankruptcy Code and the making of such Remittance
is prohibited by Section 362 of the federal Bankruptcy Code, the Trustee shall
upon notice of such prohibition, regardless of whether it has received a notice
of termination under Section 7.01, advance the amount of such Remittance by
depositing such amount in the Distribution Account on the related Distribution
Date. The Trustee shall be obligated to make such advance only if (i) such
advance, in the good faith judgment of the Trustee, can reasonably be expected
to be ultimately recoverable from funds which are in the custody of the Master
Servicer, a trustee in bankruptcy or a federal bankruptcy court and should have
been the subject of such Remittance absent such prohibition (the "Stayed Funds")
and (ii) the Trustee is not prohibited by law from making such advance or
obligating itself to do so. Upon remittance of the Stayed Funds to the Trustee
or the deposit thereof in the Distribution Account by the Master Servicer, a
trustee in bankruptcy or a federal bankruptcy court, the Trustee may recover the
amount so advanced, without interest, by withdrawing such amount from the
Distribution Account; PROVIDED, HOWEVER, that nothing in this Agreement shall be
deemed to affect the Trustee's rights to recover from the Master Servicer's own
funds interest on the amount of any such advance. If the Trustee at any time
makes an advance under this subsection which it later determines in its good
faith judgment will not be ultimately recoverable from the Stayed Funds with
respect to which such advance was made, the Trustee shall be entitled to
reimburse itself for such advance, without interest, by withdrawing from the
Distribution Account, out of amounts on deposit therein, an amount equal to the
portion of such advance attributable to the Stayed Funds.
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SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of the Master Servicer pursuant to
Section 7.01 above or any appointment of a successor to the Master Servicer
pursuant to Section 7.02 above, the Trustee shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register.
(b) Not later than the later of 60 days after the occurrence
of any event, which constitutes or which, with notice or lapse of time or both,
would constitute a Servicing Termination Event or five days after a Responsible
Officer of the Trustee becomes aware of the occurrence of such an event, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such occurrence, unless such default or Servicing Termination Event shall have
been cured or waived.
SECTION 7.04. Waiver of Servicing Termination Events.
The Holders representing at least 66% of the Voting Rights
evidenced by all Classes of Certificates affected by any default or Servicing
Termination Event hereunder may waive such default or Servicing Termination
Event; PROVIDED, HOWEVER, that a default or Servicing Termination Event under
clause (i) or (vi) of Section 7.01 may be waived, only by all of the Holders of
the Regular Certificates. Upon any such waiver of a default or Servicing
Termination Event, such default or Servicing Termination Event shall cease to
exist and shall be deemed to have been remedied for every purpose hereunder. No
such waiver shall extend to any subsequent or other default or Servicing
Termination Event or impair any right consequent thereon except to the extent
expressly so waived.
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Servicing
Termination Event and after the curing of all Servicing Termination Events which
may have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. During a Servicing Termination Event,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs. Any permissive right of the Trustee enumerated in
this Agreement shall not be construed as a duty.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement. If any such instrument is found
not to conform to the requirements of this Agreement in a material manner, the
Trustee shall take such action as it deems appropriate to have the instrument
corrected, and if the instrument is not corrected to the Trustee's satisfaction,
the Trustee will provide notice thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own gross negligent action, its own gross
negligent failure to act or its own willful misconduct; PROVIDED, HOWEVER, that:
(i) Prior to the occurrence of a Servicing Termination Event,
and after the curing of all such Servicing Termination Events which may have
occurred, the duties and obligations of the Trustee shall be determined solely
by the express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are specifically
set forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee and, in the absence of bad faith on the
part of the Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
certificates or opinions furnished to the Trustee that conform to the
requirements of this Agreement;
(ii) The Trustee shall not be personally liable for an error
of judgment made in good faith by a Responsible Officer or Responsible Officers
of the Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) The Trustee shall not be personally liable with respect
to any action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Holders of Certificates entitled to at
least 25% of the Voting Rights relating to the time, method and place
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of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this Agreement.
Whether or not expressly so provided, every provision of this
Agreement relating to the conduct or affecting the liability of or affording
protection to the Trustee is subject to the provisions of this Section.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) The Trustee may request and rely upon
and shall be protected in acting or refraining from acting
upon any resolution, Officers' Certificate, certificate of
auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document reasonably believed by it to
be genuine and to have been signed or presented by the proper
party or parties;
(ii) The Trustee may consult with counsel
and any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or
suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(iii) The Trustee shall be under no
obligation to exercise any of the trusts or powers vested in
it by this Agreement or to institute, conduct or defend any
litigation hereunder or in relation hereto at the request,
order or direction of any of the Certificateholders pursuant
to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee security
or indemnity reasonably satisfactory to the Trustee against
the costs, expenses and liabilities which may be incurred
therein or thereby; nothing contained herein shall, however,
relieve the Trustee of the obligation, upon the occurrence of
a Servicing Termination Event (which has not been cured or
waived), to exercise such of the rights and powers vested in
it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent person would exercise or
use under the circumstances in the conduct of such person's
own affairs;
(iv) The Trustee shall not be personally
liable for any action taken, suffered or omitted by it in good
faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this
Agreement;
(v) Prior to the occurrence of a Servicing
Termination Event hereunder and after the curing of all
Servicing Termination Events which may have occurred, the
Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request,
consent, order, approval, bond or other paper or document,
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unless requested in writing to do so by Holders of
Certificates entitled to at least 25% of the Voting Rights;
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 such Certificateholders,
the Trustee may require reasonable indemnity against such
expense, or liability from such Certificateholders as a
condition to taking any such action;
(vi) The Trustee may execute any of the
trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents or attorneys, and may
in all cases pay such reasonable compensation as it deems
proper to all such agents and attorneys reasonably employed or
retained by it;
(vii) The Trustee shall not be personally
liable for any loss resulting from the investment of funds
held in any Investment Account at the direction of the Master
Servicer pursuant to Section 3.12, or for any loss resulting
from the redemption or sale of any such investment as therein
authorized;
(viii) The Trustee is not required 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 has
reasonable grounds for believing that the repayment of such
funds or adequate indemnity against such risk or liability or
the payment of its fees and expenses is not reasonably assured
to it;
(ix) The Trustee is not required to take
notice or deemed to have notice of any Servicing Termination
Event hereunder, except Servicing Termination Events under
Section 7.01(i) and 7.01(vi) hereof, unless a Responsible
Officer of the Trustee has received notice in writing of such
Servicing Termination Event from the Depositor or from the
Holders of Certificates entitled to at least 25% of the Voting
Rights, and in the absence of any such notice, the Trustee may
conclusively assume that no such Servicing Termination Event
exists;
(x) The Trustee is not required to give any
bond or surety with respect to the performance of its duties
or the exercise of its powers under this
Agreement;
(xi) In the event the Trustee receives
inconsistent or conflicting requests and indemnity from two or
more groups of Holders of Certificates, each representing less
than a majority in Voting Rights for the Certificates
outstanding, the Trustee, in its sole discretion, may
determine what action, if any, shall be taken;
(xii) The Trustee's immunities and
protections from liability and its right compensation in
connection with the performance of its duties under this
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Agreement shall extend to the Trustee's officers, directors,
agents and employees, and shall survive the Trustee's
resignation or removal and final payment of the Certificates;
and
(xiii) Except for information provided by
the Trustee concerning the Trustee, the Trustee shall have no
responsibility for any information in any offering memorandum
or other disclosure material distributed with respect to the
Certificates, and the Trustee shall have no responsibility for
compliance with any state or federal securities laws in
connection with the Certificates.
(b) All rights of action under this Agreement or under any of
the Certificates, enforceable by the Trustee, may be enforced by it without the
possession of any of the Certificates, or the production thereof at the trial or
other proceeding relating thereto, may be enforced against third parties or
otherwise, and any such suit, action or proceeding instituted by the Trustee
shall be brought in its name for the benefit of all the Holders of such
Certificates, subject to the provisions of this Agreement.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage
Loans.
The recitals contained herein and in the Certificates (other
than the signature of the Trustee, the authentication of the Certificate
Registrar on the Certificates, the acknowledgments of the Trustee contained in
Article II and the representations and warranties of the Trustee in Section
8.12) shall be taken as the statements of the Depositor and the Trustee assumes
no responsibility for their correctness. The Trustee makes no representations or
warranties as to the validity or sufficiency of this Agreement (other than as
specifically set forth in Section 8.12) or of the Certificates (other than the
signature of the Trustee and authentication of the Certificate Registrar on the
Certificates) or of any Mortgage Loan or related document. The Trustee shall not
be accountable for the use or application by the Depositor of any of the
Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Depositor or the Master Servicer in respect
of the Mortgage Loans or deposited in or withdrawn from the Collection Account
by the Master Servicer, other than any funds held by or on behalf of the Trustee
in accordance with Section 3.10.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual capacity or any other capacity
may become the owner or pledgee of Certificates with the same rights it would
have if it were not Trustee.
SECTION 8.05. Trustee's Fees and Expenses.
The Trustee shall withdraw from the Distribution Account on
each Distribution Date and pay to itself the Trustee Fee and, to the extent that
the funds therein are at anytime insufficient for such purpose, the Master
Servicer shall pay such fees. The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by REMIC I and held harmless against
any loss, liability or expense (including reasonable fees and expenses of its
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counsel, but not including expenses, disbursements and advances incurred or made
by the Trustee, including the compensation and the expenses and disbursements of
its agents and counsel, in the ordinary course of the Trustee's performance in
accordance with the provisions of this Agreement) incurred by the Trustee
arising out of or in connection with the acceptance or administration of its
obligations and duties under this Agreement, other than any loss, liability or
expense (i) that constitutes a specific liability of the Trustee pursuant to
Article XI or (ii) any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or negligence in the performance of duties hereunder or
by reason of reckless disregard of obligations and duties hereunder or as a
result of a breach of the Trustee's obligations under Article XI hereof. In the
event the Trustee incurs expenses or renders services in any proceedings which
result from the occurrence or continuance of a Servicing Termination Event under
Section 7.01(iii), (iv) or (v) hereof, or from the occurrence of any event
which, by virtue of the passage of time, would become such a Servicing
Termination Event, the expenses so incurred and compensation for services so
rendered are intended to constitute expenses of administration under the United
States Bankruptcy Code or equivalent law. The Master Servicer agrees to
indemnify the Trustee from, and hold it harmless against, any loss, liability or
expense arising in respect of such Master Servicer's acts or omissions in
connection with this Agreement and the Mortgage Loans serviced by such Master
Servicer. Such indemnity shall survive the termination or discharge of this
Agreement and the resignation or removal of the Trustee. Any indemnity payment
hereunder made by the Master Servicer to the Trustee shall be from the Master
Servicer's own funds, without reimbursement from the Trust Fund therefor.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or
an 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 at least $50,000,000 and
subject to supervision or examination by federal or state authority. If such
corporation or association publishes reports of conditions 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 association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of conditions so
published. In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section, the Trustee shall resign
immediately in the manner and with the effect specified in Section 8.07.
SECTION 8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the
trust hereby created by giving written notice thereof to the Depositor, the
Master Servicer and to the Certificateholders. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor trustee by written
instrument, in duplicate, which instrument shall be delivered to the resigning
Trustee and to the successor trustee. A copy of such instrument shall be
delivered to the Certificateholders and the Master Servicer by the Depositor. If
no successor trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such
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notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06, or if at any time the Trustee
shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, which instrument shall be delivered to the Trustee so
removed and to the successor trustee. A copy of such instrument shall be
delivered to the Certificateholders and the Master Servicer by the Depositor. In
connection with the appointment of a successor trustee pursuant to the preceding
sentence, the Depositor shall, on or before the date on which any such
appointment becomes effective, obtain from each Rating Agency written
confirmation that the appointment of any such successor trustee will not result
in the reduction of the ratings on any class of the Certificates below the
lesser of the then current or original ratings on such Certificates.
The Holders of Certificates entitled to at least 51% of the
Voting Rights may at any time remove the Trustee and appoint a successor trustee
by written instrument or instruments, in triplicate, signed by such Holders or
their attorneys-in-fact duly authorized, one complete set of which instruments
shall be delivered to the Depositor, one complete set to the Trustee so removed
and one complete set to the successor so appointed. A copy of such instrument
shall be delivered to the Certificateholders and the Master Servicer by the
Depositor.
Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor trustee as
provided in Section 8.08.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07
shall execute, acknowledge and deliver to the Depositor to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee shall become effective and
such successor trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with the like effect as if originally named as trustee
herein. The predecessor trustee shall deliver to the successor trustee all
Mortgage Files and related documents and statements, as well as all moneys, held
by it hereunder (other than any Mortgage Files at the time held by a Custodian,
which shall become the agent of any successor trustee hereunder), and the
Depositor and the predecessor trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for more fully and
certainly vesting and confirming in the successor trustee all such rights,
powers, duties and obligations.
No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section
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8.06 and the appointment of such successor trustee shall not result in a
downgrading of any Class of Certificates (including any shadow rating thereof)
by either Rating Agency, as evidenced by a letter from each Rating Agency.
Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register. If the Depositor fails to mail such notice
within 10 days after acceptance of appointment by the successor trustee, the
successor trustee shall cause such notice to be mailed at the expense of the
Depositor.
SECTION 8.09. Merger or Consolidation of Trustee.
Any corporation or association into which the Trustee may be
merged or converted or with which it may be consolidated or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation or association
shall be eligible under the provisions of Section 8.06, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding.
SECTION 8.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of REMIC I or property securing the same may at the time be located, the
Master Servicer and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of REMIC I, and to
vest in such Person or Persons, in such capacity, such title to REMIC I, or any
part thereof, and, subject to the other provisions of this Section 8.10, such
powers, duties, obligations, rights and trusts as the Master Servicer and the
Trustee may consider necessary or desirable. If the Master Servicer shall not
have joined in such appointment within 15 days after the receipt by it of a
request so to do, or in case a Servicing Termination Event shall have occurred
and be continuing, the Trustee alone shall have the power to make such
appointment. No co-trustee or separate trustee hereunder shall be required to
meet the terms of eligibility as a successor trustee under Section 8.06
hereunder and no notice to Holders of Certificates of the appointment of
co-trustee(s) or separate trustee(s) shall be required under Section 8.08
hereof.
In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 8.10 all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly, except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed by the Trustee (whether as
Trustee hereunder or as successor to the defaulting Master Servicer hereunder),
the Trustee shall be incompetent or unqualified to perform such act or acts, in
which event such rights, powers, duties and obligations
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(including the holding of title to REMIC I or any portion thereof in any such
jurisdiction) shall be exercised and performed by such separate trustee or
co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article VIII. Each separate trustee and co-trustee, upon
its acceptance of the trust conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
of its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 8.11. Appointment of Office or Agency.
The Trustee will maintain or appoint an office or agency in
the City of New York where the Certificates may be surrendered for registration
of transfer or exchange, and presented for final distribution, and where notices
and demands to or upon the Trustee in respect of the
Certificates and this Agreement may be served.
SECTION 8.12. Representations and Warranties of the Trustee.
The Trustee hereby represents and warrants to the Master
Servicer and the Depositor as of the Closing Date, that:
(i) The Trustee is a banking corporation duly
organized, validly existing and in good standing under the
laws of the State of New York.
(ii) The execution and delivery of this Agreement by
the Trustee, and the performance and compliance with the terms
of this Agreement by the Trustee, will not violate the
Trustee's charter or bylaws or constitute a default (or an
event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any
material agreement or other instrument to which it is a party
or which is applicable to it or any of its assets.
(iii) The Trustee has the full power and authority
to enter into and consummate all transactions contemplated by
this Agreement, has duly authorized
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the execution, delivery and performance of this Agreement, and
has duly executed and delivered this Agreement.
(iv) This Agreement, assuming due authorization,
execution and delivery by the Master Servicer and the
Depositor, constitutes a valid, legal and binding obligation
of the Trustee, enforceable against the Trustee in accordance
with the terms hereof, subject to (A) applicable bankruptcy,
insolvency, receivership, reorganization, moratorium and other
laws affecting the enforcement of creditors' rights generally,
and (B) general principles of equity, regardless of whether
such enforcement is considered in a proceeding in equity or at
law.
