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) April 30, 1997
Financial Asset Securitization, Inc.
(Exact name of registrant as specified in charter)
Virginia 0-15483 53-1526174
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
901 East Byrd Street, Richmond, Virginia 23219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (804) 344-7575
(Former name or former address, if changed since last report.)
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Item 1. Changes in Control of Registrant.
Not Applicable.
Item 2. Acquisition or Disposition of Assets.
Not Applicable.
Item 3. Bankruptcy or Receivership.
Not Applicable.
Item 4. Changes in Registrant's Certifying Accountant.
Not Applicable.
Item 5. Other Events.
On April 30, 1997, the Registrant caused the issuance and sale of
$175,958,578 aggregate initial principal amount of Mortgage Participation
Securities, Series 1997-NAMC 1 (the "Securities") pursuant to the Series
1997-NAMC 1 Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of April 1, 1997, by and among the Registrant, North
American Mortgage Company, as Master Servicer and The First National Bank of
Chicago, as Trustee. The Securities were issued in twenty-five Classes, with
Initial Security Principal Balances and Pass-Through Rates as set forth or
described below:
Class Initial Security Pass-Through
Designation Principal Balance Rate
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Class FXA-1 $15,058,594 6.90%
Class FXA-2 20,500,000 7.75%
Class FXA-3 11,623,696 7.35%
Class FXA-4 13,200,375 7.50%
Class FXA-5 5,125,000 7.75%
Class FXA-6 4,001,000 7.75%
Class FXA-7 1,000,000 7.75%
Class FXA-8 27,665,835 Variable (1)
Class FXA-9 Inverse Floater Variable (2)
Class FXP 81,389 0.00%
Class FXS Interest Only 7.75%
Class A-1 43,444,391 7.75%
Class A-2 6,962,000 7.75%
Class A-3 1,951,000 7.75%
Class A-4 13,700,000 7.75%
Class P 1,087,731 0.00%
Class S Interest Only 7.75%
Class B-1 5,190,778 7.75%
Class B-2 2,111,503 7.75%
Class B-3 1,319,689 7.75%
Class B-4 791,813 7.75%
Class B-5 439,897 7.75%
Class B-6 703,835 7.75%
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Class R 25 7.75%
Class RP 25 7.75%
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(1) The Pass-Through Rate for the Class FXA-8 Securities will be equal to a
variable per annum rate equal to LIBOR plus 0.45%, subject to a maximum
Pass-Through Rate of 8.50% per annum. The Pass-Through Rate for the
initial Distribution Date shall be 5.95%.
(2) The Pass-Through Rate for the Class FXA-9 Securities will be equal to a
variable per annum rate equal to (i) 8.05% minus (ii) LIBOR subject to
a minimum Pass-Through Rate of 0.00% per annum. The Pass-Through Rate
for the initial Distribution Date shall be 2.55%.
The Securities evidence, in the aggregate, the entire beneficial
ownership interest in a trust (the "Trust"), which consists primarily of two
pools of conventional, one- to four-family, fixed rate, first-lien Mortgage
Loans (the "Mortgage Loans") transferred to the Trust by the Registrant pursuant
to the Pooling and Servicing Agreement. The Mortgage Loans were purchased by the
Registrant in a privately-negotiated transaction with DLJ Mortgage Capital, Inc.
("DLJMC") pursuant to a Loan Sale Agreement (the "Sales Agreement"), dated April
1, 1997, by and between the Registrant and DLJMC.
The Class FXA-1, Class FXA-2, Class FXA-3, FXA-4, Class FXA-5, Class
FXA-6, FXA-7, Class FXA-8, Class FXA-9, Class FXP, Class FXS, Class A-1, Class
A-2, Class A-3, Class A-4, Class P, Class S, Class B-1, Class B-2, Class B-3,
Class R and Class RP Securities are referred to herein collectively as the
"Offered Securities."
The Offered Securities have been sold by the Registrant to Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJSC") pursuant to an Underwriting
Agreement (the "Underwriting Agreement"), dated as of April 25, 1997, by and
between DLJSC and the Registrant. The Class B-4, Class B-5 and Class B-6
Securities have been sold by the Registrant to DLJSC pursuant to a Purchase
Agreement, dated as of April 30, 1997, by and among the Registrant and DLJSC.
Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Pooling and Servicing Agreement.
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Item 6. Resignations of Registrant's Directors. Not Applicable.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Exhibits
1.1 April 1997 Edition of Underwriting Agreement Standard
Provisions.
4.1 Series 1997-NAMC 1 Pooling and Servicing Agreement, dated as
of April 1, 1997, by and among the Registrant, North American
Mortgage Company, as Master Servicer, and The First National
Bank of Chicago, as Trustee (including exhibits).
99.1 Geographic concentration information by United States Postal
zip codes.
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<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.
April 30, 1997 FINANCIAL ASSET SECURITIZATION, INC.
By: /s/ R. Walter Jones, IV
Name: R. Walter Jones, IV
Title: President
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<PAGE>
INDEX TO EXHIBITS
1.1 April 1997 Edition of Underwriting Agreement Standard Provisions
4.1 Series 1997-NAMC 1 Pooling and Servicing Agreement, dated as of April
1, 1997, by and among the Registrant, North American Mortgage Company,
as Master Servicer, and The First National Bank of Chicago, as Trustee
(including exhibits)
99.1 Geographic concentration information by United States Postal zip codes
FINANCIAL ASSET SECURITIZATION, INC.
--------------------
Mortgage Participation Securities
(Issuable in Series)
UNDERWRITING AGREEMENT
STANDARD PROVISIONS
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April 1997
<TABLE>
<S> <C>
April 1997 Underwriting Agreement Standard Provisions
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Financial Asset Securitization, Inc., a Virginia corporation (the
"Company"), proposes to sell Mortgage Participation Securities in various series
(each, a "Series"), in one or more offerings on terms determined at the time of
sale, each to be issued by a separate trust (the "Trust") under a pooling and
servicing agreement or trust agreement, each of which may incorporate by
reference therein standard terms (in either case, collectively, the "Trust
Agreement"), for such Series between the Company, a master servicer named
therein (the "Master Servicer"), and the trustee named therein (the "Trustee").
The securities of each Series related to a Trust (the "Securities") will
represent in the aggregate the entire beneficial ownership interest in one or
more segregated pools of mortgage loans or interests in mortgage loans (the
"Mortgage Loans").
The Mortgage Loans will be serviced pursuant to the Trust Agreement by
the Master Servicer or pursuant to separate servicing agreements (the "Servicing
Agreements") with one or more servicers (the "Servicers"), each of which must be
approved as a seller-servicer by the Federal Home Loan Mortgage Corporation
("FHLMC") or the Federal National Mortgage Association ("FNMA"). The performance
by the Servicers of their duties and responsibilities under their Servicing
Agreements will be monitored and supervised by the Master Servicer.
The Securities for a Series will be issued by a separate Trust, and the
Trustee may make one or more elections to have Trust assets or portions thereof
treated as real estate mortgage investment conduits (each, a "REMIC") under the
Internal Revenue Code of 1986, as amended (the "Code"). In the event that more
than one REMIC is created, all references herein to a REMIC shall be deemed to
refer to all REMICs, unless the context otherwise requires.
The Company will sell, assign and transfer Mortgage Loans acquired by
it to the related Trust for each Series, all in exchange for the related
Securities. The Mortgage Loans are expected to be acquired by the Company from
one or more sellers (each, in such capacity, a "Seller"), in each case pursuant
to a mutually acceptable sales or other agreement (each, a "Sales Agreement"),
between the Company and the Seller of such Mortgage Loans, containing customary
provisions and negotiated in good faith. The net proceeds to the Company from
the sale of each Series of Securities principally will be used to pay the
purchase price of the Mortgage Loans acquired for the related Trust.
The Securities are more fully described in the Registration Statement
(as hereinafter defined). Each Series of Securities, and any classes of
Securities within each Series, may vary, among other things, as to number and
types of classes, aggregate principal amount, final stated distribution dates
and the rate or rates, allocation, priority and timing of distributions thereof.
From time to time, the Company may enter into one or more underwriting
agreements (each, an "Underwriting Agreement") that provide for the sale of all
or a portion of certain classes of a Series of Securities (such securities to be
so purchased being herein collectively referred to as the "Underwritten
Securities") to the underwriters named in the related underwriting agreement
(the "Underwriters"). The standard provisions set forth herein are to be
incorporated by reference in any such Underwriting Agreement. An Underwriting
Agreement, including the provisions hereof incorporated therein by reference, is
herein referred to as the "Agreement." Unless otherwise defined herein, all
capitalized terms shall have the meanings assigned to them in the Underwriting
Agreement and if not defined therein shall have the meanings assigned to them in
the Trust Agreement.
The Underwriting Agreement relating to each offering of Securities
shall specify the principal amount of Securities to be issued and their
respective interest rates or methods of determining same, the price or prices at
which the Underwritten Securities are to be purchased by the Underwriters from
the Company, the initial public offering prices or the method by which the
prices at which such Underwritten Securities are to be sold will be determined,
the names of the firms, if any, designated as representatives of the
Underwriters (the "Representatives"), the principal amount of Underwritten
Securities to be purchased by each Underwriter, and the date, time and manner of
delivery of the Underwritten Securities and payment therefor. Each such offering
of
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April 1997 Underwriting Agreement Standard Provisions
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Underwritten Securities will be governed by the Agreement, which shall inure to
the benefit of and be binding upon the Underwriters participating in the
offering of such Underwritten Securities.
The Company is a limited-purpose finance corporation and wholly-owned
subsidiary of JST Company, L.L.C., a Virginia limited liability company ("JST").
JST, in turn, is an indirect, wholly-owned subsidiary of Wheat First Butcher
Singer, Inc.
1. Representations and Warranties. (a) The Company represents and
warrants to, and agrees with, each Underwriter that:
(i) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration
statement on Form S-3 for the registration of securities under
the Securities Act of 1933, as amended (the "Act"), which
registration statement has become effective, and has filed
such amendments thereto and such additional registration
statements as may have been required to the date of the
Agreement. Such registration statement, as amended at the date
of the Agreement, meets the requirements set forth in Rule 415
under the Act and complies in all other material respects with
the Act and the rules and regulations thereunder. The Company
proposes to file with the Commission pursuant to Rule 424
under the Act a supplement to the form of prospectus included
in such registration statement relating to the Securities and
the plan of distribution thereof. Such registration statement,
including the exhibits thereto, as amended at the date of the
Agreement, and including all information, if any, filed with
the Commission pursuant to the Securities Exchange Act of
1934, as amended (the "Exchange Act") and incorporated by
reference therein, is hereinafter called the "Registration
Statement"; the latter of such prospectus in the form in which
it appears in the Registration Statement or in the form most
recently revised and filed with the Commission pursuant to
Rule 424 is hereinafter called the "Base Prospectus"; such
form of prospectus supplemented by the supplement to the form
of prospectus specifically relating to the Securities, in the
form in which it shall be first filed with the Commission
pursuant to Rule 424 (including the Base Prospectus as so
supplemented) is hereinafter called the "Final Prospectus."
Any preliminary form of the Final Prospectus which has
heretofore been filed pursuant to Rule 424 or, prior to the
effective date of the Registration Statement, pursuant to Rule
402(a), 424(a) or 430A, is hereinafter called a "Preliminary
Final Prospectus."
(ii) As of the date of the Agreement, when the Final
Prospectus is first filed pursuant to Rule 424 under the Act,
when, prior to the Closing Date (as hereinafter defined), any
amendment to the Registration Statement becomes effective,
when any supplement to the Final Prospectus is filed with the
Commission, and at the Closing Date, (A) the Registration
Statement, as amended as of any such time, and the Final
Prospectus, as amended or supplemented as of any such time,
complies and will comply in all material respects with the
applicable requirements of the Act and the rules and
regulations thereunder and (B) the Registration Statement, as
amended as of any such time, does not contain and will not
contain any untrue statement of a material fact and does not
omit and will not omit to state any material fact required to
be stated therein or necessary in order to make the statements
therein not misleading and the Final Prospectus, as amended or
supplemented as of any such time, does not and will not
include an untrue statement of a material fact and does not
omit and will not omit to state a material fact necessary in
order to make the statements, in light of the circumstances
under which they were made, not misleading; provided, however,
that the Company makes no representations or warranties as to
the information contained in or omitted from the Registration
Statement or the Final Prospectus or any amendment thereof or
supplement thereto in reliance upon and in conformity with
Underwriting Information (as defined herein) furnished in
writing to the Company by or on behalf of any Underwriter
specifically for use in connection with the preparation of the
Registration Statement and the Final Prospectus.
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April 1997 Underwriting Agreement Standard Provisions
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(iii) As of the date of the Agreement, when the Final
Prospectus is first filed pursuant to Rule 424 under the Act,
when, prior to the Closing Date, any amendment to the
Registration Statement becomes effective, when any supplement
to the Final Prospectus is filed with the Commission, and at
the Closing Date, there has not and will not have been (A) any
request by the Commission for any further amendment of the
Registration Statement or the Final Prospectus or for any
additional information, (B) any issuance by the Commission of
any stop order suspending the effectiveness of the
Registration Statement or the initiation or threat of any
proceeding for that purpose, or (C) any notification with
respect to the suspension of the qualification of the
Underwritten Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose.
(iv) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the Commonwealth of Virginia with full corporate power
and authority to own its properties and conduct its business
as now conducted by it and to enter into and perform its
obligations under the Agreement, the related Sales
Agreement(s) and Trust Agreement, and has qualified to do
business as a foreign corporation and is in good standing
under the laws of each jurisdiction that requires such
qualification wherein it owns or leases material properties,
except where the failure to so qualify would not have a
material adverse effect on the Company or its ability to
perform its obligations under the Agreement, the related Sales
Agreement(s) and the Trust Agreement.
(v) The execution, delivery and performance of the
Agreement, related Sales Agreement(s) and Trust Agreement are
within the corporate power of the Company. The Agreement has
been and, as of the Closing Date, the related Sales
Agreement(s) and Trust Agreement will have been, duly
authorized by all necessary action on the part of the Company,
and neither the issuance and sale of the Underwritten
Securities, nor the execution and delivery by the Company of
the Agreement, the related Sales Agreement(s) or Trust
Agreement, nor the consummation by the Company of any of the
transactions herein or therein contemplated, nor compliance by
the Company with the provisions hereof or thereof, will (A)
violate the articles of incorporation or by-laws of the
Company, (B) result in a breach or violation of, or constitute
a default under, any law, governmental rule or regulation or
any judgment, decree or order binding on the Company or its
properties, or any of the provisions of any indenture,
mortgage, deed of trust, contract or other instrument to which
the Company is a party or by which it is bound, or (C) result
in the creation of any lien, charge, or encumbrance upon any
of its properties pursuant to the terms of any such indenture,
mortgage, deed of trust, contract or other instrument (other
than the related Sales Agreement(s) or Trust Agreement).
(vi) The Agreement and the related Sales Agreement(s)
have been duly executed and delivered by the Company and, as
of the Closing Date, the related Trust Agreement will have
been duly executed by the Company and, assuming the due
authorization, execution and delivery by the other parties
thereto, each constitutes, or will constitute, a legal, valid
and binding agreement of the Company, enforceable against the
Company in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and to general
principles of equity regardless of whether enforcement is
sought in a proceeding in equity or at law, and except that
the provisions relating to indemnification and contribution
may be unenforceable as against public policy.
(vii) The Underwritten Securities and the Trust
Agreement will conform in all material respects to the
descriptions thereof contained in the Final Prospectus, and,
when duly and validly executed by the Trustee and the
Underwritten Securities are delivered to and paid for by the
Underwriters as provided herein, such Underwritten Securities
will be validly issued and entitled to the benefits of the
Trust Agreement.
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April 1997 Underwriting Agreement Standard Provisions
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(viii) Since the respective dates as of which
information is given in the Registration Statement and the
Final Prospectus, there has not been any material adverse
change or development involving a prospective material adverse
change in the business, operations, financial condition,
properties or assets of the Company.
(ix) There are no actions, suits or proceedings
against, or investigations of, the Company pending, or, to the
knowledge of the Company, threatened, before any court,
administrative agency or other tribunal (A) asserting the
invalidity of the Agreement, any related Sales Agreement,
Trust Agreement, or Servicing Agreement or the Underwritten
Securities, (B) seeking to prevent the issuance of the
Underwritten Securities or the consummation of any of the
transactions contemplated by the Agreement, any related Sales
Agreement, Trust Agreement or Servicing Agreement, (C) that
might materially and adversely affect the performance by the
Company of its obligations under the Agreement, any related
Sales Agreement, Trust Agreement, or Servicing Agreement, or
(D) seeking to affect adversely the federal or state income
tax attributes of the Securities as described in the Final
Prospectus.
(x) No filing or registration with, notice to,
qualification of or with, or consent, approval, authorization
or order or other action of any person, corporation or other
organization or of any court, supervisory or governmental
authority or agency is required for the consummation by the
Company of the transactions contemplated by the Agreement or
the Trust Agreement except such as have been, or will have
been prior to the Closing Date, obtained under the Act, or
state securities laws or Blue Sky laws, or from the National
Association of Securities Dealers, Inc. in connection with the
purchase and distribution of the Underwritten Securities by
the Underwriters, or any recordations of the assignment of the
Mortgage Loans to the Trustee pursuant to the Trust Agreement
that have not yet been completed.
(xi) At the time of execution of the related Trust
Agreement, the Company will own the Mortgage Loans being
transferred to the Trust pursuant to the Trust Agreement, free
and clear of any lien, adverse claim, mortgage, charge, pledge
or other encumbrance or security interest, and will not have
assigned to any other person any of its right, title or
interest in such Mortgage Loans; and, upon the execution of
the Trust Agreement, the Company will transfer all its right,
title and interest in such Mortgage Loans to the Trustee.
(xii) Under generally accepted accounting principles,
the Company will report its transfer of the Mortgage Loans to
the Trust pursuant to the Trust Agreement and the sale of the
Underwritten Securities as a sale of its interest in the
Mortgage Loans. The Company has been advised by its
independent certified public accountants that it concurs with
such treatment under generally accepted accounting principles.
For federal income tax purposes, the Company will treat the
transfer of the Mortgage Loans to the Trust and the sale of
the Securities as a sale of its interest in the Mortgage
Loans.
(xiii) As of the Closing Date, the Mortgage Loans
will be duly and validly assigned in blank or to the Trustee
(or its nominee), the related Mortgage Notes will be endorsed
in blank or to the Trustee (or its nominee) and delivered to
the Trustee or to an agent on its behalf and, where required
in order to transfer all right, title and interest to a
Mortgage Loan, upon the recordation of assignments to the
Trustee of the related mortgages in the public records in
which such mortgage shall have been recorded, the Trustee will
own each such Mortgage Loan, subject to no prior lien,
mortgage, security interest, pledge, charge or other
encumbrance, except as permitted under the Trust Agreement.
(xiv) As of the Closing Date, any Letter of Credit or
Surety Bond included in any accounts or funds constituting
part of the Trust with respect to the Securities will name the
Trustee
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April 1997 Underwriting Agreement Standard Provisions
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as the beneficiary thereof and will be delivered to and held
by the Trustee and any cash will be delivered to the Trustee,
and the Trustee either will own such assets, or have a first
priority perfected security interest therein, in either case
subject to no prior lien, security interest, pledge, charge or
other encumbrance.
(xv) Each related Seller has been duly incorporated
or otherwise formed and is validly existing and, if a
corporation, in good standing under the laws of the
jurisdiction of its incorporation or formation and duly
qualified to do business under the laws of each jurisdiction
that requires such qualification wherein it owns or leases any
material properties (except where the failure so to qualify
would not have a material adverse effect on such Seller or its
ability to perform its obligations under the related Sales
Agreement).
(xvi) At the time of the execution and delivery of a
related Sales Agreement by each Seller, the execution,
delivery and performance of such Sales Agreement by such
Seller will be within the legal power of such Seller and will
have been duly authorized by all necessary action on the part
of such Seller; and neither the execution and delivery of such
Sales Agreement by such Seller, nor the consummation by such
Seller of the transactions therein contemplated, nor
compliance with the provisions thereof by such Seller, will
(A) violate the articles of incorporation, by-laws,
partnership agreement or other organizational agreement of
such Seller, (B) result in a breach or violation of, or
constitute a default under any law, governmental rule or
regulation, any judgment, decree or order binding on such
Seller or its properties, or any of the provisions of any
indenture, mortgage, deed of trust, contract or other
instrument to which such Seller is a party or by which it is
bound, or (C) result in the creation or imposition of any
lien, charge or encumbrance upon any of its properties
pursuant to the terms of any such indenture, mortgage, deed of
trust, contract or other instrument.
(xvii) Each Sales Agreement, when executed and
delivered as contemplated thereby, will have been duly
executed and delivered by the Seller that is a party thereto,
and each will constitute, when so executed and delivered, a
legal, valid and binding agreement, enforceable against such
Seller in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and to general
principles of equity regardless of whether enforcement is
sought in a proceeding in equity or at law, and except that
the provisions relating to indemnification and contribution
may be unenforceable as against public policy.
(xviii) Under generally accepted accounting
principles, each Seller will report its transfer of the
Mortgage Loans pursuant to the related Sales Agreement as a
sale of its interest in the Mortgage Loans. Each Seller has
been advised by its independent certified public accountants
that they concur with such treatment under generally accepted
accounting principles and, if applicable, regulatory
accounting principles. Each Seller also will so report the
transfer in all financial statements and reports to the
regulatory and supervisory agencies and authorities to which
it reports, if any. For federal income tax purposes, each
Seller will treat the transfer of the Mortgage Loans pursuant
to the related Sales Agreement as a sale of the interest in
the Mortgage Loans represented by the Underwritten Securities
and an exchange of the remaining interest in the Mortgage
Loans for any Securities of each other class of the same
Series retained by the respective Seller.
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April 1997 Underwriting Agreement Standard Provisions
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(xix) At the Closing Date, each Mortgage Note and
Mortgage will constitute a legal, valid and binding
instrument, enforceable in accordance with its terms subject
to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and will
meet the criteria for selection described in the Final
Prospectus.
(xx) At the Closing Date, any required Primary
Insurance Policies and Standard Hazard Insurance Policies will
have been duly and validly authorized, executed and delivered
by, and will constitute legal, valid and binding obligations
of the issuers of the Primary Mortgage Insurance Policies and
Hazard Insurance Policies, as the case may be, subject to
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and to
general principles of equity regardless of whether enforcement
is sought in a proceeding in equity or at law.
(xxi) At the Closing Date, any Pool Insurance Policy
or Special Hazard Insurance Policy will have been duly and
validly authorized, executed and delivered by, and will
constitute the legal, valid and binding obligation of, the
issuer of such policy (the "Insurer"), subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and to general
principles of equity regardless of whether enforcement is
sought in a proceeding in equity or at law.
(xxii) Each Mortgage Loan was originated by an entity
that met the requirements of Section 3(a)(41) of the Exchange
Act at the time of origination and, unless otherwise noted in
the Final Prospectus, each of the Underwritten Securities,
when issued, will constitute a "mortgage related security" as
such term is defined in Section 3(a)(41) of the Exchange Act
for so long as such Security is rated in one of the two
highest rating categories by a nationally recognized
statistical rating organization.
(xxiii) The Master Servicer has been duly
incorporated and is validly existing and in good standing
under the laws of the jurisdiction of its incorporation and
has full corporate power and authority to own its properties
and to conduct its business as now conducted by it and is duly
qualified to do business under the laws of each jurisdiction
that requires such qualification wherein it owns or leases any
material properties or conducts any material business or in
which the performance of its duties under the Trust Agreement
would require such qualification (except where the failure so
to qualify would not have a material adverse effect on the
Master Servicer's performance under the Trust Agreement); and
the Master Servicer is approved by and in good standing with
FNMA or FHLMC as an "eligible seller/servicer" of residential
mortgage loans as provided in the FNMA Guidelines or the FHLMC
Guidelines.
(xxiv) At the time of the execution and delivery of
the Trust Agreement by the Master Servicer, the execution,
delivery and performance by the Master Servicer of such Trust
Agreement will be within the corporate power of the Master
Servicer and will have been duly authorized by all necessary
corporate action on the part of the Master Servicer; and
neither the execution and delivery thereof by the Master
Servicer, nor the consummation by the Master Servicer of the
transactions therein contemplated, nor compliance with the
provisions thereof by the Master Servicer, will (A) violate
the articles of incorporation or by-laws of the Master
Servicer, (B) result in a breach of, or constitute a default
under any law, governmental rule or regulation, or any
judgment, decree or order binding on the Master Servicer or
its properties, or any of the provisions of any indenture,
mortgage, deed of trust, contract or other instrument to which
the Master Servicer is a party or by which it is bound or (C)
result in the creation or imposition of any lien, charge or
encumbrance upon any of its property pursuant to the terms of
any such indenture, mortgage, deed of trust, contract or other
instrument.
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April 1997 Underwriting Agreement Standard Provisions
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(xxv) The Trust Agreement, when executed and
delivered as contemplated thereby, will have been duly
executed and delivered by the Master Servicer, and will
constitute a legal, valid and binding agreement, enforceable
against the Master Servicer in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally
and to general principles of equity regardless of whether
enforcement is sought in a proceeding in equity or at law.
(xxvi) Each Servicer has been duly incorporated and
is validly existing and in good standing under the laws of the
jurisdiction of its incorporation and duly qualified to do
business under the laws of each jurisdiction that requires
such qualification wherein it owns or leases any material
properties or conducts any material business or in which the
performance of its duties under its Servicing Agreement would
require such qualification (except where the failure so to
qualify would not have a material adverse effect on the
Servicer's performance under the Servicing Agreement); and
each Servicer is approved by FNMA or FHLMC as an "eligible
seller/servicer" of residential mortgage loans as provided in
the FNMA Guidelines or the FHLMC Guidelines.
(xxvii) At the time of the execution and delivery of
a Servicing Agreement by each Servicer, the execution,
delivery and performance by the Servicer of such Servicing
Agreement will be within the corporate power of such Servicer
and will have been duly authorized by all necessary corporate
action on the part of such Servicer; and neither the execution
and delivery thereof by such Servicer, nor the consummation by
such Servicer of the transactions therein contemplated, nor
compliance with the provisions thereof by such Servicer, will
(A) violate the articles of incorporation or by-laws of such
Servicer, (B) result in a breach of, or constitute a default
under any law, governmental rule or regulation, or any
judgment, decree or order binding on such Servicer or its
properties, or any of the provisions of any indenture,
mortgage, deed of trust, contract or other instrument to which
such Servicer is a party or by which it is bound or (C) result
in the creation or imposition of any lien, charge or
encumbrance upon any of its property pursuant to the terms of
any such indenture, mortgage, deed of trust, contract or other
instrument.
(xxviii) Each Servicing Agreement, when executed and
delivered as contemplated thereby, will have been duly
executed and delivered by the Servicer that is a party
thereto, and will constitute a legal, valid and binding
agreement, enforceable against such Servicer in accordance
with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights generally and to general principles of
equity regardless of whether enforcement is sought in a
proceeding in equity or at law.
(xxix) Any taxes, fees and other governmental charges
in connection with the execution, delivery and issuance of the
Agreement and the Trust Agreement and the execution, delivery
and sale of the Securities have been or will be paid at or
prior to the Closing Date.
(xxx) Neither the Company nor the Trust is, and the
issuance and sale of the Securities in the manner contemplated
by the Final Prospectus will not cause the Company or the
Trust to become, subject to registration or regulation as an
Investment Company or an affiliate of an Investment Company
under the Investment Company Act of 1940, as amended.
(xxxi) The Trust Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended.
(xxxii) Immediately prior to the delivery of the
Underwritten Securities to the Underwriters, the Company will
own the Securities free and clear of any lien, adverse claim,
pledge, encumbrance or other security interest, and will not
have assigned to any person any of its right, title or
interest in the Securities, and, upon consummation of the
transactions
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April 1997 Underwriting Agreement Standard Provisions
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contemplated in the Agreement, the Company will transfer all
its right, title and interest in the Securities to the
Underwriters free and clear of any lien, adverse claim,
pledge, encumbrance or other security interest.
(xxxiii) At the Closing Date, the representations and
warranties made by the Company in the Trust Agreement, any
Servicing Agreement and any Sales Agreement will be true and
correct in all material respects.
The Company shall be deemed not to have made the
representations and warranties contained in clauses (xiv) through
(xxviii), inclusive, of this Section 1 with respect to, and to the
extent of, representations and warranties made to the Underwriters by
any Seller, the Master Servicer, any Servicer or any Insurer or other
credit provider as to the matters covered in such clauses in a
certificate or opinion of counsel in form satisfactory to counsel for
the Underwriters delivered to the Underwriters on the Closing Date;
provided, however, the foregoing shall in no way limit the rights of
the Underwriters to indemnification and contribution as otherwise
provided in Section 8 hereof.