(v) The Trustee is not in violation of, and its
execution and delivery of this Agreement and its performance
and compliance with the terms of this Agreement will not
constitute a violation of, any law, any order or decree of any
court or arbiter, or any order, regulation or demand of any
federal, state or local governmental or regulatory authority,
which violation, in the Trustee's good faith and reasonable
judgment, is likely to affect materially and adversely either
the ability of the Trustee to perform its obligations under
this Agreement or the financial condition of the Trustee.
(vi) No litigation is pending or, to the best of the
Trustee's knowledge, threatened against the Trustee which
would prohibit the Trustee from entering into this Agreement
or, in the Trustee's good faith reasonable judgment, is likely
to materially and adversely affect either the ability of the
Trustee to perform its obligations under this Agreement.
SECTION 8.13. Appointment of Custodians.
The Trustee may, with the consent of the Master Servicer and
the Depositor, appoint one or more Custodians who are not Affiliates of the
Depositor, the Master Servicer or any Mortgage Loan Seller to hold all or a
portion of the Mortgage Files as agent for the Trustee, by entering into a
Custodial Agreement. Subject to Article VIII, the Trustee agrees to comply with
the terms of each Custodial Agreement and to enforce the terms and provisions
thereof against the Custodian for the benefit of the Certificateholders. Each
Custodian shall be a depository institution subject to supervision by federal or
state authority, shall have a combined capital and surplus of at least
$15,000,000 and shall be qualified to do business in the jurisdiction in which
it holds any Mortgage File. Each Custodial Agreement may be amended only as
provided in Section 12.01. The Trustee shall notify the Certificateholders of
the appointment of any Custodian (other than the Custodian appointed as of the
Closing Date) pursuant to this Section 8.13. The Master Servicer and the
Depositor consent to the appointment of Bankers Trust Company of California,
N.A. as Custodian on the Closing Date. The Master Servicer will indemnify and
hold harmless the Trustee, its directors, officers, employees and agents for any
liability, loss, expense or cost resulting from any act or omission of any
Custodian appointed with the consent of the Master Servicer.
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ARTICLE IX
[RESERVED]
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ARTICLE X
TERMINATION
SECTION 10.01 Termination Upon Repurchase or Liquidation of
All Mortgage Loans.
Subject to Section 10.02, the respective obligations and
responsibilities under this Agreement of the Depositor, the Master Servicer and
the Trustee (other than the obligations of the Master Servicer to the Trustee
pursuant to Section 8.05 and of the Master Servicer to provide for and the
Trustee to make payments in respect of the REMIC I Regular Interests, the REMIC
II Regular Interest or the Classes of Certificates as hereafter set forth) shall
terminate upon payment to the Certificateholders and the deposit of all amounts
held by or on behalf of the Trustee and required hereunder to be so paid or
deposited on the Distribution Date coinciding with or following the earlier to
occur (i) the purchase by the Terminator (as defined below) of all Mortgage
Loans and each REO Property remaining in REMIC I at a price equal to the greater
of (A) the aggregate Purchase Price of all the Mortgage Loans included in REMIC
I, plus the appraised value of each REO Property, if any, included in REMIC I,
such appraisal to be conducted by an appraiser mutually agreed upon by the
Terminator and the Trustee in their reasonable discretion and (B) the aggregate
fair market value of all of the assets of REMIC I (as determined by the
Terminator and the Trustee, as of the close of business on the third Business
Day next preceding the date upon which notice of any such termination is
furnished to Certificateholders pursuant to the third paragraph of this Section
10.01) and (ii) the final payment or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan or REO Property remaining in REMIC I;
provided, however, that in no event shall the trust created hereby continue
beyond the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James, living on the date hereof.
The holder of the largest Percentage Interest of the Residual
Certificates shall have the right and, to the extent the holder of the largest
Percentage Interest of the Residual Certificates fails to exercise such right,
the Master Servicer shall have the right (the party exercising such right, the
"Terminator"), to purchase all of the Mortgage Loans and each REO Property
remaining in REMIC I pursuant to clause (i) of the preceding paragraph no later
than the Determination Date in the month immediately preceding the Distribution
Date on which the Certificates will be retired; PROVIDED, HOWEVER, that the
Terminator may elect to purchase all of the Mortgage Loans and each REO Property
remaining in REMIC I pursuant to clause (i) above only if the sum of (A) the
aggregate Stated Principal Balance of the Mortgage Loans and each REO Property
remaining in REMIC I and (B) any amounts on deposit in the Pre-Funding Account
at the time of such election is equal to or less than 10% of the sum of the
Cut-off Date Pool Principal Balance and the Original Pre-Funded Amount.
Notice of any termination shall be given promptly by the
Trustee by letter to Certificateholders mailed (a) in the event such notice is
given in connection with the purchase of
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the Mortgage Loans and each REO Property by the Terminator, not earlier than the
15th day and not later than the 25th day of the month next preceding the month
of the final distribution on the Certificates or (b) otherwise during the month
of such final distribution on or before the Determination Date in such month, in
each case specifying (i) the Distribution Date upon which the Trust Fund will
terminate and final payment in respect of the REMIC I Regular Interests, the
REMIC II Regular Interests and the Certificates will be made upon presentation
and surrender of Certificates at the office of the Trustee therein designated,
(ii) the amount of any such final payment, (iii) that no interest shall accrue
in respect of the Certificates from and after the accrual period relating to the
final Distribution Date therefor and (iv) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Certificates at the office of the
Trustee. The Trustee shall give such notice to the Certificate Registrar at the
time such notice is given to Certificateholders. In the event such notice is
given in connection with the purchase of all of the Mortgage Loans and each REO
Property remaining in REMIC I by the Terminator, the Terminator shall deliver to
the Trustee for deposit in the Distribution Account not later than the last
Business Day of the month next preceding the month of the final distribution on
the Certificates an amount in immediately available funds equal to the
above-described purchase price. Upon certification to the Trustee by a Servicing
Officer of the making of such final deposit, the Trustee and any Custodian shall
promptly release to the Terminator the Mortgage Files for the remaining Mortgage
Loans, and the Trustee shall execute all assignments, endorsements and other
instruments necessary to effectuate such transfer.
Upon presentation of the Certificates by the
Certificateholders on the final Distribution Date, the Trustee shall distribute
to each Certificateholder so presenting and surrendering its Certificates the
amount otherwise distributable on such Distribution Date in accordance with
Section 4.01 in respect of the Certificates so presented and surrendered. Any
funds not distributed to any Holder or Holders of Certificates being retired on
such Distribution Date because of the failure of such Holder or Holders to
tender their Certificates shall, on such date, be set aside and held in trust
and credited to the account of the appropriate non-tendering Holder or Holders.
If any Certificates as to which notice has been given pursuant to this Section
10.01 shall not have been surrendered for cancellation within six months after
the time specified in such notice, the Trustee shall mail a second notice to the
remaining non-tendering Certificateholders to surrender their Certificates for
cancellation in order to receive the final distribution with respect thereto. If
within one year after the second notice all such Certificates shall not have
been surrendered for cancellation, the Trustee shall, directly or through an
agent, contact the remaining related non-tendering Certificateholders concerning
surrender of their Certificates in the manner reasonably specified to the
Trustee by the Master Servicer in writing. The costs and expenses of maintaining
the funds in trust and of contacting such Certificateholders shall be paid out
of the assets remaining in trust for such Certificateholders. If within two
years after the second notice any such Certificates shall not have been
surrendered for cancellation, the Trustee shall pay to the Master Servicer all
amounts distributable to the Holders thereof and the Master Servicer shall
thereafter hold such amounts for the benefit of such Holders. No interest shall
accrue or be payable to any Certificateholder on any amount held in trust or by
the Master Servicer as a result of such Certificateholder's failure to surrender
its Certificate(s) for final payment thereof in accordance with this Section
10.01.
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Immediately following the deposit of funds in trust hereunder
in respect of the Certificates, the Trust Fund shall terminate.
SECTION 10.02 Additional Termination Requirements
(a) In the event that the Terminator purchases all the
Mortgage Loans and each REO Property or the final payment on or other
liquidation of the last Mortgage Loan or REO Property remaining in REMIC I
pursuant to Section 10.01, the Trust Fund shall be terminated in
accordance with the following additional requirements:
(i) The Trustee shall specify the first day in the
90-day liquidation period in a statement attached to REMIC
I's, REMIC II's and REMIC III's final Tax Return pursuant to
Treasury regulation Section 1.860F-1 and shall satisfy all
requirements of a qualified liquidation under Section 860F of
the Code and any regulations thereunder, as evidenced by an
Opinion of Counsel obtained at the expense of the Terminator;
(ii) During such 90-day liquidation period, and at
or prior to the time of making of the final payment on the
Certificates, the Trustee shall sell all of the assets of
REMIC I to the Terminator for cash; and
(iii) At the time of the making of the final payment
on the Certificates, the Trustee shall distribute or credit,
or cause to be distributed or credited, to the Holders of the
Residual Certificates all cash on hand in the Trust Fund
(other than cash retained to meet claims), and the Trust Fund
shall terminate at that time.
(b) At the Terminator's expense, the Majority Class R
Certificateholder shall prepare the documentation required in connection with
the adoption of a plan of liquidation of each of REMIC I, REMIC II and REMIC III
pursuant to this Section 10.02.
(c) By their acceptance of Certificates, the Holders thereof
hereby agree to authorize the Trustee to specify the 90-day liquidation period
for each of REMIC I, REMIC II and REMIC II which authorization shall be binding
upon all successor Certificateholders.
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ARTICLE XI
REMIC PROVISIONS
SECTION 11.01. REMIC Administration.
(a) The Trustee shall elect to treat each of REMIC I, REMIC II
and REMIC III as a REMIC under the Code and, if necessary, under applicable
state law. Each such election will be made on Form 1066 or other appropriate
federal tax or information return or any appropriate state return for the
taxable year ending on the last day of the calendar year in which the
Certificates are issued. For the purposes of the REMIC election in respect of
REMIC I, the REMIC I Regular Interests shall be designated as the Regular
Interests in REMIC I and the Class R-I Certificates shall be designated as the
Residual Interests in REMIC I. The REMIC II Regular Interests shall be
designated as the Regular Interests in REMIC II and the Class R-II Certificates
shall be designated as the Residual Interests in REMIC II. The Class A
Certificates, the Subordinate Certificates and the Class C Certificates shall be
designated as the Regular Interests in REMIC III and the Class R-III
Certificates shall be designated as the Residual Interests in REMIC III. The
Trustee shall not permit the creation of any "interests" in REMIC I, REMIC II or
REMIC III (within the meaning of Section 860G of the Code) other than the REMIC
I Regular Interests, the REMIC II Regular Interests and the interests
represented by the Certificates.
(b) The Closing Date is hereby designated as the "Startup Day"
of REMIC I, REMIC II and REMIC III within the meaning of Section 860G(a)(9) of
the Code.
(c) The Trustee shall pay, with right of reimbursement
pursuant to Section 3.11(xi) hereunder, any and all expenses relating to any tax
audit of the Trust Fund (including, but not limited to, any professional fees or
any administrative or judicial proceedings with respect to any of REMIC I, REMIC
II or REMIC III that involve the Internal Revenue Service or state tax
authorities), other than the expense of obtaining any tax related Opinion of
Counsel; provided, however, that any such Opinion of Counsel, other than an
opinion requested by the Trustee pursuant to Section 8.02(a), shall not be at
the expense of the Trustee. The Trustee, as agent for all of REMIC I's, REMIC
II's and REMIC III's tax matters person, shall (i) act on behalf of the Trust
Fund in relation to any tax matter or controversy involving any of REMIC I,
REMIC II or REMIC III and (ii) represent the Trust Fund in any administrative or
judicial proceeding relating to an examination or audit by any governmental
taxing authority with respect thereto. The holder of the largest Percentage
Interest of the Residual Certificates shall be designated, in the manner
provided under Treasury regulations section 1.860F-4(d) and temporary Treasury
regulations section 301.6231(a)(7)-1T, as the tax matters person of the related
REMIC created hereunder. By their acceptance thereof, the holder of the largest
Percentage Interest of the Residual Certificates hereby agrees to irrevocably
appoint the Trustee or an Affiliate as its agent to perform all of the duties of
the tax matters person for the Trust Fund.
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(d) The Trustee shall prepare, sign and file all of the Tax
Returns in respect of each REMIC created hereunder. The expenses of preparing
and filing such returns shall be borne by the Trustee without any right of
reimbursement therefor. The Master Servicer shall provide on a timely basis to
the Trustee or its designee such information with respect to the assets of the
Trust Fund as is in its possession and reasonably required by the Trustee to
enable it to perform its obligations under this Article.
(e) The Trustee shall perform on behalf of each of REMIC I,
REMIC II and REMIC III 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, as required by the Code, the REMIC
Provisions or other such compliance guidance, the Trustee shall provide (i) to
any Transferor of a Residual Certificate such information as is necessary for
the application of any tax relating to the transfer of a Residual Certificate to
any Person who is not a Permitted Transferee, (ii) to the Certificateholders
such information or reports as are required by the Code or the REMIC Provisions
including reports relating to interest, original issue discount and market
discount or premium (using the Prepayment Assumption as required) and (iii) to
the Internal Revenue Service the name, title, address and telephone number of
the person who will serve as the representative of REMIC I, REMIC II and REMIC
III. The Master Servicer shall provide on a timely basis to the Trustee such
information with respect to the assets of the Trust Fund, including, without
limitation, the Mortgage Loans, as is in its possession and reasonably required
by the Trustee to enable it to perform its obligations under this subsection. In
addition, the Depositor shall provide or cause to be provided to the Trustee,
within ten (10) days after the Closing Date, all information or data that the
Trustee reasonably determines to be relevant for tax purposes as to the
valuations and issue prices of the Certificates, including, without limitation,
the price, yield, prepayment assumption and projected cash flow of the
Certificates.
(f) The Trustee shall take such action and shall cause each
REMIC created hereunder to take such action as shall be necessary to create or
maintain the status thereof as a REMIC under the REMIC Provisions (and the
Master Servicer shall assist it, to the extent reasonably requested by it). The
Trustee shall not take any action, cause the Trust Fund 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 REMIC I, REMIC II or REMIC III as a REMIC or (ii) result in the
imposition of a tax upon the Trust Fund (including but not limited to the tax on
prohibited transactions as defined in Section 860F(a)(2) of the Code and the tax
on contributions to a REMIC set forth in Section 860G(d) of the Code) (either
such event, an "Adverse REMIC Event") unless the Trustee has received an Opinion
of Counsel, addressed to the Trustee (at the expense of the party seeking to
take such action but in no event at the expense of the Trustee) to the effect
that the contemplated action will not, with respect to any of REMIC I, REMIC II
or REMIC III, endanger such status or result in the imposition of such a tax,
nor shall the Master Servicer take or fail to take any action (whether or not
authorized hereunder) as to which the Trustee has advised it in writing that it
has received an Opinion of Counsel to the effect that an Adverse REMIC Event
could occur with respect to such action. In addition, prior to taking any action
with respect to REMIC I, REMIC II or REMIC III or the respective assets of each,
or causing REMIC I, REMIC II or REMIC III to take any action,
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which is not contemplated under the terms of this Agreement, the Master Servicer
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
REMIC I, REMIC II or REMIC III, and the Master Servicer shall not take any such
action or cause any of REMIC I, REMIC II or REMIC III to take any such action as
to which the Trustee has advised it in writing that an Adverse REMIC Event could
occur. The Trustee may consult with counsel to make such written advice, and the
cost of same shall be borne by the party seeking to take the action not
permitted by this Agreement, but in no event shall such cost be an expense of
the Trustee. At all times as may be required by the Code, the Trustee will
ensure that substantially all of the assets of REMIC I, REMIC II and REMIC III
will consist of "qualified mortgages" as defined in Section 860G(a)(3) of the
Code and "permitted investments" as defined in Section 860G(a)(5) of the Code.