Any certificate signed by a Seller, the Master Servicer, a
Servicer, an Insurer or other credit provider and delivered to the
Underwriters or to counsel for the Underwriters in connection with an
offering of the Securities shall state that it is a representation and
warranty as to the matters covered thereby by a Seller, the Master
Servicer, a Servicer, an Insurer or other credit provider, as the case
may be, to each Underwriter to whom the representations and warranties
in this Section 1 are made.
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties set forth herein, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at the applicable purchase prices set
forth in the Underwriting Agreement (plus accrued interest as therein set
forth), Underwritten Securities representing the respective aggregate
approximate principal amounts, notional amounts or percentage interests, as the
case may be, of the various classes of Securities set forth in the Underwriting
Agreement or opposite such Underwriter's name in an attachment to the
Underwriting Agreement.
3. Delivery and Payment. Delivery of and payment for the Underwritten
Securities shall be made at the office, on the date and at the time specified in
the Underwriting Agreement, which date and time may be postponed by agreement
between the Underwriters and the Company or as provided in Section 10 hereof
(such date and time of delivery and payment for the Underwritten Securities
being herein called the "Closing Date"). Delivery of the Underwritten Securities
shall be made to the Underwriters against payment by the Underwriters of the
purchase price thereof to or upon the order of the Company in the type of funds
specified in the Underwriting Agreement. The Underwritten Securities shall be
registered in such names and in such authorized denominations as the
Underwriters may request not less than two full business days in advance of the
Closing Date.
The Company agrees to have the Underwritten Securities available for
inspection, checking and packaging by the Underwriters in New York, New York (or
such other location within the continental United States requested by the
Underwriters), not later than 1:00 p.m. on the business day prior to the Closing
Date.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Underwritten Securities for sale to the public
as set forth in the Final Prospectus.
5. Agreements. (a) The Company covenants and agrees with the several
Underwriters that:
(i) Substantially contemporaneously with the
execution of the Agreement, the Company will prepare the
supplement to the Base Prospectus setting forth the principal
amount of Securities covered thereby and the material terms
thereof, the initial public offering price of the Underwritten
Securities or the manner of offering such Underwritten
Securities, the price at
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which the Underwritten Securities are to be purchased by the
Underwriters from the Company, the selling concessions and
reallowance, if any, and such other information as the
Underwriters and the Company deem appropriate in connection
with the offering of the Securities. Until the Closing Date,
the Company will not file any amendment to the Registration
Statement or supplement to the Base Prospectus, and
thereafter, will not file any supplement to the Final
Prospectus relating to the Securities unless the Company has
furnished the Underwriters a copy for their review prior to
filing and will not file any such proposed amendment or
supplement to which the Underwriters reasonably object.
Subject to the foregoing sentence, the Company will cause the
Final Prospectus to be filed with the Commission pursuant to
Rule 424 under the Act and a report on Form 8-K will be filed
with the Commission within 15 days following the Closing
setting forth specific information concerning the Securities
and the Mortgage Loans and including, as an exhibit, a copy of
the Trust Agreement. In addition, to the extent that any
Underwriter (i) has provided Collateral Term Sheets (as
defined herein) to the Company that such Underwriter has
provided to a prospective investor, the Company will file or
cause to be filed with the Commission such Collateral Term
Sheets as an Exhibit to Form 8-K within two business days of
its receipt thereof, or (ii) has provided Structural Term
Sheets or Computational Materials (as such terms are defined
herein) to the Company that such Underwriter has provided to a
prospective investor, the Company will file or cause to be
filed with the Commission such Structural Term Sheets and
Computational Materials as an Exhibit to Form 8-K as soon as
reasonably practicable after the date of the Underwriting
Agreement, but in any event, not later than the date on which
the Final Prospectus is filed with the Commission pursuant to
Rule 424 under the Act. The Company will promptly advise the
Underwriters (A) when the Final Prospectus shall have been
filed with the Commission pursuant to Rule 424 and the Form
8-K containing Computational Materials shall have been filed
with the Commission, (B) when any amendment to the
Registration Statement shall have become effective, (C) of any
request by the Commission for any amendment of the
Registration Statement or the Final Prospectus or for any
additional information, (D) of the issuance by the Commission
of any stop order suspending the effectiveness of the
Registration Statement or the initiation or threatening of any
proceeding for that purpose, and (E) of the receipt by the
Company of any notification with respect to the suspension of
the qualification of the Underwritten Securities for sale in
any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will use its best
efforts to prevent the issuance of any such stop order or
suspension and, if issued, to obtain as soon as possible the
withdrawal thereof.
(ii) If, at any time when a prospectus relating to
the Securities is required to be delivered under the Act, any
event occurs as a result of which in the opinion of counsel to
the Company or the Underwriters, the Final Prospectus, as then
amended or supplemented, would include any untrue statement of
a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or
if it shall be necessary to amend or supplement the Final
Prospectus to comply with the Act or the rules and regulations
thereunder, the Company will promptly prepare and file with
the Commission, subject to paragraph (i) of this Section 5(a),
an amendment or supplement that will correct such statement or
omission or an amendment that will effect such compliance and,
if such amendment or supplement is required to be contained in
a post-effective amendment of the Registration Statement, will
use its best efforts to cause such amendment of the
Registration Statement to be made effective as soon as
possible and will promptly file all reports and any definitive
proxy or information statements required to be filed by the
Company pursuant to Sections 13, 14, and 15 of the Exchange
Act subsequent to the date of the Prospectus for so long as
the delivery of a Prospectus is required in connection with
the offering or sale of the Securities; provided however, that
any such amendment or update prepared more than nine months
after the Closing Date shall be at the expense of the
Underwriters.
(iii) The Company will furnish to counsel for the
Underwriters and to each Underwriter, without charge,
conformed copies of the Registration Statement (including
exhibits
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thereto) and each amendment thereto which shall become
effective on or prior to the Closing Date, and, so long as
delivery of a prospectus by an Underwriter or dealer may be
required by the Act, as many copies of any Preliminary Final
Prospectus and the Final Prospectus and any amendments thereof
and supplements thereto as the Underwriters may reasonably
request.
(iv) The Company will apply the net proceeds from the
sale of the Securities in the manner set forth in the
Prospectus.
(v) The Company will pay all the fees and
disbursements of its counsel and of independent accountants
for the Company relating to legal review, opinions of counsel
for the Company, audits, review of unaudited financials, cold
comfort review or otherwise; the costs and expenses of
printing (or otherwise reproducing) and delivering the
Agreement, the Trust Agreement and the Securities; the initial
fees, costs and expenses of the Trustee under the Trust
Agreement and its counsel; the costs and expenses incident to
the preparation, printing, distribution and filing of the
Registration Statement (including exhibits thereto), the Base
Prospectus, the Preliminary Final Prospectus and the Final
Prospectus, and all amendments of and supplements to the
foregoing, and of the Securities; and the fees of rating
agencies. Except as provided in Section 7 hereof, the
Underwriters shall be responsible for paying all costs and
expenses incurred by them in connection with their purchase
and sale of the Underwritten Securities.
(vi) The Company will use its best efforts to arrange
for the qualification of the Securities for sale under the
laws of such jurisdictions as the Underwriters may designate
in the Underwriting Agreement, to maintain such qualifications
in effect so long as required for the distribution of the
Securities and to arrange for the determination of the
legality of the Securities for purchase by investors;
provided, however, that the Company shall not be required to
qualify to do business in any jurisdiction where it is not now
so qualified or to take any action which would subject it to
general or unlimited service of process in any jurisdiction
where it is not now so subject; and provided further, that the
Underwriters will pay all costs and expenses associated
therewith.
(vii) So long as any Securities are outstanding, the
Company will cause the Master Servicer or Trustee to furnish
to the Underwriter, as soon as available, a copy of (A) the
annual statement of compliance delivered by the Master
Servicer to the Trustee under the Trust Agreement, (B) the
annual independent public accountants' servicing report
furnished to the Trustee pursuant to the Trust Agreement, (C)
each report, statement or other document regarding the
Securities filed with the Commission under the Exchange Act or
mailed to the holders of the Securities, pursuant to the Trust
Agreement or otherwise, (D) any reports provided by certified
public accountants pursuant to the Trust Agreement regarding
the reports, statements or other documents included in (C)
above, and (E) from time to time, such other information
concerning the Securities as the Underwriter may reasonably
request and which may be furnished by the Company or the
Master Servicer without undue expense.
(viii) Without the consent of the Underwriters, the
Company will not waive any of the conditions to its
obligations to purchase Mortgage Loans pursuant to a Sales
Agreement.
(b) Each Underwriter represents, warrants, covenants
and agrees with the Company that:
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(i) It either (A) has not provided any potential
investor with a Collateral Term Sheet (that is required to be
filed with the Commission within two business days of first
use under the terms of the Public Securities Association
Letter as described below), or (B) has, substantially
contemporaneously with its first delivery of such Collateral
Term Sheet to a potential investor, delivered such Collateral
Term Sheet to the Company, which Collateral Term Sheet, if
any, is attached to the Underwriting Agreement as Exhibit A.
(ii) It either (A) has not provided any potential
investor with a Structural Term Sheet or Computational
Materials prior to the date of the Underwriting Agreement, or
(B) has provided any such Structural Term Sheet or
Computational Materials to the Company, which Structural Term
Sheets and Computational Materials, if any, are attached to
the Underwriting Agreement as Exhibit B.
(iii) Each Collateral Term Sheet bears a legend
indicating that the information contained therein will be
superseded by the description of the collateral contained in
the Prospectus Supplement and, except in the case of the
initial Collateral Term Sheet, that such information
supersedes the information in all prior Collateral Term
Sheets.
(iv) Each Structural Term Sheet and all Computational
Materials bear a legend substantially as follows (or in such
other form as may be agreed prior to the date of the
Underwriting Agreement):
This information does not constitute either an offer
to sell or a solicitation of an offer to buy any of
the securities referred to herein. Information
contained herein is confidential and provided for
information only, does not purport to be complete and
should not be relied upon in connection with any
decision to purchase the securities. This information
supersedes any prior versions hereof and will be
deemed to be superseded by any subsequent versions
including, with respect to any description of the
securities or the underlying assets, the information
contained in the final Prospectus and accompanying
Prospectus Supplement. Offers to sell and
solicitations of offers to buy the securities are
made only by the final Prospectus and the related
Prospectus Supplement.
(v) It (at its own expense) agrees to provide to the
Company any accountants' letters obtained relating to the
Collateral Term Sheets, Structural Term Sheets and
Computational Materials, which accountants' letters shall be
addressed to the Company.
(vi) It has not, and will not, without the prior
written consent of the Company, provide any Collateral Term
Sheet, Structural Term Sheets or Computational Materials to
any investor or prospective investor after the date of the
Underwriting Agreement unless such Collateral Term Sheets,
Structural Term Sheets or Computational Materials are preceded
or accompanied by the delivery of the Final Prospectus to such
investor or prospective investor.
For purposes of this Agreement, Collateral Term Sheets and Structural
Term Sheets shall have the respective meanings assigned to them in the February
13, 1995 letter of Cleary, Gottlieb, Steen & Hamilton on behalf of the Public
Securities Association (which letter, and the SEC staff's response thereto, are
publicly available February 17, 1995). The term "Collateral Term Sheet" as used
herein includes any subsequent Collateral Term Sheet that reflects a substantive
change in the information presented. Computational Materials has the meaning
assigned to it in the May 17, 1994 letter of Brown & Wood on behalf of Kidder,
Peabody & Co., Inc. (which letter, and the SEC staff's response thereto, are
publicly available May 20, 1994).
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April 1997 Underwriting Agreement Standard Provisions
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6. Conditions to the Obligations of the Underwriters. The obligations
of the Underwriters under the Agreement to purchase the Securities shall be
subject to the performance by the Company, each Seller and the Master Servicer
of its obligations hereunder (in the case of the Company) and in any applicable
agreement, and the following additional conditions:
(a) To the accuracy on the date of the Agreement and on the
Closing Date (as if made on such Closing Date) and as of the date of
the effectiveness of any amendment to the Registration Statement filed
prior to the Closing Date of the representations and warranties on the
part of the Company contained herein, and to the extent that the
Company is deemed, pursuant to Section 1 hereof, not to make the
representations and warranties (xv) through (xxviii), inclusive, or
portions thereof, to the accuracy of the representations and warranties
provided by the parties making such representations and warranties as
of the date thereof and on the Closing Date (as if made on such Closing
Date) and as of the date of the effectiveness of any amendment to the
Registration Statement filed prior to the Closing Date.
(b) The Registration Statement shall have become effective and
no stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and not
withdrawn and no proceedings for that purpose shall have been
instituted or threatened; and the Final Prospectus shall have been
filed or mailed for filing with the Commission in accordance with Rule
424 under the Act, and all actions required to be taken and all filings
required to be made by the Company under the Act prior to the sale of
the Securities shall have been duly taken or made.
(c) Certificates
(i) The Company shall have delivered to the
Underwriters a certificate of the Company, signed by the
President or any Vice President or Assistant Vice President of
the Company and dated the Closing Date, to the effect that the
signer of such certificate has carefully examined the
Registration Statement, the Final Prospectus, and the
Agreement and that: (A) the representations and warranties of
the Company in the Agreement are true and correct in all
material respects at and as of the Closing Date with the same
effect as if made on the Closing Date; (B) the Company has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date; (C) no stop order suspending the
effectiveness of the Registration Statement has been issued
and no proceedings for that purpose have been instituted or,
to the Company's knowledge, threatened; (D) nothing has come
to such Officer's attention that would lead him or her to
believe that the Final Prospectus contains any untrue
statement of a material fact or omits to state any material
fact necessary in order to make the statements, in the light
of the circumstances under which they were made, not
misleading; and (E) there has been no material adverse change
or development involving a prospective material adverse change
in the business, operations, financial condition, properties
or assets of the Company.
(ii) The Master Servicer shall have delivered to the
Underwriters a certificate of the Master Servicer, signed by
the President or any Vice President or Assistant Vice
President of the Master Servicer and dated the Closing Date,
to the effect that the signer of such certificate has
carefully examined the Trust Agreement and that: (A) the
representations and warranties of the Master Servicer in the
Trust Agreement are true and correct in all material respects
at and as of the Closing Date with the same effect as if made
on the Closing Date, (B) there has been no material adverse
change or development involving a prospective material adverse
change in the business, operations, financial condition,
properties or assets of the Master Servicer and (C) the Master
Servicer has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at
or prior to the Closing Date.
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(iii) Each Seller shall have delivered to the
Underwriters a certificate of such Seller, signed by the
President or any Vice President or Assistant Vice President
and dated the Closing Date, to the effect that the signer of
such certificate has examined the Sales Agreement and that:
(A) the representations and warranties of the related Seller
in such Sales Agreement are true and correct in all material
respects at and as of the Closing Date with the same effect as
if made on the Closing Date; and (B) such Seller has complied
with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the
Closing Date.
(iv) Each Seller shall have delivered to the
Underwriters a certificate of such Seller, signed by such
Seller's Chief Financial Officer (however denominated) and
dated the Closing Date, stating that the transfer of the
Mortgage Loans from the Seller to the Company pursuant to the
Sales Agreement will be classified as a sale of the Seller's
interest in the Mortgage Loans under generally accepted
accounting principles and, if applicable, under regulatory
accounting principles.
(d) Accounting Comfort
(i) The Underwriters shall have received from a
nationally recognized independent accounting firm, two
letters, (i) one dated the date of the Agreement and
satisfactory in form and substance to the Underwriters and
counsel for the Underwriters to the effect that (A) the
decrement tables, any yield tables and any related statistical
data contained in the Prospectus Supplement are accurate based
upon the Modeling Assumptions set forth therein and (B)
covering such other matters relating to the Trust as the
Underwriters may reasonably request; and (ii) the other dated
the Closing Date and satisfactory in form and substance to the
Underwriters and counsel for the Underwriters (A) confirming
the information contained in the letter dated the date of the
Agreement and (B) covering such other matters relating to the
Trust as the Underwriters may reasonably request.
(ii) The Underwriters shall have received from the
certified public accountants of the Servicer and Master
Servicer, as applicable, a letter or letters dated the date of
the Agreement and satisfactory in form and substance to the
Underwriters and counsel to the Underwriters to the effect
that they have performed certain specified procedures as a
result of which they determined that certain information of an
accounting, financial and statistical nature set forth in the
Final Prospectus under the caption (A) "The Servicer" (or
other caption relating to the Servicer's servicing activities)
is an accurate compilation of the records of the Servicer; and
(B) "The Master Servicer" (or other caption relating to the
Master Servicer's servicing activities) is an accurate
compilation of the records of the Master Servicer.
(e) Opinions
(i) The Underwriters shall have received from Hunton
& Williams, counsel for the Company, a favorable opinion,
dated the Closing Date and satisfactory in form and substance
to counsel for the Underwriters, as to (A) various matters
relating to the issuance of the Securities; (B) the applicable
federal income tax treatment of the Securities; (C) in the
event of the bankruptcy of the Company, a court would find
that the Mortgage Loans are not assets of the Company and (D)
such other matters reasonably requested by the Underwriters.
(ii) The Underwriters shall have received copies of
any opinions of counsel furnished to the Rating Agencies (upon
which the Underwriters shall be entitled to rely).
(iii) The Underwriters shall have received from
reputable counsel an opinion or opinions of counsel dated the
Closing Date and satisfactory in form and substance to counsel
for
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April 1997 Underwriting Agreement Standard Provisions
<PAGE>
the Underwriters, as to the income tax treatment of the
Securities in those states specified in the Underwriting
Agreement.
(iv) The Underwriters shall have received from
counsel for the Underwriters such opinion or opinions, dated
the Closing Date, with respect to the issuance and sale of the
Securities, the Trust Agreement, the Agreement, the
Registration Statement, the Final Prospectus and other related
matters as the Underwriters may reasonably require, and the
Company shall have furnished to such counsel such documents as
they reasonably request for the purpose of enabling them to
pass upon such matters.
(v) The Company shall have furnished to the
Underwriters the opinions of counsel to the Master Servicer,
dated the Closing Date and satisfactory in form and substance
to counsel for the Underwriters, as to the due authorization,
execution and delivery of the Trust Agreement by the Master
Servicer, its enforceability against the Master Servicer and
such other matters reasonably requested by the Underwriters.
(vi) The Company shall have furnished to the
Underwriters the opinions of counsel to each Seller, dated the
Closing Date and satisfactory in form and substance to counsel
for the Underwriters, as to the due authorization, execution
and delivery of each of the Sales Agreement by the related
Seller, its enforceability against the related Seller and such
other matters reasonably requested by the Underwriters.
(vii) The Company shall have furnished to the
Underwriters the opinions of counsel to the Trustee, dated the
Closing Date and satisfactory in form and substance to counsel
for the Underwriters, as to the due authorization, execution
and delivery of the Trust Agreement by the Trustee and such
other matters reasonably requested by the Underwriters.
(viii) The Company shall have furnished to the
Underwriters the opinions of counsel to any Insurer, dated the
Closing Date and satisfactory in form and substance to counsel
for the Underwriters, as to the due issuance and
enforceability of the policies issued by such Insurer and such
other matters reasonably requested by the Underwriters.
(ix) The Company shall have furnished to the
Underwriters the opinions of counsel to the issuers of any
Letters of Credit or Surety Bond, dated the Closing Date and
satisfactory in form and substance to counsel for the
Underwriters, as to the due issuance and enforceability of
such instruments and such other matters reasonably requested
by the Underwriters.
(f) The Underwritten Securities have been assigned the ratings
set forth in the Underwriting Agreement, which shall be in one of the
four highest rating categories by one or more "nationally recognized
statistical rating organizations" (as that term is defined by the
Commission) designated in the Underwriting Agreement. On the Closing
Date, (i) such rating or ratings shall not have been rescinded and
there shall not have been any downgrading, or public notification of a
possible downgrading or public notice of a possible change, without
indication of direction; and (ii) no downgrading, or public
notification of a possible downgrading or public notification of a
possible change, without indication of direction, shall have occurred
in the rating accorded any of the debt securities of any person,
providing any form of credit enhancement for the Securities by any
"nationally recognized statistical rating organization."
(g) If applicable, and subject to the conditions set forth in
the Trust Agreement, any reserve fund to be established for the benefit
of the Securityholders shall have been established by the Company with
the Trustee in accordance with the terms of the Trust Agreement and any
initial deposit thereto shall have been delivered to the Trustee for
deposit therein as contemplated by the Trust Agreement.
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(h) On the Closing Date, there shall not have occurred any
change, or any development involving a prospective change, in or
affecting the business or properties of the Company since the date of
the Underwriting Agreement that the Underwriter concludes in the
reasonable judgment of the Underwriter materially impairs the
investment quality of the Underwritten Securities so as to make it
impractical or inadvisable to proceed with the public offering or the
delivery of the Underwritten Securities as contemplated by the Final
Prospectus.
(i) All proceedings in connection with the transactions
contemplated by the Agreement and all documents incident hereto shall
be satisfactory in form and substance to the Underwriters and counsel
for the Underwriters, and the Underwriters and counsel for the
Underwriters shall have received such information, certificates and
documents as they may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in
the Agreement, if the Company is in breach of any covenants or
agreements contained herein or if any of the opinions and certificates
mentioned above or elsewhere in the Agreement shall not be in all
material respects reasonably satisfactory in form and substance to the
Underwriters and counsel for the Underwriters, the Agreement and all
obligations of the Underwriters under the Agreement may be canceled at,
or at any time prior to, the Closing Date by the Underwriters. Notice
of such cancellation shall be given to the Company in writing, or by
telephone or telegraph and confirmed in writing.
In the event that the Company is advised prior to the Closing
Date that the documentation for some of the Mortgage Loans is
incomplete or defective and such defects cannot be remedied prior to
the Closing Date, the Company may, with the consent of the
Underwriters, nevertheless deliver the Mortgage Loans to the Trust and
may deposit with the Trustee an amount equal to the principal amount of
the incomplete or defective Mortgage Loans as of the Cut-off Date plus
one month's interest on each such Mortgage Loan at the Note Rate. If
the incomplete or defective documentation for a Mortgage Loan is
remedied prior to the first Distribution Date, the amount deposited
with the Trustee on account thereof shall be returned to the Company.
If the incomplete or defective documentation for a Mortgage Loan is not
remedied prior to the first Distribution Date, the amount will be
applied in payment of the Securities and the Mortgage Loan released to
the Company.
7. Reimbursement of Expenses. If for any reason other than a default by
the Underwriters in their obligations under the Agreement the sale of the
Underwritten Securities provided for herein is not consummated, the Company or
the Master Servicer will reimburse the Underwriters severally upon demand for
all out-of-pocket expenses (including reasonable fees and disbursements of
counsel) that shall have been reasonably incurred by them in connection with
their investigation, the preparation to market and the marketing of the
Securities, or in contemplation of the performance by them of their obligations
under the Agreement.
8. Indemnification and Contribution. (a) The Company indemnifies and
holds harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act as follows:
(i) against any and all losses, claims, expenses,
damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject
under the Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in
(y) the Registration Statement, the Final Prospectus, or any
amendment or supplement thereto, or any related Preliminary
Final Prospectus, or (z) the Collateral Term Sheets,
Structural Term Sheets or Computational Materials (but only to
the extent the underlying information related to such untrue
statement or alleged untrue statement arises out of or is
based upon Company Information (as defined below) that was not
superseded or corrected by delivery to the Underwriters of
corrected written or electronic information, or for which the
- 16 -
April 1997 Underwriting Agreement Standard Provisions
<PAGE>
Company provided written notice of an error or material
omission prior to the confirmation of the sale of the
applicable Underwritten Securities) or arise out of, or are
based upon, the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading; and will reimburse
each Underwriter and each such controlling person for any
legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with
investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided,
however, that (A) the Company will not be liable in any such
case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement
or omission, or alleged untrue statement or omission, made in
any of such documents in reliance upon and in conformity with
written information furnished to the Company by an
Underwriter, specifically for use therein and constituting
Underwriting Information (as defined below), and (B) such
indemnity solely with respect to any Preliminary Final
Prospectus shall not inure to the benefit of any Underwriter
(or any person controlling such Underwriter) from whom the
person asserting any such loss, claim, damage or liability
purchased the Securities which are the subject thereof if such
person did not receive a copy of the Final Prospectus (or the
Final Prospectus as amended or supplemented, excluding any
documents incorporated therein by reference) at or prior to
the confirmation of the sale of such Securities to such person
in any case where such delivery is required by the Act and the
untrue statement or omission of a material fact contained in
such Preliminary Final Prospectus was corrected in the Final
Prospectus (or the Final Prospectus as amended or
supplemented, excluding any documents incorporated therein by
reference);
(ii) against any and all loss, liability, claim,
damage and expense whatsoever, to the extent of the aggregate
amount paid in settlement of any litigation, or investigation
or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue
statement or omission, if such settlement is effected with the
written consent of the Company; and
(iii) against any and all expense whatsoever
(including the fees and disbursements of counsel chosen by
you), reasonably incurred in investigating, preparing or
defending against any litigation, or investigation or
proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid
under (i) or (ii) above.
As used herein, (i) the term "Company Information" means the information
furnished to the Underwriters by or on behalf of the Company regarding the
Company or the Mortgage Loans and (ii) the term "Underwriting Information" means
the information (a) in the portion of the Final Prospectus constituting the
prospectus supplement set forth under the heading "Underwriting" and the
statements regarding the Underwriters' intention to make a secondary market and
sales to investors in negotiated transactions and, if applicable, to engage in
certain transactions to stabilize, maintain or affect the market price of the
Underwritten Securities and (b) contained in Collateral Term Sheets, Structural
Term Sheets or Computational Materials to the extent such information does not
constitute, does not arise out of and is not based upon Company Information.
This indemnity will be in addition to any liability that the Company
may otherwise have.
(b) Each Underwriter agrees to indemnify and hold harmless the
Company, each of its directors, each of the Company's officers who have
signed the Registration Statement and each person, if any, who controls
the Company within the meaning of the Act or the Exchange Act, against
any and all losses, claims, expenses, damages or liabilities to which
the Company or any such director, officer or controlling person may
become subject, under the Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities, (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in (y) the Registration
- 17 -
April 1997 Underwriting Agreement Standard Provisions
<PAGE>
Statement, the Final Prospectus or any amendment or supplement thereto,
or any related Preliminary Final Prospectus, or (z) the Collateral Term
Sheets, Structural Term Sheets or Computational Materials (except to
the extent the underlying information relating to such untrue statement
or alleged untrue statement constitutes, arises out of, or is based
upon Company Information), or arise out of, or are based upon, the
omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in
conformity with written information constituting Underwriting
Information furnished to the Company by such Underwriter specifically
for use therein; and will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending any
such loss, claim, damage, liability or action. This indemnity agreement
will be in addition to any liability that such Underwriter may
otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party
of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability that it may
have to any indemnified party otherwise than under this Section 8. In
case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein, and, to the
extent that it may elect by written notice delivered promptly to the
indemnified party after receiving the aforesaid notice from such
indemnified party, jointly with any other indemnifying party similarly
notified, to assume (at its own expense) the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the
indemnifying party) to represent the indemnified party in such action;
provided that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party
or parties shall have concluded that there may be legal defenses
available to it or them and/or other indemnified parties which are
different from or additional to those available to the indemnified
party, the indemnified party or parties shall have the right to select
separate counsel in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party
of the selected counsel, and, after notice from the indemnifying party
to such indemnified party under this Section 8, such indemnifying party
shall not be liable for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation unless (i) the
indemnified party shall have employed separate legal counsel in
connection with the assertion of legal defenses in accordance with the
proviso to the next preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of
more than one separate counsel, approved by any indemnified party in
the case of subsection (a) above, representing the indemnified parties
under such subparagraph (a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party (it being
understood that if clause (i) or (iii) is applicable, such liability
shall be only in respect of the counsel referred to in such clause (i)
or (iii)).
(d) If the indemnification provided for in this Section 8 is
unavailable to hold harmless an indemnified party under subsection (a)
or (b) above in respect of any losses, claims, damages or liabilities
(or actions in respect thereof) referred to herein, then each
indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other from the offering of the
Underwritten Securities to which such loss, claim, damage or liability
(or action in respect thereof) relates. If, however, the allocation
provided by the immediately preceding sentence is not permitted by
applicable law or if the
- 18 -
April 1997 Underwriting Agreement Standard Provisions
<PAGE>
indemnified party failed to give the notice required under subsection
(c) above, then each indemnifying party shall contribute to such amount
paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the
relative fault of the Company on the one hand the Underwriters on the
other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and
Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from such offering (before deducting
expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. The relative
fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material facts or the
omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or the Underwriters
on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be
just and equitable if contribution pursuant to this subsection (d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim subject to the
limitations set forth in subsection (c) above. Notwithstanding the
provisions of this subsection (d), the Underwriters shall not be
required to contribute any amount in excess of the amount by which the
total price at which the Underwritten Securities underwritten and
distributed to the public exceeds the amount of any damages which the
Underwriters have otherwise paid or been required or become liable to
pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligation of any Underwriter pursuant to this
subsection (d) shall be several in proportion to its respective
underwriting obligations and not joint.
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities of any Class agreed to be
purchased by such Underwriter or Underwriters under the Agreement and such
failure to purchase shall constitute a default in the performance of its or
their obligations under the Agreement, the remaining Underwriters shall be
obligated severally to take up and pay for (in the respective proportions which
the portion of the Securities of such Class set forth opposite their names in an
attachment to the Underwriting Agreement bears to the aggregate amount of
Securities of such Class set forth opposite the names of the remaining
Underwriters) the Securities of such Class which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the event
that the amount of Securities of such Class which the defaulting Underwriter or
Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Securities of such Class as set forth in the Final Prospectus, the
remaining Underwriters shall have the right to purchase all, but shall not be
under any obligation to purchase any, of the Securities of such Class, and if
such non-defaulting Underwriters do not purchase all the Securities of such
Class, the Agreement will terminate without liability to any non-defaulting
Underwriter or the Company. In the event of a default by any Underwriter as set
forth in this Section 9, the Closing Date for such Class of Securities shall be
postponed for such period, not exceeding seven days, as the Underwriters shall
determine in order that the required changes in the Registration Statement and
the Final Prospectus or in any other documents or arrangements may be effected.
Nothing contained in the Agreement shall relieve any defaulting Underwriter of
its liability, if any, to the Company and any non-defaulting Underwriter for
damages occasioned by its default under the Agreement.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Underwriters, by notice given to the Company prior to
or at delivery of and payment for all Securities if prior to such time (i)
trading in securities generally on the New York Stock Exchange shall have been
suspended or limited, or minimum prices shall have been established on such
Exchange, (ii) a banking moratorium shall have been declared by either federal
or New York State authorities or (iii) the outbreak or escalation of hostilities
involving
- 19 -
April 1997 Underwriting Agreement Standard Provisions
<PAGE>
the United States or the declaration by the United States of a national
emergency or war, if the effect of any such event specified in this clause (iii)
in the judgment of the Underwriters make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Underwritten Securities
on the terms and in the manner contemplated by the Prospectus Supplement.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company and the Underwriters set forth in or made pursuant to the Agreement will
remain in full force and effect, regardless of any investigation made by or on
behalf of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Securities. The provisions of this Section 11 and
Sections 5(a)(v), 7 and 8 hereof shall survive the termination or cancellation
of the Agreement.
12. Notices. All communications under the Agreement will be in writing
and effective only on receipt and, if sent to the Underwriters, will be mailed,
delivered or telegraphed and confirmed to it at the office or offices set forth
in the Underwriting Agreement; or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at Riverfront Plaza, West Tower,
901 East Byrd Street, Richmond, Virginia 23219, Attention:
President.
13. Successors. The Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and their
successors and assigns, and no other person will have any right or obligation
under the Agreement.
14. Applicable Law. The Agreement will be governed by and construed in
accordance with the laws of the jurisdiction as may be specified in the
Underwriting Agreement. The Agreement may be executed in any number of
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall together constitute but one and the same instrument.
15. Miscellaneous. Time shall be of the essence of the Agreement. The
Agreement supersedes all prior or contemporaneous agreements and understandings
relating to the subject matter of the Agreement. Neither the Agreement nor any
term of the Agreement may be changed, waived, discharged or terminated except by
a writing signed by the party against whom enforcement of such change, waiver,
discharge or termination is sought.
- 20 -
April 1997 Underwriting Agreement Standard Provisions
</TABLE>
Exhibit 4.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FINANCIAL ASSET SECURITIZATION, INC.,
Seller,
NORTH AMERICAN MORTGAGE COMPANY,
Master Servicer/Loan Seller,
and
THE FIRST NATIONAL BANK OF CHICAGO,
Trustee
---------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of April 1, 1997
---------------------------------
Mortgage Participation Securities
Series 1997-NAMC 1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S> <C>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms............................................................... 4
Accepted Servicing Practices......................................................... 4
Accrued Interest..................................................................... 4
Advance.............................................................................. 5
Advance Reimbursement Amount......................................................... 5
Agreement............................................................................ 5
Anniversary.......................................................................... 5
Assignment........................................................................... 5
Available Distribution Amount........................................................ 5
Bankruptcy Amount.................................................................... 6
Bankruptcy Code...................................................................... 6
Bankruptcy Loss...................................................................... 6
Benefit Plan Opinion................................................................. 6
Book-Entry Security.................................................................. 6
Business Day......................................................................... 6
Cash Liquidation..................................................................... 6
Class................................................................................ 7
Class A Liquidation Amount........................................................... 7
Class A Percentage................................................................... 7
Class A Prepayment Percentage........................................................ 7
Class A Principal Distribution Amount................................................ 8
Class A Security..................................................................... 8
Class A Subaccounts.................................................................. 8
Class A-1 Security................................................................... 8
Class A-2 Security................................................................... 8
Class A-3 Security................................................................... 8
Class A-4 Liquidation Amount......................................................... 8
Class A-4 Percentage................................................................. 9
Class A-4 Prepayment Percentage...................................................... 9
Class A-4 Principal Distribution Amount.............................................. 9
Class A-4 Security................................................................... 9
Class B Group I Loan Group Component Balance......................................... 9
Class B Group II Loan Group Component Balance........................................ 9
Class B Percentage................................................................... 9
Class B Subaccount................................................................... 10
Class B-1 Percentage................................................................. 10
-i-
<PAGE>
Class B-1 Security................................................................... 10
Class B-2 Percentage................................................................. 10
Class B-2 Security................................................................... 10
Class B-3 Percentage................................................................. 10
Class B-3 Security................................................................... 10
Class B-4 Percentage................................................................. 11
Class B-4 Security................................................................... 11
Class B-5 Percentage................................................................. 11
Class B-5 Security................................................................... 11
Class B-6 Percentage................................................................. 11
Class B-6 Security................................................................... 11
Class FX Security.................................................................... 12
Class FX Subaccount.................................................................. 12
Class FXA Liquidation Amount......................................................... 12
Class FXA Percentage................................................................. 12
Class FXA Prepayment Percentage...................................................... 12
Class FXA Security................................................................... 13
Class FXA Subaccounts................................................................ 13
Class FXA-1 Security................................................................. 13
Class FXA-2 Liquidation Amount....................................................... 13
Class FXA-2 Percentage............................................................... 14
Class FXA-2 Prepayment Percentage.................................................... 14
Class FXA-2 Principal Distribution Amount............................................ 14
Class FXA-2 Security................................................................. 14
Class FXA-3 Security................................................................. 14
Class FXA-4 Security................................................................. 14
Class FXA-5 Security................................................................. 14
Class FXA-6 Security................................................................. 15
Class FXA-7 Security................................................................. 15
Class FXA-8 Security................................................................. 15
Class FXA-9 Notional Amount.......................................................... 15
Class FXA-9 Security................................................................. 15
Class FXP Distribution Amount........................................................ 15
Class FXS Notional Amount............................................................ 16
Class FXS Pool Strip Rate............................................................ 16
Class FXS Security................................................................... 16
Class II Security.................................................................... 16
Class II Subaccount.................................................................. 16
Class P Distribution Amount.......................................................... 16
Class P Security..................................................................... 16
Class R Security..................................................................... 17
Class RP Security.................................................................... 17
Class S Notional Amount.............................................................. 17
Class S Pool Strip Rate.............................................................. 17
-ii-
<PAGE>
Class S Security..................................................................... 17
Closing Date......................................................................... 17
Code................................................................................. 17
Collateral Value..................................................................... 17
Corporate Trust Office............................................................... 18
Corresponding Class.................................................................. 18
Credit Support Depletion Date........................................................ 18
Curtailment.......................................................................... 18
Custodial Account.................................................................... 18
Cut-off Date......................................................................... 18
Debt Service Reduction............................................................... 18
Deficient Valuation.................................................................. 18
Definitive Security.................................................................. 19
Depository........................................................................... 19
Depository Participant............................................................... 19
Determination Date................................................................... 19
Discount Fraction.................................................................... 19
Discount Mortgage Loan............................................................... 19
Disqualified Organization............................................................ 19
Distribution Date.................................................................... 20
DLJMCI............................................................................... 20
Due Date............................................................................. 20
Due Period........................................................................... 20
Eligible Account..................................................................... 20
Event of Default..................................................................... 20
Excess Bankruptcy Loss............................................................... 20
Excess Fraud Loss.................................................................... 20
Excess Proceeds...................................................................... 21
Excess Proceeds Account.............................................................. 21
Excess Special Hazard Loss........................................................... 21
Exemption............................................................................ 21
Extraordinary Events................................................................. 21
Extraordinary Losses................................................................. 22
FDIC................................................................................. 22
FHLMC................................................................................ 22
Fitch................................................................................ 22
FNMA................................................................................. 22
FNMA Guides.......................................................................... 22
Fraud Loss Amount.................................................................... 22
Fraud Losses......................................................................... 22
Funding Date......................................................................... 22
Group I Discount Mortgage Loan....................................................... 22
Group I Mortgage Loan................................................................ 22
Group I Premium Mortgage Loan........................................................ 23
-iii-
<PAGE>
Group I Subordinate Percentage....................................................... 23
Group I Subordinate Prepayment Percentage............................................ 23
Group II Discount Mortgage Loan...................................................... 23
Group II Mortgage Loan............................................................... 23
Group II Premium Mortgage Loan....................................................... 23
Group II Subordinate Percentage...................................................... 23
Group II Subordinate Prepayment Percentage........................................... 23
Initial Purchaser.................................................................... 23
Initial Security Principal Balance................................................... 23
Insurance Policy..................................................................... 23
Insurance Proceeds................................................................... 23
Interest Accrual Period.............................................................. 23
Issuing REMIC........................................................................ 24
Late Collections..................................................................... 24
LIBOR................................................................................ 24
LIBOR Determination Date............................................................. 25
Liquidated Loan...................................................................... 25
Liquidation Principal................................................................ 25
Liquidation Proceeds................................................................. 25
Loan Group........................................................................... 26
Loan Seller.......................................................................... 26
Loan-to-Value Ratio.................................................................. 26
Lockout Percentage................................................................... 26
Master Servicer...................................................................... 26
Monthly Payment...................................................................... 26
Mortgage............................................................................. 26
Mortgage File........................................................................ 26
Mortgage Loan........................................................................ 26
Mortgage Loan Purchase Agreements.................................................... 26
Mortgage Loan Schedule............................................................... 27
Mortgage Note........................................................................ 28
Mortgage Rate........................................................................ 28
Mortgaged Property................................................................... 28
Mortgagor............................................................................ 28
Net Mortgage Rate.................................................................... 28
Non-Discount Mortgage Loan........................................................... 28
Nonrecoverable Advance............................................................... 28
Non-United States Person............................................................. 28
Notional Amount...................................................................... 29
Officers' Certificate................................................................ 29
Opinion of Counsel................................................................... 29
OTS.................................................................................. 29
Outstanding Mortgage Loan............................................................ 29
Overcollateralized................................................................... 29
-iv-
<PAGE>
Ownership Interest................................................................... 29
Pass-Through Rate.................................................................... 29
Payoff............................................................................... 30
Payoff Period........................................................................ 30
Percentage Interest.................................................................. 30
Permitted Encumbrances............................................................... 30
Permitted Instruments................................................................ 30
Permitted Transferee................................................................. 31
Person............................................................................... 31
Pooling REMIC........................................................................ 32
Prepayment Assumption................................................................ 32
Prepaid Monthly Payment.............................................................. 32
Prepayment Interest Shortfall........................................................ 32
Prepayment Period.................................................................... 32
Primary Hazard Insurance Policy...................................................... 32
Primary Mortgage Insurance Policy.................................................... 32
Principal Only Security.............................................................. 32
Principal Payment Amount............................................................. 32
Principal Prepayment................................................................. 32
Principal Prepayment Amount.......................................................... 33
Pro Rata Allocation.................................................................. 33
Purchase Price....................................................................... 33
Qualified Mortgage Insurer........................................................... 33
Rating Agency........................................................................ 33
Realized Loss........................................................................ 34
Record Date.......................................................................... 34
Reference Bank....................................................................... 34
Regular Security..................................................................... 34
REMIC................................................................................ 34
REMIC Provisions..................................................................... 34
Remittance Report.................................................................... 34
REO Acquisition...................................................................... 34
REO Disposition...................................................................... 35
REO Imputed Interest................................................................. 35
REO Proceeds......................................................................... 35
REO Property......................................................................... 35
Request for Release.................................................................. 35
Residual Security.................................................................... 35
Responsible Officer.................................................................. 35
Rule 144A............................................................................ 35
Security............................................................................. 35
Security Account..................................................................... 36
Security Account Deposit Date........................................................ 36
Security Distribution Amount......................................................... 36
-v-
<PAGE>
Security Owner....................................................................... 36
Security Principal Balance........................................................... 36
Security Register.................................................................... 38
Security Registrar................................................................... 38
Securityholder....................................................................... 38
Seller............................................................................... 38
Senior Percentage.................................................................... 38
Senior Security...................................................................... 39
Servicing Account.................................................................... 39
Servicing Advances................................................................... 39
Servicing Fee........................................................................ 39
Servicing Fee Rate................................................................... 39
Servicing Officer.................................................................... 39
Servicing Transfer................................................................... 39
Single Security...................................................................... 39
Special Hazard Amount................................................................ 40
Special Hazard Loss.................................................................. 40
Standard & Poor's.................................................................... 40
Startup Day.......................................................................... 40
Stated Principal Balance............................................................. 40
Step Down Percentage................................................................. 40
Strip Security....................................................................... 41
Subaccount........................................................................... 41
Subaccount Distribution Amount....................................................... 41
Subaccount Principal Balance......................................................... 41
Subordinate Liquidation Amount....................................................... 41
Subordinate Percentage............................................................... 41
Subordinate Principal Distribution Amount............................................ 41
Subordinate Security................................................................. 42
Sub-Servicer......................................................................... 42
Sub-Servicer Remittance Date......................................................... 42
Sub-Servicing Account................................................................ 42
Sub-Servicing Agreement.............................................................. 42
Tax Returns.......................................................................... 42
Transfer............................................................................. 43
Transferor........................................................................... 43
Trust................................................................................ 43
Trust Fund........................................................................... 43
Trustee.............................................................................. 43
Undercollateralized.................................................................. 43
Uninsured Cause...................................................................... 43
United States Person................................................................. 43
Voting Rights........................................................................ 44
-vi-
<PAGE>
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF SECURITIES
SECTION 2.01. Conveyance of Mortgage Loans................................................ 45
SECTION 2.02. Acceptance of the Trust Fund by the Trustee................................. 48
SECTION 2.03. Representations, Warranties and Covenants of the Master
Servicer and the Seller..................................................... 50
SECTION 2.04. Representations and Warranties of the Loan Seller........................... 52
SECTION 2.05. Issuance of Securities Evidencing Interests in the Trust
Fund........................................................................ 63
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
SECTION 3.01. Master Servicer to Act as Master Servicer................................... 64
SECTION 3.02. Sub-Servicing Agreements Between Master Servicer and
Sub-Servicers............................................................... 65
SECTION 3.03. Successor Sub-Servicers..................................................... 66
SECTION 3.04. Liability of the Master Servicer............................................ 66
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and
Trustee or Securityholders.................................................. 66
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements
by Trustee.................................................................. 67
SECTION 3.07. Collection of Certain Mortgage Loan Payments................................ 67
SECTION 3.08. Sub-Servicing Accounts...................................................... 68
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Accounts.......................................................... 68
SECTION 3.10. Custodial Account........................................................... 69
SECTION 3.11. Permitted Withdrawals From the Custodial Account............................ 70
SECTION 3.12. Permitted Instruments....................................................... 71
SECTION 3.13. Maintenance of Primary Hazard Insurance..................................... 71
SECTION 3.14. Enforcement of Due-on-Sale Clauses; Assumption
Agreements.................................................................. 72
SECTION 3.15. Realization Upon Defaulted Mortgage Loans................................... 73
SECTION 3.16. Trustee to Cooperate; Release of Mortgage Files............................. 74
SECTION 3.17. Servicing Compensation...................................................... 76
SECTION 3.18. Maintenance of Certain Servicing Policies................................... 76
SECTION 3.19. Annual Statement as to Compliance........................................... 76
SECTION 3.20. Annual Independent Public Accountants' Servicing
Statement................................................................... 77
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<PAGE>
SECTION 3.21. Access to Certain Documentation............................................. 77
SECTION 3.22. Title, Conservation and Disposition of REO Property......................... 78
SECTION 3.23. Additional Obligations of the Master Servicer............................... 80
SECTION 3.24. Excess Proceeds Account..................................................... 81
ARTICLE IV
PAYMENTS TO SECURITYHOLDERS
SECTION 4.01. Security Account; Distributions............................................. 84
SECTION 4.02. Statements to Securityholders............................................... 95
SECTION 4.03. Remittance Reports; Advances by the Master Servicer......................... 98
SECTION 4.04. Allocation of Realized Losses...............................................100
SECTION 4.05. Information Reports to be Filed by the Master Servicer......................101
SECTION 4.06. Compliance with Withholding Requirements....................................101
ARTICLE V
THE SECURITIES
SECTION 5.01. The Securities..............................................................102
SECTION 5.02. Registration of Transfer and Exchange of Securities.........................104
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Securities.............................109
SECTION 5.04. Persons Deemed Owners.......................................................109
ARTICLE VI
THE SELLER AND THE MASTER SERVICER
SECTION 6.01. Liability of the Seller and the Master Servicer.............................110
SECTION 6.02. Merger, Consolidation or Conversion of the Seller or the
Master Servicer.............................................................110
SECTION 6.03. Limitation on Liability of the Seller, the Master Servicer
and Others..................................................................110
SECTION 6.04. Limitation on Resignation of the Master Servicer............................111
ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default...........................................................113
SECTION 7.02. Trustee to Act; Appointment of Successor....................................115
SECTION 7.03. Notification to Securityholders.............................................116
SECTION 7.04. Waiver of Events of Default.................................................116
-viii-
<PAGE>
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee...........................................................117
SECTION 8.02. Certain Matters Affecting the Trustee.......................................118
SECTION 8.03. Trustee Not Liable for Securities or Mortgage Loans.........................119
SECTION 8.04. Trustee May Own Securities..................................................120
SECTION 8.05. Master Servicer to Pay Trustee's Fees.......................................120
SECTION 8.06. Eligibility Requirements for Trustee........................................120
SECTION 8.07. Resignation and Removal of the Trustee......................................121
SECTION 8.08. Successor Trustee...........................................................122
SECTION 8.09. Merger or Consolidation of Trustee..........................................122
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee...............................123
ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation of All
Mortgage Loans..............................................................125
SECTION 9.02. Additional Termination Requirements.........................................127
ARTICLE X
REMIC PROVISIONS
SECTION 10.01. REMIC Administration........................................................128
SECTION 10.02. Prohibited Transactions and Activities......................................131
SECTION 10.03. Master Servicer and Trustee Indemnification.................................131
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment...................................................................133
SECTION 11.02. Recordation of Agreement; Counterparts......................................134
SECTION 11.03. Limitation on Rights of Securityholders.....................................135
SECTION 11.04. Governing Law...............................................................135
SECTION 11.05. Notices.....................................................................136
SECTION 11.06. Severability of Provisions..................................................136
SECTION 11.07. Successors and Assigns; Third Party Beneficiary.............................136
SECTION 11.08. Article and Section Headings................................................136
SECTION 11.09. Notice to Rating Agencies and Securityholder................................137
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<PAGE>
EXHIBITS
Exhibit A Form of Senior Security
Exhibit B-1 Form of Class B Security
Exhibit B-2 Form of Residual Security
Exhibit C Form of Trustee Initial Certification
Exhibit D Form of Trustee Final Certification
Exhibit E [Reserved]
Exhibit F-1 Form of Request for Release
Exhibit F-2 Form of Request for Release for Mortgage Loans Paid in Full
Exhibit G-1 Form of Investor Representation Letter
Exhibit G-2 Form of Transferor Representation Letter
Exhibit G-3 Transferee Affidavit and Agreement
Exhibit G-4 Transferor Certificate
Exhibit G-5 Form of Investor Representation Letter for Insurance
Companies/Bank Collective Investment Funds
Exhibit H Form of Rule 144A Investment Representation
Exhibit I Mortgage Loan Schedule
Exhibit J Schedule of Discount Fractions
Exhibit K Loan Data Requirements - Monthly Data
-x-
</TABLE>
<PAGE>
This Pooling and Servicing Agreement, dated and effective as
of April 1, 1997, among Financial Asset Securitization, Inc., as Seller (the
"Seller"), North American Mortgage Company, as Master Servicer (in such
capacity, the "Master Servicer"), and as Loan Seller (in such capacity, the
"Loan Seller") and The First National Bank of Chicago, as Trustee (the
"Trustee").
PRELIMINARY STATEMENT:
The Seller intends to sell mortgage participation securities
(collectively, the "Securities"), to be issued hereunder in multiple classes,
which in the aggregate will evidence the entire beneficial ownership interest in
the Mortgage Loans (as defined herein). As provided herein, the Trustee will
cause an election to be made to treat the entire segregated pool of assets
subject to this Agreement (including the Mortgage Loans) as two real estate
mortgage investment conduits (each a "REMIC") for federal income tax purposes,
consisting of a "lower tier" or "pooling" REMIC (the "Pooling REMIC") and an
"upper tier" or "issuing" REMIC (the "Issuing REMIC"). The Class FXS, Class
FXA-1, Class FXA-2, Class FXA-3, Class FXA-4, Class FXA-5, Class FXA-6, Class
FXA-7, Class FXA-8, Class FXA-9, Class FXP, Class S, Class A-1, Class A-2, Class
A-3, Class A-4, Class P, Class B-1, Class B-2, Class B-3, Class B-4, Class B-5
and Class B-6 Securities will represent ownership of the "regular interests" in
the Issuing REMIC, the Class RP Securities will represent ownership of the
"residual interest" in the Pooling REMIC and the Class R Securities will
represent ownership of the "residual interests" in the Issuing REMIC.
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<PAGE>
The following table sets forth the designation, Pass-Through Rate,
Initial Security Principal Balance and the initial percentage of the Trust Fund
(as defined herein) for each Class of Securities comprising the interests in the
Trust Fund created hereunder.
<TABLE>
<CAPTION>
<S> <C>
AGGREGATE INITIAL
PASS- SECURITY PRINCIPAL
THROUGH BALANCE OR
DESIGNATION TYPE RATE NOTIONAL AMOUNT
Class FXS Interest Only 7.75% $ 9,750,681
Class FXA-1 Senior 6.90% 15,058,594
Class FXA-2 Senior 7.75% 20,500,000
Class FXA-3 Senior 7.35% 11,623,696
Class FXA-4 Senior 7.50% 13,200,375
Class FXA-5 Senior 7.75% 5,125,000
Class FXA-6 Senior 7.75% 4,001,000
Class FXA-7 Senior 7.75% 1,000,000
Class FXA-8 Floater Variable(1) 27,665,835
Class FXA-9 Inverse Floater Variable(2) 27,665,835
Class FXP Principal Only 0.00% 81,389
Class S Interest Only 7.75% 1,201,718
Class A-1 Senior 7.75% 43,444,391
Class A-2 Senior 7.75% 6,962,000
Class A-3 Senior 7.75% 1,951,000
Class A-4 Senior 7.75% 13,700,000
Class P Principal Only 0.00% 1,087,731
Class B-1 Subordinate 7.75% 5,190,778
Class B-2 Subordinate 7.75% 2,111,503
Class B-3 Subordinate 7.75% 1,319,689
Class B-4 Subordinate 7.75% 791,813
Class B-5 Subordinate 7.75% 439,897
Class B-6 Subordinate 7.75% 703,835
Class RP Residual 7.75% 25
Class R Residual 7.75% 25
</TABLE>
(1) The Pass-Through Rate for the Class FXA-8 Securities will be equal to a
variable per annum rate equal to LIBOR plus 0.45%, subject to a maximum
Pass-Through Rate of 8.50% per annum. The Pass-Through Rate for the initial
Distribution Date shall be 5.95%.
(2) The Pass-Through Rate for the Class FXA-9 Securities will be equal to a
variable per annum rate equal to (i) 8.05% minus (ii) LIBOR subject to a minimum
Pass-Through Rate of 0.00% per annum. The Pass-Through Rate for the initial
Distribution Date shall be 2.55%.
As of the Cut-off Date, the Mortgage Loans have an aggregate
Stated Principal Balance equal to $175,958,578.
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<PAGE>
The following table sets forth the designation, Pass-Through
Rates, Initial Subaccount Principal Balances and Corresponding Classes of
Securities for the Subaccounts, which represent the regular interests in the
Pooling REMIC (the "Pooling REMIC Regular Interests").
<TABLE>
<CAPTION>
AGGREGATE INITIAL
PASS- SECURITY PRINCIPAL CORRESPONDING
THROUGH BALANCES OR CLASS(ES) OF
DESIGNATION RATE NOTIONAL AMOUNTS SECURITIES
<S> <C>
Class FXS Subaccount 7.75% $9,750,681 Class FXS
Class FXA-1 Subaccount 6.90% 15,058,594 Class FXA-1
Class FXA-2 Subaccount 7.75% 20,500,000 Class FXA-2
Class FXA-3 Subaccount 7.35% 11,623,696 Class FXA-3
Class FXA-4 Subaccount 7.50% 13,200,375 Class FXA-4
Class FXA-5 Subaccount 7.75% 5,125,000 Class FXA-5
Class FXA-6 Subaccount 7.75% 4,001,000 Class FXA-6
Class FXA-7 Subaccount 7.75% 1,000,000 Class FXA-7
Class FXA-8 Subaccount 8.50% 27,665,835 Class FXA-8, Class FXA-9
Class FXP Subaccount Principal Only 81,389 Class FXP
Class S Subaccount 7.75% 1,201,718 Class S
Class A-1 Subaccount 7.75% 43,444,391 Class A-1
Class A-2 Subaccount 7.75% 6,962,000 Class A-2
Class A-3 Subaccount 7.75% 1,951,000 Class A-3
Class A-4 Subaccount 7.75% 13,700,000 Class A-4
Class P Subaccount Principal Only 1,087,731 Class P
Class B-1 Subaccount 7.75% 5,190,778 Class B-1
Class B-2 Subaccount 7.75% 2,111,503 Class B-2
Class B-3 Subaccount 7.75% 1,319,689 Class B-3
Class B-4 Subaccount 7.75% 791,813 Class B-4
Class B-5 Subaccount 7.75% 439,897 Class B-5
Class B-6 Subaccount 7.75% 703,835 Class B-6
Class R Subaccount 7.75% 25 Class R
</TABLE>
In consideration of the mutual agreements herein contained,
the Seller, the Master Servicer and the Trustee agree as follows:
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<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement, the following words and
phrases, unless the context otherwise requires, shall have the meanings
specified in this Article.
"Accepted Servicing Practices": With respect to any Mortgage
Loan, those mortgage servicing practices (including collection procedures) of
prudent mortgage banking institutions which service mortgage loans of the same
type as such Mortgage Loan, and which are in accordance with FNMA servicing
practices and procedures, for MBS pool mortgages, as defined in the FNMA Guides
including future updates.
"Accrued Interest": With respect to each Distribution Date, as
to any Security of any Class (other than the Class FXP Securities and Class P
Securities), and any Subaccount of any Class (other than the Class FXP
Subaccount and the Class P Subaccount) one month's interest accrued at the
related Pass-Through Rate on the Security Principal Balance, Subaccount
Principal Balance or Notional Amount, as the case may be, immediately prior to
such Distribution Date for the related Interest Accrual Period. Accrued Interest
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months. In each case Accrued Interest on any such Class of Securities or
Subaccounts, as the case may be, will be reduced by the amount of (i) Prepayment
Interest Shortfalls, if any, which are not covered by payments by the Master
Servicer pursuant to Section 3.23 with respect to such Distribution Date, (ii)
the interest portion (adjusted to the Net Mortgage Rate) of Realized Losses
(including Excess Special Hazard Losses, Excess Fraud Losses, Excess Bankruptcy
Losses and Extraordinary Losses), not allocated solely to the Subordinate
Securities pursuant to Section 4.04, (iii) the interest portion of Advances
previously made with respect to a Mortgage Loan or REO Property which remained
unreimbursed following the Cash Liquidation or REO Disposition of such Mortgage
Loan or REO Property that were made with respect to delinquencies that
ultimately constituted Excess Special Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses or Extraordinary Losses, and (iv) any interest shortfalls due
to interest that is not collectible from the Mortgagor pursuant to the Soldiers'
and Sailors' Civil Relief Act of 1940, as amended, or similar legislation or
regulations as in effect from time to time, pro rata in proportion to their
respective amounts of Accrued Interest which would have resulted absent such
reductions. In addition to that portion of the reductions described in the
preceding sentence that are allocated to the Subordinate Securities, Accrued
Interest on the Subordinate Securities will be reduced by the interest portion
(adjusted to the Net Mortgage Rate) of the portion of Realized Losses that are
allocated solely to the Subordinate Securities as applicable, pursuant to
Section 4.04 and any such reduction shall be allocated to the Corresponding
Classes of Subaccounts.