(g) In the event that any tax is imposed on "prohibited
transactions" of any REMIC created hereunder as defined in Section 860F(a)(2) of
the Code, on the "net income from foreclosure property" of such REMIC as defined
in Section 860G(c) of the Code, on any contributions to any such REMIC after the
Startup Day therefor pursuant to Section 860G(d) of the Code, or any other tax
is imposed by the Code or any applicable provisions of state or local tax laws,
such tax shall be charged (i) to the Trustee pursuant to Section 11.03 hereof,
if such tax arises out of or results from a breach by the Trustee of any of its
obligations under this Article XI, (ii) to the Master Servicer pursuant to
Section 11.03 hereof, if such tax arises out of or results from a breach by the
Master Servicer of any of its obligations under Article III or this Article XI,
or otherwise (iii) against amounts on deposit in the Distribution Account and
shall be paid by withdrawal therefrom.
(h) On or before April 15 of each calendar year, commencing
April 15, 1999, the Trustee shall deliver to the Master Servicer and each Rating
Agency a Certificate from a Responsible Officer of the Trustee stating the
Trustee's compliance with this Article XI.
(i) The Trustee shall, for federal income tax purposes,
maintain books and records with respect to each of REMIC I, REMIC II and REMIC
III on a calendar year and on an accrual basis.
(j) Following the Startup Day, the Trustee shall not accept
any contributions of assets to any of REMIC I, REMIC II or REMIC III other than
in connection with any Qualified Substitute Mortgage Loan delivered in
accordance with Section 2.03 unless it shall have received an Opinion of
Counsel, at the expense of the party seeking to make such contributions or to
the effect that the inclusion of such assets in the Trust Fund will not cause
the related REMIC to fail to qualify as a REMIC at any time that any
Certificates are outstanding or subject such REMIC to any tax under the REMIC
Provisions or other applicable provisions of federal, state and local law or
ordinances.
(k) Neither the Trustee nor the Master Servicer shall enter
into any arrangement by which REMIC I, REMIC II or REMIC III will receive a fee
or other compensation for services nor permit any such REMIC to receive any
income from assets other than "qualified mortgages"
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as defined in Section 860G(a)(3) of the Code or "permitted investments" as
defined in Section 860G(a)(5) of the Code.
SECTION 11.02. Prohibited Transactions and Activities.
None of the Depositor, the Master Servicer or the Trustee
shall sell, dispose of or substitute for any of the Mortgage Loans (except in
connection with (i) the foreclosure of a Mortgage Loan, including but not
limited to, the acquisition or sale of a Mortgaged Property acquired by deed in
lieu of foreclosure, (ii) the bankruptcy of REMIC I, (iii) the termination of
REMIC I pursuant to Article IX of this Agreement, (iv) a substitution pursuant
to Article II of this Agreement or (v) a purchase of Mortgage Loans pursuant to
Article II or III of this Agreement), nor acquire any assets for any of REMIC I,
REMIC II or REMIC III (other than REO Property acquired in respect of a
defaulted Mortgage Loan), nor sell or dispose of any investments in the
Collection Account or the Distribution Account for gain, nor accept any
contributions to any of REMIC I, REMIC II or REMIC III after the Closing Date
(other than a Qualified Substitute Mortgage Loan delivered in accordance with
Section 2.03), unless it has received an Opinion of Counsel, addressed to the
Trustee (at the expense of the party seeking to cause such sale, disposition,
substitution, acquisition or contribution but in no event at the expense of the
Trustee) that such sale, disposition, substitution, acquisition or contribution
will not (a) affect adversely the status of any of REMIC I, REMIC II or REMIC
III as a REMIC or (b) cause any of REMIC I, REMIC II or REMIC III to be subject
to a tax on "prohibited transactions" or "contributions" pursuant to the REMIC
Provisions.
SECTION 11.03. Master Servicer and Trustee Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the
Depositor and the Master Servicer for any taxes and costs including, without
limitation, any reasonable attorneys fees imposed on or incurred by the Trust
Fund, the Depositor or the Master Servicer, as a result of a
breach of the Trustee's covenants set forth in this Article XI.
(b) The Master Servicer agrees to indemnify the Trust Fund,
the Depositor and the Trustee for any taxes and costs including, without
limitation, any reasonable attorneys' fees imposed on or incurred by the Trust
Fund, the Depositor or the Trustee, as a result of a breach of the Master
Servicer's covenants set forth in Article III or this Article XI.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01. Amendment.
This Agreement may be amended from time to time by the
Depositor, the Master Servicer and the Trustee, but without the consent of any
of the Certificateholders, (i) to cure any ambiguity, to correct any defect or
to give effect to the expectations of Holders, (ii) to correct, modify or
supplement any provisions herein, or (iii) to make any other provisions with
respect to matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement, provided that such action
shall not, as evidenced by an Opinion of Counsel delivered to the Trustee,
adversely affect in any material respect the interests of any Certificateholder
, PROVIDED, FURTHER, that if the Person requesting such amendment delivers to
the Trustee written confirmation from each Rating Agency that such amendment
will not cause such Rating Agency to revise or withdraw its then current rating
or shadow rating of the Class A Certificates, such amendment will be deemed to
not adversely affect in any material respect the interests of the
Certificateholders and no such Opinion of Counsel shall be required.
This Agreement may also be amended from time to time by the
Depositor, the Master Servicer and the Trustee with the consent of the Holders
of Certificates entitled to at least 66% of the Voting Rights for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates; provided, however, that no such amendment shall (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, (ii) adversely affect in any
material respect the interests of the Holders of any Class of Certificates in a
manner, other than as described in (i), without the consent of the Holders of
Certificates of such Class evidencing at least 66% of the Voting Rights
allocated to such Class, or (iii) modify the consents required by the
immediately preceding clauses (i) and (ii) without the consent of the Holders of
all Certificates then outstanding. Notwithstanding any other provision of this
Agreement, for purposes of the giving or withholding of consents pursuant to
this Section 12.01, Certificates registered in the name of the Depositor or the
Master Servicer or any Affiliate thereof shall be entitled to Voting Rights with
respect to matters affecting such Certificates.
Notwithstanding any contrary provision of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel to the effect that such amendment will
not result in the imposition of any tax on REMIC I, REMIC II or REMIC III
pursuant to the REMIC Provisions or cause REMIC I, REMIC II or REMIC III to fail
to qualify as a REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any such amendment with the
consent of Holders the Trustee shall furnish a copy of such amendment to each
Certificateholder.
129
<PAGE>
It shall not be necessary for the consent of
Certificateholders under this Section 12.01 to approve the particular form of
any proposed amendment, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
The cost of any Opinion of Counsel to be delivered pursuant to
this Section 12.01 shall be borne by the Person seeking the related amendment,
but in no event shall such Opinion of Counsel be an expense of the Trustee.
The Trustee may, but shall not be obligated to enter into any
amendment pursuant to this Section that affects its rights, duties and
immunities under this Agreement or otherwise.
SECTION 12.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is
subject to recordation in all appropriate public offices for real property
records in all the counties or other comparable jurisdictions in which any or
all of the properties subject to the Mortgages are situated, and in any other
appropriate public recording office or elsewhere, such recordation to be
effected by the Master Servicer and at the expense of the Certificateholders,
but only upon direction of the Trustee accompanied by an Opinion of Counsel at
the expense of the Certificateholders, to the effect that such recordation
materially and beneficially affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this
Agreement as herein provided and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and such counterparts shall
constitute but one and the same instrument.
SECTION 12.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a partition or winding up of the
Trust Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of any 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.
130
<PAGE>
No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided and such default would
not result in a claim under the Policy, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding in
its own name as Trustee hereunder and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders of
Certificates shall have any right in any manner whatsoever by virtue of any
provision of this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of such Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right
under this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section, each and every Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
SECTION 12.04. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS AND
THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH
LAWS.
SECTION 12.05. Notices.
All directions, demands and notices hereunder shall be in
writing and shall be deemed to have been duly given when received if personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service or delivered in any other manner specified
herein, addressed as follows:
To the Depositor: Merrill Lynch Mortgage Investors, Inc.
World Financial Center
New York, NY 10281
Attention: General Counsel's Office
Telephone: (212) 449-1000
Telecopier: (212) 449-5559
132
<PAGE>
To the Initial
Master Servicer and
Mortgage Loan Seller: Golden National Mortgage Banking Corp.
One Huntington Quadrangle, CW, 3rd Floor
Melville, NY 11747
Attention: Chief Operating Officer
Telephone: (516) 249-2100
Telecopier: (516) 353-4112
To the Subsequent
Master Servicer: Litton Loan Servicing LP
5373 W Alabama, Suite 600
Houston, TX 77056
Attention: Janice McClure
Telephone: (800) 888-9646
Telecopier:(713) 960-0539
To the Trustee: THE CHASE MANHATTAN BANK
450 West 33rd Street, 8th Floor
New York, New York 10001
Attention: Structured Finance Services
Telephone: (212) 946-7600
Telecopier:(212) 946-8191
Any party hereto may change the address, telephone number or
telecopier number by notice to the other parties hereto in accordance with the
terms hereof. Any notice required or permitted to be given to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given when mailed, whether or not the
Certificateholder receives such notice. A copy of any notice required to be
telecopied hereunder also shall be mailed to the appropriate party in the manner
set forth above.
SECTION 12.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof.
132
<PAGE>
SECTION 12.07. Notice to Rating Agencies.
The Trustee shall use its best efforts promptly to provide
notice to the Rating Agencies with respect to each of the following of which it
has actual knowledge:
1. Any material change or amendment to this
Agreement;
2. The occurrence of any Servicing Termination Event
that has not been cured or waived;
3. The resignation or termination of the Master
Servicer or the Trustee;
4. The repurchase or substitution of Mortgage Loans
pursuant to or as contemplated by Section 2.03;
5. The final payment to the Holders of any Class of
Certificates;
6. Any change in the location of the Collection
Account or the Distribution Account; and
7. Any event that would result in the inability of
the Trustee to make advances regarding delinquent
mortgage loans.
In addition, the Trustee shall promptly furnish to each Rating
Agency copies of each report to Certificateholders described in Section 4.02 and
the Master Servicer shall promptly furnish to each Rating Agency copies of the
following:
1. Each annual statement as to compliance described
in Section 3.19; and
2. Each annual independent public accountants'
servicing report described in Section 3.20.
Any such notice pursuant to this Section 12.07 shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or by express delivery service
to Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007
and to Standard & Poor's Ratings Services, 25 Broadway, New York, New York
10004, or such other addresses as the Rating Agencies may designate in writing
to the parties hereto.
SECTION 12.08. Article and Section References
All article and section references used in this Agreement,
unless otherwise provided, are to articles and sections in this Agreement.
133
<PAGE>
SECTION 12.09. Confirmation of Intent
It is the express intent of the parties hereto that the conveyance of
the Mortgage Loans and the other assets constituting the Trust Fund by the
Depositor to the Trustee as contemplated by this Agreement be, and be treated
for all purposes as, a sale by the Depositor to the Trustee of the Mortgage
Loans and other assets constituting the Trust Fund. It is, further, not the
intention of the parties that such conveyance be deemed a pledge of the Mortgage
Loans and the other assets constituting the Trust Fund by the Depositor to the
Trustee to secure a debt or other obligation of the Depositor. However, in the
event that, notwithstanding the intent of the parties, the Mortgage Loans and
the other assets constituting the Trust Fund are held to continue to be property
of the Depositor then (a) the Agreement shall also be deemed to b e a security
agreement within the meaning of Articles 8 and 9 of the Uniform Commercial Code;
(b) the transfer of the Mortgage Loans and the other assets constituting the
Trust Fund provided for herein shall be deemed to be a grant by the Depositor to
the Trustee of a security interest in all of the Depositor's right, title and
interest in and to the Mortgage Loans and the other assets constituting the
Trust Fund and all amounts payable on the Mortgage Loans in accordance with the
terms thereof and all proceeds of the conversion, voluntary or involuntary, of
the foregoing into cash, instruments, securities or other property; (c) the
possession by the Trustee, or the Custodian on its behalf, of Mortgage Loans and
such other items of property as constitute instruments, money, negotiable
documents or chattel paper shall be deemed to be "possession by the secured
party" for purposes of perfecting the security interest pursuant to Section
9--305 of the Uniform Commercial Code; and (d) notifications to persons holding
such property, acknowledgments, receipts or confirmations from persons holding
such property, shall be deemed notifications to, or acknowledgments, receipts or
confirmations from, financial intermediaries, bailees or agents (as applicable)
of the Trustee for the purpose of perfecting such security interest under
applicable law. Any assignment of the interest of the Trustee pursuant to any
provision hereof shall also be deemed to be an assignment of any security
interest created hereby. The Master Servicer and the Depositor shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
Mortgage Loans and the other assets constituting the Trust Fund, such security
interest would be deemed to be a perfected security interest of first priority
under applicable law and would be maintained as such throughout the term of this
Agreement.
134
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Initial Master
Servicer, the Subsequent Master Servicer and the Trustee have caused their names
to be signed hereto by their respective officers thereunto duly authorized, in
each case as of the day and year first above written.
MERRILL LYNCH MORTGAGE INVESTORS,
INC.,
as Depositor
By:_________________________________
Name:_______________________________
Title:______________________________
GOLDEN NATIONAL MORTGAGE BANKING
CORP.
as Initial Master Servicer
By:_________________________________
Name:_______________________________
Title:______________________________
LITTON LOAN SERVICING LP,
as Subsequent Master Servicer
By:_________________________________
Name:_______________________________
Title:______________________________
THE CHASE MANHATTAN BANK,
as Trustee
By:_________________________________
Name:_______________________________
Title:______________________________
135
<PAGE>
STATE OF _______________________)
) ss.:
COUNTY OF_______________________)
On the 29th day of October 1998, before me, a notary public in
and for said State, personally appeared , known to me to be the ___________ of
Merrill Lynch Mortgage Investors, Inc., one of the corporations that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
_________________________
Notary Public
[Notarial Seal]
136
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of October 1998, before me, a notary public in
and for said State, personally appeared _____________, known to me to be the
________________________ of Golden National Mortgage Banking Corp., one of the
corporations that executed the within instrument, and also known to me to be the
person who executed it on behalf of said corporation, and acknowledged to me
that such corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
____________________
Notary Public
[Notarial Seal]
137
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 29th day of October 1998, before me, a notary public in
and for said State, personally appeared _____________, known to me to be the
________________________ of Litton Loan Servicing LP, one of the corporations
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
___________________
Notary Public
[Notarial Seal]
138
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 30th day of October 1998, before me, a notary public in
and for said State, personally appeared _________, known to me to be a _________
of The Chase Manhattan Bank, one of the corporations that executed the within
instrument, and also known to me to be the person who executed it on behalf of
said corporation, and acknowledged to me that such corporation executed the
within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal the day and year in this certificate first above written.
__________________________
Notary Public
[Notarial Seal]
139
<PAGE>
EXHIBIT A-1
GOLDEN NATIONAL
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 1998-GN3, CLASS A
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
<TABLE>
<CAPTION>
<S> <C>
Series 1998-GN3, Class A Class Certificate Balance of the Class A
Certificates as of the Closing Date:
Pass-Through Rate: ____% $_____________
Date of Pooling and Servicing Agreement and Denomination (Notional Amount):
Cut-off Date: October 1, 1998 $_____________
First Distribution Date: November 25, 1998 Initial Master Servicer: Golden National
Mortgage Banking Corp.
No. 1
Subsequent Master Servicer: Litton Loan
Servicing LP
Trustee: The Chase Manhattan Bank
Closing Date: October 30, 1998
CUSIP:
</TABLE>
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN BELOW.
<PAGE>
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional one- to four-family first
mortgage loans formed and sold by
GOLDEN NATIONAL MORTGAGE BANKING CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN GOLDEN
NATIONAL MORTGAGE BANKING CORP., THE MASTER SERVICER, THE TRUSTEE OR ANY
OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES.
This certifies that Cede & Co. is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the Class Certificate Balance of the Class A Certificates) in that certain
beneficial ownership interest evidenced by all the Class A Certificates in the
Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among Merrill Lynch Mortgage Investors, Inc.
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Master Servicer and the Trustee, a summary of certain
of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), from funds in the
Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class A Certificates on such Distribution Date pursuant to the
Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class A Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$1,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Trustee may deduct a reasonable wire transfer fee
from any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender
<PAGE>
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class A Certificates.
The Class A Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, any Master Servicer, the Trustee or
the Certificate Registrar may treat the
<PAGE>
Person in whose name this Certificate is registered as the owner hereof for all
purposes, and none of the Depositor, the Master Servicer, the Trustee, the
Certificate Registrar nor any such agent shall be affected by notice to the
contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the sum of the
aggregate Stated Principal Balance of the Mortgage Loans and the Original
Pre-Funded Amount at the time of purchase being 10% or less of the Cut-off Date
Pool Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: October 30, 1998
THE CHASE MANHATTAN BANK, as Trustee
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class A Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, as Certificate
Registrar
By:_______________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
_______________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)_____________________________________________
_______________________________________________________________________________
a Percentage Interest equal to ____% evidenced by the within Asset-Backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ________________________________________________
_______________________________________________________________________________
for the account of _______________________________, account number ____________
_________________,
or, if mailed by check, to ___________________________________________________.
Applicable statements should be mailed to _____________________________________
This information is provided by ______________________________________________,
the assignee named above, or ___________________________________, as its agent.
<PAGE>
EXHIBIT A-2
-----------
GOLDEN NATIONAL
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 1998-GN3, CLASS M-1
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
<TABLE>
<CAPTION>
<S> <C>
Series 1998-GN3, Class M-1 Class Certificate Balance of the Class M-1
Certificates as of the Closing Date:
Pass-Through Rate: ____% (Subject to the $_____________
Available Funds Cap)
Denomination: $______________
Date of Pooling and Servicing Agreement and
Cut-off Date: October 1, 1998 Initial Master Servicer: Golden National
Mortgage Banking Corp.
First Distribution Date: November 25, 1998
Subsequent Master Servicer: Litton Loan
No. 1 Servicing LP
Trustee: The Chase Manhattan Bank
Closing Date: October 30, 1998
CUSIP:
</TABLE>
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN BELOW.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO
SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND
IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE
<PAGE>
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR THE CODE
WILL BE REGISTERED EXCEPT IN COMPLIANCE WITH THE PROCEDURES DESCRIBED IN
SECTION 5.02 OF THE AGREEMENT AND HEREIN.
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional one- to four-family first
mortgage loans formed and sold by
GOLDEN NATIONAL MORTGAGE BANKING CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN GOLDEN
NATIONAL MORTGAGE BANKING CORP., THE MASTER SERVICER, THE TRUSTEE OR ANY
OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the Class Certificate Balance of the Class M-1 Certificates) in that certain
beneficial ownership interest evidenced by all the Class M-1 Certificates in the
Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among Merrill Lynch Mortgage Investors, Inc.
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Master Servicer and the Trustee, a summary of certain
of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), from funds in the
Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class M-1 Certificates on such Distribution Date pursuant to
the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class M-1 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$1,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register,
<PAGE>
provided that the Trustee may deduct a reasonable wire transfer fee from any
payment made by wire transfer. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the pendency
of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Trustee for that purpose as
provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class M-1 Certificates.
The Class M-1 Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
Except as provided in Section 5.02 of the Agreement, no transfer of
this Certificate or any ownership interest therein shall be made.
<PAGE>
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, any Master Servicer, any Servicer or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Servicer, the Certificate Registrar nor any such agent
shall be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the sum of the
aggregate Stated Principal Balance of the Mortgage Loans and the Original
Pre-Funded Amount at the time of purchase being 10% or less of the Cut-off Date
Pool Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: October 30, 1998
THE CHASE MANHATTAN BANK, as Trustee
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class M-1 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, as Certificate
Registrar
By:_______________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto _______________________________________________________
________________________________________________________________________
_________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)______________________________________
_________________
________________________________________________________________________
__________
a Percentage Interest equal to ____% evidenced by the within Asset-Backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
_______________________________________________________________________________
____.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ____________________________________________
_________________
___________________________________________________________________________
_________________
for the account of _______________________________, account number ________
_________________,&
or, if mailed by check, to ____________________________________________________
_____.
Applicable statements should be mailed to _________________________________
_________________
This information is provided by _______________________________________________
_____,
the assignee named above, or ___________________________________, as its agent.
<PAGE>
EXHIBIT A-3
-----------
GOLDEN NATIONAL
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 1998-GN3, CLASS M-2
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING
THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 100% CONSTANT PREPAYMENT RATE, USED SOLELY FOR THE
PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE "PREPAYMENT
ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $______
OF OID PER $100,000 OF INITIAL NOTIONAL AMOUNT, THE YIELD TO MATURITY IS
______% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD
IS NO MORE THAN $____ PER $100,000 OF INITIAL NOTIONAL AMOUNT, COMPUTED
UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS
WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER
RATE.]
<TABLE>
<CAPTION>
<S> <C>
Series 1998-GN3, Class M-2 Class Certificate Balance of the Class M-2
Certificates as of the Closing Date:
Pass-Through Rate: ____% (Subject to the $_______________
Available Funds Cap)
Denomination: $______________
Date of Pooling and Servicing Agreement and
Cut-off Date: October 1, 1998 Initial Master Servicer: Golden National
Mortgage Banking Corp.
First Distribution Date: November 25, 1998
Subsequent Master Servicer: Litton Loan
No. 1 Servicing LP
Trustee: The Chase Manhattan Bank
Closing Date: October 30, 1998
CUSIP:
</TABLE>
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH
<PAGE>
HEREIN. ACCORDINGLY, THE OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF
AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN BELOW.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO
SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND
IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED IN SECTION 5.02 OF THE
AGREEMENT AND HEREIN.
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional one- to four-family first
mortgage loans formed and sold by
GOLDEN NATIONAL MORTGAGE BANKING CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN GOLDEN
NATIONAL MORTGAGE BANKING CORP., THE MASTER SERVICER, THE TRUSTEE OR ANY
OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the Class Certificate Balance of the Class M-2 Certificates) in that certain
beneficial ownership interest evidenced by all the Class M-2 Certificates in the
Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among Merrill Lynch Mortgage Investors, Inc.
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Master Servicer and the Trustee, a summary of certain
of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
<PAGE>
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), from funds in the
Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class M-2 Certificates on such Distribution Date pursuant to
the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class M-2 Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$1,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Trustee may deduct a reasonable wire transfer fee
from any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class M-2 Certificates.
The Class M-2 Certificates are limited in right of payment to
certain collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
<PAGE>
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
Except as provided in Section 5.02 of the Agreement, no transfer of
this Certificate or any ownership interest therein shall be made.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, any Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the sum of the
aggregate Stated Principal Balance of the Mortgage Loans and the Original
Pre-Funded Amount at the time of purchase being 10% or less of the Cut-off Date
Pool Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: October 30, 1998
THE CHASE MANHATTAN BANK, as Trustee
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class M-2 Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, as Certificate
Registrar
By:_______________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ___________________________________________________
____________________________________________________________________
_________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)__________________________________
_________________
____________________________________________________________________
____________
a Percentage Interest equal to ____% evidenced by the within Asset-Backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
_______________________________________________________________________________
____.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ___________________________________________
_________________
__________________________________________________________________________
____________
for the account of _______________________________, account number _______
____________,
or, if mailed by check, to ____________________________________________________
_____.
Applicable statements should be mailed to ________________________________
_________________
This information is provided by _______________________________________________
_____,
the assignee named above, or ___________________________________, as its agent.
<PAGE>
EXHIBIT A-4
-----------
GOLDEN NATIONAL
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 1998-GN3, CLASS B
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING
THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 100% CONSTANT PREPAYMENT RATE, USED SOLELY FOR THE
PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE "PREPAYMENT
ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $______
OF OID PER $100,000 OF INITIAL NOTIONAL AMOUNT, THE YIELD TO MATURITY IS
______% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD
IS NO MORE THAN $____ PER $100,000 OF INITIAL NOTIONAL AMOUNT, COMPUTED
UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS
WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER
RATE.]
<TABLE>
<CAPTION>
<S> <C>
Series 1998-GN3, Class B Class Certificate Balance of the Class B
Certificates as of the Closing Date:
Pass-Through Rate: ____% (Subject to the $_____________
Available Funds Cap)
Denomination: $______________
Date of Pooling and Servicing Agreement and
Cut-off Date: October 1, 1998 Initial Master Servicer: Golden National
Mortgage Banking Corp.
First Distribution Date: November 25, 1998
Subsequent Master Servicer: Litton Loan
No. 1 Servicing LP
Trustee: The Chase Manhattan Bank
Closing Date: October 30, 1998
CUSIP:
</TABLE>
<PAGE>
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN BELOW.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO
SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND
IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED IN SECTION 5.02 OF THE
AGREEMENT AND HEREIN.
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional one- to four-family first
mortgage loans formed and sold by
GOLDEN NATIONAL MORTGAGE BANKING CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN GOLDEN
NATIONAL MORTGAGE BANKING CORP., THE MASTER SERVICER, THE TRUSTEE OR ANY
OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES.
This certifies that _____________ is the registered owner of a
Percentage Interest (obtained by dividing the denomination of this Certificate
by the Class Certificate Balance of the Class B Certificates) in that certain
beneficial ownership interest evidenced by all the Class B Certificates in the
Trust Fund created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Agreement"), among Merrill Lynch Mortgage Investors, Inc.
(hereinafter called the "Depositor," which term includes any successor entity
under the Agreement), the Master Servicer and the Trustee, a summary of certain
of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement. This Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound.
<PAGE>
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), from funds in the
Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class B Certificates on such Distribution Date pursuant to the
Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class B Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$1,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Trustee may deduct a reasonable wire transfer fee
from any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class B Certificates.
The Class B Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
<PAGE>
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
Except as provided in Section 5.02 of the Agreement, no transfer of
this Certificate or any ownership interest therein shall be made.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, any Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the sum of the
aggregate Stated Principal Balance of the Mortgage Loans and the Original
Pre-Funded Amount at the time of purchase being 10% or less of the Cut-off Date
Pool Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: October 30, 1998
THE CHASE MANHATTAN BANK, as Trustee
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class B Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, as Certificate
Registrar
By:_______________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________
_______________________________________________________________________
________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)_____________________________________
________________
_______________________________________________________________________
___________
a Percentage Interest equal to ____% evidenced by the within Asset-Backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to _____________________________________________
________________
____________________________________________________________________________
__________
for the account of _______________________________, account number _________
__________,
or, if mailed by check, to ____________________________________________________
_____.
Applicable statements should be mailed to __________________________________
___________
This information is provided by _______________________________________________
_____,
the assignee named above, or ___________________________________, as its agent.
<PAGE>
EXHIBIT A-5
-----------
GOLDEN NATIONAL
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 1998-GN3, CLASS C
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"REGULAR INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
[THE FOLLOWING INFORMATION IS PROVIDED SOLELY FOR THE PURPOSES OF APPLYING
THE U.S. FEDERAL INCOME TAX ORIGINAL ISSUE DISCOUNT ("OID") RULES TO THIS
CERTIFICATE. BASED ON THE OID REGULATIONS AND ASSUMING THAT THE MORTGAGE
LOANS PREPAY AT 100% CONSTANT PREPAYMENT RATE, USED SOLELY FOR THE
PURPOSES OF APPLYING THE OID RULES TO THE CERTIFICATES (THE "PREPAYMENT
ASSUMPTION"), THIS CERTIFICATE HAS BEEN ISSUED WITH NO MORE THAN $______
OF OID PER $100,000 OF INITIAL NOTIONAL AMOUNT, THE YIELD TO MATURITY IS
______% AND THE AMOUNT OF OID ATTRIBUTABLE TO THE INITIAL ACCRUAL PERIOD
IS NO MORE THAN $____ PER $100,000 OF INITIAL NOTIONAL AMOUNT, COMPUTED
UNDER THE EXACT METHOD. NO REPRESENTATION IS MADE THAT THE MORTGAGE LOANS
WILL PREPAY AT A RATE BASED ON THE PREPAYMENT ASSUMPTION OR AT ANY OTHER
RATE.]
THIS CERTIFICATE IS SUBORDINATE TO THE CLASS A CERTIFICATES, THE CLASS M
CERTIFICATES AND THE CLASS B CERTIFICATES TO THE EXTENT DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS REGISTERED PURSUANT TO
SUCH ACT AND LAWS OR IS SOLD OR TRANSFERRED IN TRANSACTIONS THAT ARE
EXEMPT FROM REGISTRATION UNDER SUCH ACT AND UNDER APPLICABLE STATE LAW AND
IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
AGREEMENT.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED IN SECTION 5.02 OF THE
AGREEMENT AND HEREIN.
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Series 1998-GN3, Class C Class Certificate Balance of the Class C
Certificates as of the Closing Date:
Variable Pass-Through Rate $_______________
Date of Pooling and Servicing Agreement and Denomination: $______________
Cut-off Date: October 1, 1998
Initial Master Servicer: Golden National
First Distribution Date: November 25, 1998 Mortgage Banking Corp.
No. 1 Subsequent Master Servicer: Litton Loan
Servicing LP
Aggregate Notional Amount of the Class C
Certificates as of the Closing Date: Trustee: The Chase Manhattan Bank
$__________________
Closing Date: October 30, 1998
</TABLE>
DISTRIBUTIONS IN REDUCTION OF THE CERTIFICATE PRINCIPAL BALANCE OF THIS
CERTIFICATE MAY BE MADE MONTHLY AS SET FORTH HEREIN. ACCORDINGLY, THE
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE HEREOF AT ANY TIME MAY BE LESS
THAN THE AMOUNT SHOWN BELOW.
<PAGE>
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional one- to four-family first
mortgage loans formed and sold by
GOLDEN NATIONAL MORTGAGE BANKING CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN GOLDEN
NATIONAL MORTGAGE BANKING CORP., THE MASTER SERVICER, THE TRUSTEE OR ANY
OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES.
This certifies that Golden National Mortgage Finance Corporation is
the registered owner of a Percentage Interest (obtained by dividing the
denomination of this Certificate by the Class Certificate Balance of the Class C
Certificates) in that certain beneficial ownership interest evidenced by all the
Class C Certificates in the Trust Fund created pursuant to a Pooling and
Servicing Agreement, dated as specified above (the "Agreement"), among Merrill
Lynch Mortgage Investors, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Master Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), from funds in the
Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class C Certificates on such Distribution Date pursuant to the
Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class C Certificates the
aggregate initial Certificate Principal Balance of which is in excess of
$1,000,000, or by check mailed by first class mail to the address of the Person
entitled thereto, as such name and address shall appear on the Certificate
Register, provided that the Trustee may deduct a reasonable wire transfer fee
from any payment made by wire transfer. Notwithstanding the above, the final
distribution on this Certificate will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender
<PAGE>
of this Certificate at the office or agency appointed by the Trustee for that
purpose as provided in the Agreement.
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing a Percentage
Interest in the Class C Certificates.
The Class C Certificates are limited in right of payment to certain
collections and recoveries respecting the Mortgage Loans, all as more
specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
Except as provided in Sections 5.02 of the Agreement, no transfer of
this Certificate or any ownership interest therein shall be made.
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
<PAGE>
The Depositor, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, any Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the sum of the
aggregate Stated Principal Balance of the Mortgage Loans and the Original
Pre-Funded Amount at the time of purchase being 10% or less of the Cut-off Date
Pool Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: October 30, 1998
THE CHASE MANHATTAN BANK, as Trustee
By:____________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class C Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK, as Certificate
Registrar
By:_______________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto ______________________________________________________
_______________________________________________________________________
_________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)_____________________________________
_________________
_______________________________________________________________________
_________
a Percentage Interest equal to ____% evidenced by the within Asset-Backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
_______________________________________________________________________________.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ____________________________________________
_________________
___________________________________________________________________________
_________
for the account of _______________________________, account number ________
_________,
or, if mailed by check, to ___________________________________________________.