-4-
<PAGE>
"Advance": As to any Mortgage Loan, any Servicing Advance or
any advance made by the Master Servicer on any Distribution Date pursuant to
Section 4.03.
"Advance Reimbursement Amount": For any Distribution Date, the
amount of reimbursement owed to the Master Servicer for any Advances previously
made with respect to any Mortgage Loan or REO Property which remain unreimbursed
in whole or in part following the Cash Liquidation or REO Disposition of such
Mortgage Loan or REO Property, minus any such Advances that were made with
respect to delinquencies that ultimately constituted Excess Special Hazard
Losses, Excess Fraud Losses, Excess Bankruptcy Losses, or Extraordinary Losses.
"Agreement": This Pooling and Servicing Agreement and all
amendments hereof.
"Anniversary": Each anniversary of April 1, 1997.
"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.
"Available Distribution Amount": With respect to any
Distribution Date for each Loan Group, for purposes of Distributions on the
Securities, an amount equal to (a) the sum of (i) the balance on deposit in the
Custodial Account relating to such Loan Group as of the close of business on the
related Determination Date and (ii) the aggregate amount of (x) any Advances
(other than Servicing Advances) made with respect to such Loan Group, (y) all
required transfers pursuant to Section 3.22, which relate to such Loan Group and
(z) all amounts required to be paid by the Master Servicer with respect to such
Loan Group pursuant to Sections 3.13 and 3.23 by deposits into the Security
Account on the immediately preceding Security Account Deposit Date, reduced by
(b) the sum, as of the close of business on the related Determination Date, of
(i) Monthly Payments with respect to such Loan Group collected but due during a
Due Period subsequent to the Due Period relating to such Distribution Date, (ii)
all interest or other income earned on deposits relating to such Loan Group in
the Custodial Account, (iii) any other amounts reimbursable or payable to the
Master Servicer or any Sub-Servicer pursuant to Section 3.11, which relate to
such Loan Group and (iv) any unscheduled payments with respect to such Loan
Group, including Insurance Proceeds, Liquidation Proceeds, Principal
Prepayments, REO Proceeds and the proceeds of Mortgage Loan purchases made
pursuant to Section 2.02, 2.04 or 3.22, in each case received after the
Prepayment Period relating to such Distribution Date; provided, however, that if
(i) either the Class FX Subaccounts or the Class II Subaccounts are
Overcollateralized, and (ii) either the Class FX Subaccounts or the Class II
Subaccounts are Undercollateralized, the Available Distribution Amount with
respect to the Loan Group related to the Undercollateralized Subaccounts shall
be increased in an amount equal to 1/12th of 7.75% of the amount by which the
aggregate Subaccount Principal Balance for such Undercollateralized Subacounts
exceeds the aggregate Stated Principal Balance of the Mortgage Loans in such
Loan Group, plus any shortfall in interest on such Subaccounts for any prior
distribution Date, up to
-5-
<PAGE>
the Available Distribution Amount remaining with respect to the
Overcollateralized Subaccounts after the distributions of interest deemed to be
made thereon pursuant to Sections 4.01(b)(1)(a)(i) and (a)(ii) or Sections
4.01(b)(1)(b)(i) and (b)(ii), as applicable, and the Available Distribution
Amount with respect to the Loan Group relating to the Overcollateralized
Subaccounts shall be correspondingly reduced by such amount. Notwithstanding the
foregoing, with respect to the Subordinate Securities, "Available Distribution
Amount" shall mean, with respect to any Distribution Date, the sum of (x) the
Available Distribution Amount for Loan Group I for such Distribution Date, plus
(y) the Available Distribution Amount for Loan Group II for such Distribution
Date, in each case, after any distributions required to made prior to such
Classes of Subaccounts on such Distribution Date pursuant to Section 4.01(b).
"Bankruptcy Amount": As of any date of determination, an
amount, equal to the excess, if any, of (1) $100,000.00 (the initial "Bankruptcy
Amount") over (2) the aggregate amount of Bankruptcy Losses allocated solely to
the Subordinate Securities prior to such date in accordance with Section 4.04.
The Bankruptcy Amount may be further reduced by the Seller
(including accelerating the manner in which such coverage is reduced) provided
that prior to any such reduction, the Seller shall obtain written confirmation
from each Rating Agency that such reduction shall not adversely affect the
then-current rating assigned to the Securities by each Rating Agency and shall
provide a copy of such written confirmation to the Trustee.
"Bankruptcy Code": The Bankruptcy Code of 1978, as amended.
"Bankruptcy Loss": With respect to any Mortgage Loan, a
Realized Loss resulting from a Deficient Valuation or Debt Service Reduction.
"Benefit Plan Opinion": The Opinion of Counsel described in
Section 5.02(d).
"Book-Entry Security": Any Security 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 institutions in California, New York or Illinois (and such
other state or states in which the Custodial Account or the Security Account are
at the time located) or in the city in which the Corporate Trust Office of the
Trustee is located are authorized or obligated by law or executive order to
close.
"Cash Liquidation": As to any defaulted Mortgage Loan other
than a Mortgage Loan as to which an REO Disposition occurred, the final receipt
by or on behalf of the Master Servicer of all Insurance Proceeds, Liquidation
Proceeds and other payments or cash recoveries which the Master Servicer
reasonably and in good faith expects to be finally recoverable with respect to
such Mortgage Loan.
-6-
<PAGE>
"Class": Collectively, all of the Securities bearing the same
designation.
"Class A Liquidation Amount": The aggregate of, for each Group
II Mortgage Loan which became a Liquidated Loan during the calendar month
preceding the month of the Distribution Date, the lesser of (i) the Class A
Percentage of the principal balance of such Mortgage Loan (exclusive of the
Discount Fraction thereof, with respect to any Group II Discount Mortgage Loan)
and (ii) the Class A Prepayment Percentage of the Liquidation Principal with
respect to such Mortgage Loan.
"Class A Percentage": With respect to any Distribution Date,
the lesser of (i) 100% and (ii) a fraction, expressed as a percentage, the
numerator of which is the aggregate Security Principal Balance of the Class A
Securities, Class R Securities and Class RP Securities immediately prior to such
Distribution Date and the denominator of which is the aggregate Stated Principal
Balance of all of the Group II Mortgage Loans (or related REO Properties) (other
than the related Discount Fraction of each Group II Discount Mortgage Loan)
immediately prior to such Distribution Date.
"Class A Prepayment Percentage": The Class A Prepayment
Percentage shall equal, with respect to any Distribution Date, the percentage
indicated below:
<TABLE>
<CAPTION>
Distribution Date Class A Prepayment Percentage
<S> <C>
May 1997 through April 2002 100%
May 2002 through April 2003 Class A Percentage, plus 70% of the difference
between 100% and the Class A Percentage
May 2003 through April 2004 Class A Percentage, plus 60% of the difference
between 100% and the Class A Percentage
May 2004 through April 2005 Class A Percentage, plus 40% of the difference
between 100% and the Class A Percentage
May 2005 through April 2006 Class A Percentage, plus 20% of the difference
between 100% and the Class A Percentage
May 2006 and thereafter Class A Percentage;
</TABLE>
Any Scheduled reduction to the Class A Prepayment Percentage described above
shall not be made as of any Distribution Date, unless both (i)(X) the average
outstanding principal balance of the Group II Mortgage Loans delinquent 60 days
or more over the last six months, as a percentage of the Class B Loan Group II
Component Balance, is less than 50% or (Y) the average outstanding principal
balance of the Group II Mortgage Loans delinquent 60 days or more over the last
six months, as a percentage of the aggregate average outstanding principal
balance of all Group II Mortgage Loans over the last six months, does not exceed
2% and (ii) realized losses on the Group II Mortgage Loans to date for such
Distribution Date, if occurring during the sixth, seventh, eighth, ninth or
tenth year (or any year thereafter) after the first Distribution Date, are less
than 30%, 35%, 40%, 45% or 50%, respectively, of the initial Class
-7-
<PAGE>
B Group II Loan Group Component Balance. Notwithstanding the above, if on any
Distribution Date, the Class FXA Percentage exceeds the initial Class FXA
Percentage, then the Class A Prepayment Percentage for each such Distribution
Date will equal 100%. Further, upon the reduction of the Class A Subaccount
Principal Balance of all of the Class A Subaccounts to zero, the Class A
Prepayment Percentage shall equal zero.
"Class A Principal Distribution Amount": As to any
Distribution Date, the sum of (i) the Class A Percentage of the Principal
Payment Amount for Group II (exclusive of the portion thereof attributable to
the Class P Distribution Amount), (ii) the Class A Prepayment Percentage of the
Principal Prepayment Amount for Group II (exclusive of the portion thereof
attributable to the Class FXP Principal Distribution Amount), and (iii) the
Class A Liquidation Amount.
"Class A Security": Any one of the Class A-1 Securities, Class
A-2 Securities, Class A-3 Securities or the Class A-4 Securities.
"Class A Subaccounts": The Class A-1 Subaccount, the Class A-2
Subaccount, the Class A-3 Subaccount and the Class A-4 Subaccount.
"Class A-1 Security": Any one of the Class A-1 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
"Class A-2 Security": Any one of the Class A-2 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
"Class A-3 Security": Any one of the Class A-3 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
"Class A-4 Liquidation Amount": The aggregate of, for each
Group II Mortgage Loan which became a Liquidated Loan during the calendar month
preceding the month of the Distribution Date, the lesser of (i) the Class A-4
Percentage of the principal balance of such Mortgage Loan (exclusive of the
Discount Fraction thereof, if applicable) and (ii) the Class A-4 Percentage on
any Distribution Date occurring prior to the fifth anniversary of the first
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<PAGE>
Distribution Date, and the Class A-4 Prepayment Percentage on any Distribution
Date thereafter, in each case, of the Liquidation Principal with respect to such
Mortgage Loan.
"Class A-4 Percentage": For any Distribution Date, the lesser
of (i) 100% and (ii) the Class A-4 Subaccount Principal Balance divided by the
aggregate Stated Principal Balance of the Group II Mortgage Loans (less the
Class P Subaccount Principal Balance), in each case immediately prior to the
Distribution Date.
"Class A-4 Prepayment Percentage": The product of (a) the
Class A-4 Percentage and (b) the Step Down Percentage; provided, however, if on
any Distribution Date the Security Principal Balances of the Class A Securities,
other than the Class A-4 Securities, have been reduced to zero, the Class A-4
Prepayment Percentage shall be equal to the Class A Prepayment Percentage for
such Distribution Date.
"Class A-4 Principal Distribution Amount": For any
Distribution Date, the sum of (i) the Class A-4 Percentage of the Principal
Payment Amount for Group II (exclusive of the portion thereof attributable to
the Class P Principal Distribution Amount), (ii) the Class A-4 Prepayment
Percentage of the Principal Prepayment Amount for Group II (exclusive of the
portion thereof attributable to the Class P Principal Distribution Amount), and
(iii) the Class A-4 Liquidation Amount.
"Class A-4 Security": Any one of the Class A-4 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
"Class B Group I Loan Group Component Balance": At any time
with respect to the Group I Mortgage Loans, the then outstanding aggregate
Stated Principal Balance of the Group I Mortgage Loans minus the then
outstanding Security Principal Balance of the Class FX Securities.
"Class B Group II Loan Group Component Balance": At any time
with respect to the Group II Mortgage Loans, the then outstanding aggregate
Stated Principal Balance of the Group II Mortgage Loans minus the then
outstanding aggregate Security Principal Balance of the Class II Securities.
"Class B Percentage": The sum of the Class B-1 Percentage,
Class B-2 Percentage, Class B-3 Percentage, Class B-4 Percentage, Class B-5
Percentage and Class B-6 Percentage.
-9-
<PAGE>
"Class B Subaccount": The Class B-1 Subaccount, the Class B-2
Subaccount, the Class B-3 Subaccount, the Class B-4 Subaccount, the Class B-5
Subaccount and the Class B-6 Subaccount.
"Class B-1 Percentage": With respect to any Distribution Date,
the lesser of 100% and a fraction, expressed as a percentage, the numerator of
which is the Security Principal Balance of the Class B-1 Securities immediately
prior to such Distribution Date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) (other than the aggregate of the related Discount Fraction of each
such Stated Principal Balance) immediately prior to such Distribution Date.
"Class B-1 Security": Any one of the Class B-1 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B, subordinate to the Senior Securities with respect
to distributions and the allocation of Realized Losses as set forth in Section
4.04, and evidencing an interest designated as a "regular interest" in the
Issuing REMIC for purposes of the REMIC Provisions.
"Class B-2 Percentage": With respect to any Distribution Date,
the lesser of 100% and a fraction, expressed as a percentage, the numerator of
which is the Security Principal Balance of the Class B-2 Securities immediately
prior to such Distribution Date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) (other than the aggregate of the related Discount Fraction of each
such Stated Principal Balance) immediately prior to such Distribution Date.
"Class B-2 Security": Any one of the Class B-2 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B, subordinate to the Senior Securities and the Class
B-1 Securities with respect to distributions of interest and, with respect to
the Senior Securities, principal and the allocation of Realized Losses as set
forth in Section 4.04, and evidencing an interest designated as a "regular
interest" in the Issuing REMIC for purposes of the REMIC Provisions.
"Class B-3 Percentage": With respect to any Distribution Date,
the lesser of 100% and a fraction, expressed as a percentage, the numerator of
which is the Security Principal Balance of the Class B-3 Securities immediately
prior to such Distribution Date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) (other than the aggregate of the related Discount Fraction of each
such Stated Principal Balance) immediately prior to such Distribution Date.
"Class B-3 Security": Any one of the Class B-3 Securities,
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B, subordinate to the Senior Securities, Class B-1
Securities and Class B-2 Securities with respect to distributions of interest
and, with respect to the Senior Securities, principal and the
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<PAGE>
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
"Class B-4 Percentage": With respect to any Distribution Date,
the lesser of 100% and a fraction, expressed as a percentage, the numerator of
which is the Security Principal Balance of the Class B-4 Securities immediately
prior to such Distribution Date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) (other than the aggregate of the related Discount Fraction of each
such Stated Principal Balance) immediately prior to such Distribution Date.
"Class B-4 Security": Any one of the Class B-4 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B, subordinate to the Senior Securities and the Class
B-1 Securities, Class B-2 Securities and Class B-3 Securities with respect to
distributions of interest and, with respect to the Senior Securities, principal
and the allocation of Realized Losses as set forth in Section 4.04, and
evidencing an interest designated as a "regular interest" in the Issuing REMIC
for purposes of the REMIC Provisions.
"Class B-5 Percentage": With respect to any Distribution Date,
the lesser of 100% and a fraction, expressed as a percentage, the numerator of
which is the Security Principal Balance of the Class B-5 Securities immediately
prior to such Distribution Date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) (other than the aggregate of the related Discount Fraction of each
such Stated Principal Balance) immediately prior to such Distribution Date.
"Class B-5 Security": Any one of the Class B-5 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B, subordinate to the Senior Securities and the Class
B-1 Securities, Class B-2 Securities, Class B-3 Securities and Class B-4
Securities with respect to distributions of interest and, with respect to the
Senior Securities, principal and the allocation of Realized Losses as set forth
in Section 4.04, and evidencing an interest designated as a "regular interest"
in the Issuing REMIC for purposes of the REMIC Provisions.
"Class B-6 Percentage": With respect to any Distribution Date,
the lesser of 100% and a fraction, expressed as a percentage, the numerator of
which is the Security Principal Balance of the Class B-6 Securities immediately
prior to such Distribution Date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) (other than the aggregate of the related Discount Fraction of each
such Stated Principal Balance) immediately prior to such Distribution Date.
"Class B-6 Security": Any one of the Class B-6 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B, subordinate to the Senior Securities and the Class
B-1 Securities, Class B-2 Securities, Class B-3 Securities,
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<PAGE>
Class B-4 Securities and Class B-5 Securities with respect to distributions of
interest and, with respect to the Senior Securities, principal and the
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
"Class FX Security": Any one of the Class FXA Securities, the
Class FXP Securities or the Class FXS Securities.
"Class FX Subaccount": Any or all of the Class FXA
Subaccounts, the Class FXP Subaccount and the Class FXS Subaccount, as
appropriate.
"Class FXA Liquidation Amount": The aggregate of, for each
Group I Mortgage Loan which became a Liquidated Loan during the calendar month
preceding the month of the Distribution Date, the lesser of (i) the Class FXA
Percentage of the principal balance of such Mortgage Loan (exclusive of the
Discount Fraction thereof, with respect to any Group I Discount Mortgage Loan)
and (ii) the Class FXA Prepayment Percentage of the Liquidation Principal with
respect to such Mortgage Loan.
"Class FXA Percentage": With respect to any Distribution Date,
the lesser of (i) 100% and (ii) a fraction, expressed as a percentage, the
numerator of which is the aggregate Security Principal Balance of the Class FXA
Securities immediately prior to such Distribution Date and the denominator of
which is the aggregate Stated Principal Balance of all of the Group I Mortgage
Loans (or related REO Properties) (other than the related Discount Fraction of
each Group I Discount Mortgage Loan) immediately prior to such Distribution
Date.
"Class FXA Prepayment Percentage": The Class FXA Prepayment
Percentage shall equal, with respect to any Distribution Date, the percentage
indicated below:
<TABLE>
<CAPTION>
Distribution Date Class FXA Prepayment Percentage
<S> <C>
May 1997 through April 2002 100%
May 2002 through April 2003 Class FXA Percentage, plus 70% of the difference
between 100% and the Class FXA Percentage
May 2003 through April 2004 Class FXA Percentage, plus 60% of the difference
between 100% and the Class FXA Percentage
May 2004 through April 2005 Class FXA Percentage, plus 40% of the difference
between 100% and the Class FXA Percentage
May 2005 through April 2006 Class FXA Percentage, plus 20% of the difference
between 100% and the Class FXA Percentage
May 2006 and thereafter Class FXA Percentage;
</TABLE>
Any scheduled reduction to the Class FXA Prepayment Percentage described above
shall not be made as of any Distribution Date unless both (i)(X) the average
outstanding principal balance
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of the Group I Mortgage Loans delinquent 60 days or more over the last six
months, as a percentage of the Class B Loan Group I Component Balance, is less
than 50% or (Y) the average outstanding principal balance of the Group I
Mortgage Loans delinquent 60 days or more over the last six months, as a
percentage of the aggregate average outstanding principal balance of all Group I
Mortgage Loans over the last six months, does not exceed 2% and (ii) realized
losses on the Group I Mortgage Loans to date for such Distribution Date, if
occurring during the sixth, seventh, eighth, ninth or tenth year (or any year
thereafter) after the first Distribution Date, are less than 30%, 35%, 40%, 45%
or 50%, respectively, of the initial Class B Group I Loan Group Component
Balance. Notwithstanding the above, if on any Distribution Date, the Class A
Percentage exceeds the initial Class A Percentage, then the Class FXA Prepayment
Percentage for each such Distribution Date will equal 100%. Further, upon the
reduction of the aggregate Subaccount Principal Balance of the Class FXA
Subaccounts to zero, the Class FXA Prepayment Percentage will equal 0%.
"Class FXA Principal Distribution Amount": As to any
Distribution Date, the sum of (i) the Class FXA Percentage of the Principal
Payment Amount for Group I (exclusive of the portion thereof attributable to the
Class FXP Distribution Amount), (ii) the Class FXA Prepayment Percentage of the
Principal Prepayment Amount for Group I (exclusive of the portion thereof
attributable to the Class FXP Principal Distribution Amount), and (iii) the
Class FXA Liquidation Amount.
"Class FXA Security": Any one of the Class FXA-1 Securities,
Class FXA-2 Securities, Class FXA-3 Securities, Class FXA-4 Securities, Class
FXA-5 Securities, Class FXA-6 Securities, Class FXA-7 Securities, Class FXA-8
Securities or Class FXA-9 Securities.
"Class FXA Subaccounts": The Class FXA-1 Subaccount, the Class
FXA-2 Subaccount, the Class FXA-3 Subaccount, the Class FXA-4 Subaccount, the
Class FXA-5 Subaccount, the Class FXA-6 Subaccount, the Class FXA-7 Subaccount
and the Class FXA-8 Subaccount.
"Class FXA-1 Security": Any one of the Class FXA-1 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
"Class FXA-2 Liquidation Amount": The aggregate of, for each
Group I Mortgage Loan which became a Liquidated Loan during the calendar month
preceding the month of the Distribution Date, the lesser of (i) the Class FXA-2
Percentage of the principal balance of such Mortgage Loan (exclusive of the
Discount Fraction thereof, if applicable) and (ii) the Class FXA-2 Percentage on
any Distribution Date occurring prior to the fifth anniversary of the first
Distribution Date, and the Class FXA-2 Prepayment Percentage on any Distribution
Date thereafter, in each case, of the Liquidation Principal with respect to such
Mortgage Loan.
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<PAGE>
"Class FXA-2 Percentage": For any Distribution Date, the
lesser of (i) 100% and (ii) the Class FXA-2 Subaccount Principal Balance divided
by the aggregate Stated Principal Balance of the Group I Mortgage Loans (less
the Class FXP Subaccount Principal Balance), in each case immediately prior to
the Distribution Date.
"Class FXA-2 Prepayment Percentage": The product of (a) the
Class FXA-2 Percentage and (b) the Step Down Percentage; provided, however, if
on any Distribution Date the Security Principal Balances of the Class FXA
Securities, other than the Class FXA-2 Securities, have been reduced to zero,
the Class FXA-2 Prepayment Percentage shall be equal to the Class FXA Prepayment
Percentage for such Distribution Date.
"Class FXA-2 Principal Distribution Amount": For any
Distribution Date, the sum of (i) the Class FXA-2 Percentage of the Principal
Payment Amount for Group I (exclusive of the portion thereof attributable to the
Class FXP Principal Distribution Amount), (ii) the Class FXA-2 Prepayment
Percentage of the Principal Prepayment Amount for Group I (exclusive of the
portion thereof attributable to the Class FXP Principal Distribution Amount),
and (iii) the Class FXA-2 Liquidation Amount.
"Class FXA-2 Security": Any one of the Class FXA-2 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
"Class FXA-3 Security": Any one of the Class FXA-3 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
"Class FXA-4 Security": Any one of the Class FXA-4 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
"Class FXA-5 Security": Any one of the Class FXA-5 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
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<PAGE>
"Class FXA-6 Security": Any one of the Class FXA-6 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
"Class FXA-7 Security": Any one of the Class FXA-7 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
"Class FXA-8 Security": Any one of the Class FXA-8 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
"Class FXA-9 Notional Amount": The Security Principal Balance
of the Class FXA-8 Securities as of the immediately preceding Distribution Date
after giving effect to any allocation of Realized Losses or distributions of
principal.
"Class FXA-9 Security": Any one of the Class FXA-9 Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and the
allocation of Realized Losses as set forth in Section 4.04, and evidencing an
interest designated as a "regular interest" in the Issuing REMIC for purposes of
the REMIC Provisions.
"Class FXP Distribution Amount": With respect to any
Distribution Date, an amount equal to the aggregate for all Group I Discount
Mortgage Loans of the product for each Group I Discount Mortgage Loan of the
applicable Discount Fraction and the sum of (x) scheduled payments of principal
on such Group I Discount Mortgage Loan due on or before the related Due Date in
respect of which no distribution has been made on any previous Distribution Date
and which were received by the Determination Date, or which have been advanced
as part of an Advance with respect to such Distribution Date, and (y) the
portion of the Principal Prepayment Amount for Loan Group I received in respect
of such Group I Discount Mortgage Loan during the related Prepayment Period.
"Class FXP Security": Any one of the Class FXP Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, evidencing an interest designated as a "regular
interest" in the Issuing REMIC for purposes of the REMIC Provisions.
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<PAGE>
"Class FXS Notional Amount": With respect to any Distribution
Date shall equal the product of (x) the aggregate Stated Principal Balance, as
of the second preceding Due Date after giving effect to payments scheduled to be
received as of such Due Date, whether or not received, or with respect to the
initial Distribution Date, as of the Cut-off Date, of the Group I Premium Rate
Mortgage Loans and (y) a fraction, the numerator of which is the weighted
average of the Class FX Pool Strip Rates for the Group I Premium Rate Mortgage
Loans and the denominator of which is 7.75%. The Class FXS Notional Amount as of
the Cut-off Date shall be $750,681.
"Class FXS Pool Strip Rate": With respect to each Non-Discount
Mortgage Loan in Loan Group I and any Distribution Date, the Class FXS Pool
Strip Rate is equal to the then-applicable Net Mortgage Rate thereon minus 7.75%
per annum, and with respect to each Group I Discount Mortgage Loan and any
Distribution Date, the Class FXS Pool Strip Rate is equal to zero.
"Class FXS Security": Any one of the Class FXS Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and to the
allocation of Realized Losses as set forth herein, and evidencing an interest
designated as a "regular interest" in the Issuing REMIC for purposes of the
REMIC Provisions.
"Class II Security": Any one of the Class A Securities, the
Class P Securities, the Class S Securities, the Class R Securities or the Class
RP Securities.
"Class II Subaccount": Any or all of the Class A Subaccounts,
the Class P Subaccount, the Class S Subaccount and the Class R Subaccount, as
appropriate.
"Class P Distribution Amount": With respect to any
Distribution Date, an amount equal to the aggregate for all Group II Discount
Mortgage Loans of the product for each Group II Discount Mortgage Loan of the
applicable Discount Fraction and the sum of (x) scheduled payments of principal
on such Group II Discount Mortgage Loan due on or before the related Due Date in
respect of which no distribution has been made on any previous Distribution Date
and which were received by the Determination Date, or which have been advanced
as part of an Advance with respect to such Distribution Date, and (y) the
portion of the Principal Prepayment Amount for Loan Group I received in respect
of such Group II Discount Mortgage Loan during the related Prepayment Period.
"Class P Security": Any one of the Class P Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, evidencing an interest designated as a "regular
interest" in the Issuing REMIC for purposes of the REMIC Provisions.
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<PAGE>
"Class R Security": Any one of the Class R Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B-2 and evidencing an interest designated as a
"residual interest" in the Issuing REMIC for purposes of the REMIC Provisions.
"Class RP Security": Any one of the Class RP Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit B-2 and evidencing an interest designated as a
"residual interest" in the Pooling REMIC for purposes of the REMIC Provisions.
"Class S Notional Amount": With respect to any Distribution
Date shall equal the product of (x) the aggregate Stated Principal Balance, as
of the second preceding Due Date after giving effect to payments scheduled to be
received as of such Due Date, whether or not received, or with respect to the
initial Distribution Date, as of the Cut-off Date, of the Group II Premium Rate
Mortgage Loans and (y) a fraction, the numerator of which is the weighted
average of the Class II Pool Strip Rates for the Group II Premium Rate Mortgage
Loans and the denominator of which is 7.75%. The Class S Notional Amount as of
the Cut-off Date shall be $1,201,720.
"Class S Pool Strip Rate": With respect to each Non-Discount
Mortgage Loan in Loan Group II and any Distribution Date, the Class S Pool Strip
Rate is equal to the then-applicable Net Mortgage Rate thereon minus 7.75% per
annum, and with respect to each Group II Discount Mortgage Loan and any
Distribution Date, the Class S Pool Strip Rate is equal to zero.
"Class S Security": Any one of the Class S Securities
executed, authenticated and delivered by the Trustee substantially in the form
annexed hereto as Exhibit A, senior with respect to distributions and to the
allocation of Realized Losses as set forth herein, and evidencing an interest
designated as a "regular interest" in the Issuing REMIC for purposes of the
REMIC Provisions.
"Closing Date": April 30, 1997.
"Code": The Internal Revenue Code of 1986, as amended.
"Collateral Value": The appraised value of a Mortgaged
Property based upon the lesser of (i) the appraisal (as reviewed and approved by
the Loan Seller) made at the time of the origination of the related Mortgage
Loan, or (ii) the sales price of such Mortgaged Property at such time of
origination. With respect to a Mortgage Loan the proceeds of which were used to
refinance an existing mortgage loan, the appraised (as reviewed and approved by
the Loan Seller) value of the Mortgaged Property based upon the appraisal (as
reviewed and approved by the Loan Seller) obtained at the time of refinancing.
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"Corporate Trust Office": The principal corporate trust office
of the Trustee at which at any particular time its corporate trust business
related to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at One First National Plaza, Mail Suite
0126, Chicago, Illinois 60670-0126, Attention: FASI/North
American 1997-NAMC 1.
"Corresponding Class": With respect to each Class of
Subaccount, the one or more Classes of Securities designated as such in the
Preliminary Statement; provided, however, that, with respect to allocations of
principal payments from the Class FXA Subaccounts, the Class FXA-8 Securities
shall only correspond to the Class FXA-8 Subaccount and the Class FXA-9
Securities shall not correspond with any Subaccount for such purposes.
"Credit Support Depletion Date": The first Distribution Date
on which the Senior Percentage equals 100%.
"Curtailment": Any payment of principal on a Mortgage Loan,
made by or on behalf of the related Mortgagor, other than a Monthly Payment, a
Prepaid Monthly Payment or a Payoff, which is applied to reduce the stated
Principal Balance of the Mortgage Loan including the principal portion of
repurchase proceeds received with respect to any Mortgage Loan which was
repurchased by the Loan Seller pursuant to its repurchase obligation in Sections
2.02 and 2.04 hereof, Insurance Proceeds, and any other unscheduled payments of
principal, other than Payoffs or Liquidation Principal, which were received
during the preceding calendar month.
"Custodial Account": The custodial account or accounts created
and maintained pursuant to Section 3.10 in the name of a depository institution,
as custodian for the holders of the Securities, for the holders of certain other
interests in mortgage loans serviced or sold by the Master Servicer and for the
Master Servicer, into which the amounts set forth in Section 3.10 shall be
deposited directly. Any such account or accounts shall be an Eligible Account.
"Cut-off Date": April 1, 1997.
"DCR": Duff & Phelps Credit Rating Co. or its successor in
interest.
"Debt Service Reduction": With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, except such a
reduction constituting a Deficient Valuation or any reduction that results in a
permanent forgiveness of principal.
"Deficient Valuation": With respect to any Mortgage Loan, a
valuation by a court of competent jurisdiction of the Mortgaged Property in an
amount less than the then outstanding indebtedness under the Mortgage Loan,
which valuation results from a proceeding initiated by the Mortgagor under the
Bankruptcy Code.
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"Definitive Security": Any definitive, fully registered
Security.
"Depository": The Depository Trust Company, or any successor
Depository hereafter named. The nominee of the initial Depository for purposes
of registering those Securities that are to be Book-Entry Securities 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 Participant": A broker, dealer, bank or other
financial institutions 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": The 15th day (or if such 15th day is not
a Business Day, the Business Day immediately preceding such 15th day) of the
month of the related Distribution Date.
"Discount Fraction": With respect to each Discount Mortgage
Loan, the fraction expressed as a percentage, the numerator of which is 7.75%
minus the Net Mortgage Rate for such Mortgage Loan as of the Cut-off Date and
the denominator of which is 7.75%. The Discount Fraction with respect to each
Discount Mortgage Loan is set forth on Exhibit J attached hereto.
"Discount Mortgage Loan": Any Group I Discount Mortgage Loan
or Group II Discount Mortgage Loan.
"Disqualified Organization": Any of (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 (unless such organization is subject to the tax imposed by
Section 511 of the Code on unrelated business taxable income), (iv) rural
electric and telephone cooperatives described in Section 1381(a)(2)(C) of the
Code and (v) any other Person so designated by the Trustee based upon an Opinion
of Counsel provided to the Trustee that the holding of an ownership interest in
a Residual Security by such Person may cause the Trust Fund or any Person having
an ownership interest in any Class of Securities (other than such Person) to
incur liability for any federal tax imposed under the Code that would not
otherwise be imposed but for the transfer of an ownership interest in the
Residual Security to such Person. The terms "United States," "State" and
"international organization" shall have the meanings set forth in Section 7701
of the Code.
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"Distribution Date": The 25th day of any month, or if such
25th day is not a Business Day, the Business Day immediately following such 25th
day, commencing on May 27, 1997.
"DLJMCI": DLJ Mortgage Capital, Inc., a Delaware corporation.
"DLJMCI Loan Sale Agreement": The Loan Sale Agreement, dated
as of April 1, 1997, between the Seller and DLJMCI.
"Due Date": The first day of the month of the related
Distribution Date.
"Due Period": With respect to any Distribution Date, the
period commencing on the second day of the month preceding the month of such
Distribution Date (or, with respect to the first Due Period, the day following
the Cut-off Date) and ending on the related Due Date.
"Eligible Account": An account maintained with a federal or
state chartered depository institution (i) the short-term obligations of which
are rated by each of the Rating Agencies in its highest rating at the time of
any deposit therein, or (ii) insured by the FDIC (to the limits established by
such Corporation), the uninsured deposits in which account are otherwise secured
such that, as evidenced by an Opinion of Counsel (obtained by the Person
requesting that the account be held pursuant to this clause (ii)) delivered to
the Trustee prior to the establishment of such account, the Securityholders will
have a claim with respect to the funds in such account and a perfected first
priority security interest against any collateral (which shall be limited to
Permitted Instruments, each of which shall mature not later than the Business
Day immediately preceding the Distribution Date next following the date of
investment in such collateral or the Distribution Date if such Permitted
Instrument is an obligation of the institution that maintains the Security
Account or Custodial Account) securing such funds that is superior to claims of
any other depositors or general creditors of the depository institution with
which such account is maintained or (iii) a trust account or accounts maintained
with a federal or state chartered depository institution or trust company with
trust powers acting in its fiduciary capacity or (iv) an account or accounts of
a depository institution acceptable to the Rating Agencies (as evidenced in
writing by the Rating Agencies that use of any such account as the Custodial
Account, the Excess Proceeds Account or the Security Account will not have an
adverse effect on the then-current ratings assigned to the Classes of the
Securities then rated by the Rating Agencies). Eligible Accounts may bear
interest.
"Event of Default": One or more of the events described in
Section 7.01.
"Excess Bankruptcy Loss": Any Bankruptcy Loss, or portion
thereof, which exceeds the then applicable Bankruptcy Amount.
"Excess Fraud Loss": Any Fraud Loss, or portion thereof, which
exceeds the then applicable Fraud Loss Amount.
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"Excess Proceeds": With respect to each Mortgage Loan as to
which an REO Disposition has occurred, the proceeds that are specified as being
"Excess Proceeds" in Section 3.22.
"Excess Proceeds Account": The separate account or accounts
created and maintained pursuant to Section 3.24, which shall be entitled "The
First National Bank of Chicago, in trust for registered holders of Mortgage
Participation Securities, Series 1997- NAMC 1, Excess Proceeds Account," and
which account or accounts shall be an Eligible Account.
"Excess Special Hazard Loss": Any Special Hazard Loss, or
portion thereof, that exceeds the then applicable Special Hazard Amount.
"Exemption": Prohibited Transaction Exemption 90-83, 55 Fed.
Reg. 50, 250 (December 5, 1990) granted by the U.S. Department of Labor.
"Extraordinary Events": Any of the following conditions with
respect to a Mortgaged Property or Mortgage Loan causing or resulting in a loss
which causes the liquidation of such Mortgage Loan:
(a) losses which are of a type that would be covered by the
fidelity bond and the errors and omissions insurance policy required to
be maintained pursuant to Section 3.18, but are in excess of the
coverage maintained thereunder;
(b) nuclear reaction or nuclear radiation or radioactive
contamination, all whether controlled or uncontrolled, or remote or be
in whole or in part caused by, contributed to or aggravated by a peril
covered by the definition of the term "Special Hazard Loss";
(c) hostile or warlike action in time of peace or war,
including action in hindering, combatting or defending against an
actual, impending or expected attack;
1. by any government or sovereign power, de jure or
de facto, or by any authority maintaining or using military, naval or
air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power,
authority or forces;
(d) any weapon of war employing atomic fission or radioactive
force whether in time of peace or war; or
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(e) insurrection, rebellion, revolution, civil war, usurped
power or action taken by governmental authority in hindering,
combatting or defending against such an occurrence, seizure or
destruction under quarantine or customs regulations, confiscation by
order of any government or public authority; or risks of contraband or
illegal transportation or trade.
"Extraordinary Losses": Any loss incurred on a Mortgage Loan
caused by or resulting from an Extraordinary Event.
"FDIC": Federal Deposit Insurance Corporation or any
successor.
"FHLMC": Federal Home Loan Mortgage Corporation or any
successor.
"Fitch": Fitch Investors Service, Inc., or its successor (One
State Street Plaza, New York, New York 10004).
"FNMA": Federal National Mortgage Association or any
successor.
"FNMA Guides": The FNMA Sellers' Guide and the FNMA Servicers'
Guide and all amendments or additions thereto.
"Fraud Loss Amount": With respect to any date of determination
after the Cut-off Date an amount equal to: (i) prior to the first Anniversary,
an amount equal to 2.00% of the aggregate outstanding principal balance of all
of the Mortgage Loans as of the Cut-off Date minus the aggregate amount of Fraud
Losses allocated solely to the Subordinate Securities, in accordance with
Section 4.04 since the Cut-off Date, and (ii) from and including the first
Anniversary to but not including the fifth Anniversary, an amount equal to the
lesser of (a) the Fraud Loss Amount as of the most recent Anniversary and (b)
1.00% of the aggregate outstanding principal balance of all of the Mortgage
Loans, as of the most recent Anniversary. On and after the fifth Anniversary the
Fraud Loss Amount with respect to the Securities shall be zero.
"Fraud Losses": Realized Losses on Mortgage Loans as to which
there was fraud in the origination of such Mortgage Loan.
"Funding Date": With respect to each Mortgage Loan, the date
on which funds were advanced by or on behalf of the Loan Seller and interest
began to accrue thereunder.
"Group I Discount Mortgage Loan": Any Group I Mortgage Loan
having a Net Mortgage Rate of less than 7.75% per annum as of the Cut-off Date.
"Group I Mortgage Loan": Those Mortgage Loans so indicated on
the Mortgage Loan Schedule.
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"Group I Premium Mortgage Loan": Any Group I Mortgage Loan
having a Net Mortgage Rate in excess of 7.75% per annum as of the Cut-off Date.
"Group I Subordinate Percentage": For any Distribution Date
will equal the excess of 100% over the Class FXA Percentage.
"Group I Subordinate Prepayment Percentage": The excess of
100% over the Class FXA Prepayment Percentage.
"Group II Discount Mortgage Loan": Any Group II Mortgage Loan
having a Net Mortgage Rate of less than 7.75% per annum as of the Cut-off Date.
"Group II Mortgage Loan": Those Mortgage Loans so indicated on
the Mortgage Loan Schedule.
"Group II Premium Mortgage Loan": Any Group II Mortgage Loan
having a Net Mortgage Rate in excess of 7.75% per annum as of the Cut-off Date.
"Group II Subordinate Percentage": For any Distribution Date
will equal the excess of 100% over the Class A Percentage.
"Group II Subordinate Prepayment Percentage": The excess of
100% over the Class A Prepayment Percentage.
"Initial Purchaser": Donaldson, Lufkin & Jenrette Securities
Corporation.
"Initial Security Principal Balance": With respect to each
Class of Securities, the Security Principal Balance of such Class of Securities
as of the Cut-off Date as set forth in the Preliminary Statement hereto.
"Insurance Policy": With respect to any Mortgage Loan, any
insurance policy which is required to be maintained from time to time under this
Agreement in respect of such Mortgage Loan.
"Insurance Proceeds": Proceeds paid in respect of the Mortgage
Loans pursuant to any Primary Hazard Insurance Policy, any title insurance
policy or any other insurance policy covering a Mortgage Loan, to the extent
such proceeds are not 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.
"Interest Accrual Period": With respect to any Distribution
Date and any Class of Securities other than the Class FXA-8 and Class FXA-9
Securities, the immediately preceding calendar month, and with respect to the
Class FXA-8 and Class FXA-9 Securities, the period
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from the 25th day of the immediately preceding month to the 24th day of the
month of such Distribution Date.
"Issuing REMIC": The REMIC consisting primarily of the
Subaccounts and the Security Account (other than amounts in the Security Account
that are distributable to the Class RP Security).
"Late Collections": With respect to any Mortgage Loan, all
amounts received during any Due Period, whether as late payments of Monthly
Payments or as Insurance Proceeds, Liquidation Proceeds or otherwise, which
represent late payments or collections of Monthly Payments due but delinquent
for a previous Due Period and not previously recovered.
"LIBOR": With respect to each Distribution Date, the London
Interbank Offered Rate for one-month United States Dollar deposits determined by
the Trustee on the basis of quotations as of approximately 11:00 a.m. (London
time) appearing on the Telerate Page 3750 (as defined in the International Swap
Dealers Association Inc. Code of 1987 Interest Rate and Currency Exchange
Definitions), as follows:
(i) On each LIBOR Determination Date, the Trustee will determine
LIBOR on the basis of LIBOR quotations as of approximately 11:00
a.m. (London time) on the LIBOR Determination Date in question.
If such rate does not appear on Telerate Page 3750, the LIBOR for
that day will be determined on the basis of the rates at which
deposits in U.S. Dollars are offered by the Reference Banks at
approximately 11:00 a.m. London Time on the LIBOR Determination
Date to prime banks in the London interbank market for a period
of one month commencing on the first day of such Interest Accrual
Period. The Trustee will request each Reference Banks to provide
a quotation of its rate.
(ii) If, on any LIBOR Determination Date, at least two of the
Reference Banks provide quotations, LIBOR will be determined as
the arithmetic mean (rounded upward, if necessary, to the nearest
multiple of 1/16 of 1%) of such offered quotations.
(iii)If, on any LIBOR Determination Date, only one or none of the
Reference Banks provides quotations, LIBOR will be the higher of:
(a) LIBOR as determined on the previous LIBOR Determination
Date (or, in the case of the first LIBOR Determination
Date, the initial LIBOR of 5.50%); or
(b) the Reserve Rate. The Reserve Rate will be the rate per
annum (rounded upward, if necessary, to the nearest
multiple of 1/16 of 1%) that the Trustee determines to
be either (1) the arithmetic mean of the offered
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quotations that the leading banks in New York City
selected by the Trustee are quoting on the relevant
LIBOR Determination Date for one-month United States
Dollar deposits to the principal London office of each
of the Reference Banks or those of them (being at least
two in number) to which such offered quotations are, in
the opinion of the Trustee, being so made, or (2) in
the event that the Trustee can determine no such
arithmetic mean, the arithmetic mean of the offered
quotations that leading banks in New York City selected
by the Trustee are quoting on such LIBOR Determination
Date to leading European banks for one-month United
States Dollar deposits; provided, however, that if the
banks selected by the Trustee are not quoting as
mentioned above, LIBOR for the next accrual period will
be LIBOR as specified in (a) above.
(iv) Notwithstanding the foregoing, LIBOR for the next succeeding
Interest Accrual Period shall not be based on LIBOR for the
previous Interest Accrual Period for two consecutive LIBOR
Determination Dates. If, under the priorities described above,
LIBOR for the next succeeding Interest Accrual Period would be
based on LIBOR for the previous LIBOR Determination Date for the
second consecutive LIBOR Determination Date, the Trustee shall
select an alternative index (over which the Trustee has no
control) used for determining LIBOR that is calculated and
published (or otherwise made available) by an independent third
party.
"LIBOR Determination Date": With respect to interest paid on
any Distribution Date, other than the first Distribution Date, the second
business day (in London) on which banks in London and New York City are open for
the transaction of international business prior to the 25th day of the month
preceding the Distribution Date.
"Liquidated Loan": A Mortgage Loan as to which the Master
Servicer has determined in accordance with its Accepted Servicing Practices that
all amounts which it expects to recover from or on account of such Mortgage
Loan, whether from Insurance Proceeds, Liquidation Proceeds, or otherwise have
been recovered.
"Liquidation Principal": The principal portion of Liquidation
Proceeds received with respect to each Mortgage Loan which became a Liquidated
Loan (but not in excess of the principal balance thereof) during the calendar
month preceding the month of the Distribution Date, exclusive of the portion
thereof attributable to the applicable Class FXP Principal Distribution Amount.
"Liquidation Proceeds": Amounts (other than Insurance
Proceeds) received by the Master Servicer in connection with the taking of an
entire Mortgaged Property by exercise of the power of eminent domain or
condemnation or in connection with the liquidation of a defaulted Mortgage Loan
through trustee's sale, foreclosure sale or otherwise, other than amounts
received in respect of any REO Property.
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"Loan Group": Each of the Group I Mortgage Loans and the Group
II Mortgage Loans.
"Loan Seller": North American Mortgage Company, and its
successors and assigns.
"Loan-to-Value Ratio": With respect to any Mortgage Loan and
as of any date, the fraction, expressed as a percentage, the numerator of which
is the current principal balance of such Mortgage Loan at the date of
determination and the denominator of which is the Collateral Value of the
related Mortgaged Property.
"Lockout Percentage": For any Distribution Date occurring
prior to the Distribution Date in May, 2002, 0%; and for any Distribution Date
occurring on or after the Distribution Date in May, 2002, 100%.
"Master Servicer": North American Mortgage Company or any
successor master servicer appointed as herein provided.
"Monthly Payment": With respect to any Mortgage Loan, the
scheduled monthly payment of principal and interest on such Mortgage Loan which
is payable by a Mortgagor under the related Mortgage Note as originally executed
(after adjustment, if any, for Principal Prepayments and for Deficient
Valuations occurring prior to such Due Date, and after any adjustment by reason
of any bankruptcy or similar proceeding or any moratorium or similar waiver or
grace period).
"Mortgage": The mortgage, deed of trust or any other
instrument securing the Mortgage Loan.
"Mortgage File": The mortgage documents listed in Section 2.01
pertaining to a particular Mortgage Loan.
"Mortgage Loan": Each of the mortgage loans, transferred and
assigned to the Trustee pursuant to Section 2.01 or Section 2.03 and from time
to time held in the Trust Fund, the Mortgage Loans originally so transferred,
assigned and held being identified in the Mortgage Loan Schedule. As used
herein, the term "Mortgage Loan" includes the related Mortgage Note and
Mortgage.
"Mortgage Loan Purchase Agreements": With respect to certain
Mortgage Loans, that certain Seller's purchase, warranties and servicing
agreement between the Loan Seller and DLJMCI pursuant to which the Loan Seller
sold such Mortgage Loan to DLJMCI and DLJMCI purchased such Mortgage Loan from
the Loan Seller, and with respect to the balance of the Mortgage Loans, that
certain Seller's purchase, warranties and servicing agreement, dated as of April
1, 1997, by and between the Loan Seller and DLJMCI pursuant to which the Loan
Seller
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sold such Mortgage Loans to DLJMCI and DLJMCI purchased such Mortgage Loans from
the Loan Seller.
"Mortgage Loan Schedule": As of any date of determination, the
schedule of Mortgage Loans included in the Trust Fund. The initial schedule of
Mortgage Loans with accompanying information transferred on the Closing Date to
the Trustee as part of the Trust Fund for the Securities, attached hereto as
Exhibit I (and, for purposes of the Trustee's review of the Mortgage Files
pursuant to Section 2.02, in computer-readable form as delivered to the Trustee)
which list shall set forth the following information with respect to each
Mortgage Loan:
(i) the loan number and name of the Mortgagor;
(ii) the street address, city, state and zip code of the
Mortgaged Property;
(iii) the Mortgage Rate set forth in the related Mortgage
Note;
(iv) the maturity date;
(v) the original principal balance;
(vi) the first payment date;
(vii) the type of Mortgaged Property;
(viii) the Monthly Payment in effect as of the Cut-off Date;
(ix) the scheduled principal balance as of the Cut-off
Date;
(x) the unpaid actual principal balance as of the Cut-off
Date;
(xi) the occupancy status;
(xii) the purpose of the Mortgage Loan;
(xiii) the Collateral Value of the Mortgaged Property;
(xiv) the original term to maturity;
(xv) whether or not the Mortgage Loan provides for a
Principal Prepayment penalty;
(xvi) the paid-through date of the Mortgage Loan;
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(xvii) the number of units in the Mortgaged Property; and
(xviii) whether such Mortgage Loan is a Group I Mortgage
Loan, which is a Mortgage Loan that was originated
under the Loan Seller's "Flex Extra Program", or a
Group II Mortgage Loan, which is a Mortgage Loan that
was originated under the Loan Seller's "Gold Flex
Program."
The Mortgage Loan Schedule shall also set forth the
total of the amounts described under clause (viii) above for all of the Mortgage
Loans. The Mortgage Loan Schedule may be in the form of more than one schedule,
collectively setting forth all of the information required.
"Mortgage Note": The note or other evidence of the
indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgage Rate": With respect to any Mortgage Loan, the annual
rate at which interest accrues on such Mortgage Loan.
"Mortgaged Property": With respect to a Mortgage Loan, the
underlying real property (or leasehold estate of the Mortgagor, the term of
which is equal to or longer than the term of the Mortgage) securing repayment of
a Mortgage Note, consisting of a single parcel of real estate considered to be
real estate under the laws of the State in which such real property is located,
which may include condominium units and planned unit developments, improved by a
residential dwelling.
"Mortgagor": The obligor or obligors on a Mortgage Note.
"Net Mortgage Rate": As to each Mortgage Loan, a per annum
rate of interest equal to the Mortgage Rate as in effect from time to time minus
the Servicing Fee Rate.
"Non-Discount Mortgage Loan": Any Mortgage Loan that is not a
Discount Mortgage Loan.
"Nonrecoverable Advance": Any Advance previously made or
proposed to be made in respect of a Mortgage Loan which, in the good faith
judgment of the Master Servicer, will not or, in the case of a proposed Advance,
would not be ultimately recoverable from related Late Collections, Insurance
Proceeds, Liquidation Proceeds, REO Proceeds or amounts reimbursable to the
Master Servicer pursuant to Section 4.03(b). The determination by the Master
Servicer that it has made a Nonrecoverable Advance or that any proposed Advance
would constitute a Nonrecoverable Advance, shall be evidenced by an Officers'
Certificate delivered to the Seller and the Trustee.
"Non-United States Person": Any Person other than a United
States Person.
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"Notional Amount": Any of the Class FXS Notional Amount, the
Class S Notional Amount, the Class FXA-9 Notional Amount, the Class FXS
Subaccount Notional Amount, or the Class S Subaccount Notional Amount.
"Officers' Certificate": A certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President, vice president or
assistant vice president and by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Master Servicer, the Loan
Seller, or of the Sub-Servicer and delivered to the Seller and Trustee.
"Opinion of Counsel": A written opinion of counsel, who may be
counsel for the Seller or the Master Servicer, reasonably acceptable to the
Trustee; except that any opinion of counsel relating to (a) the qualification of
any account required to be maintained pursuant to this Agreement as an Eligible
Account, (b) qualification of either the Issuing REMIC or the Pooling REMIC as a
REMIC, (c) compliance with the REMIC Provisions or (d) resignation of the Master
Servicer pursuant to Section 6.04 must be an opinion of counsel who (i) is in
fact independent of the Seller and the Master Servicer, (ii) does not have any
direct financial interest or any material indirect financial interest in the
Seller or the Master Servicer or in an affiliate of either and (iii) is not
connected with the Seller or the Master Servicer as an officer, employee,
director or person performing similar functions.
"OTS": Office of Thrift Supervision or any successor.
"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, Cash Liquidation or REO Disposition and which was not
purchased prior to such Due Date pursuant to Sections 2.02, 2.03 or 2.04.
"Overcollateralized" For any Distribution Date, (i) with
respect to the Class FX Subaccounts, if the aggregate Subaccount Principal
Balance of the Class FX Subaccounts exceeds the aggregate Stated Principal
Balance of the Group I Mortgage Loans, less the applicable Discount Fraction of
any Group I Discount Mortgage Loans, and (ii) with respect to the Class II
Subaccounts, if the aggregate Subaccount Principal Balance of the Class II
Subaccounts, exceeds the aggregate Stated Principal Balance of the Group II
Mortgage Loans, less the applicable Discount Fraction of any Group II Discount
Mortgage Loans.
"Ownership Interest": As to any Security, any ownership or
security interest in such Security, including any interest in such Security 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 (i) each Class of
Securities (other than the Class FXA-8 Securities and Class FXA-9 Securities),
the per annum rate set forth in the Preliminary Statement hereto; (ii) the Class
FXA-8 Securities for any Distribution Date, a variable per annum rate equal to
LIBOR, determined as of the related LIBOR Determination
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Date, plus 0.45%, subject to a maximum Pass-Through Rate of 8.50% per annum;
provided, however, that the rate for the initial Distribution Date shall be the
rate set forth in the Preliminary Statement hereto; (iii) the Class FXA-9
Securities for any Distribution Date, a variable per annum rate equal to (x)
8.05% minus (y) LIBOR, determined as of the related LIBOR Determination Date,
subject to a minimum Pass-Through Rate of 0.00% per annum; provided, however,
that the rate for the initial Distribution Date shall be the rate set forth in
the Preliminary Statement hereto; and (iv) each Subaccount, the per annum rate
set forth in the Preliminary Statement hereto.
"Payoff": Any Mortgagor payment of principal on a Mortgage
Loan equal to the entire outstanding Principal Balance of such Mortgage Loan, if
received in advance of the last scheduled Due Date for such Mortgage Loan and
accompanied by an amount of interest equal to accrued unpaid interest on the
Mortgage Loan to the date of such payment-in-full.
"Payoff Period": With respect to the first Distribution Date,
the period from the Cut-Off Date through May 14, 1997, inclusive; and with
respect to any Distribution Date thereafter, the period from the 15th day of the
prior month through the 14th day of the month of such Distribution Date,
inclusive.
"Percentage Interest": With respect to any Security (other
than a Residual Security), the undivided beneficial ownership interest in the
related Class evidenced by such Security, which as to each such Security shall
be equal to the initial Security Principal Balance (or Notional Amount, as
applicable) thereof divided by the aggregate initial Security Principal Balance
(or Notional Amount, as applicable) of all of the Securities of the same Class,
expressed as a percentage carried to four decimal places. With respect to a
Residual Security, the interest in distributions to be made with respect to such
Class evidenced thereby, expressed as a percentage carried to four decimal
places, as stated on the face of such Security.
"Permitted Encumbrances": With respect to any Mortgaged
Property, any of the following: (1) the lien of non-delinquent current real
property taxes and assessments not yet due and payable, (2) covenants,
conditions and restrictions, rights of way, easements and other matters of the
public record as of the date of recording which are acceptable to mortgage
lending institutions generally and either (A) which are referred to or otherwise
considered in the appraisal made for the originator of the Mortgage Loan, or (B)
which do not adversely affect the appraised value of the Mortgaged Property as
set forth in such appraisal, and (3) other matters to which like properties are
commonly subject which do not materially interfere with the benefits of the
security intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property.
"Permitted Instruments": Any one or more of the following:
(i) direct obligations of, or obligations, the timely payment
of which, are fully guaranteed as to principal and interest by, the
United States or any agency or
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instrumentality thereof, provided such obligations are backed by the
full faith and credit of the United States;
(ii) repurchase obligations (the collateral for which is held
by a third party or the Trustee) with respect to any security described
in clause (i) above, provided that the long-term unsecured obligations
of the party agreeing to repurchase such obligations are at the time
rated by each Rating Agency in one of its two highest long-term rating
categories;
(iii) Securities of deposit, time deposits, demand deposits
and bankers' acceptances of any bank or trust company incorporated
under the laws of the United States or any state thereof or the
District of Columbia, provided that the short-term commercial paper of
such bank or trust company at the date of acquisition thereof has been
rated by each Rating Agency in its highest short-term rating;
(iv) money market funds organized under the Investment Company
Act of 1940 or common trust fund rated not less than "AAAm" by Standard
& Poor's, not less than "Aaa" by Moody's Investors Services and not
less than "AAA" by Fitch and DCR, if rated by DCR;
(v) commercial paper (having original maturities of not more
than nine months) of any corporation incorporated under the laws of the
United States or any state thereof or the District of Columbia which on
the date of acquisition has been rated by each Rating Agency in its
highest short-term rating; and
(vi) any other obligation or security acceptable to the Rating
Agencies (as certified by a letter from each Rating Agency to the
Trustee) in respect of mortgage pass-through Securities rated in one of
its two highest rating categories;
provided, that no such instrument shall be a Permitted Instrument if such
instrument evidences either (a) the right to receive interest only payments with
respect to the obligations underlying such instrument or (b) both principal and
interest payments derived from obligations underlying such instrument where the
principal and interest payments with respect to such instrument provide a yield
to maturity exceeding 120% of the yield to maturity at par of such underlying
obligation.
"Permitted Transferee": Any transferee of a Class R or Class
RP Security other than a Non-United States Person or Disqualified Organization.
"Person": Any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
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"Pooling REMIC": The REMIC consisting primarily of the
Mortgage Loans, the Excess Proceeds Account, amounts in the Security Account
that are distributable to the Class RP Securities and the Custodial Account.
"Prepayment Assumption": 235% of the "Basic Prepayment
Assumption", used solely for determining the rate of accrual of original issue
discount, market discount and amortizable premium on the related Securities for
federal income tax purposes. The "Basic Prepayment Assumption" represents an
annualized constant assumed rate of prepayment each month of a pool of mortgage
loans relative to its then outstanding principal balance for the life of such
mortgage loans.