____.
Applicable statements should be mailed to _________________________________
__________
This information is provided by ______________________________________________,
____,
the assignee named above, or ___________________________________, as its agent.
<PAGE>
EXHIBIT A-6
-----------
GOLDEN NATIONAL
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 1998-GN3, CLASS [R-I] [R-II] [R-III]
THIS CERTIFICATE MAY NOT BE TRANSFERRED TO A NON-UNITED STATES PERSON.
SOLELY FOR U.S. FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A
"RESIDUAL INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC"), AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND
860D OF THE INTERNAL REVENUE CODE OF 1986 (THE "CODE").
THIS CLASS [R-I] [R-II] [R-III] CERTIFICATE IS SUBORDINATE TO THE OFFERED
CERTIFICATES AND THE CLASS C CERTIFICATES OF THIS SERIES TO THE EXTENT
DESCRIBED HEREIN AND IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
THIS CLASS [R-I] [R-II] [R-III] CERTIFICATE WILL NOT BE ENTITLED TO
PAYMENTS UNTIL SUCH TIME AS DESCRIBED IN THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
THIS CLASS [R-I] [R-II] [R-III] CERTIFICATE HAS NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"),
OR THE SECURITIES LAWS OF ANY STATE. ANY RESALE, TRANSFER OR OTHER
DISPOSITION OF THIS CERTIFICATE WITHOUT SUCH REGISTRATION OR QUALIFICATION
MAY BE MADE ONLY IN A TRANSACTION THAT DOES NOT REQUIRE SUCH REGISTRATION
OR QUALIFICATION AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF
THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE TO AN EMPLOYEE BENEFIT PLAN OR OTHER
RETIREMENT ARRANGEMENT SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), OR THE CODE WILL BE REGISTERED EXCEPT
IN COMPLIANCE WITH THE PROCEDURES DESCRIBED IN SECTION 5.02 OF THE
AGREEMENT AND HEREIN.
ANY RESALE, TRANSFER OR OTHER DISPOSITION OF THIS CLASS [R-I] [RII]
[R-III] CERTIFICATE MAY BE MADE ONLY IF THE PROPOSED TRANSFEREE PROVIDES
(1) AN AFFIDAVIT TO THE CERTIFICATE REGISTRAR AND THE TRUSTEE THAT SUCH
TRANSFEREE IS NOT (A) THE UNITED STATES, ANY STATE OR POLITICAL
SUBDIVISION THEREOF, ANY
<PAGE>
FOREIGN GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR
INSTRUMENTALITY OF ANY OF THE FOREGOING, (B) ANY ORGANIZATION (OTHER THAN
A COOPERATIVE DESCRIBED IN SECTION 521 OF THE CODE) WHICH IS EXEMPT FROM
THE TAX IMPOSED BY CHAPTER 1 OF THE CODE UNLESS SUCH ORGANIZATION IS
SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE CODE, (C) ANY
ORGANIZATION DESCRIBED IN SECTION 1381(A)(2)(C) OF THE CODE, (D) ANY
"ELECTING LARGE PARTNERSHIP" (ANY SUCH PERSON DESCRIBED IN THE FOREGOING
CLAUSES (A), (B), (C) OR (D) BEING HEREINAFTER REFERRED TO AS A
"DISQUALIFIED ORGANIZATION"), OR (E) AN AGENT OF A DISQUALIFIED
ORGANIZATION OR (F) A NON-UNITED STATES PERSON AND (2) NO PURPOSE OF SUCH
TRANSFER IS TO IMPEDE THE ASSESSMENT OR COLLECTION OF TAX, AND (3) SUCH
TRANSFEREE SATISFIES CERTAIN ADDITIONAL CONDITIONS RELATING TO THE
FINANCIAL CONDITION OF THE PROPOSED TRANSFEREE. NOTWITHSTANDING THE
REGISTRATION IN THE CERTIFICATE REGISTER OR ANY TRANSFER, SALE OR OTHER
DISPOSITION OF THIS CLASS [R-I] [R-II] [R-III] CERTIFICATE TO A
DISQUALIFIED ORGANIZATION OR AN AGENT OF A DISQUALIFIED ORGANIZATION, SUCH
REGISTRATION SHALL BE DEEMED TO BE OF NO LEGAL FORCE OR EFFECT WHATSOEVER
AND SUCH PERSON SHALL NOT BE DEEMED TO BE A CERTIFICATEHOLDER FOR ANY
PURPOSE HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF
DISTRIBUTIONS ON THIS CERTIFICATE. EACH HOLDER OF A CLASS [R-I] [R-II]
[R-III] CERTIFICATE BY ACCEPTANCE OF THIS CERTIFICATE SHALL BE DEEMED TO
HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH AND THE PROVISIONS OF
SECTION 5.02(D) OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
ANY PERSON THAT IS A DISQUALIFIED ORGANIZATION IS PROHIBITED FROM
ACQUIRING BENEFICIAL OWNERSHIP OF THIS CLASS R CERTIFICATE.
<TABLE>
<CAPTION>
<S> <C>
Series 1998-GN3, Class [R-I] [R-II] [R-III] Initial Master Servicer: Golden National
Mortgage Banking Corp.
Date of Pooling and Servicing Agreement and
Cut-off Date: October 1, 1998 Subsequent Master Servicer: Litton Loan
Servicing LP
First Distribution Date: November 25, 1998
No. 1 Trustee: The Chase Manhattan Bank
Percentage Interest: _____% Closing Date: October 30, 1998
</TABLE>
<PAGE>
MORTGAGE LOAN ASSET BACKED CERTIFICATE
evidencing a beneficial ownership interest in a portion of a Trust Fund
consisting primarily of a pool of conventional one- to four-family first
mortgage loans formed and sold by
GOLDEN NATIONAL MORTGAGE BANKING CORP.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN GOLDEN
NATIONAL MORTGAGE BANKING CORP., THE MASTER SERVICER, THE TRUSTEE OR ANY
OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED
STATES.
This certifies that Golden National Mortgage Finance Corporation is
the registered owner of a Percentage Interest set forth above in that certain
beneficial ownership interest evidenced by all the Class [R-I] [R-II] [R-III]
Certificates in the Trust Fund created pursuant to a Pooling and Servicing
Agreement, dated as specified above (the "Agreement"), among Merrill Lynch
Mortgage Investors, Inc. (hereinafter called the "Depositor," which term
includes any successor entity under the Agreement), the Master Servicer and the
Trustee, a summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used herein
have the meanings assigned in the Agreement. This Certificate is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
Pursuant to the terms of the Agreement, distributions will be made
on the 25th day of each month or, if such 25th day is not a Business Day, the
Business Day immediately following (a "Distribution Date"), commencing on the
First Distribution Date specified above, to the Person in whose name this
Certificate is registered on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), from funds in the
Distribution Account in an amount equal to the product of the Percentage
Interest evidenced by this Certificate and the amount required to be distributed
to the Holders of Class [R-I] [R-II] [R-III] Certificates on such Distribution
Date pursuant to the Agreement.
All distributions to the Holder of this Certificate under the
Agreement will be made or caused to be made by or on behalf of the Trustee by
wire transfer in immediately available funds to the account of the Person
entitled thereto if such Person shall have so notified the Trustee in writing at
least five Business Days prior to the Record Date immediately prior to such
Distribution Date and is the registered owner of Class [R-I] [R-II] [R-III]
Certificates the aggregate Percentage Interest of which is in excess of a 66%
Percentage Interest of the Class [R-I] [R-II] [R-III] Certificates, or by check
mailed by first class mail to the address of the Person entitled thereto, as
such name and address shall appear on the Certificate Register, provided that
the Trustee may deduct a reasonable wire transfer fee from any payment made by
wire transfer. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose as provided in the
Agreement.
<PAGE>
This Certificate is one of a duly authorized issue of Certificates
designated as Mortgage Loan Asset Backed Certificates of the Series specified on
the face hereof (herein called the "Certificates") and representing the
Percentage Interest specified on the face hereof.
The Class [R-I] [R-II] [R-III] Certificates are limited in right of
payment to certain collections and recoveries respecting the Mortgage Loans, all
as more specifically set forth herein and in the Agreement. As provided in the
Agreement, withdrawals from the Collection Account and the Distribution Account
may be made from time to time for purposes other than distributions to
Certificateholders, such purposes including reimbursement of advances made, or
certain expenses incurred, with respect to the Mortgage Loans.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor, the Master Servicer, the Trustee and the rights of the
Certificateholders under the Agreement at any time by the Depositor, the Master
Servicer and the Trustee with the consent of the Holders of Certificates
entitled to at least 66% of the Voting Rights. Any such consent by the Holder of
this Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Certificate and of any Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Certificate is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies appointed by the Trustee as provided in the
Agreement, duly endorsed by, or accompanied by an assignment in the form below
or other written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of the same Class in authorized denominations evidencing the same aggregate
Percentage Interest will be issued to the designated transferee or transferees.
The Certificates are issuable in fully registered form only without
coupons in Classes and denominations representing Percentage Interests specified
in the Agreement. As provided in the Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of the same Class in authorized denominations evidencing the same
aggregate Percentage Interest, as requested by the Holder surrendering the same.
Except as provided in Sections 5.02 of the Agreement, no transfer of
this Certificate or any ownership interest therein shall be made.
The Holder of this Certificate, by its acceptance hereof, shall be
deemed for all purposes to have consented to the provisions of Section 5.02 of
the Agreement and to any amendment of the Agreement deemed necessary by counsel
of the Depositor to ensure that the transfer of this Certificate to any Person
other than a Permitted Transferee or any other Person will not cause the REMIC
Trust to cease to qualify as a REMIC or cause the imposition of a tax upon the
REMIC Trust.
<PAGE>
No service charge will be made for any such registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
The Depositor, the Master Servicer, the Trustee and the Certificate
Registrar and any agent of the Depositor, any Master Servicer, the Trustee or
the Certificate Registrar may treat the Person in whose name this Certificate is
registered as the owner hereof for all purposes, and none of the Depositor, the
Master Servicer, the Trustee, the Certificate Registrar nor any such agent shall
be affected by notice to the contrary.
The obligations created by the Agreement and the Trust Fund created
thereby shall terminate upon payment to the Certificateholders of all amounts
held by or on behalf of the Trustee and required to be paid to them pursuant to
the Agreement following the earlier of (i) the final payment or other
liquidation (or any advance with respect thereto) of the last Mortgage Loan
remaining in the Trust Fund, and (ii) the purchase by the party designated in
the Agreement at a price determined as provided in the Agreement from the Trust
Fund of all Mortgage Loans and all property acquired in respect of such Mortgage
Loans. The Agreement permits, but does not require, the party designated in the
Agreement to purchase from the Trust Fund all Mortgage Loans and all property
acquired in respect of any Mortgage Loan at a price determined as provided in
the Agreement. The exercise of such right will effect early retirement of the
Certificates; however, such right to purchase is subject to the sum of the
aggregate Stated Principal Balance of the Mortgage Loans and the Original
Pre-Funded Amount at the time of purchase being 10% or less of the Cut-off Date
Pool Balance.
The recitals contained herein shall be taken as statements of the
Depositor and the Trustee assumes no responsibility for their correctness.
Unless the certificate of authentication hereon has been executed by
the Certificate Registrar, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: October 30, 1998
THE CHASE MANHATTAN BANK, as Trustee
By:__________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
-----------------------------
This is one of the Class [R-I] [R-II] [R-III] Certificates referred
to in the within-mentioned Agreement.
THE CHASE MANHATTAN BANK, as Certificate
Registrar
By:__________________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
-------------
The following abbreviations, when used in the inscription on the face of this
instrument, shall be construed as though they were written out in full according
to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT - Custodian
------------
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts
to Minors Act
JT TEN - as joint tenants with right _________________
if survivorship and not as (State)
tenants in common
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
----------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto_______________________________________________________
_______________________________________________________________________
_________________
(Please print or typewrite name, address including postal zip code, and Taxpayer
Identification Number of assignee)_____________________________________
_______________________________________________________________________
_________
a Percentage Interest equal to ____% evidenced by the within Asset-Backed
Certificate and hereby authorize(s) the registration of transfer of such
interest to assignee on the Certificate Register of the Trust Fund.
I (we) further direct the Certificate Registrar to issue a new
Certificate of a like Percentage Interest and Class to the above named assignee
and deliver such Certificate to the following address:
________________________________________________________________________________
_____.
Dated:
_____________________________________
Signature by or on behalf of assignor
_____________________________________
Signature Guaranteed
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distributions shall be made, by wire transfer or otherwise, in
immediately available funds to ____________________________________________
___________________________________________________________________________
_________________
for the account of _______________________________, account number ________
___________
or, if mailed by check, to ____________________________________________________
______.
Applicable statements should be mailed to ________________________________
_________
_______________________________________________________________________________
_________
This information is provided by _______________________________________________
_________
the assignee named above, or ___________________________________, as its agent.
<PAGE>
EXHIBIT B-1
-----------
FORM OF TRUSTEE'S INITIAL CERTIFICATION
_________________ , 1998
Merrill Lynch Mortgage Investors, Inc.
North Tower
World Financial Center
New York, New York 10281
[Master Servicer]
Re: Pooling and Servicing Agreement, dated as of October 1,
1998, among Merrill Lynch Mortgage Investors, Inc.,
Golden National Mortgage Banking Corp., Litton Loan
Servicing LP and The Chase Manhattan Bank - Mortgage
Loan Asset Backed Certificates, Series 1998-GN3
-------------------------------------------------------
Ladies and Gentlemen:
Pursuant to Section 2.02 of the Agreement, we certify that, as to each
Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan
paid in full or any Mortgage Loan specifically identified in the exception
report annexed hereto as not being covered by this certification), (i) the
Mortgage Note included in each Mortgage File required to be delivered to us
pursuant to the Agreement is in our possession and (ii) such Mortgage Note has
been reviewed by us and appears regular on its face and relates to such Mortgage
Loan.
Attached is the Trustee's preliminary exceptions in accordance with
Section 2.02 of the Agreement. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to them in the Agreement.
The Trustee has made no independent examination of any documents contained
in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
due authorization, recordability or genuineness of any of the documents
contained in the Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, or (ii) the collectability, insurability, effectiveness
or suitability of any such Mortgage Loan.
<PAGE>
THE CHASE MANHATTAN BANK,
as Trustee
By:________________________
Name:______________________
Title:_____________________
<PAGE>
EXHIBIT B-2
-----------
FORM OF TRUSTEE FINAL CERTIFICATION
__________________ , 1998
Merrill Lynch Mortgage Investors, Inc.
North Tower
World Financial Center
New York, New York 10281
[Master Servicer]
Re: Pooling and Servicing Agreement, dated as of October 1,
1998, among Merrill Lynch Mortgage Investors, Inc.,
Golden National Mortgage Banking Corp., Litton Loan
Servicing LP and The Chase Manhattan Bank - Mortgage
Loan Asset Backed Certificates, Series 1998-GN3
-------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and Servicing
Agreement, the undersigned, as 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 the attachment hereto), it or a
Custodian on its behalf has received:
(i) the original recorded Mortgage, and the original
recorded power of attorney, if the Mortgage was executed pursuant to
a power of attorney, or a certified copy thereof in those instances
where the public recording office retains the original or where the
original has been lost;
(ii) an original recorded Assignment of the Mortgage to
the Trustee together with the original recorded Assignment or
Assignments of the Mortgage showing a complete chain of assignment
from the originator, or a certified copy of such Assignments in
those instances where the public recording retains the original or
where original has been lost; and
(iii) the original lender's title insurance policy.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
above-referenced Pooling and Servicing Agreement. The Trustee makes no
representations as to: (i) the validity, legality, sufficiency, enforceability
or genuineness of any of the documents contained in the Mortgage File of any of
the Mortgage Loans identified on the Mortgage Loan Schedule, or (ii) the
collectability, insurability, effectiveness or suitability of any such Mortgage
Loan.