"Prepaid Monthly Payment": Any Monthly Payment received prior
to its scheduled Due Date, which is intended to be applied to a Mortgage Loan on
its scheduled Due Date and held in the related Custodial Account until the
Security Account Deposit Date.
"Prepayment Interest Shortfall": With respect to any
Distribution Date, for each Mortgage Loan that was the subject of a Curtailment
or a Payoff during the related Prepayment Period, an amount equal to the amount
of interest that would have accrued at the applicable Net Mortgage Rate on the
principal balance of such Mortgage Loan immediately prior to such prepayment (or
in the case of a Curtailment on the amount of such prepayment) during the period
commencing on the date of prepayment, or in the case of a Payoff in full the
date as of which the prepayment is applied, and ending on the last day of the
month of prepayment.
"Prepayment Period": As to any Distribution Date, with respect
to (i) Payoffs, the Payoff Period, and (ii) Curtailments, the calendar month
preceding the month in which such Distribution Date occurs.
"Primary Hazard Insurance Policy": Each primary hazard
insurance policy required to be maintained pursuant to the first or the second
paragraph of Section 3.13.
"Primary Mortgage Insurance Policy": Each primary policy of
mortgage insurance represented to be in effect pursuant to Section
2.04(b)(xxxi), or any replacement policy therefor obtained by the Master
Servicer pursuant to Section 3.25.
"Principal Only Security": Each of the Class FXP Securities
and Class P Securities.
"Principal Payment Amount": On any Distribution Date and for
any Loan Group, the sum of the scheduled principal payments on the Mortgage
Loans in such Loan Group due on the related Due Date.
"Principal Prepayment": Any payment of principal on a Mortgage
Loan which constitutes a Payoff or Curtailment.
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"Principal Prepayment Amount": On any Distribution Date and
with respect to any Loan Group, the sum of (i) Curtailments received during the
related Prepayment Period from the Mortgage Loans in such Loan Group and (ii)
Payoffs received during the related Prepayment Period from the Mortgage Loans in
such Loan Group.
"Pro Rata Allocation": The allocation of (i) the principal
portion of losses relating to a Mortgage Loan to all Classes of Securities,
other than the Principal Only Securities, pro rata according to their respective
Stated Principal Balances, except if the loss is recognized with respect to a
Group I Discount Mortgage Loan or a Group II Discount Mortgage Loan, the
applicable Discount Fraction of such loss will first be allocated to the related
Principal Only Securities, and (ii) of the interest portion of losses relating
to a Mortgage Loan to all Classes of Securities pro rata according to the amount
of interest accrued on each such Class, other than the Principal Only
Securities, in reduction thereof and then in reduction of their related Stated
Principal Balance.
"Purchase Price": With respect to any Mortgage Loan (or REO
Property) required to be purchased pursuant to Section 2.02 or 2.04 or that the
Master Servicer is entitled to repurchase pursuant to Section 3.22, an amount
equal to the sum of (i) 100% of the Stated Principal Balance thereof, plus (ii)
unpaid accrued interest (or REO Imputed Interest) at the applicable Net Mortgage
Rate on the Stated Principal Balance thereof outstanding during each Due Period
that such interest was not paid or advanced, from the date through which
interest was last paid by the Mortgagor or advanced and distributed to
Securityholders together with unpaid Servicing Fees from the date through which
interest was last paid by the Mortgagor, in each case to the first day of the
month in which such Purchase Price is to be distributed, plus (iii) the
aggregate of all Advances made in respect of such Mortgage Loan (or REO
Property) that were not previously reimbursed.
"Qualified Mortgage Insurer": A mortgage guaranty insurance
company qualified under the laws of the state in which the related Mortgaged
Property is located to transact a mortgage guaranty insurance business therein
and to write the insurance provided by primary mortgage insurance policies and
approved as an insurer by FNMA or FHLMC and whose obligations have a rating by
each Rating Agency not lower than the rating of the Securities.
"Rating Agency": Standard & Poor's, Fitch and DCR, however, if
such agencies and their successors are no longer in existence, "Rating Agency"
shall be such nationally recognized statistical rating agency, or other
comparable Person, designated by the Seller, notice of which designation shall
be given to the Trustee and Master Servicer. References herein to the two
highest long term debt rating categories of a Rating Agency shall mean "AA" or
better in the case of Standard & Poor's, Fitch and DCR and references herein to
the highest short-term debt rating of a Rating Agency shall mean "A-1" in the
case of Standard & Poor's, "F-1+" in the case of Fitch and "D-1" in the case of
DCR, and in the case of any other Rating Agency such references shall mean such
rating categories without regard to any plus or minus.
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"Realized Loss": With respect to each Mortgage Loan or REO
Property as to which a Cash Liquidation or REO Disposition has occurred, an
amount (not less than zero) equal to (i) the Stated Principal Balance of the
Mortgage Loan as of the date of Cash Liquidation or REO Disposition, plus (ii)
interest (and REO Imputed Interest, if any) at the Net Mortgage Rate from the
Due Date as to which interest was last paid or advanced to Securityholders up to
the last day of the month in which the Cash Liquidation or REO Disposition
occurred on the Stated Principal Balance of such Mortgage Loan outstanding
during each Due Period that such interest was not paid or advanced, minus (iii)
the proceeds, if any, received during the month in which such Cash Liquidation
or REO Disposition occurred, to the extent applied as recoveries of interest at
the Net Mortgage Rate and to principal of the Mortgage Loan, net of the portion
thereof reimbursable to the Master Servicer or any Sub-Servicer with respect to
related Advances not previously reimbursed. 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 amount of such Debt Service Reduction.
"Record Date": The last Business Day of the month immediately
preceding the month of the related Distribution Date.
"Reference Bank": A leading bank selected by the Trustee
engaged in transactions in Eurodollar deposits in the international Eurocurrency
market, which does not control, is not controlled by nor under common control
with, the Trustee and which has an established place of business in London.
"Regular Security": Any of the Securities other than the Class
RP Securities or Class R Securities.
"REMIC": A "real estate mortgage investment conduit" within
the meaning of Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law
relating to real estate mortgage investment conduits, which appear at Sections
860A through 860G of Subchapter M of Chapter 1 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 prepared by the Master Servicer
providing the information set forth in Section 4.02.
"REO Acquisition": The acquisition by the Master Servicer on
behalf of the Trustee for the benefit of the Securityholders of any REO Property
pursuant to Section 3.15.
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"REO Disposition": The final receipt by or on behalf of the
Master Servicer of all Insurance Proceeds, Liquidation Proceeds, REO Proceeds
and other payments and recoveries (including proceeds of a final sale) which the
Master Servicer expects to be finally recoverable from the sale or other
disposition of the REO Property.
"REO Imputed Interest": As to any REO Property, for any
period, an amount equivalent to interest (at the Mortgage Rate that would have
been applicable to the related Mortgage Loan had it been outstanding) on the
unpaid principal balance of the Mortgage Loan as of the date of acquisition
thereof (as such balance is reduced pursuant to Section 3.15 by any income from
the REO Property treated as a recovery of principal).
"REO Proceeds": Proceeds, net of directly related expenses,
received in respect of any REO Property (including, without limitation, proceeds
from the rental of the related Mortgaged Property and of any REO Disposition),
which proceeds are required to be deposited into the Custodial Account as and
when received.
"REO Property": A Mortgaged Property acquired by the Master
Servicer through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Mortgage Loan.
"Request for Release": A release signed by a Servicing
Officer, in the form of Exhibits F-1 or F-2 attached hereto.
"Residual Security": Any of the Class R Securities or Class RP
Securities.
"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, any assistant trust officer, the
controller and any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer to whom such matter is referred because of such officer's knowledge of
and familiarity with the particular subject.
"Rule 144A": Rule 144A under the Securities Act of 1933, as
amended, as in effect from time to time.
"Security": Any Class FXS Security, Class FXA-1 Security,
Class FXA-2 Security, Class FXA-3 Security, Class FXA-4 Security, Class FXA-5
Security, Class FXA-6 Security, Class FXA-7 Security, Class FXA-8 Security,
Class FXA-9 Security, Class FXP Security, Class S Security, Class A-1 Security,
Class A-2 Security, Class A-3 Security, Class A-4 Security, Class P Security,
Class B-1 Security, Class B-2 Security, Class B-3 Security,
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Class B-4 Security, Class B-5 Security, Class B-6 Security, Class RP Security or
Class R Security.
"Security Account": The trust account or accounts created and
maintained pursuant to Section 4.01, which shall be entitled "The First National
Bank of Chicago, in trust for registered holders of Mortgage Participation
Securities, Series 1997-NAMC 1", and which account or accounts must each be an
Eligible Account.
"Security Account Deposit Date": With respect to any
Distribution Date, the Business Day immediately prior thereto.
"Security Distribution Amount": The amounts to be distributed
to the holders of the Security (other than the Class RP Securities) pursuant to
Section 4.01(c)(1) and (c)(2).
"Security Owner": With respect to a Book-Entry Security, the
Person who is the beneficial owner of such Security, as reflected on the books
of an indirect participating brokerage firm for which a Depository Participant
acts as agent, if any, and otherwise on the books of a Depository Participant,
if any, and otherwise on the books of the Depository.
"Security Principal Balance": With respect to each Class FXA-1
Security, Class FXA-2 Security, Class FXA-3 Security, Class FXA-4 Security,
Class FXA-5 Security, Class FXA-6 Security, Class FXA-7 Security, Class FXA-8
Security, Class FXP Security, Class A-1 Security, Class A-2 Security, Class A-3
Security, Class A-4 Security, Class P Security, Class R Security and Class RP
Security, on any date of determination, an amount equal to (i) the Initial
Security Principal Balance of such Security, minus (ii) the sum of (a) the
aggregate of all amounts previously distributed with respect to such Security
(or any predecessor Security) and applied to reduce the Security Principal
Balance thereof pursuant to Section 4.01(c), and (b) the aggregate of all
reductions in Security Principal Balance in connection with Realized Losses
which were previously allocated to such Security (or any predecessor Security)
pursuant to Section 4.04. With respect to each Class B-1 Security, on any date
of determination, an amount equal to (i) the initial Security Principal Balance
of such Class B-1 Security, as specified on the face thereof, minus (ii) the sum
of (a) the aggregate of all amounts previously distributed with respect to such
Security (or any predecessor Security) and applied to reduce the Security
Principal Balance thereof pursuant to Section 4.01(c), and (b) the aggregate of
all reductions in Security Principal Balance in connection with Realized Losses
which were previously allocated to such Security (or any predecessor Security)
pursuant to Section 4.04; provided that if the Security Principal Balances of
the Class B-2 Securities, Class B-3 Securities, Class B-4, Class B-5 Securities
and Class B-6 Securities have been reduced to zero, the Security Principal
Balance of each Class B-1 Security, at any given time shall thereafter be an
amount equal to (i) the Percentage Interest evidenced by such Security times
(ii) the excess, if any, of (a) the then aggregate Stated Principal Balance of
the Mortgage Loans (or related REO Properties) over (b) the sum of the then
aggregate Security Principal Balance of all of the Senior Securities. With
respect to each Class B-2 Security, on any date of determination, an amount
equal to (i) the
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initial Security Principal Balance of such Class B-2 Security, as specified on
the face thereof, minus (ii) the sum of (a) the aggregate of all amounts
previously distributed with respect to such Security (or any predecessor
Security) and applied to reduce the Security Principal Balance thereof pursuant
to Section 4.01(c), and (b) the aggregate of all reductions in Security
Principal Balance in connection with Realized Losses which were previously
allocated to such Security (or any predecessor Security) pursuant to Section
4.04; provided, that if the Security Principal Balance of the Class B-3
Securities, Class B-4 Securities, Class B-5 Securities and Class B-6 Securities
has been reduced to zero, the Security Principal Balance of each Class B-2
Security at any given time shall thereafter be an amount equal to (i) the
Percentage Interest evidenced by such Security times (ii) the excess, if any, of
(a) the then aggregate Stated Principal Balance of the Mortgage Loans (or
related REO Properties) over (b) the sum of the then aggregate Security
Principal Balance of all of the Senior Securities and Class B-1 Securities. With
respect to each Class B-3 Security, on any date of determination, an amount
equal to (i) the initial Security Principal Balance of such Class B-3 Security,
as specified on the face thereof, minus (ii) the sum of (a) the aggregate of all
amounts previously distributed with respect to such Security (or any predecessor
Security) and applied to reduce the Security Principal Balance thereof pursuant
to Section 4.01(b), and (b) the aggregate of all reductions in Security
Principal Balance in connection with Realized Losses which were previously
allocated to such Security (or any predecessor Security) pursuant to Section
4.04; provided, that if the Security Principal Balance of the Class B-4
Securities, Class B-5 Securities and Class B-6 Securities has been reduced to
zero, the Security Principal Balance of each Class B-3 Security at any given
time, shall thereafter be an amount equal to (i) the Percentage Interest
evidenced by such Security times (ii) the excess, if any, of (a) the then
aggregate Stated Principal Balance of the Mortgage Loans (or related REO
Properties) over (b) the sum of the then aggregate Security Principal Balance of
all of the Senior Securities, Class B-1 Securities and Class B-2 Securities.
With respect to each Class B-4 Security, on any date of determination, an amount
equal to (i) the initial Security Principal Balance of such Class B-4 Security,
as specified on the face thereof, minus (ii) the sum of (a) the aggregate of all
amounts previously distributed with respect to such Security (or any predecessor
Security) and applied to reduce the Security Principal Balance thereof pursuant
to Section 4.01(b), and (b) the aggregate of all reductions in Security
Principal Balance in connection with Realized Losses which were previously
allocated to such Security (or any predecessor Security) pursuant to Section
4.04; provided, that if the Security Principal Balance of the Class B-5
Securities and Class B-6 Securities has been reduced to zero, the Security
Principal Balance of each Class B-4 Security at any given time, shall thereafter
be an amount equal to (i) the Percentage Interest evidenced by such Security
times (ii) the excess, if any, of (a) the then aggregate Stated Principal
Balance of the Mortgage Loans (or related REO Properties) over (b) the sum of
the then aggregate Security Principal Balance of all of the Senior Securities,
Class B-1 Securities, Class B-2 Securities and the Class B-3 Securities. With
respect to each Class B-5 Security, on any date of determination, an amount
equal to (i) the initial Security Principal Balance of such Class B-5 Security,
as specified on the face thereof, minus (ii) the sum of (a) the aggregate of all
amounts previously distributed with respect to such Security (or any predecessor
Security) and applied to reduce the Security Principal Balance thereof pursuant
to Section 4.01(c), and (b) the aggregate of all reductions in Security
Principal
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Balance in connection with Realized Losses which were previously allocated to
such Security (or any predecessor Security) pursuant to Section 4.04; provided,
that if the Security Principal Balance of the Class B-6 Securities has been
reduced to zero, the Security Principal Balance of each Class B-5 Security at
any given time, shall thereafter be an amount equal to (i) the Percentage
Interest evidenced by such Security times (ii) the excess, if any, of (a) the
then aggregate Stated Principal Balance of the Mortgage Loans (or related REO
Properties) over (b) the sum of the then aggregate Security Principal Balance of
all of the Senior Securities, Class B-1 Securities, Class B-2 Securities, Class
B-3 Securities and Class B-4 Securities. With respect to each Class B-6
Security, at any given time, an amount equal to (i) the Percentage Interest
evidenced by such Security times (ii) the excess, if any, of (a) the then
aggregate Stated Principal Balance of the Mortgage Loans (or related REO
Properties) over (b) the then aggregate Security Principal Balance of all of the
Senior Securities, Class B-1 Securities, Class B-2 Securities, Class B-3
Securities, Class B-4 Securities and the Class B-5 Securities. The Strip
Securities and Class FXA-9 Securities have no principal balances and shall not
be entitled to distributions of principal.
"Security Register": The register maintained pursuant to
Section 5.02.
"Security Registrar": The Person appointed by the Trustee to
be its agents with respect to certain securities administration matters;
provided, however, that any such appointment will not relieve the Trustee from
its obligation to perform its duties hereunder.
"Securityholder" or "Holder": The Person in whose name a
Security is registered in the Security Register, except that, neither a
Disqualified Organization nor a non-United States Person shall be a Holder of a
Class RP or Class R Security for any purposes hereof and, solely for the
purposes of giving any consent pursuant to this Agreement, any Security
registered in the name of the Seller or 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 11.01. The Trustee shall be
entitled to rely upon a certification of the Seller or the Master Servicer in
determining if any Securities are registered in the name of a respective
affiliate. All references herein to "Holders" or "Securityholders" shall reflect
the rights of Security 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 "Securityholder" only the Person in whose name a
Security is registered in the Security Register.
"Seller": Financial Asset Securitization, Inc. or its
successor in interest.
"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 aggregate Security Principal Balance of the Senior Securities
(other than the Principal Only Securities) immediately
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prior to such Distribution Date and the denominator of which is the aggregate
Stated Principal Balance of all of the Mortgage Loans (or related REO
Properties) (other than the related Discount Fraction of each Discount Mortgage
Loan) immediately prior to such Distribution Date.
"Senior Security": Any of the Class FXS Securities, the Class
FXA Securities, the Class FXP Securities, the Class S Securities, the Class A
Securities, the Class P Securities, the Class R Securities or the Class RP
Securities.
"Servicing Account": The account or accounts created and
maintained pursuant to Section 3.09.
"Servicing Advances": All customary, reasonable and necessary
"out of pocket" costs and expenses incurred in connection with a default,
delinquency or other unanticipated event 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,
(iii) the management and liquidation of any REO Property and (iv) compliance
with the obligations under the second paragraph of Section 3.01, Section 3.09
and Section 3.25.
"Servicing Fee": As to each Mortgage Loan, an amount, payable
out of any payment of interest on the Mortgage Loan, equal to interest at the
applicable Servicing Fee Rate on the Stated Principal Balance of such Mortgage
Loan for the calendar month preceding the month in which the payment is due
(alternatively, in the event such payment of interest accompanies a Principal
Prepayment in full made by the Mortgagor, interest for the number of days
covered by such payment of interest computed on the basis of a 360 day year
consisting of twelve, 30 day months).
"Servicing Fee Rate": With respect to each Mortgage Loan, the
per annum rate of 0.26%.
"Servicing Officer": Any officer of the Master Servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans, whose name appears on a list of servicing officers furnished to
the Trustee by the Master Servicer, as such list may from time to time be
amended.
"Servicing Transfer": The transfer of servicing
responsibilities to a successor Master Servicer pursuant to Section 7.01 of this
Agreement.
"Single Security": A Security of any Class evidencing an
initial Security Principal Balance equal to $1,000.
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"Special Hazard Amount": On each anniversary of the Cut-off
Date, the Special Hazard Amount will be reduced, but not increased, to an amount
equal to the lesser of (1) the greatest of (a) the aggregate principal balance
of the Mortgage Loans located in the single California zip code area containing
the largest aggregate Stated Principal Balance of the Mortgage Loans, (b) 1% of
the aggregate Stated Principal Balance of the Mortgage Loans and (c) twice the
Stated Principal Balance of the largest single Mortgage Loan, in each case
calculated as of the Due Date in the immediately preceding month and (2) the
Special Hazard Amount as of the Cut-off Date as reduced by the Special Hazard
Losses allocated to the Securities since the Cut-off Date.
"Special Hazard Loss": Any Realized Loss suffered by a
Mortgaged Property on account of direct physical loss, but not including (i) any
loss of a type covered by a hazard insurance policy or a flood insurance policy
required to be maintained in respect to such Mortgaged Property pursuant to
Section 3.13 to the extent of the amount of such loss covered thereby, or (ii)
any Extraordinary Loss.
"Standard & Poor's": Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc. or its successor in interest.
"Startup Day": The day designated as such pursuant to Article
X hereof.
"Stated Principal Balance": With respect to any Mortgage Loan
or related REO Property at any given time, (i) the principal balance of the
Mortgage Loan outstanding as of the Cut-off Date, after application of principal
payments due on or before such date, whether or not received, minus (ii) the sum
of (a) the principal portion of the Monthly Payments due with respect to such
Mortgage Loan or REO Property during each Due Period ending prior to the most
recent Distribution Date which were distributed or with respect to which an
Advance was distributed, and (b) all Principal Prepayments with respect to such
Mortgage Loan or REO Property, and all Insurance Proceeds, Liquidation Proceeds
and net income from a REO Property to the extent applied by the Master Servicer
as recoveries of principal in accordance with Section 3.15 with respect to such
Mortgage Loan or REO Property, which were distributed pursuant to Section 4.01
on any previous Distribution Date, and (c) any Realized Loss with respect
thereto allocated pursuant to Section 4.04 for any previous Distribution Date.
"Step Down Percentage": For any Distribution Date will be the
following percentage:
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DISTRIBUTION DATE OCCURRING IN STEP DOWN PERCENTAGE
May 1997 through April 2002 0%
May 2002 through April 2003 30%
May 2003 through April 2004 40%
May 2004 through April 2005 60%
May 2005 through April 2006 80%
May 2006 and thereafter 100%
"Strip Security": Each of the Class FXS Securities and the
Class S Securities.
"Subaccount": Each of the subaccounts established solely for
purposes of the REMIC Provisions by the Trustee which have the Pass-Through
Rates and initial Subaccount Principal Balances or Notional Amounts set forth in
the Preliminary Statement hereto. References herein to one or more "Classes" of
Subaccounts shall refer to the Class designation set forth in the Preliminary
Statement hereto.
"Subaccount Distribution Amount": The amounts deemed
distributed to the Subaccounts pursuant to Sections 4.01(b)(1) and (b)(2).
"Subaccount Principal Balance": With respect to each
Subaccount (other than the Class FXS Subaccount and Class S Subaccount), on any
date of determination, an amount equal to (i) the initial Subaccount Principal
Balance as specified in the Preliminary Statement, minus (ii) the sum of (a) the
aggregate of all amounts previously deemed distributed with respect to such
Subaccount and applied to reduce the Subaccount Principal Balance thereof
pursuant to Section 4.01(a) and (b) the aggregate of all reductions in
Subaccount Principal Balance deemed to have occurred in connection with Realized
Losses which were previously allocated to such Subaccount pursuant to Section
4.04. The Class FXS Subaccount and Class S Subaccount have no principal
balances.
"Subordinate Liquidation Amount": The excess, if any, of the
(i) aggregate Liquidation Principal for all Mortgage Loans which became
Liquidated Loans during the calendar month preceding the month of the
Distribution Date (other than any such amounts allocated to the Principal Only
Securities), over (ii) the sum of the Class FXA Liquidation Amount and Class A
Liquidation Amount for such Distribution Date.
"Subordinate Percentage": With respect to any Distribution
Date, 100% minus the Senior Percentage for such Distribution Date.
"Subordinate Principal Distribution Amount": For any
Distribution Date, the excess of (A) the sum of (i) the Subordinate Percentage
for Group I of the Principal Payment Amount for Group I (exclusive of the
portion thereof attributable to the Class FXP Distribution Amount), (ii) the
Subordinate Percentage for Group II of the Principal Payment Amount for
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Group II (exclusive of the portion thereof attributable to the Class P
Distribution Amount), (iii) the Subordinate Prepayment Percentage for Group I of
the Principal Prepayment Amount for Group I (exclusive of the portion thereof
attributable to the Class FXP Distribution Amount), (iv) the Subordinate
Prepayment Percentage for Group II of the Principal Prepayment Amount for Group
II (exclusive of the portion thereof attributable to the Class P Distribution
Amount) and (v) the Subordinate Liquidation Amount over (B) the sum of (x) the
amounts required to be distributed to the Principal Only Securities pursuant to
clause (iv) of Section 4.01(b)(1)(a) and 4.01(b)(1)(b) on such Distribution
Date, (y) in the event that the Security Principal Balance of either the Class
FXA or Class A Securities has been reduced to zero, principal paid from the
Available Distribution Amount for the Mortgage Loan Group related to such Class
FXA or Class A Securities to the remaining Class FXA or Class A Securities and
(z) the amounts in respect of principal paid from the Available Distribution
Amount of the Loan Groups relating to Overcollateralized Subaccounts pursuant to
Section 4.01(b)(1)(c)(ii).
"Subordinate Security": Any of the Class B-1 Securities, Class
B-2 Securities, Class B-3 Securities, Class B-4 Securities, Class B-5 Securities
or Class B-6 Securities.
"Sub-Servicer": Any Person with which the Master Servicer has
entered into a Sub-Servicing Agreement and which meets the qualifications of a
Sub-Servicer pursuant to Section 3.02; provided, however, that the term
"Sub-Servicer" shall not include any agent on behalf of the Master Servicer
solely with respect to tax collections and provided further that notwithstanding
the employment of any such agent, nothing herein shall relieve the Master
Servicer from its obligations and liabilities to the Securityholders and the
Trustee for servicing and administering the Mortgage Loans.
"Sub-Servicer Remittance Date": The 18th day of each month, or
if such day is not a Business Day, the immediately preceding Business Day.
"Sub-Servicing Account": An account established by a
Sub-Servicer which meets the requirements set forth in Section 3.08 and is
otherwise acceptable to the Master Servicer.
"Sub-Servicing Agreement": The written contract between the
Master Servicer and a Sub-Servicer and any successor Sub-Servicer relating to
servicing and administration of certain Mortgage Loans as provided in Section
3.02.
"Tax Returns": The federal income tax return on Internal
Revenue Service Form 1066, U.S. Real Estate Mortgage Investment Conduit Income
Tax Return, including Schedule Q thereto, Quarterly Notice to Residual Interest
Holders of REMIC Taxable Income or Net Loss Allocation, or any successor forms,
to be filed on behalf of the Trust Fund due to its classification as a REMIC
under the REMIC Provisions, together with any and all other information, reports
or returns that may be required to be furnished to the Securityholders or filed
with the Internal Revenue Service or any other governmental taxing authority
under any applicable provisions of federal, state or local tax laws.
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"Transfer": Any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any Ownership Interest in a
Security.
"Transferor": Any Person who is disposing by Transfer of any
Ownership Interest in a Security.
"Trust": The trust established pursuant to the terms of this
Agreement.
"Trust Fund": The pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder, consisting
of: (i) the Mortgage Loans (exclusive of payments of principal and interest due
on or before the Cut-off Date, if any) as from time to time are subject to this
Agreement and all payments under and proceeds of the Mortgage Loans (exclusive
of any prepayment fees and late payment charges received on the Mortgage Loans),
together with all documents included in the related Mortgage File, subject to
Section 2.01; (ii) such funds or assets as from time to time are deposited in
the Custodial Account, the Excess Proceeds Account or the Security Account;
(iii) any REO Property; and (iv) the Primary Hazard Insurance Policies, if any,
and all other Insurance Policies with respect to the Mortgage Loans.
"Trustee": The First National Bank of Chicago, or its
successor in interest, or any successor trustee appointed as herein provided.
"Undercollateralized": For any Distribution Date, (i) with
respect to the Class FX Subaccounts, if the aggregate Stated Principal Balance
of the Group I Mortgage Loans, less the applicable Discount Fraction of any
Group I Discount Mortgage Loans exceeds the aggregate Subaccount Principal
Balance of the Class FX Subaccounts, and (ii) with respect to the Class II
Subaccounts, if the aggregate Stated Principal Balance of the Group II Mortgage
Loans, less the applicable Discount Fraction of any Group II Discount Mortgage
Loans exceeds the aggregate Subaccount Principal Balance of the Class II
Subaccounts.
"Uninsured Cause": Any cause of damage to property subject to
a Mortgage such that the complete restoration of such property is not fully
reimbursable by the hazard insurance policies or flood insurance policies
required to be maintained pursuant to Section 3.13.
"United States Person": A citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, an
estate whose income from sources without the United States is includible in
gross income for United States federal income tax purposes regardless of its
connection with the conduct of a trade or business within the United States and
any 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
fiduciaries have the authority to control all substantial decisions of the
trust. The term "United States" shall have the meaning set forth in Section 7701
of the Code or successor provisions.
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"Voting Rights": The portion of the voting rights of all of
the Securities which is allocated to any Security. At all times during the term
of this Agreement, 96.00% of all of the Voting Rights shall be allocated among
Holders of the Class FXA-1 Securities, Class FXA-2 Securities, Class FXA-3
Securities, Class FXA-4 Securities, Class FXA-5 Securities, Class FXA-6
Securities, Class FXA-7 Securities, Class FXA-8 Securities, Class FXP
Securities, Class A-1 Securities, Class A-2 Securities, Class A-3 Securities,
Class A-4 Securities, Class P Securities, Class B-1 Securities, Class B-2
Securities, Class B-3 Securities, Class B-4 Securities, Class B-5 Securities and
Class B-6 Securities in proportion to the outstanding Security Principal
Balances of their respective Securities; 3.00% of all of the Voting Rights will
be allocated among the Holders of the Class FXS Securities, Class S Securities
and Class FXA-9 Securities pro rata, based upon their applicable Notional
Amounts and 0.50% of all Voting Rights will be allocated to each of the Class RP
Securities and Class R Securities in proportion to their initial respective
Security Principal Balance, in each case allocated among the Securities of each
such Class in accordance with their respective Percentage Interests.