<PAGE>
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
THE CHASE MANHATTAN BANK,
as Trustee
By:________________________
Name:______________________
Title:_____________________
<PAGE>
EXHIBIT C
---------
FORM OF MORTGAGE LOAN PURCHASE AGREEMENT
[Available Upon Request]
<PAGE>
EXHIBIT D-1
-----------
REQUEST FOR RELEASE
(for Trustee/Custodian)
Loan Information
- ----------------
Name of Mortgagor: _______________________
Master Servicer
Loan No.: _______________________
Trustee/Custodian
- -----------------
Name: The Chase Manhattan Bank
Address: 450 West 33rd Street, 15th Floor, New York, NY
10001-2697
Trustee/Custodian
Mortgage File No.: _______________________
Depositor
- ---------
Name: MERRILL LYNCH MORTGAGE INVESTORS, INC.
Address: 250 Vesey Street, World Financial Center, North
Tower, New York, NY 10281
Certificates: Mortgage Loan Asset
Certificates, Series 1998-GN3.
<PAGE>
The undersigned Servicer hereby acknowledges that it has received
from The Chase Manhattan Bank, as Trustee for the Holders of Mortgage Loan Asset
Backed Certificates, Series 1998-GN3, the documents referred to below (the
"Documents"). All capitalized terms not otherwise defined in this Request for
Release shall have the meanings given them in the Pooling and Servicing
Agreement, dated as of October 1, 1998, among the Trustee, the Depositor, the
Initial Master Servicer and the Subsequent Master Servicer (the "Pooling and
Servicing Agreement").
( ) Promissory Note dated _______________, 19__, in the original principal sum
of $__________, made by _____________________, payable to, or endorsed to
the order of, the Trustee.
( ) Mortgage recorded on _________________________ as instrument no.
____________________ in the County Recorder's Office of the County of
_________________, State of __________________ in book/reel/docket
_________________ of official records at page/image _____________.
( ) Deed of Trust recorded on ___________________ as instrument no.
________________ in the County Recorder's Office of the County of
_________________, State of ____________________ in book/reel/docket
_________________ of official records at page/image ______________.
( ) Assignment of Mortgage or Deed of Trust to the Trustee, recorded on
___________________ as instrument no. _________ in the County Recorder's
Office of the County of _______________, State of _______________________
in book/reel/docket ____________ of official records at page/image
____________.
( ) Other documents, including any amendments, assignments or other
assumptions of the Mortgage Note or Mortgage.
( ) ________________________________________________
( ) ________________________________________________
( ) ________________________________________________
( ) ________________________________________________
The undersigned Master Servicer hereby acknowledges and agrees as
follows:
(1) The Master Servicer shall hold and retain possession of
the Documents in trust for the benefit of the Trustee, solely for the
purposes provided in the Agreement.
(2) The Master Servicer shall not cause or permit the
Documents to become subject to, or encumbered by, any claim, liens,
security interest, charges, writs of attachment or other impositions nor
shall the Master Servicer assert or seek to assert any claims or rights of
setoff to or against the Documents or any proceeds thereof.
<PAGE>
(3) The Master Servicer shall return each and every Document
previously requested from the Mortgage File to the Trustee when the need
therefor no longer exists, unless the Mortgage Loan relating to the
Documents has been liquidated and the proceeds thereof have been remitted
to the Collection Account and except as expressly provided in the
Agreement.
(4) The Documents and any proceeds thereof, including any
proceeds of proceeds, coming into the possession or control of the Master
Servicer shall at all times be earmarked for the account of the Trustee,
and the Master Servicer shall keep the Documents and any proceeds separate
and distinct from all other property in the Master Servicer's possession,
custody or control.
Dated:
[MASTER SERVICER]
By:_____________________________
Name:___________________________
Title:__________________________
<PAGE>
EXHIBIT D-2
-----------
REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICERS' CERTIFICATE AND TRUST RECEIPT
MORTGAGE LOAN ASSET BACKED CERTIFICATES
SERIES 1998-GN3
____________________________________________________ HEREBY CERTIFIES THAT
HE/SHE IS AN OFFICER OF THE MASTER SERVICER, HOLDING THE OFFICE SET FORTH
BENEATH HIS/HER SIGNATURE, AND HEREBY FURTHER CERTIFIES AS FOLLOWS:
WITH RESPECT TO THE MORTGAGE LOANS, AS THE TERM IS DEFINED IN THE POOLING AND
SERVICING AGREEMENT DESCRIBED IN THE ATTACHED SCHEDULE:
ALL PAYMENTS OF PRINCIPAL, PREMIUM (IF ANY), AND INTEREST HAVE BEEN MADE.
LOAN NUMBER:_______________________ BORROWER'S NAME:________________________
COUNTY: ___________________________
WE HEREBY CERTIFY THAT ALL AMOUNTS RECEIVED IN CONNECTION WITH SUCH PAYMENTS,
WHICH ARE REQUIRED TO BE DEPOSITED IN THE COLLECTION ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.
DATED:
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
<PAGE>
EXHIBIT E-1
-----------
FORM OF TRANSFER AFFIDAVIT AND AGREEMENT
STATE OF )
: ss.:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Owner] (record or
beneficial owner of the Mortgage Loan Asset Backed Certificates, Series
1998-GN3, Class [R-I][R-II][R-III] (the "Owner")), a [savings institution]
[corporation] duly organized and existing under the laws of [the State of
__________________] [the United States], on behalf of which he makes this
affidavit and agreement.
2. That the Owner (i) is not and will not be as of October 30, 1998
a "disqualified organization" within the meaning of Section 860E(e)(5) of the
Internal Revenue Code of 1986, as amended (the "Code") or an "electing large
partnership" within the meaning of Section 775 of the Code, (ii) will endeavor
to remain other than a disqualified organization and an electing large
partnership for so long as it retains its ownership in the Class
[R-I][R-II][R-III] Certificates, and (iii) is acquiring the Class
[R-I][R-II][R-III] Certificates for its own account or for the account of
another Owner from which it has received an affidavit and agreement in
substantially the same form as this affidavit and agreement. (For this purpose,
a "disqualified organization" means the United States, any state or political
subdivision thereof, any agency or instrumentality of any of the foregoing
(other than an instrumentality all of the activities of which are subject to tax
and, except for the Federal Home Loan Mortgage Corporation, a majority of whose
board of directors is not selected by any such governmental entity) or any
foreign government, international organization or any agency or instrumentality
of such foreign government or organization, any rural electric or telephone
cooperative, or any organization (other than certain farmers' cooperatives) that
is generally exempt from federal income tax unless such organization is subject
to the tax on unrelated business taxable income).
3. That the Owner is aware (i) of the tax that would be imposed on
transfers of Class [R-I][R-II][R-III] Certificates to disqualified organizations
under the Code, that applies to all transfers of Class [R-I][R-II][R-III]
Certificates after March 31, 1988; (ii) that such tax would be on the
transferor, or, if such transfer is through an agent (which person includes a
broker, nominee or middleman) for a disqualified organization, on the agent;
(iii) that the person otherwise liable for the tax shall be relieved of
liability for the tax if the transferee furnishes to such person an affidavit
that the transferee is not a disqualified organization and, at the time of
transfer, such person does not have actual knowledge that the affidavit is
false; and (iv) that the Class [R-I][R-II][R-III] Certificates may be
"noneconomic residual interests" within the meaning of Treasury regulations
promulgated pursuant to the Code and that the transferor of a noneconomic
residual interest will remain liable for any taxes due with respect to the
income on such residual interest, unless no significant purpose of the transfer
was to impede the assessment or collection of tax.
<PAGE>
4. That the Owner is aware of the tax imposed on a "pass-through
entity" holding Class [R-I][R-II][R-III] Certificates if at any time during the
taxable year of the pass-through entity a disqualified organization is the
record holder of an interest in such entity. (For this purpose, a "pass through
entity" includes a regulated investment company, a real estate investment trust
or common trust fund, a partnership, trust or estate, and certain cooperatives.)
5. That the Owner is aware that the Trustee will not register the
transfer of any Class [R-I][R-II][R-III] Certificates unless the transferee, or
the transferee's agent, delivers to it an affidavit and agreement, among other
things, in substantially the same form as this affidavit and agreement. The
Owner expressly agrees that it will not consummate any such transfer if it knows
or believes that any of the representations contained in such affidavit and
agreement are false.
6. That the Owner has reviewed the restrictions set forth on the
face of the Class [R- I][R-II][R-III] Certificates and the provisions of Section
5.02(f) of the Pooling and Servicing Agreement under which the Class
[R-I][R-II][R-III] Certificates were issued (in particular, clause (iii)(A) and
(iii)(B) of Section 5.02(f) which authorize the Trustee to deliver payments to a
person other than the Owner and negotiate a mandatory sale by the Trustee in the
event the Owner holds such Certificates in violation of Section 5.02(f)). The
Owner expressly agrees to be bound by and to comply with such restrictions and
provisions.
7. That the Owner consents to any additional restrictions or
arrangements that shall be deemed necessary upon advice of counsel to constitute
a reasonable arrangement to ensure that the Class [R-I][R-II][R-III]
Certificates will only be owned, directly or indirectly, by an Owner that is not
a disqualified organization.
8. The Owner's Taxpayer Identification Number is ______________.
9. This affidavit and agreement relates only to the Class
[R-I][R-II][R-III] Certificates held by the Owner and not to any other holder of
the Class [R-I][R-II][R-III] Certificates. The Owner understands that the
liabilities described herein relate only to the Class [R- I][R-II][R-III]
Certificates.
10. That no purpose of the Owner relating to the transfer of any of
the Class [R-I][R- II][R-III] Certificates by the Owner is or will be to impede
the assessment or collection of any tax.
11. That the Owner has no present knowledge or expectation that it
will be unable to pay any United States taxes owed by it so long as any of the
Certificates remain outstanding. In this regard, the Owner hereby represents to
and for the benefit of the person from whom it acquired the Class
[R-I][R-II][R-III] Certificates that the Owner intends to pay taxes associated
with holding such Class [R-I][R-II][R-III] Certificates as they become due,
fully understanding that it may incur tax liabilities in excess of any cash
flows generated by the Class [R-I][R-II][R-III] Certificates.
12. That the Owner has no present knowledge or expectation that it
will become insolvent or subject to a bankruptcy proceeding for so long as any
of the Class [R-I][R-II][R-III] Certificates remain outstanding.
<PAGE>
13. The Owner is a citizen or resident of the United States, a
corporation, partnership (including an entity treated as a corporation or
partnership for federal income tax purposes) or other entity created or
organized in, or under the laws of, the United States or any political
subdivision thereof (except in the case of a partnership, to the extent provided
in regulations), an estate whose income from sources without the United States
is includable in gross income for United States federal income tax purposes
regardless of its connection with the conduct of a trade or business within the
United States or a trust other than a "foreign trust" as defined in Section
7701(a)(31) of the Code.
14. The Owner hereby certifies, represents and warrants to, and
covenants with the Company, the Trustee and the Master Servicers that the
following statements in (a) or (b) are accurate: (a) The Certificates (i) are
not being acquired by, and will not be transferred to, any employee benefit plan
within the meaning of section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or other retirement arrangement, including
individual retirement accounts and annuities, Keogh plans and bank collective
investment funds and insurance company general or separate accounts in which
such plans, accounts or arrangements are invested, that is subject to Section
406 of ERISA or Section 4975 of the Internal Revenue Code of 1986 (the "Code")
(any of the foregoing, a "Plan"), (ii) are not being acquired with "plan assets"
of a Plan within the meaning of the Department of Labor ("DOL") regulation, 29
C.F.R. ss. 2510.3-101 or otherwise under ERISA, and (iii) will not be
transferred to any entity that is deemed to be investing in plan assets within
the meaning of the DOL regulation, 29 C.F.R. ss. 2510.3-101 or otherwise under
ERISA; or
(b) The purchase of Certificates is permissible under applicable
law, will not constitute or result in any prohibited transaction under ERISA or
Section 4975 of the Code, will not subject the Company, the Trustee or the
Master Servicer to any obligation in addition to those undertaken in the Pooling
and Servicing Agreement and, with respect to each source of funds ("Source")
being used by the Purchaser to acquire the Certificates, each of the following
statements are accurate: (a) the Purchaser is an insurance company; (b) the
Source is assets of the Purchaser's "general account;" (c) the conditions set
forth in Prohibited Transaction Class Exemption ("PTCE") 95-60 issued by the DOL
have been satisfied and the purchase, holding and transfer of Certificates by or
on behalf of the Purchaser are exempt under PTCE 95-60; and (d) the amount of
reserves and liabilities for such general account contracts held by or on behalf
of any Plan do not exceed 10% of the total reserves and liabilities of such
general account plus surplus as of the date hereof (for purposes of this clause,
all Plans maintained by the same employer (or affiliate thereof) or employee
organization are deemed to be a single Plan) in connection with its purchase and
holding of such Certificates; or
(c) The Owner will provide the Trustee, the Company and the Master
Servicer with an opinion of counsel acceptable to and in form and substance
satisfactory to the Trustee, the Company and the Master Servicer to the effect
that the purchase of Certificates is permissible under applicable law, will not
constitute or result in any non-exempt prohibited transaction under ERISA or
Section 4975 of the Code and will not subject the Trustee, the Company or the
Master Servicer to any obligation or liability (including obligations or
liabilities under ERISA or Section 4975 of the Code) in addition to those
undertaken in the Pooling and Servicing Agreement.
<PAGE>
In addition, the Owner hereby certifies, represents and warrants to,
and covenants with, the Company, the Trustee and the Master Servicers that the
Owner will not transfer such Certificates to any Plan or person unless either
such Plan or person meets the requirements set forth in either (a), (b) or (c)
above.
Capitalized terms used but not defined herein shall have the
meanings assigned in the Pooling and Servicing Agreement.
<PAGE>
IN WITNESS WHEREOF, the Owner has caused this instrument to be
executed on its behalf, pursuant to the authority of its Board of Directors, by
its [Title of Officer] and its corporate seal to be hereunto attached, attested
by its [Assistant] Secretary, this ____ day of _______________, 199__.
[NAME OF OWNER]
By:_____________________________________
[Name of Officer]
[Title of Officer]
[Corporate Seal]
ATTEST:
_________________________________
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer],
known or proved to me to be the same person who executed the foregoing
instrument and to be the [Title of Officer] of the Owner, and acknowledged to me
that he executed the same as his free act and deed and the free act and deed of
the Owner.
Subscribed and sworn before me this ____ day of _____________,
199__.
NOTARY PUBLIC
COUNTY OF ______________________________
STATE OF _______________________________
My Commission expires the ____ day of
_______________, 19__.
<PAGE>
EXHIBIT E-2
-----------
FORM OF TRANSFEROR CERTIFICATE
__________________, 19__
Merrill Lynch Mortgage Investors, Inc.
World Financial Center
North Tower
New York, New York 10281
The Chase Manhattan Bank
450 West 33rd Street, 8th Floor
New York, New York 10001-2697
Attention: Golden National Mortgage Banking Corp. Series 1998-GN3
Re: Mortgage Loan Asset Backed Certificates,
Series 1998-GN3, Class [R-I][R-II][R-III]
-----------------------------------------
Ladies and Gentlemen:
This letter is delivered to you in connection with the transfer by
____________________________ (the "Seller") to ____________________________ (the
"Purchaser") of $_____________ Initial Certificate Principal Balance of Mortgage
Loan Asset Backed Certificates, Series 1998-GN3, Class [R-I][R-II][R-III] (the
"Certificates"), pursuant to Section 5.02 of the Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement"), dated as of October 1, 1998 among
Merrill Lynch Mortgage Investors, Inc., as depositor (the "Company"), Golden
National Mortgage Banking Corp., as initial master servicer, Litton Loan
Servicing LP, as subsequent master servicer and The Chase Manhattan Bank, as
trustee (the "Trustee"). All terms used herein and not otherwise defined shall
have the meanings set forth in the Pooling and Servicing Agreement. The Seller
hereby certifies, represents and warrants to, and covenants with, the Company
and the Trustee that:
1. No purpose of the Seller relating to the transfer of the
Certificate by the Seller to the Purchaser is or will be to impede the
assessment or collection of any tax.