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ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF SECURITIES
SECTION 2.01. Conveyance of Mortgage Loans.
The Seller, as of the Closing Date, and concurrently with the
execution and delivery hereof, does hereby assign, transfer, sell, set over and
otherwise convey to the Trustee without recourse all the right, title and
interest of the Seller in and to the Mortgage Loans identified on the Mortgage
Loan Schedule (exclusive of any prepayment fees and late payment charges
received thereon) and all other assets included or to be included in the Trust
Fund for the benefit of the Securityholders. Such assignment includes all
principal and interest received by the Master Servicer on or with respect to the
Mortgage Loans (other than payment of principal and interest due on or before
the Cut-off Date).
In connection with such transfer and assignment, the Seller
shall deliver (or cause to be delivered) to, and deposit (or cause to be
deposited) with the Trustee on or before the Closing Date, the following
documents or instruments:
(i) the original Mortgage Note endorsed "Pay to the order of
The First National Bank of Chicago, as trustee, without recourse," and
signed in the name of the Loan Seller by an authorized officer, with
all intervening endorsements showing a complete chain of title from the
originator to the Loan Seller. If the Mortgage Loan was acquired by the
Loan Seller in a merger, the endorsement must be by "[Loan Seller],
successor by merger to the [name of predecessor]". If the Mortgage Loan
was acquired or originated by the Loan Seller while doing business
under another name, the endorsement must be by "[Loan Seller] formerly
known as [previous name]";
(ii) the original Mortgage with evidence of recording thereon,
or a copy thereof certified by the public recording office in which
such Mortgage has been recorded or, if the original Mortgage has not
been returned from the applicable public recording office, a true
certified copy, certified by the Loan Seller, of the original Mortgage
together with a certification of the Loan Seller certifying that the
original Mortgage has been delivered for recording in the appropriate
public recording office of the jurisdiction in which the Mortgaged
Property is located;
(iii) a duly executed original Assignment of the Mortgage in
recordable form to "The First National Bank of Chicago, as trustee for
the holders of Financial Asset Securitization, Inc., Mortgage
Participation Securities," Series 1997-NAMC 1;
(iv) originals of all recorded intervening Assignments of
Mortgage, or copies thereof, certified by the public recording office
in which such Assignments of Mortgage
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have been recorded showing a complete chain of title from the
originator to the Loan Seller, with evidence of recording thereon, or a
copy thereof certified by the public recording office in which such
Assignment of Mortgage has been recorded or, if the original Assignment
of Mortgage has not been returned from the applicable public recording
office, a true certified copy, certified by the Loan Seller of the
original Assignment of Mortgage together with a certification
certifying that the original Assignment of Mortgage has been delivered
for recording in the appropriate public recording office of the
jurisdiction in which the Mortgaged Property is located;
(v) the original policy of title insurance, including riders
and endorsements thereto, or a certified copy of such policy certified
by the Loan Seller, or if the policy has not yet been issued, a written
commitment or interim binder or preliminary report of title issued by
the title insurance or escrow company;
(vi) originals, or copies thereof certified by the public
recording office in which such documents have been recorded, of each
assumption, extension, modification, written assurance or substitution
agreements, if applicable, or if the original of such document has not
been returned from the applicable public recording office, a true
certified copy, certified by the Loan Seller, of such original document
together with certificate of Loan Seller certifying the original of
such document has been delivered for recording in the appropriate
recording office of the jurisdiction in which the Mortgaged Property is
located;
(vii) if the Mortgage Note or Mortgage or any other material
document or instrument relating to the Mortgage Loan has been signed by
a person on behalf of the Mortgagor, the original power of attorney or
other instrument or a certified copy of such certified by the Loan
Seller, that authorized and empowered such person to sign bearing
evidence that such instrument has been recorded, if so required in the
appropriate jurisdiction where the Mortgaged Property is located (or,
in lieu thereof, a duplicate or conformed copy of such instrument,
together with a certificate of receipt from the recording office,
certifying that such copy represents a true and complete copy of the
original and that such original has been or is currently submitted to
be recorded in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located), or if the
original power of attorney or other such instrument has been delivered
for recording in the appropriate public recording office of the
jurisdiction in which the Mortgaged Property is located; and
(viii) evidence of the original or certified to be true copy,
certified by the Loan Seller, of the Primary Mortgage Insurance Policy,
if required.
If the Seller cannot deliver the original recorded Mortgage
Loan Documents or the original policy of title insurance, including riders and
endorsements thereto, on the Closing Date, the Loan Seller will, promptly upon
receipt of notice thereof and in any case not later than
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180 days from the Closing Date, deliver such original documents, including
original recorded documents, to the Trustee (unless the Loan Seller is delayed
in making such delivery by reason of the fact that such documents shall not have
been returned by the appropriate recording office). If delivery is not completed
within 180 days solely due to delays in making such delivery by reason of the
fact that such documents shall not have been returned by the appropriate
recording office, the Loan Seller is required to deliver such documents to the
Trustee within such time period as specified in an officer's certificate of the
Loan Seller. In the event that documents have not been received by the date
specified in such officer's certificate of the Loan Seller, a subsequent
officer's certificate is required to be delivered by the Loan Seller by such
date specified in the prior officer's certificate of the Loan Seller, stating a
revised date for receipt of documentation. The procedure shall be repeated until
the documents have been received and delivered. The Loan Seller shall continue
to use its best efforts to effect delivery within 270 days of the Closing Date.
Upon receipt of any such document from the Loan Seller, the Seller shall
promptly deliver such document to the Trustee.
The Loan Seller shall pay all initial recording fees, for the
Assignments and any other fees in connection with the transfer of all original
documents to the Trustee. The Loan Seller shall prepare, in recordable form, all
Assignments necessary to assign the Mortgage Loans to the Trustee on behalf of
the Trust, and as promptly as practicable after the Closing Date, the Loan
Seller shall cause to be delivered to the appropriate public office for
recordation in the real property records the Assignment referred to in clause
(iii) and to the extent necessary in clause (iv) of this Section 2.01. While
such Assignment to be recorded is being recorded, the Trustee shall retain a
photocopy of such Assignment. If any Assignment is lost or returned unrecorded
to the Trustee because of any defect therein, the Loan Seller shall prepare a
substitute Assignment or cure such defect, as the case may be, and the Trustee
shall cause such Assignment to be recorded in accordance with this paragraph. If
any Assignment is lost or returned unrecorded because of any Trustee error, the
Trustee shall cause such Assignment to be recorded in accordance with this
paragraph at its expense.
All original documents relating to the Mortgage Loans which
are not delivered to the Trustee are and shall be held by the Master Servicer in
trust for the benefit of the Trustee on behalf of the Securityholders.
Except as may otherwise expressly be provided herein, neither
the Seller, the Loan Seller, the Master Servicer nor the Trustee shall (and the
Master Servicer shall ensure that no Sub-Servicer shall) assign, sell, dispose
of or transfer any interest in the Trust Fund or any portion thereof, or permit
the Trust Fund or any portion thereof to be subject to any lien, claim,
mortgage, security interest, pledge or other encumbrance of, any other Person.
It is intended that the conveyance of the Mortgage Loans by
the Seller to the Trustee as provided in this Section be, and be construed as, a
sale of the Mortgage Loans by the Seller to the Trustee for the benefit of the
Securityholders. It is, further, not intended that such conveyance be deemed a
pledge of the Mortgage Loans by the Seller to the Trustee to secure
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a debt or other obligation of the Seller. However, in the event that the
Mortgage Loans are held to be property of the Seller, or if for any reason this
Agreement is held or deemed to create a security interest in the Mortgage Loans,
then it is intended that, (a) this Agreement shall also be deemed to be a
security agreement within the meaning of Articles 8 and 9 of the New York
Uniform Commercial Code and the Uniform Commercial Code of any other applicable
jurisdiction; (b) the conveyance provided for in this Section shall be deemed to
be a grant by the Seller to the Trustee of a security interest in all of the
Seller's right (including the power to convey title thereto), title and
interest, whether now owned or hereafter acquired, in and to (A) the Mortgage
Loans, including the Mortgage Notes, the Mortgages, any related insurance
policies and all other documents in the related Mortgage Files, (B) all amounts
payable to the holders of the Mortgage Loans in accordance with the terms
thereof and (C) all proceeds of the conversion, voluntary or involuntary, of the
foregoing into cash, instruments, securities or other property, including
without limitation all amounts from time to time held or invested in the
Security Account or the Custodial Account, whether in the form of cash,
instruments, securities or other property; (c) the possession by the Trustee or
its agent of Mortgage Notes and such other items of property as constitute
instruments, money, negotiable documents or chattel paper shall be deemed to be
"possession by the secured party" or possession by a purchaser or a person
designated by such secured party, for purposes of perfecting the security
interest pursuant to the New York Uniform Commercial Code and the Uniform
Commercial Code of any other applicable jurisdiction (including, without
limitation, Sections 9-305, 8-313 or 8-321 thereof); and (d) notifications to
persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents (as applicable) of the Trustee for the purpose of perfecting
such security interest under applicable law. The Seller and the Trustee shall,
to the extent consistent with this Agreement, take such actions as may be
necessary to ensure that, if this Agreement were deemed to create a security
interest in the Mortgage Loans, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement.
SECTION 2.02. Acceptance of the Trust Fund by the Trustee.
The Trustee acknowledges receipt (subject to any exceptions
noted in the Initial Certification described below) of the documents referred to
in Section 2.01 above and all other assets included in the Trust Fund and
declares that it holds and will hold such documents and the other documents
delivered to it constituting the Mortgage Files, and that it holds or will hold
such other assets included in the Trust Fund (to the extent delivered or
assigned to the Trustee), in trust for the exclusive use and benefit of all
present and future Securityholders.
The Trustee agrees, for the benefit of the Securityholders, to
review each Mortgage File on or before the Closing Date to ascertain that all
documents required to be delivered to it are in its possession, and the Trustee
agrees to execute and deliver to the Seller, the Loan Seller and the Master
Servicer on the Closing Date an Initial Certification in the form
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annexed hereto as Exhibit C to the effect 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 such certification as not covered by
such certification), (i) all documents required to be delivered to it pursuant
to this Agreement with respect to such Mortgage Loan are in its possession, (ii)
such documents have been reviewed by it and appear regular on their face and
relate to such Mortgage Loan and (iii) based on its examination and only as to
the foregoing documents, the information set forth in items (i) - (vi), (xiv)
and (xv) of the definition of the "Mortgage Loan Schedule" accurately reflects
information set forth in the Mortgage File. Neither the Trustee nor the Master
Servicer shall be under any duty to determine whether any Mortgage File should
include any of the documents specified in clause (vi) of Section 2.01. Neither
the Trustee nor the Master Servicer shall be under any duty or obligation to
inspect, review or examine said documents, instruments, Securities or other
papers to determine that the same 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.
Within 90 days of the Closing Date the Trustee shall deliver
to the Seller, the Loan Seller and the Master Servicer a Final Certification in
the form annexed hereto as Exhibit D evidencing the completeness of the Mortgage
Files, with any applicable exceptions noted thereon.
If in the process of reviewing the Mortgage Files and
preparing the certifications referred to above the Trustee finds any document or
documents constituting a part of a Mortgage File to be missing or defective in
any material respect (but only after giving effect to any time period set forth
in Section 2.01), the Trustee shall promptly notify the Loan Seller, the Master
Servicer and the Seller. The Trustee shall promptly notify the Seller of such
defect and request that the Loan Seller cure any such defect within 60 days from
the date on which the Loan Seller was notified of such defect, and if the Loan
Seller does not cure such defect in all material respects during such period,
request that the Loan Seller purchase such Mortgage Loan from the Trust Fund on
behalf of the Securityholders at the Purchase Price within 90 days after the
date on which the Loan Seller was notified of such defect. It is understood and
agreed that the obligation of the Loan Seller to cure a material defect in, or
purchase any Mortgage Loan as to which a material defect in a constituent
document exists shall constitute the sole remedy respecting such defect
available to Securityholders or the Trustee on behalf of Securityholders. The
Purchase Price for the purchased Mortgage Loan shall be deposited or caused to
be deposited upon receipt by the Master Servicer in the Custodial Account and,
upon receipt by the Trustee of written notification of such deposit signed by a
Servicing Officer, the Trustee shall release or cause to be released to the Loan
Seller (or its designee) the related Mortgage File and shall execute and deliver
such instruments of transfer or assignment, in each case without recourse, as
the Loan Seller (or its designee) shall require as necessary to vest in the
Seller (or its designee) ownership of any Mortgage Loan released pursuant hereto
and at such time the Trustee shall have no further responsibility with respect
to the related Mortgage File.
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SECTION 2.03. Representations, Warranties and Covenants of
the Master Servicer and the Seller.
(a) The Master Servicer hereby represents and warrants to and
covenants with the Seller, the Loan Seller and the Trustee for the benefit of
Securityholders that:
(i) The Master Servicer is, and throughout the term hereof
shall remain, a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware (except as
otherwise permitted pursuant to Section 6.02), the Master Servicer is,
and shall remain, in compliance with the laws of each state in which
any Mortgaged Property is located to the extent necessary to perform
its obligations under this Agreement, and the Master Servicer is, and
shall remain, approved to sell mortgage loans to and service mortgage
loans for FNMA and FHLMC;
(ii) The execution and delivery of this Agreement by the
Master Servicer, and the performance and compliance with the terms of
this Agreement by the Master Servicer, will not violate the Master
Servicer'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 Master Servicer has the full power and authority to
enter into and consummate all transactions contemplated by this
Agreement, has duly authorized 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 Seller and the Trustee, constitutes a valid, legal and
binding obligation of the Master Servicer, enforceable against the
Master Servicer in accordance with the terms hereof, subject to (A)
applicable bankruptcy, insolvency, 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 Master Servicer 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 is likely to
affect materially and adversely either the ability of the Master
Servicer to perform its obligations under this Agreement or the
financial condition of the Master Servicer;
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(vi) No litigation is pending or, to the best of the Master
Servicer's knowledge, threatened against the Master Servicer which
would prohibit its entering into this Agreement or performing its
obligations under this Agreement or is likely to affect materially and
adversely either the ability of the Master Servicer to perform its
obligations under this Agreement or the financial condition of the
Master Servicer;
(vii) The Master Servicer will comply in all material respects
in the performance of this Agreement with all reasonable rules and
requirements of each insurer under each Insurance Policy necessary to
maintain coverage thereunder;
(viii) The execution of this Agreement and the performance of
the Master Servicer's obligations hereunder do not require any license,
consent or approval of any state or federal court, agency, regulatory
authority or other governmental body having jurisdiction over the
Master Servicer, other than such as have been obtained; and
(ix) No written information, certificate of an officer,
statement furnished in writing or report delivered to the Seller, any
affiliate of the Seller or the Trustee by the Master Servicer will, to
the knowledge of the Master Servicer, contain any untrue statement of a
material fact or omit a material fact necessary to make the
information, certificate, statement or report not misleading.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.03(a) shall survive the
execution and delivery of this Agreement, and shall inure to the benefit of the
Seller, the Loan Seller, the Trustee and the Securityholders. Upon discovery by
the Seller, the Trustee, the Loan Seller or the Master Servicer of a breach of
any of the foregoing representations, warranties and covenants that materially
and adversely affects the interests of the Seller or the Trustee, the party
discovering such breach shall give prompt written notice to the other parties.
(b) The Seller hereby represents and warrants to the Master
Servicer and the Trustee for the benefit of Securityholders that as of the
Closing Date, assuming that the representation of the Loan Seller set forth in
Section 2.04(b)(xiii) hereof and the representation of DLJMCI set forth in
Section 3.01(g) of the DLJMCI Loan Sale Agreement are both true and correct,
then immediately prior to the assignment of the Mortgage Loans to the Trustee,
the Seller had good and marketable title to, and was the sole owner thereof,
each Mortgage Loan free and clear of any pledge, lien, encumbrance or security
interest (other than rights to servicing and related compensation) and such
assignment validly transfers ownership of the Mortgage Loans to the Trustee free
and clear of any pledge, lien, encumbrance or security interest. It is
understood and agreed that the representations and warranties set forth in this
Section 2.03(b) shall survive delivery of the respective Mortgage Files to the
Trustee.
Upon discovery by either the Seller, the Master Servicer, the
Loan Seller or the Trustee of a breach of any representation or warranty set
forth in this Section 2.03 which
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materially and adversely affects the interests of the Securityholders in any
Mortgage Loan, the party discovering such breach shall give prompt written
notice to the other parties.
SECTION 2.04. Representations and Warranties of the Loan
Seller.
(a) The Loan Seller hereby represents and warrants to and
covenants with the Seller, the Master Servicer and the Trustee for the benefit
of Securityholders that:
(i) The Loan Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(ii) The execution and delivery of this Agreement by the Loan
Seller, and the performance and compliance with the terms of this
Agreement by the Loan Seller, will not violate the Loan Seller'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 Loan Seller has the full power and authority to
enter into and consummate all transactions contemplated by this
Agreement, has duly authorized 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 Seller and the Trustee, constitutes a valid, legal and
binding obligation of the Loan Seller, enforceable against the Loan
Seller in accordance with the terms hereof, subject to (A) applicable
bankruptcy, insolvency, 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 Loan Seller 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 is likely to affect materially
and adversely either the ability of the Loan Seller to perform its
obligations under this Agreement or the financial condition of the Loan
Seller;
(vi) No litigation is pending or, to the best of the Loan
Seller's knowledge, threatened against the Loan Seller which would
prohibit its entering into this Agreement or performing its obligations
under this Agreement or is likely to affect materially and
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adversely either the ability of the Loan Seller to perform its
obligations under this Agreement or the financial condition of the Loan
Seller;
(vii) The execution of this Agreement and the performance of
the Loan Seller's obligations hereunder do not require any license,
consent or approval of any state or federal court, agency, regulatory
authority or other governmental body having jurisdiction over the Loan
Seller, other than such as have been obtained; and
(viii) No information, certificate of an officer, statement
furnished in writing or report delivered to the Seller, any affiliate
of the Seller or the Trustee by the Loan Seller will, to the knowledge
of the Loan Seller, contain any untrue statement of a material fact or
omit a material fact necessary to make the information, certificate,
statement or report not misleading.
It is understood and agreed that the representations,
warranties and covenants set forth in this Section 2.04(a) shall survive the
execution and delivery of this Agreement, and shall inure to the benefit of the
Seller, the Trustee, the Master Servicer and the Securityholders. Upon discovery
by the Seller, the Trustee, the Loan Seller or the Master Servicer of a breach
of any of the foregoing representations, warranties and covenants that
materially and adversely affects the interests of the Seller, the Master
Servicer or the Trustee, the party discovering such breach shall give prompt
written notice to the other parties.
(b) The Loan Seller hereby represents and warrants to and
covenants with the Seller, the Master Servicer and the Trustee for the benefit
of the Securityholders that, with respect to each Mortgage Loan, as of the
Closing Date or as of such date specifically provided herein:
(i) The consummation of the transactions contemplated by this
Agreement is in the ordinary course of business of the Loan Seller, and
the transfer, assignment and conveyance of the Mortgage Notes and the
Mortgages by the Loan Seller pursuant to each Mortgage Loan Purchase
Agreement were not subject to bulk transfer or any similar statutory
provisions in effect in any applicable jurisdiction;
(ii) The Loan Seller used no selection procedures (other than
those set forth on the Mortgage Loan Schedule) that identified the
Mortgage Loans as being less desirable or valuable than other
comparable mortgage loans in the Loan Seller's portfolio;
(iii) The information set forth in the Mortgage Loan Schedule
is true, complete and correct;
(iv) All payments due prior to the Cut-off Date for such
Mortgage Loan have been made as of the Closing Date, the Mortgage Loan
is not delinquent in payment more than 30 days and has not been
dishonored; the Loan Seller has not advanced funds
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for payments of principal or interest, or induced, solicited or
knowingly received any advance of funds for payments of principal or
interest from a party other than the owner of the Mortgaged Property
subject to the Mortgage, directly or indirectly, for the payment of any
amount required by the Mortgage Loan for payments of principal or
interest; there has been no more than one delinquency during the
preceding twelve-month period and such delinquency did not last more
than 30 days;
(v) There are no material defaults in complying with the terms
of the Mortgage, and all taxes, governmental assessments, insurance
premiums, water, sewer and municipal charges, leasehold payments or
ground rents which previously became due and owing have been paid, or
escrow funds have been established in an amount sufficient to pay for
every such escrowed item which remains unpaid and which has been
assessed but is not yet due and payable;
(vi) The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by
written instruments which have been recorded to the extent any such
recordation is required by law, or, necessary to protect the interest
of the Trust and the Securityholders. No instrument of waiver,
alteration or modification has been executed, and no Mortgagor has been
released, in whole or in part, from the terms thereof except in
connection with an assumption agreement and which assumption agreement
is part of the Mortgage File and the terms of which are reflected in
the Mortgage Loan Schedule; the substance of any such waiver,
alteration or modification has been approved by the issuer of any
related Primary Mortgage Insurance Policy and title insurance policy,
to the extent required by the related policies;
(vii) The Mortgage Note and the Mortgage are not subject to
any right of rescission, set-off, counterclaim or defense, including,
without limitation, the defense of usury, nor will the operation of any
of the terms of the Mortgage Note or the Mortgage, or the exercise of
any right thereunder, render the Mortgage Note or Mortgage
unenforceable, in whole or in part, or subject to any right of
rescission, set-off, counterclaim or defense, including the defense of
usury, and no such right of rescission, set-off, counterclaim or
defense has been asserted with respect thereto, other than any other
state laws providing "security first" election of remedies, one action,
and anti-deficiency requirements; and to the best of Loan Seller's
knowledge, the Mortgagor was not a debtor in any state or federal
bankruptcy or insolvency proceeding at the time the Mortgage Loan was
originated;
(viii) All buildings or other customarily insured improvements
upon the Mortgaged Property are insured by an insurer acceptable under
the FNMA Guides, against loss by fire, hazards of extended coverage and
such other hazards as are provided for in the FNMA Guides or by FHLMC,
as well as all additional requirements set forth in Section 3.13
hereof. All such standard hazard policies are in full force and effect
and
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on the date of origination contained a standard mortgagee clause naming
the Loan Seller and its successors in interest and assigns as loss
payee and such clause is still in effect and all premiums due thereon
have been paid. If required by the Flood Disaster Protection Act of
1973, as amended, the Mortgage Loan is covered by a flood insurance
policy meeting the requirements of the current guidelines of the
Federal Insurance Administration which policy conforms to FNMA and
FHLMC requirements. Such policy was issued by an insurer acceptable
under FNMA or FHLMC guidelines. The Mortgage obligates the Mortgagor
thereunder to maintain all such insurance at the Mortgagor's cost and
expense, and on the Mortgagor's failure to do so, authorizes the holder
of the Mortgage to maintain such insurance at the Mortgagor's cost and
expense and to seek reimbursement therefor from the Mortgagor;
(ix) Any and all requirements of any federal, state or local
law including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit
opportunity or disclosure laws applicable to the Mortgage Loan have
been complied with;
(x) The Mortgage has not been satisfied, canceled or
subordinated, in whole or in part, or rescinded, and the Mortgaged
Property has not been released from the lien of the Mortgage, in whole
or in part nor has any instrument been executed that would effect any
such release, cancellation, subordination or rescission. Neither the
Loan Seller nor any servicer has waived the performance by the
Mortgagor of any action, if the Mortgagor's failure to perform such
action would cause the Mortgage Loan to be in default, nor has the Loan
Seller nor any servicer waived any default resulting from any action or
inaction by the Mortgagor;
(xi) The Mortgage is a valid, subsisting, enforceable and
perfected first lien on the Mortgaged Property, including all buildings
on the Mortgaged Property and all installations and mechanical,
electrical, plumbing, heating and air conditioning systems affixed to
such buildings, and all additions, alterations and replacements made at
any time with respect to the foregoing securing the Mortgage Note's
original principal balance. Such lien is free and clear of all adverse
claims, liens and encumbrances having priority over the first lien of
the Mortgage, subject only to Permitted Encumbrances. Any security
agreement, chattel mortgage or equivalent document related to and
delivered in connection with the Mortgage Loan establishes and creates
a valid, subsisting, enforceable and perfected first lien and first
priority security interest on the property described therein, and the
Loan Seller had the full right to sell and assign the same to the
Seller;
(xii) The Mortgage Note and the related Mortgage are original
and genuine and each is the legal, valid and binding obligation of the
maker thereof, enforceable in all respects in accordance with its terms
subject to bankruptcy, insolvency and other laws of general application
affecting the rights of creditors. The Loan Seller has taken all
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action necessary to transfer such rights of enforceability to the
Seller and the Trust. All parties to the Mortgage Note and the Mortgage
had the legal capacity to enter into the Mortgage Loan and to execute
and deliver the Mortgage Note and the Mortgage. The Mortgage Note and
the Mortgage have been duly and properly executed by such parties. No
fraud, error, omission, misrepresentation, negligence or similar
occurrence with respect to a Mortgage Loan has taken place on the part
of Loan Seller or the Mortgagor or, to the best of the Loan Seller's
knowledge, any other party involved in the origination of the Mortgage
Loan. The proceeds of the Mortgage Loan have been fully disbursed and
there is no requirement for future advances thereunder, and any and all
requirements as to completion of any on-site or off-site improvements
and as to disbursements of any escrow funds therefor have been complied
with. All costs, fees and expenses incurred in making or closing the
Mortgage Loan and the recording of the Mortgage were paid or are in the
process of being paid, and the Mortgagor is not entitled to any refund
of any amounts paid or due under the Mortgage Note or Mortgage;
(xiii) Immediately prior to the sale of the Mortgage Loans to
DLJMCI pursuant to the applicable Mortgage Loan Purchase Agreement, the
Loan Seller was the sole owner of record and holder of the Mortgage
Loan and the indebtedness evidenced by the Mortgage Note, and the
Mortgage Loan, including the Mortgage Note and the Mortgage, were not
subject to an assignment or pledge, and the Loan Seller had good and
marketable title to and was the sole owner thereof and had full right
to transfer and sell the Mortgage Loan to DLJMCI free and clear of any
encumbrance, equity, lien, pledge, charge, claim or security interest
and had the full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and
assign the Mortgage Loan pursuant to the applicable Mortgage Loan
Purchase Agreement and such assignment under such Mortgage Loan
Purchase Agreement validly transferred ownership of the Mortgage Loans
to DLJMCI free and clear of any encumbrance, equity, participation
interest, lien, pledge, charge, claim or security interest. The Loan
Seller has no obligation or right to repurchase the Mortgage Loan or
substitute another Mortgage Loan, except as provided in this Agreement
(other than Escrow Funds due to overages, if any, to the extent
currently maintained in escrow accounts by the Loan Seller);
(xiv) Each Mortgage Loan is covered by an ALTA lender's title
insurance policy or other generally acceptable form of policy or
insurance acceptable to FNMA or FHLMC, issued by a title insurer
acceptable to FNMA or FHLMC and qualified to do business in the
jurisdiction where the Mortgaged Property is located, insuring (subject
to any Permitted Encumbrances) the Loan Seller, its successors and
assigns, as to the first priority lien of the Mortgage in the original
principal amount of the Mortgage Loan. Such lender's title insurance
policy affirmatively insures ingress and egress and against
encroachment by or upon the Mortgaged Property or any interest therein.