2. The Seller understands that the Purchaser has delivered to the
Trustee and the Master Servicers a transfer affidavit and agreement in the form
attached to the Pooling and Servicing Agreement as Exhibit E-1. The Seller does
not know or believe that any representation contained therein is false.
3. The Seller has at the time of the transfer conducted a reasonable
investigation of the financial condition of the Purchaser as contemplated by
Treasury Regulations Section
<PAGE>
1.860E-1(c)(4)(i) and, as a result of that investigation, the Seller has
determined that the Purchaser has historically paid its debts as they become due
and has found no significant evidence to indicate that the Purchaser will not
continue to pay its debts as they become due in the future. The Seller
understands that the transfer of a Class [R-I][R-II][R-III] Certificates may not
be respected for United States income tax purposes (and the Seller may continue
to be liable for United States income taxes associated therewith) unless the
Seller has conducted such an investigation.
4. The Seller has no actual knowledge that the proposed Transferee
is not both a United States Person and a Permitted Transferee.
Very truly yours,
________________________________________
(Seller)
By:_____________________________________
Name:___________________________________
Title:__________________________________
<PAGE>
EXHIBIT F
---------
FORM OF INVESTOR REPRESENTATION LETTER
______________, 19__
Merrill Lynch Mortgage Investors, Inc.
World Financial Center
North Tower
New York, New York 10281
The Chase Manhattan Bank
450 West 33rd Street, 8th Floor
New York, New York 10001-2697
[Master Servicer]
Attention: Golden National Mortgage Banking Corp. Series 1998-GN3
Re: Mortgage Loan Asset Backed Certificates,
Series 1998-GN3, Class [M- ][B][C][R- ]
----------------------------------------
Ladies and Gentlemen:
_________________________ (the "Purchaser") intends to purchase from
___________________________ (the "Seller") $_____________ Initial Certificate
Principal Balance of Mortgage Loan Asset Backed Certificates, Series 1998-GN3,
Class [M- ][B][C][R- ] (the "Certificates"), issued pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of October
1, 1998 among Merrill Lynch Mortgage Investors, Inc., as depositor (the
"Company"), Golden National Mortgage Banking Corp., as initial master servicer
(the "Initial Master Servicer"), Litton Loan Servicing LP, as subsequent master
servicer and The Chase Manhattan Bank, as trustee (the "Trustee"). All terms
used herein and not otherwise defined shall have the meanings set forth in the
Pooling and Servicing Agreement. The Purchaser hereby certifies, represents and
warrants to, and covenants with, the Company, the Trustee and the Master
Servicers that:
1. The Purchaser understands that (a) the Certificates have
not been and will not be registered or qualified under the
Securities Act of 1933, as amended (the "Act") or any state
securities law, (b) the Company is not required to so register or
qualify the Certificates, (c) the Certificates may be resold only if
registered and qualified pursuant to the provisions of the Act or
any state securities law, or if an exemption from such registration
and qualification is available, (d) the Pooling and Servicing
Agreement contains restrictions regarding the transfer of the
Certificates and (e) the Certificates will bear a legend to the
foregoing effect.
<PAGE>
2. The Purchaser is acquiring the Certificates for its own
account for investment only and not with a view to or for sale in
connection with any distribution thereof in any manner that would
violate the Act or any applicable state securities laws.
3. The Purchaser is (a) a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters, and, in particular, in such matters
related to securities similar to the Certificates, such that it is
capable of evaluating the merits and risks of investment in the
Certificates, (b) able to bear the economic risks of such an
investment and (c) an "accredited investor" within the meaning of
Rule 501(a) promulgated pursuant to the Act.
4. The Purchaser has been furnished with, and has had an
opportunity to review (a) [a copy of the Private Placement
Memorandum, dated ___________________, 19__, relating to the
Certificates (b)] a copy of the Pooling and Servicing Agreement and
[b] [c] such other information concerning the Certificates, the
Mortgage Loans and the Company as has been requested by the
Purchaser from the Company or the Seller and is relevant to the
Purchaser's decision to purchase the Certificates. The Purchaser has
had any questions arising from such review answered by the Company
or the Seller to the satisfaction of the Purchaser. [If the
Purchaser did not purchase the Certificates from the Seller in
connection with the initial distribution of the Certificates and was
provided with a copy of the Private Placement Memorandum (the
"Memorandum") relating to the original sale (the "Original Sale") of
the Certificates by the Company, the Purchaser acknowledges that
such Memorandum was provided to it by the Seller, that the
Memorandum was prepared by the Company solely for use in connection
with the Original Sale and the Company did not participate in or
facilitate in any way the purchase of the Certificates by the
Purchaser from the Seller, and the Purchaser agrees that it will
look solely to the Seller and not to the Company with respect to any
damage, liability, claim or expense arising out of, resulting from
or in connection with (a) error or omission, or alleged error or
omission, contained in the Memorandum, or (b) any information,
development or event arising after the date of the Memorandum.]
5. The Purchaser has not and will not nor has it authorized or
will it authorize any person to (a) offer, pledge, sell, dispose of
or otherwise transfer any Certificate, any interest in any
Certificate or any other similar security to any person in any
manner, (b) solicit any offer to buy or to accept a pledge,
disposition of other transfer of any Certificate, any interest in
any Certificate or any other similar security from any person in any
manner, (c) otherwise approach or negotiate with respect to any
Certificate, any interest in any Certificate or any other similar
security with any person in any manner, (d) make any general
solicitation by means of general advertising or in any other manner
or (e) take any other action, that (as to any of (a) through (e)
above) would constitute a distribution of any Certificate under the
Act, that would render the disposition of any Certificate a
violation of Section 5 of the Act or any state securities law, or
that would require registration or qualification pursuant
<PAGE>
thereto. The Purchaser will not sell or otherwise transfer any of
the Certificates, except in compliance with the provisions of the
Pooling and Servicing Agreement.
6. The Purchaser hereby certifies, represents and warrants to, and
covenants with the Company, the Trustee and the Master Servicers
that the following statements in (a), (b) or (c) are correct:
(a) The Purchaser is not an employee benefit or other plan
subject to the prohibited transaction provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or
Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code") (a "Plan"), or any other person (including an investment
manager, a named fiduciary or a trustee of any Plan) acting,
directly or indirectly, on behalf of or purchasing any Certificate
with "plan assets" of any Plan within the meaning of the Department
of Labor ("DOL") regulation at 29 C.F.R. ss.2510.3-101;
(b) The Purchaser is an insurance company; the source of the
funds being used by the Purchaser to acquire the Certificates is
assets of the Purchaser's "general account"; the conditions set
forth in Prohibited Transaction Class Exemption ("PTCE") 95-60
issued by the DOL have been satisfied and the purchase, holding and
transfer of Certificates by or on behalf of the Purchaser are exempt
under PTCE 95- 60; and the amount of reserves and liabilities for
such general account contracts held by or on behalf of any Plan do
not exceed 10% of the total reserves and liabilities of such general
account plus surplus as of the date hereof (for purposes of this
clause, all Plans maintained by the same employer (or affiliate
thereof) or employee organization are deemed to be a single Plan) in
connection with its purchase and holding of such Certificates; or
(c) The Purchaser has provided the Trustee, the Company and
the Master Servicer with an opinion of counsel acceptable to and in
form and substance satisfactory to the Trustee, the Company and the
Master Servicer to the effect that the purchase of Certificates is
permissible under applicable law, will not constitute or result in
any non-exempt prohibited transaction under ERISA or Section 4975 of
the Code and will not subject the Trustee, the Company or the Master
Servicer to any obligation or liability (including obligations or
liabilities under ERISA or Section 4975 of the Code) in addition to
those undertaken in the Pooling and Servicing Agreement.
<PAGE>
In addition, the Purchaser hereby certifies, represents and warrants
to, and covenants with, the Company, the Trustee and the Master Servicers that
the Purchaser will not transfer such Certificates to any Plan or person unless
either such Plan or person meets the requirements set forth in either (a), (b)
or (c) above.
Very truly yours,
__________________________________
(Purchaser)
By:________________________________
Name:______________________________
Title:_____________________________
<PAGE>
EXHIBIT G
---------
FORM OF TRANSFEROR REPRESENTATION LETTER
_______, 19
Merrill Lynch Mortgage Investors, Inc.
World Financial Center
North Tower
New York, New York 10281
The Chase Manhattan Bank
450 West 33rd Street, 8th Floor
New York, New York 10001-2697
Attention: Golden National Mortgage Banking Corp. Series 1998-GN3
Re: Mortgage Loan Asset Backed Certificates,
Series 1998-GN3, Class [M- ][B][C][R- ]
----------------------------------------
Ladies and Gentlemen:
In connection with the sale by ______(the "Seller") to _______(the
"Purchaser") of $______ Initial Certificate Principal Balance of Mortgage Loan
Asset Backed Certificates, Series 1998-GN3, Class [M- ][B][C][R- ] (the
"Certificates"), issued pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement"), dated as of October 1, 1998 among Merrill
Lynch Mortgage Investors, Inc., as depositor (the "Company"), Golden National
Mortgage Banking Corp., as initial master servicer, Litton Loan Servicing LP, as
subsequent master servicer and The First National Bank of Chicago, as trustee
(the "Trustee"). The Seller hereby certifies, represents and warrants to, and
covenants with, the Company and the Trustee that:
Neither the Seller nor anyone acting on its behalf has (a) offered,
pledged, sold, disposed of or otherwise transferred any Certificate, any
interest in any Certificate or any other similar security to any person in any
manner, (b) has solicited any offer to buy or to accept a pledge, disposition or
other transfer of any Certificate, any interest in any Certificate or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to any Certificate, any interest in any Certificate or
any other similar security with any person in any manner, (d) has made any
general solicitation by means of general advertising or in any other manner, or
(e) has taken any other action, that (as to any of (a) through (e) above) would
constitute a distribution of the Certificates under the Securities Act of 1933
(the "Act"), that would render the disposition of any Certificate a violation of
Section 5 of the Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Seller will not act, in any
manner set forth in the foregoing sentence with respect to any Certificate. The
Seller has not and will not sell or otherwise transfer any of the Certificates,
except in compliance with the provisions of the Pooling and Servicing Agreement.
<PAGE>
Very truly yours,
_______________________________________
(Seller)
By:_______________________
Name:_______________________
Title:____________________
<PAGE>
EXHIBIT H
---------
[FORM OF RULE 144A INVESTMENT REPRESENTATION]
Description of Rule 144A Securities, including numbers:
_______________________________________________________
_______________________________________________________
_______________________________________________________
_______________________________________________________
The undersigned seller, as registered holder (the "Seller"), intends
to transfer the Rule 144A Securities described above to the undersigned buyer
(the "Buyer").
1. In connection with such transfer and in accordance with the
agreements pursuant to which the Rule 144A Securities were issued, the Seller
hereby certifies the following facts: Neither the Seller nor anyone acting on
its behalf has offered, transferred, pledged, sold or otherwise disposed of the
Rule 144A Securities, any interest in the Rule 144A Securities or any other
similar security to, or solicited any offer to buy or accept a transfer, pledge
or other disposition of the Rule 144A Securities, any interest in the Rule 144A
Securities or any other similar security from, or otherwise approached or
negotiated with respect to the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security with, any person in any manner, or
made any general solicitation by means of general advertising or in any other
manner, or taken any other action, that would constitute a distribution of the
Rule 144A Securities under the Securities Act of 1933, as amended (the "1933
Act"), or that would render the disposition of the Rule 144A Securities a
violation of Section 5 of the 1933 Act or require registration pursuant thereto,
and that the Seller has not offered the Rule 144A Securities to any person other
than the Buyer or another "qualified institutional buyer" as defined in Rule
144A under the 1933 Act.
2. The Buyer warrants and represents to, and covenants with, the
Seller, the Trustee and the Master Servicer (as defined in the Pooling and
Servicing Agreement (the "Agreement"), dated as of October 1, 1998 among Golden
National Mortgage Banking Corp. as Initial Master Servicer, Litton Loan
Servicing LP as Subsequent Master Servicer, Merrill Lynch Mortgage Investors,
Inc. as depositor pursuant to Section 5.02 of the Agreement and The Chase
Manhattan Bank, as trustee, as follows:
a. The Buyer understands that the Rule 144A Securities have
not been registered under the 1933 Act or the securities laws of any
state.
b. The Buyer considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in financial
and business matters that it is capable of evaluating the merits and risks
of investment in the Rule 144A Securities.
c. The Buyer has been furnished with all information regarding
the Rule 144A Securities that it has requested from the Seller, the
Trustee or the Servicers.
<PAGE>
d. Neither the Buyer nor anyone acting on its behalf has
offered, transferred, pledged, sold or otherwise disposed of the Rule 144A
Securities, any interest in the Rule 144A Securities or any other similar
security to, or solicited any offer to buy or accept a transfer, pledge or
other disposition of the Rule 144A Securities, any interest in the Rule
144A Securities or any other similar security from, or otherwise
approached or negotiated with respect to the Rule 144A Securities, any
interest in the Rule 144A Securities or any other similar security with,
any person in any manner, or made any general solicitation by means of
general advertising or in any other manner, or taken any other action,
that would constitute a distribution of the Rule 144A Securities under the
1933 Act or that would render the disposition of the Rule 144A Securities
a violation of Section 5 of the 1933 Act or require registration pursuant
thereto, nor will it act, nor has it authorized or will it authorize any
person to act, in such manner with respect to the Rule 144A Securities.
e. The Buyer is a "qualified institutional buyer" as that term
is defined in Rule 144A under the 1933 Act and has completed either of the
forms of certification to that effect attached hereto as Annex 1 or Annex
2. The Buyer is aware that the sale to it is being made in reliance on
Rule 144A. The Buyer is acquiring the Rule 144A Securities for its own
account or the accounts of other qualified institutional buyers,
understands that such Rule 144A Securities may be resold, pledged or
transferred only (i) to a person reasonably believed to be a qualified
institutional buyer that purchases for its own account or for the account
of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the 1933 Act.
[3. The Buyer
a. is not an employee benefit or other plan subject to the
prohibited transaction provisions of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code") (a "Plan"), or any
other person (including an investment manager, a named fiduciary or a
trustee of any Plan) acting, directly or indirectly, on behalf of or
purchasing any Certificate with "plan assets" of any Plan; or
b. is an insurance company, the source of funds to be used by
it to purchase the Certificates is an "insurance company general account"
(within the meaning of Department of Labor Prohibited Transaction Class
Exemption ("PTCE") 95-60), and the purchase is being made in reliance upon
the availability of the exemptive relief afforded under PTCE 95-60.]
4. This document may be executed in one or more counterparts and by
the different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same document.
<PAGE>
IN WITNESS WHEREOF, each of the parties has executed this document
as of the date set forth below.
________________________ ___________________________
Print Name of Seller Print Name of Buyer
By:________________________ By:________________________
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No.________________________ No.________________________
Date:______________________ Date:______________________
<PAGE>
ANNEX 1 TO EXHIBIT H
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Buyers Other Than Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because (i) the Buyer owned and/or invested
on a discretionary basis $______________________ in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.
___ CORPORATION, ETC. The Buyer is a corporation (other than a bank,
savings and loan association or similar institution), Massachusetts
or similar business trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal Revenue Code.
___ BANK. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the District of
Columbia, the business of which is substantially confined to banking
and is supervised by the State or territorial banking commission or
similar official or is a foreign bank or equivalent institution, and
(b) has an audited net worth of at least $25,000,000 as demonstrated
in its latest annual financial statements, A COPY OF WHICH IS
ATTACHED HERETO.
<PAGE>
___ SAVINGS AND LOAN. The Buyer (a) is a savings and loan association,
building and loan association, cooperative bank, homestead
association or similar institution, which is supervised and examined
by a State or Federal authority having supervision over any such
institutions or is a foreign savings and loan association or
equivalent institution and (b) has an audited net worth of at least
$25,000,000 as demonstrated in its latest annual financial
statements.
___ BROKER-DEALER. The Buyer is a dealer registered pursuant to Section
15 of the Securities Exchange Act of 1934.
___ INSURANCE COMPANY. The Buyer is an insurance company whose primary
and predominant business activity is the writing of insurance or the
reinsuring of risks underwritten by insurance companies and which is
subject to supervision by the insurance commissioner or a similar
official or agency of a State or territory or the District of
Columbia.
___ STATE OR LOCAL PLAN. The Buyer is a plan established and maintained
by a State, its political subdivisions, or any agency or
instrumentality of the State or its political subdivisions, for the
benefit of its employees.
___ ERISA PLAN. The Buyer is an employee benefit plan within the meaning
of Title I of the Employee Retirement Income Security Act of 1974.
___ INVESTMENT ADVISER. The Buyer is an investment adviser registered
under the Investment Advisers Act of 1940.
___ SBIC. The Buyer is a Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958.
___ BUSINESS DEVELOPMENT COMPANY. The Buyer is a business development
company as defined in Section 202(a)(22) of the Investment Advisers
Act of 1940.
___ TRUST FUND. The Buyer is a trust fund whose trustee is a bank or
trust company and whose participants are exclusively (a) plans
established and maintained by a State, its political subdivisions,
or any agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees, or (b) employee
benefit plans within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, but is not a trust fund that
includes as participants individual retirement accounts or H.R. 10
plans.
3. The term "SECURITIES" as used herein DOES NOT INCLUDE (i)
securities of issuers that are affiliated with the Buyer, (ii) securities that
are part of an unsold allotment to or subscription by the Buyer, if the Buyer is
a dealer, (iii) bank deposit notes and certificates of deposit, (iv) loan
participations, (v) repurchase agreements, (vi) securities owned but subject to
a repurchase agreement and (vii) currency, interest rate and commodity swaps.
<PAGE>
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used the
cost of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
___ ___ Will the Buyer be purchasing the Rule 144A
Yes No Securities only for the Buyer's own account?
6. If the answer to the foregoing question is "no", the Buyer agrees
that, in connection with any purchase of securities sold to the Buyer for the
account of a third party (including any separate account) in reliance on Rule
144A, the Buyer will only purchase for the account of a third party that at the
time is a "qualified institutional buyer" within the meaning of Rule 144A. In
addition, the Buyer agrees that the Buyer will not purchase securities for a
third party unless the Buyer has obtained a current representation letter from
such third party or taken other appropriate steps contemplated by Rule 144A to
conclude that such third party independently meets the definition of "qualified
institutional buyer" set forth in Rule 144A.
7. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of Rule 144A Securities will
constitute a reaffirmation of this certification as of the date of such
purchase.
______________________________________
Print Name of Buyer
By: ________________________________
Name:
Title:
Date:______________________________
<PAGE>
ANNEX 2 TO EXHIBIT H
--------------------
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
--------------------------------------------------------
[For Buyers That Are Registered Investment Companies]
The undersigned hereby certifies as follows in connection with the
Rule 144A Investment Representation to which this Certification is attached:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933 ("Rule 144A") because Buyer is part of a Family of
Investment Companies (as defined below), is such an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in SEC Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, and (ii)
as marked below, the Buyer alone, or the Buyer's Family of Investment Companies,
owned at least $100,000,000 in securities (other than the excluded securities
referred to below) as of the end of the Buyer's most recent fiscal year. For
purposes of determining the amount of securities owned by the Buyer or the
Buyer's Family of Investment Companies, the cost of such securities was used.
____ The Buyer owned $___________________ in securities (other than the
excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year (such amount being calculated in accordance
with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which owned in
the aggregate $______________ in securities (other than the excluded
securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with
Rule 144A).
3. The term "FAMILY OF INVESTMENT COMPANIES" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
4. The term "SECURITIES" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) bank deposit notes and certificates
of deposit, (iii) loan participations, (iv) repurchase agreements, (v)
securities owned but subject to a repurchase agreement and (vi) currency,
interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that each of
the parties to which this certification is made are relying and will continue to
rely on the statements made herein
<PAGE>
because one or more sales to the Buyer will be in reliance on Rule 144A. In
addition, the Buyer will only purchase for the Buyer's own account.
6. The undersigned will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein.
Until such notice, the Buyer's purchase of Rule 144A Securities will constitute
a reaffirmation of this certification by the undersigned as of the date of such
purchase.
_____________________
Print Name of Buyer
By:____________________
Name:_____________________
Title:_________________
IF AN ADVISER:
_____________________
Print Name of Buyer
Date:________________
<PAGE>
EXHIBIT I
---------
CUSTODIAL AGREEMENT
[RESERVED]
<PAGE>
EXHIBIT J
---------
FORM OF LOST NOTE AFFIDAVIT
Golden National Mortgage Banking Corp., a Delaware corporation (the
"Mortgage Loan Seller"), by its undersigned authorized representative, hereby
certifies:
Pursuant to the Mortgage Loan Purchase Agreement, dated October 27,
1998, between the Mortgage Loan Seller and Merrill Lynch Mortgage Investors,
Inc. (the "Depositor"), the Mortgage Loan Seller is granting all of its right,
title and interest in and to the Mortgage Loan identified below to the
Depositor. Terms used but not defined herein have the respective meanings
assigned to them in the Mortgage Loan Purchase Agreement.
Mortgage Loan Number:
Maker:
Original Principal Amount:
Original Mortgage Note Date:
Maturity Date:
The Mortgage Loan Seller is the current owner and holder of the
indebtedness evidenced by the original Mortgage Note.
After diligent search, the Mortgage Loan Seller has been unable to
locate the original Mortgage Note and believes it to be lost or misplaced.
A true, complete and correct photocopy of the original Mortgage Note
is attached hereto.
If at any time the Mortgage Loan Seller locates the original
Mortgage Note, the Mortgage Loan Seller shall endorse such original Mortgage
Note in the following form: "Pay to the order of The Chase Manhattan Bank, as
Trustee for the registered holders of Golden National Mortgage Banking Corp.,
Mortgage Loan Asset Backed Certificates, Series 1998-GN3, without recourse," and
shall promptly deliver to the Trustee the original Mortgage Note so endorsed,
with all prior and intervening endorsements showing a complete chain of
endorsement from the originator to the Mortgage Loan Seller.
The Mortgage Loan Seller hereby indemnifies the Depositor, the
Trustee and the Certificateholders from and against any and all losses,
liabilities, damages, claims or expenses of whatever kind (including without
limitation attorneys' fees and disbursements) arising from or in connection with
the Mortgage Loan Seller's failure to have delivered the original Mortgage Note
(as required under the Mortgage Loan Purchase Agreement) to the Trustee as
designee of the Depositor, including without limitation any such losses,
liabilities, damages, claims or expenses arising from or in connection with any
claim by any third party who is the holder of such indebtedness by virtue of its
possession of such original Mortgage Note.
<PAGE>
This Lost Note Affidavit shall inure to the benefit of the
Depositor, the Trustee and the Certificateholders and their respective
successors and permitted assigns.
Dated:
GOLDEN NATIONAL MORTGAGE
BANKING CORP.
By:______________________________
Name:____________________________
Title:_________________________
<PAGE>
EXHIBIT K
---------
REMITTANCE REPORT
[Available Upon Request]
<PAGE>
EXHIBIT L
---------
FORM OF SUBSEQUENT TRANSFER INSTRUMENT
Pursuant to this Subsequent Transfer Instrument, dated __________, 1998
(the "Instrument"), between Merrill Lynch Mortgage Investors, Inc. as seller
(the "Depositor"), and The Chase Manhattan Bank as trustee of the Golden
National Mortgage Loan Asset Backed Certificates, Series 1998-GN3, as purchaser
(the "Trustee"), and pursuant to the Pooling and Servicing Agreement, dated as
of October 1, 1998 (the "Pooling and Servicing Agreement"), among the Depositor
as depositor, Golden National Mortgage Banking Corp. as initial master servicer,
Litton Loan Servicing LP as subsequent master servicer and the Trustee as
trustee, the Depositor and the Trustee agree to the sale by the Depositor and
the purchase by the Trustee, on behalf of the Trust Fund, of the Mortgage Loans
listed on the attached Schedule of Mortgage Loans (the "Subsequent Mortgage
Loans").
Capitalized terms used but not otherwise defined herein shall have
the meanings set forth in the Pooling and Servicing Agreement.
Section 1. CONVEYANCE OF SUBSEQUENT MORTGAGE LOANS.
(a) The Depositor does hereby sell, transfer, assign, set over and
convey to the Trustee, on behalf of the Trust Fund, without recourse, all of its
right, title and interest in and to the Subsequent Mortgage Loans, and including
all amounts due on the Subsequent Mortgage Loans after the related Subsequent
Cut-off Date, and all items with respect to the Subsequent Mortgage Loans to be
delivered pursuant to Section 2.01 of the Pooling and Servicing Agreement;
provided, however that the Depositor reserves and retains all right, title and
interest in and to amounts due on the Subsequent Mortgage Loans on or prior to
the related Subsequent Cut-off Date. The Depositor, contemporaneously with the
delivery of this Agreement, has delivered or caused to be delivered to the
Trustee each item set forth in Section 2.01 of the Pooling and Servicing
Agreement. The transfer to the Trustee by the Depositor of the Subsequent
Mortgage Loans identified on the Mortgage Loan Schedule shall be absolute and is
intended by the Depositor, the Master Servicers, the Trustee and the
Certificateholders to constitute and to be treated as a sale by the Depositor to
the Trust Fund.
(b) The Depositor, concurrently with the execution and delivery
hereof, does hereby transfer, assign, set over and otherwise convey to the
Trustee without recourse for the benefit of the Certificateholders all the
right, title and interest of the Depositor, in, to and under the Subsequent
Mortgage Loan Purchase Agreement, dated the date hereof, between the Depositor
as purchaser and the Master Servicer as seller, to the extent of the Subsequent
Mortgage Loans, a copy of which agreement is annexed hereto as Attachment G.
(c) Additional terms of the sale are set forth on Attachment A
hereto.
Section 2. REPRESENTATIONS AND WARRANTIES; CONDITIONS PRECEDENT.
(a) The Depositor hereby confirms that each of the conditions
precedent and the representations and warranties set forth in Section 2.11 of
the Pooling and Servicing Agreement are satisfied as of the date hereof.
<PAGE>
(b) All terms and conditions of the Pooling and Servicing Agreement
are hereby ratified and confirmed; provided, however, that in the event of any
conflict, the provisions of this Instrument shall control over the conflicting
provisions of the Pooling and Servicing Agreement.
Section 3. RECORDATION OF INSTRUMENT.
To the extent permitted by applicable law, this Instrument, or a
memorandum thereof if permitted under applicable law, is subject to recordation
in all appropriate public offices for real property records in all of the
counties or other comparable jurisdictions in which any or all of the properties
subject to the Mortgages are situated, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by the Master
Servicers at the Certificateholders' expense on direction of the related
Certificateholders, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders or is necessary for the administration or servicing of
the Mortgage Loans.
Section 4. GOVERNING LAW.
This Instrument 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 giving
effect to principles of conflicts of law.
Section 5. COUNTERPARTS.
This Instrument 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 instrument.
<PAGE>
Section 6. SUCCESSORS AND ASSIGNS.
This Instrument shall inure to the benefit of and be binding upon
the Depositor and the Trustee and their respective successors and assigns.
MERRILL LYNCH MORTGAGE INVESTORS, INC.
By:__________________________________
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee for Golden National Mortgage
Loan Asset Backed Certificates, Series 1998-GN3
By:___________________________________
Name:
Title:
ATTACHMENTS
A. Additional terms of sale.
B. Schedule of Subsequent Mortgage Loans.
C. Depositor's Officer's certificate.
D. Opinions of Depositor's counsel (bankruptcy, corporate).
E. Trustee's Certificate.
F. Opinion of Trustee's Counsel.
G. Subsequent Mortgage Loan Purchase Agreement.
<PAGE>
ATTACHMENT A
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ADDITIONAL TERMS OF SALE
A. General
1. Subsequent Cut-off Date: ________ 1, 1998
2. Subsequent Transfer Date: _____________, 1998
3. Aggregate Principal Balance of the Subsequent Mortgage Loans as
of the Subsequent Cut-off Date: $______________________
4. Purchase Price: 100.00%
B. The following representations and warranties with respect to each
Subsequent Mortgage Loan determined as of the Subsequent Cut-off Date shall be
true and correct: (i) the Subsequent Mortgage Loan may not be 30 or more days
delinquent as of the related Subsequent Cut-off Date (except with respect to
1.00% of the Subsequent Mortgage Loans, by aggregate principal balance as of the
related Subsequent Cut-off Date, which may be 30 or more days delinquent but
less than 60 days delinquent as of the related Cut-off Date); (ii) the stated
term to maturity of the Subsequent Mortgage Loan will not be less than 60 months
and will not exceed 360 months; (iii) the Subsequent Mortgage Loan may not
provide for negative amortization; (iv) the Subsequent Mortgage Loan will not
have a Loan-to-Value Ratio greater than 100%; (v) the Subsequent Mortgage Loans
will have as of the Subsequent Cut-off Date, a weighted average term since
origination not in excess of 6 months; (vi) no Subsequent Mortgage Loan shall
have a Mortgage Rate less than 7.125% or greater than 10.50%; (vii) the
Subsequent Mortgage Loan shall have been serviced by the Master Servicer since
origination or purchase by the Depositor; (viii) the Subsequent Mortgage Loan
must have a first Monthly Payment due on or before January 1, 1999; and (ix) the
Subsequent Mortgage Loan shall be underwritten in accordance with the criteria
set forth under the section "The Mortgage Pool--Underwriting Standards;
Representations" in the Prospectus Supplement.
C. Following the purchase of the Subsequent Mortgage Loans by the Trust
Fund, the Mortgage Loans (including the related Subsequent Mortgage Loans) will
as of the Subsequent Cutoff Date: (i) have a weighted average original term to
stated maturity of not more than 360 months; (ii) have a weighted average
Mortgage Rate of not less than 8.25% and not more than 9.00% by aggregate
principal balance of the Mortgage Loans; (iii) have a weighted average
Loan-to-Value Ratio of not more than 92.00%; (iv) have no Mortgage Loan with a
principal balance in excess of $500,000 and (v) of the Mortgage Loans with
Loan-to-Value Ratios in excess of 80% and less than or equal to 97%, at least
70% of such Mortgage Loans will be covered by a primary mortgage insurance
policy. Notwithstanding the foregoing, any Subsequent Mortgage Loan may be
rejected by either Rating Agency if the inclusion of such Subsequent Mortgage
Loan would adversely affect the ratings on any class of Offered Certificates.
<PAGE>
EXHIBIT M
---------
FORM OF ADDITION NOTICE
[Date]
[Trustee]
___________________
___________________
Re: Pooling and Servicing Agreement, dated as of October 1, 1998,
among Merrill Lynch Mortgage Investors, Inc., Golden National
Mortgage Banking Corp., Litton Loan Servicing LP and The Chase
Manhattan Bank, relating to Golden National Mortgage Loan
Asset Backed Certificates, Series 1998-GN3
-------------------------------------------------------------
Ladies and Gentlemen:
Pursuant to Section 2.11 of the referenced Pooling and Servicing
Agreement, Merrill Lynch Mortgage Investors, Inc. has designated Subsequent
Mortgage Loans to be sold to the Trust Fund on [DATE], with an aggregate
principal balance of $___________________. Capitalized terms not otherwise
defined herein have the meaning set forth in the Pooling and Servicing
Agreement.
Please acknowledge your receipt of this notice by countersigning the
enclosed copy in the space indicated below and returning it to the attention of
the undersigned.
Very truly yours,
MERRILL LYNCH MORTGAGE
INVESTORS, INC.
By:__________________________
Name:
Title:
Acknowledged and Agreed:
THE CHASE MANHATTAN BANK
By:__________________________
Name:
Title:
<PAGE>
EXHIBIT N
Form of Accountant's Letter
[Available Upon Request]
<PAGE>
SCHEDULE 1
MORTGAGE LOAN SCHEDULE