Where required by state law or regulation, the Mortgagor has been given
the opportunity to choose the carrier of the required mortgage title
insurance. The Loan Seller, its successors and assigns, are the sole
insureds of such lender's title insurance policy, such
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title insurance policy has been duly and validly endorsed to the Trust
or the assignment to the Trust of the Loan Seller's interest therein
does not require the consent of or notification to the insurer and such
lender's title insurance policy is in full force and effect and will be
in full force and effect upon the consummation of the transactions
contemplated by this Agreement. No claims have been made under such
lender's title insurance policy, and no prior holder of the related
Mortgage, including the Loan Seller, has done, by act or omission,
anything which would impair the coverage of such lender's title
insurance policy;
(xv) There is no default, breach, violation or event of
acceleration existing under the Mortgage or the related Mortgage Note
and no event which, with the passage of time or with notice and the
expiration of any grace or cure period, would constitute a default,
breach, violation or event permitting acceleration; and neither the
Loan Seller nor any prior mortgagee has waived any default, breach,
violation or event permitting acceleration;
(xvi) There are no mechanics', or similar liens or claims
which have been filed for work, labor or material (and no rights are
outstanding that under law could give rise to such liens) affecting the
related Mortgaged Property which are or may be liens prior to or equal
to the lien of the related Mortgage;
(xvii) All improvements subject to the Mortgage which were
considered in determining the appraised value of the Mortgaged Property
lie wholly within the boundaries and building restriction lines of the
Mortgaged Property (and wholly within the project with respect to a
condominium unit) and no improvements on adjoining properties encroach
upon the Mortgaged Property except those which are insured against by
the title insurance policy referred to in clause (xv) above and all
improvements on the property comply with all applicable zoning and
subdivision laws and ordinances; as of the date of origination of the
Mortgage Loan the Mortgage Property was, and to the best of the Loan
Seller's knowledge as of the Closing Date the Mortgage Property is,
lawfully occupied under applicable law;
(xviii) The Mortgage Loan was originated by or for the Loan
Seller. The Mortgage Loan complies with all the terms, conditions and
requirements of the Loan Seller's underwriting standards in effect at
the time of origination of such Mortgage Loan. The Mortgage Notes and
Mortgages (exclusive of any riders) are on forms acceptable to FNMA or
FHLMC. The Loan Seller is currently selling loans to FNMA and/or FHLMC
which are the same document forms as the Mortgage Notes and Mortgages
(inclusive of any riders); the Mortgage Loan bears interest at a fixed
rate as set forth in the Mortgage Loan Schedule, and Monthly Payments
under the Mortgage Note are due and payable on the first day of each
month. The Mortgage contains the usual and enforceable provisions
(subject to any applicable state, federal or local laws) of the
originator at the time of origination for the acceleration of the
payment of the
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unpaid principal amount of the Mortgage Loan if the related Mortgaged
Property is sold without the prior consent of the mortgagee thereunder;
(xix) The Mortgaged Property is not subject to any material
damage by waste, fire, earthquake, windstorm, flood or other casualty
and is in good repair. At origination of the Mortgage Loan there was,
and there currently is, no proceeding pending for the total or partial
condemnation of the Mortgaged Property. There have not been any
condemnation proceedings with respect to the Mortgaged Property and, to
the best of Loan Seller's knowledge, there are no such proceedings
scheduled to commence at a future date;
(xx) The related Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder
thereof adequate for the realization against the Mortgaged Property of
the benefits of the security provided thereby, including, (1) in the
case of a Mortgage designated as a deed of trust, by trustee's sale,
and (2) otherwise by judicial foreclosure. There is no homestead or
other exemption available to the Mortgagor which would interfere with
the right to sell the Mortgaged Property at a trustee's sale or the
right to foreclose the Mortgage;
(xxi) If the Mortgage constitutes a deed of trust, a trustee,
authorized and duly qualified if required under applicable law to act
as such, has been properly designated and currently so serves and is
named in the Mortgage, and no fees or expenses are or will become
payable by the Trust or any other Person to the trustee under the deed
of trust, except in connection with a trustee's sale or attempted sale
after default by the Mortgagor;
(xxii) The Mortgage File contains an appraisal of the related
Mortgaged Property signed prior to the final approval of the mortgage
loan application by the appraiser, approved by the Loan Seller, who, to
the best of Loan Seller's knowledge, had no interest, direct or
indirect, in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan, and the appraisal and appraiser both
satisfy the requirements of FNMA or FHLMC and Title XI of FIRREA and
the regulations promulgated thereunder, all as in effect on the date
the Mortgage Loan was originated;
(xxiii) All parties which have had any interest in the
Mortgage, whether as mortgagee, assignee, pledgee or otherwise, are
(or, during the period in which they held and disposed of such
interest, were) (A) in compliance with any and all applicable licensing
requirements of the laws of the state wherein the Mortgaged Property is
located, and (B) (1) organized under the laws of such state, or (2)
qualified to do business in such state, or (3) federal savings and loan
associations or national banks or a Federal Home Loan Bank or savings
bank having principal offices in such state, or (4) not doing business
in such state;
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(xxiv) The related Mortgage Note is not and has not been
secured by any collateral except the lien of the corresponding Mortgage
and the security interest of any applicable security agreement or
chattel mortgage referred to above and such collateral does not serve
as security for any other obligation;
(xxv) The Mortgagor has received all disclosure materials
required by applicable law with respect to the making of such mortgage
loans;
(xxvi) The Mortgage Loan does not contain "graduated payment"
or "buy down" features;
(xxvii) The Mortgagor is not in bankruptcy and, to the best of
the Loan Seller's knowledge, the Mortgagor is not insolvent; to the
best of the Loan Seller's knowledge there exist no circumstances or
conditions with respect to the Mortgage, the Mortgaged Property, the
Mortgagor or the Mortgagor's credit standing that could reasonably be
expected to cause investors to regard the Mortgage Loan as an
unacceptable investment, cause the Mortgage Loan to become delinquent,
or materially adversely affect the value or marketability of the
Mortgage Loan;
(xxviii) The Mortgage Loans are fixed rate mortgage loans. The
Mortgage Loans have an original term to maturity of not more than
thirty (30) years, with interest payable in arrears on the first day of
each month. Each Mortgage Note requires a monthly payment which is
sufficient to fully amortize the original principal balance over the
original term thereof and to pay interest at the related Mortgage
Interest Rate. No Mortgage Loan contains terms or provisions which
would result in negative amortization.
(xxix) The origination and servicing practices used by the
Loan Seller, with respect to each Mortgage Note and Mortgage have been
legal and in accordance with applicable laws and regulations, and in
all material respects proper and prudent in the mortgage origination
and servicing business. With respect to escrow deposits and payments
that the Loan Seller is entitled to collect, all such payments are in
the possession of, or under the control of, the Loan Seller, and there
exist no deficiencies in connection therewith for which customary
arrangements for repayment thereof have not been made. All escrow
payments have been collected in full compliance with state and federal
law and the provisions of the related Mortgage Note and Mortgage. As to
any Mortgage Loan that is the subject of an escrow, escrow of funds is
not prohibited by applicable law and has been established in an amount
sufficient to pay for every escrowed item that remains unpaid and has
been assessed but is not yet due and payable. No escrow deposits or
other charges or payments due under the Mortgage Note have been
capitalized under any Mortgage or the related Mortgage Note;
(xxx) None of the Mortgage Loans had a Loan-to-Value Ratio at
origination greater than 95%. Approximately 20% (by aggregate
outstanding principal balance of
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the mortgage Loans as of the Cut-off Date) of the Mortgage Loans are
insured under Primary Mortgage Insurance Policies;
(xxxi) In the event the Mortgage Loan has an LTV greater than
80%, the excess of the principal balance of the Mortgage Loan over 80%
of the Collateral Value is and will be insured as to payment defaults
by a Primary Mortgage Insurance Policy issued by a Qualified Mortgage
Insurer. All provisions of such Primary Mortgage Insurance Policy have
been and are being complied with, such policy is in full force and
effect, and all premiums due thereunder have been paid. No action,
inaction, or event has occurred and no state of facts exists that has,
or will result in the exclusion from, denial of, or defense to
coverage. Subject to the mortgagor's right to cancel under any
applicable federal or state law, any Mortgage Loan subject to a Primary
Mortgage Insurance Policy obligates the Mortgagor thereunder to
maintain the Primary Mortgage Insurance Policy and to pay all premiums
and charges in connection therewith. The Mortgage Interest Rate for the
Mortgage Loan as set forth on the Mortgage Loan Schedule is net of any
such insurance premium;
(xxxii) The assignment of Mortgage is in recordable form and
is acceptable for recording under the laws of the jurisdiction in which
the Mortgaged Property is located;
(xxxiii) As to Mortgage Loans that are not secured by an
interest in a leasehold estate, the Mortgaged Property is located in
the state identified in the Mortgage Loan Schedule and consists of a
single parcel of real property with a detached single family residence
erected thereon, or a townhouse, or a two-to four-family dwelling, or
an individual condominium unit in a condominium project, or an
individual unit in a planned unit development or a de minimis planned
unit development, provided, however, that no residence or dwelling is a
single parcel of real property with a cooperative housing corporation
erected thereon, or a mobile home. To the best of the Loan Seller's
knowledge, as of the date of origination, no portion of the Mortgaged
Property was used for commercial purposes, and to the best of the Loan
Seller's knowledge, since the date of origination, no portion of the
Mortgaged Property is used for commercial purposes;
(xxxiv) Principal payments on the Mortgage Loan commenced no
more than sixty (60) days after the funds were disbursed in connection
with the Mortgage Loan. The Mortgage Note is payable on the first day
of each month in equal monthly installments of principal and interest,
with interest calculated and payable in arrears, sufficient to amortize
the Mortgage Loan fully by the stated maturity date, over an original
term of not more than thirty (30) years from commencement of
amortization;
(xxxv) As of the date of origination of the Mortgage Loan, the
Mortgaged Property was lawfully occupied under applicable law, and all
inspections, licenses and certificates required to be made or issued
with respect to all occupied portions of the Mortgaged Property and,
with respect to the use and occupancy of the same, including
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but not limited to certificates of occupancy and fire underwriting
certificates, have been made or obtained from the appropriate
authorities;
(xxxvi) If the Mortgaged Property is a condominium unit or a
planned unit development (other than a de minimis planned unit
development) such condominium or planned unit development project meets
FNMA or FHLMC eligibility requirements, or is located in a condominium
or planned unit development project which has received project approval
from FNMA or FHLMC;
(xxxvii) There is no pending action or proceeding directly
involving the Mortgaged Property in which compliance with any
environmental law, rule or regulation is an issue; to the best of Loan
Seller's knowledge, there is no violation of any environmental law,
rule or regulation with respect to the Mortgaged Property;
(xxxviii) The Mortgagor has not notified the Loan Seller, and
the Loan Seller has no knowledge of any relief requested or allowed to
the Mortgagor under the Soldiers' and Sailors' Civil Relief Act of
1940;
(xxxix) No Mortgage Loan was made in connection with the
construction or rehabilitation of a Mortgaged Property;
(xl) Each Mortgage Loan has been serviced in compliance with
those mortgage servicing practices (including collection procedures) of
prudent mortgage banking institutions which service mortgage loans of
the same type as such Mortgage Loan, and which are in accordance with
FNMA servicing practices and procedures, for MBS pool mortgages, as
defined in the FNMA Guides including future updates;
(xli) Mortgage Loan was originated by a mortgagee approved by
the Secretary of Housing and Urban Development pursuant to sections 203
and 211 of the National Housing Act, a savings and loan association, a
savings bank, a commercial bank, credit union, insurance company or
similar institution which is supervised and examined by a federal or
state authority;
(xlii) With respect to any ground lease to which a Mortgaged
Property may be subject: (i) the Mortgagor is the owner of a valid and
subsisting leasehold interest under such ground lease; (ii) such ground
lease is in full force and effect, unmodified and not supplemented by
any writing or otherwise; (iii) all rent, additional rent and other
charges reserved therein have been fully paid to the extent payable as
of the Closing Date; (iv) the Mortgagor enjoys the quiet and peaceful
possession of the leasehold estate, subject to any sublease; (v) the
Mortgagor is not in default under any of the terms of such ground
lease, and there are no circumstances which, with the passage of time
or the giving of notice, or both, would result in a default under such
ground lease; (vi) the lessor under such ground lease is not in default
under any of the terms or provisions of
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such ground lease on the part of the lessor to be observed or
performed; (vii) the lessor under such ground lease has satisfied any
repair or construction obligations due as of the Closing Date pursuant
to the terms of such ground lease; and (viii) the execution, delivery
and performance of the Mortgage do not require the consent (other than
those consents which have been obtained and are in full force and
effect) under, and will not contravene any provision of or cause a
default under, such ground lease. No more than 1% of the Mortgaged
Properties (by outstanding principal balance as of the Cut-off Date)
are secured by leasehold interests;
(xliii) The Mortgage Loan is a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code (without regard to Treasury
Regulations ss. 1.860G-2(f) or any similar rule that provides that a
defective obligation is a qualified mortgage for a temporary period);
and
(xliv) If the Mortgage Loan is secured by a long-term
residential lease, (1) the lessor under the lease holds a fee simple
interest in the land; (2) the terms of such lease expressly permit the
mortgaging of the leasehold estate, the assignment of the lease without
the lessor's consent and the acquisition by the holder of the Mortgage
of the rights of the lessee upon foreclosure or assignment in lieu of
foreclosure or provide the holder of the Mortgage with substantially
similar protections; (3) the terms of such lease do not (a) allow the
termination thereof upon the lessee's default without the holder of the
Mortgage being entitled to receive written notice of, and opportunity
to cure, such default, (b) allow the termination of the lease in the
event of damage or destruction as long as the Mortgage is in existence,
(c) prohibit the holder of the Mortgage from being insured (or
receiving proceeds of insurance) under the hazard insurance policy or
policies relating to the Mortgaged Property or (d) permit any increase
in rent by the lessor other than pre-established increases set forth in
the lease; (4) the original term of such lease is not less than 15
years; (5) the term of such lease does not terminate earlier than five
years after the maturity date of the Mortgage Note; and (6) the
Mortgaged Property is located in a jurisdiction in which the use of
leasehold estates in transferring ownership in residential properties
is a widely accepted practice.
Upon the discovery by the Seller, the Master Servicer, the
Loan Seller or the Trustee of a breach of any of the representations and
warranties made in this Section 2.04(b) which materially and adversely affects
the interests of the Securityholders in such Mortgage Loan, the party
discovering such breach shall give prompt written notice to the other parties.
The Loan Seller shall, within 90 days from the earlier of the date that (x) the
Seller, the Master Servicer or the Trustee notified the Loan Seller of such
breach, or (y) the Loan Seller discovered such breach, either (i) cure such
breach in all material respects or (ii) purchase such Mortgage Loan from the
Trust Fund at the Purchase Price and in the manner set forth in Section 2.02.
Except as expressly set forth herein none of the Trustee, the Seller or the
Master Servicer (in its capacity as Master Servicer) is under any obligation to
discover any breach of the above mentioned representations and warranties. It is
understood and agreed that the obligation of the
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Loan Seller to cure such breach or purchase such Mortgage Loan as to which such
a breach has occurred and is continuing shall constitute the sole remedy
respecting such breach available to Securityholders or the Trustee on behalf of
Securityholders.
SECTION 2.05. Issuance of Securities Evidencing Interests
in the Trust Fund.
The Trustee acknowledges the assignment to it of the Mortgage
Loans and the delivery of the Mortgage Files to it together with the assignment
to it of all other assets included in the Trust Fund, receipt of which is hereby
acknowledged. Concurrently with such delivery and in exchange therefor, the
Trustee, pursuant to the written request of the Seller executed by an officer of
the Seller has executed and caused to be authenticated and delivered to, or upon
the order of, the Seller the Securities in authorized denominations which
evidence ownership of the entire Trust Fund.
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ARTICLE III
ADMINISTRATION AND SERVICING
OF THE TRUST FUND
SECTION 3.01. Master Servicer to Act as Master Servicer.
The Master Servicer shall service and administer the Mortgage
Loans in accordance with this Agreement, the related Mortgage Notes and
Mortgages and Accepted Servicing Practices, and shall have full power and
authority, acting alone and/or through SubServicers as provided in Section 3.02,
to do or cause to be done any and all things in connection with such servicing
and administration that it may deem necessary or desirable and consistent with
Accepted Servicing Practices and the terms of this Agreement. 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 believes it appropriate in its best judgment, to (i) execute and
deliver, on behalf of the Securityholders and the Trustee or any of them, 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, (ii) institute foreclosure
proceedings or obtain a deed-in-lieu of foreclosure so as to convert the
ownership of such properties, and (iii) hold or cause to be held title to such
properties, on behalf of the Trustee and Securityholders. 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. Subject to Section 3.16, the Trustee shall
execute based on the written request of the Master Servicer and furnish to the
Master Servicer and any Sub-Servicer any special or limited powers of attorney
and other documents necessary or appropriate to enable the Master Servicer and
any Sub-Servicer to carry out their servicing and administrative duties
hereunder. The Trustee shall not be liable for any action taken by the Master
Servicer or any Sub-Servicer pursuant to the application of such special or
limited 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. No costs incurred by the Master Servicer or by
Sub-Servicers in effecting the payment of taxes and assessments on the Mortgaged
Properties shall, for the purpose of calculating distributions to
Securityholders, be added to the amount owing under the related Mortgage Loans,
notwithstanding that the terms of such Mortgage Loans so permit.
Notwithstanding anything in this Agreement to the contrary,
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) make or permit any
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modification, waiver or amendment of any term of any Mortgage Loan that would
both (i) 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 (ii) cause either the Pooling REMIC or the Issuing
REMIC to fail to qualify as a REMIC under the Code or the imposition of any tax
on "prohibited transactions" or "contributions" after the Startup Day under the
REMIC Provisions.
The relationship of the Master Servicer (and of any successor
to the Master Servicer under this Agreement) to the Trustee under this Agreement
is intended by the parties to be that of an independent contractor and not that
of a joint venturer, partner or agent.
SECTION 3.02. Sub-Servicing Agreements Between Master
Servicer and Sub-Servicers.
(a) The Master Servicer may enter into Sub-Servicing
Agreements with SubServicers for the servicing and administration of the
Mortgage Loans and for the performance of any and all other activities of the
Master Servicer hereunder. Each Sub-Servicer 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 Sub-Servicing Agreement, and in either case
shall be a FHLMC or FNMA approved mortgage servicer. Any Subservicing Agreement
entered into by the Master Servicer shall include the provision that such
Subservicing Agreement may be immediately terminated without cause and without
any termination fee by any successor Master Servicer hereunder. In addition,
each Sub-Servicing Agreement must impose on the Sub-Servicer requirements
conforming to the provisions set forth in Section 3.08 and provide for servicing
of the Mortgage Loans consistent with the terms of this Agreement. With the
consent of the Trustee, which consent shall not be unreasonably withheld, the
Master Servicer and the Sub-Servicers may enter into Sub-Servicing Agreements
and make amendments to the Sub-Servicing Agreements or enter into different
forms of Sub-Servicing Agreements; provided, however, that any such amendments
or different forms shall be consistent with and not violate the provisions of
this Agreement, and that no such amendment or different form shall be made or
entered into which could be reasonably expected to be materially adverse to the
interests of the Securityholders, without the consent of the Holders of
Securities entitled to at least 51% of the Voting Rights.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Securityholders, shall enforce
the obligations of each Sub-Servicer under the related Sub-Servicing Agreement,
including, without limitation, any obligation to make advances in respect of
delinquent payments as required by a Sub-Servicing Agreement. Such enforcement,
including, without limitation, the legal prosecution of claims, termination of
SubServicing Agreements and the pursuit of other appropriate remedies, shall be
in such form and
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carried out to such an extent and at such time as the Master Servicer, in its
good faith business judgment, would require were it the owner of the related
Mortgage Loans. The Master Servicer shall pay the costs of such enforcement at
its own expense, but shall be reimbursed therefor only (i) from a general
recovery resulting from such enforcement only to the extent, if any, that such
recovery exceeds all amounts due in respect of the related Mortgage Loans or
(ii) from a specific recovery of costs, expenses or attorneys' fees against the
party against whom such enforcement is directed.
SECTION 3.03. Successor Sub-Servicers.
The Master Servicer shall be entitled to terminate any
Sub-Servicing Agreement and the rights and obligations of any Sub-Servicer
pursuant to any Sub-Servicing Agreement in accordance with the terms and
conditions of such Sub-Servicing Agreement. In the event of termination of any
Sub-Servicer, all servicing obligations of such Sub-Servicer shall be assumed
simultaneously by the Master Servicer without any act or deed on the part of
such Sub-Servicer or the Master Servicer, and the Master Servicer either shall
service directly the related Mortgage Loans or shall enter into a Sub-Servicing
Agreement with a successor Sub-Servicer which qualifies under Section 3.02. Each
Sub-Servicing Agreement, if any, shall include the provision that such agreement
may be immediately terminated by any successor Master Servicer without cause and
without payment of any fee or penalty in the event that the Master Servicer
shall, for any reason, no longer be the Master Servicer (including by reason of
an Event of Default).
SECTION 3.04. Liability of the Master Servicer.
Notwithstanding any Sub-Servicing Agreement, any of the
provisions of this Agreement relating to agreements or arrangements between the
Master Servicer and a SubServicer or reference to actions taken through a
Sub-Servicer or otherwise, the Master Servicer shall remain obligated and
primarily liable to the Trustee and Securityholders 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
Sub-Servicing Agreements or arrangements or by virtue of indemnification from
the Sub-Servicer and to the same extent and under the same terms and conditions
as if the Master Servicer alone were servicing and administering the Mortgage
Loans. For purposes of this Agreement, the Master Servicer shall be deemed to
have received payments on Mortgage Loans when the Sub-Servicer has received such
payments. The Master Servicer shall be entitled to enter into any agreement with
a SubServicer for indemnification of the Master Servicer by such Sub-Servicer
and nothing contained in this Agreement shall be deemed to limit or modify such
indemnification.
SECTION 3.05. No Contractual Relationship Between
Sub-Servicers and Trustee or Securityholders.
Any Sub-Servicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Sub-Servicer
in its capacity as such and not
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as an originator shall be deemed to be between the Sub-Servicer and the Master
Servicer alone, and the Trustee and Securityholders shall not be deemed parties
thereto and shall have no claims, rights, obligations, duties or liabilities
with respect to the Sub-Servicer except as set forth in Section 3.06.
SECTION 3.06. Assumption or Termination of Sub-Servicing
Agreements by Trustee.
In the event the Master Servicer shall for any reason no
longer be the master servicer (including by reason of an Event of Default)
hereunder, the Trustee or its designee shall thereupon assume all of the rights
and obligations of the Master Servicer under each SubServicing Agreement that
the Master Servicer may have entered into, unless the Trustee is then permitted
and elects to terminate any Sub-Servicing Agreement in accordance with its
terms. Subject to Section 3.03, 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 each Sub-Servicing Agreement to the same extent as if the SubServicing
Agreements had been assigned to the assuming party, except that the Master
Servicer shall not thereby be relieved of any liability or obligations under the
Sub-Servicing Agreements, and the Master Servicer shall continue to be entitled
to any rights or benefits which arose prior to its termination as master
servicer.
The Master Servicer at its expense shall, upon request of the
Trustee, deliver to the assuming party all documents and records relating to
each Sub-Servicing 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 the Sub-Servicing
Agreements to the assuming party.
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
The Master Servicer shall use reasonable efforts to collect
all payments due under each Mortgage Loan when the same shall become due and
payable and shall, to the extent such procedures shall be consistent with this
Agreement, Accepted Servicing Practices, and the terms and provisions of related
Primary Mortgage Insurance Policy or other Insurance Policy, follow such
collection procedures as it follows with respect to mortgage loans comparable to
the Mortgage Loans and held for its own account. The Master Servicer shall not
be required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note, Primary Hazard Insurance
Policy or otherwise or against any public or governmental authority with respect
to a taking or condemnation) if it reasonably believes that it is prohibited by
applicable law from enforcing the provision of the Mortgage or other instrument
pursuant to which such payment is required. Consistent with the foregoing, the
Master Servicer may in its discretion (i) waive any prepayment charge,
assumption fee, late payment charge or other charge in connection with a
Mortgage Loan, and (ii) arrange a schedule, running for no more than 180 days
after the Due Date for payment of any installment
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on any Mortgage Note, for the liquidation of delinquent items. The Master
Servicer shall be responsible for preparing and distributing all information
statements relating to payments on the Mortgage Loans, in accordance with all
applicable federal and state tax laws and regulations.
SECTION 3.08. Sub-Servicing Accounts.
In those cases where a Sub-Servicer is servicing a Mortgage
Loan pursuant to a Sub-Servicing Agreement, the Sub-Servicer will be required to
establish and maintain one or more accounts (collectively, the "Sub-Servicing
Account"). The Sub-Servicing Account shall be an Eligible Account and shall
otherwise be acceptable to the Master Servicer. All amounts held in a
Sub-Servicing Account shall be held in trust for the Trustee for the benefit of
the Securityholders. The Sub-Servicer will be required to deposit into the
Sub-Servicing Account on a daily basis, but in no event later than the first
Business Day after receipt of all proceeds of the Mortgage Loans received by the
Sub-Servicer, less its servicing compensation and any unreimbursed expenses and
advances, to the extent permitted by the Sub-Servicing Agreement. On each
Sub-Servicer Remittance Date the Sub-Servicer will be required to remit to the
Master Servicer all funds held in the Sub-Servicing Account with respect to any
Mortgage Loan as of the Sub-Servicer Remittance Date, after deducting from such
remittance an amount equal to the servicing compensation and unreimbursed
expenses and advances to which it is then entitled pursuant to the related
Sub-Servicing Agreement, to the extent not previously paid to or retained by it.
In addition, on each Sub-Servicer Remittance Date the Sub-Servicer will be
required to remit to the Master Servicer any amounts required to be advanced
pursuant to the related SubServicing Agreement. The Sub-Servicer will also be
required to remit to the Master Servicer, within one Business Day of receipt,
the proceeds of any Principal Prepayment made by the Mortgagor and any Insurance
Proceeds or Liquidation Proceeds.
SECTION 3.09. Collection of Taxes, Assessments and Similar
Items; Servicing Accounts.
The Master Servicer and the Sub-Servicers shall establish and
maintain one or more accounts (the "Servicing Accounts"), and shall deposit and
retain therein all collections from the Mortgagors (or related advances from
Sub-Servicers) for the payment of taxes, assessments, Primary Hazard Insurance
Policy and Primary Mortgage Insurance Policy premiums, and comparable items for
the account of the Mortgagors, to the extent that the Master Servicer
customarily escrows for such amounts. Withdrawals of amounts so collected from a
Servicing Account may be made only to (i) effect payment of taxes, assessments,
Primary Hazard Insurance Policy and Primary Mortgage Insurance Policy premiums
and comparable items; (ii) reimburse the Master Servicer (or a Sub-Servicer to
the extent provided in the related Sub-Servicing Agreement) out of related
collections for any payments made pursuant to Sections 3.01 (with respect to
taxes and assessments), 3.13 (with respect to Primary Hazard Insurance Policies)
and 3.25 (with respect to Primary Mortgage Insurance only); (iii) refund to
Mortgagors any sums as may be determined to be overages; (iv) clear and
terminate the Servicing Account at the termination of this Agreement pursuant to
Section 9.01 or (v) to withdraw any amounts
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deposited therein that were not required to be so deposited. As part of its
servicing duties, the Master Servicer or Sub-Servicers shall, if and to the
extent required by law, pay to the Mortgagors interest on funds in Servicing
Accounts from its or their own funds, without any reimbursement therefor.
SECTION 3.10. Custodial Account.
(a) The Master Servicer shall establish and maintain one or
more accounts as the Custodial Account in which the Master Servicer shall
deposit or cause to be deposited on a daily basis, or as and when received from
the Sub-Servicers, the following payments and collections received or made by or
on behalf of it subsequent to the Cut-off Date, or received by it prior to the
Cut-off Date but allocable to a period subsequent thereto (other than in respect
of principal and interest on the Mortgage Loans due on or before the Cut-off
Date):
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans;
(ii) all payments on account of interest on the Mortgage
Loans, exclusive of any portion thereof representing interest in excess
of the related Net Mortgage Rate;
(iii) all Insurance Proceeds (other than proceeds that
represent reimbursement of costs and expenses incurred by the Master
Servicer in connection with presenting claims under the related
Insurance Policies), Liquidation Proceeds and REO Proceeds;
(iv) all proceeds of any Mortgage Loan or REO Property
repurchased or purchased in accordance with Sections 2.02, 2.04, 3.22
or 9.01;
(v) any amounts required to be deposited pursuant to Section
3.12 or 3.13; and
(vi) all amounts transferred from the Security Account to the
Custodial Account in accordance with Section 4.01(b).
The foregoing requirements for deposit in the Custodial
Account shall be exclusive. In the event the Master Servicer shall deposit in
the Custodial Account any amount not required to be deposited therein, it may
withdraw such amount from the Custodial Account, any provision herein to the
contrary notwithstanding. The Custodial Account shall be maintained as a
segregated account, separate and apart from trust funds created for mortgage
pass-through certificates of other series, and the other accounts of the Master
Servicer.
(b) Funds in the Custodial Account may be invested in
Permitted Instruments in accordance with the provisions set forth in Section
3.12. The Master Servicer shall give notice to the Trustee and the Seller of the
location of the Custodial Account after any change thereof.
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SECTION 3.11. Permitted Withdrawals From the Custodial
Account.
The Master Servicer may, from time to time as provided herein,
make withdrawals from the Custodial Account of amounts on deposit therein
pursuant to Section 3.10 that are attributable to the Mortgage Loans for the
following purposes:
(i) to make deposits into the Security Account in the amounts
and in the manner provided for in Section 4.01;
(ii) to pay to itself, the Seller, the Loan Seller or any
other appropriate person, as the case may be, with respect to each
Mortgage Loan that has previously been purchased or repurchased
pursuant to Sections 2.02, 2.04 or 9.01 all amounts received thereon
and not yet distributed as of the date of purchase or repurchase;
(iii) to reimburse itself or any Sub-Servicer for Advances not
previously reimbursed, the Master Servicer's or any Sub-Servicer's
right to reimbursement pursuant to this clause (iii) being limited to
amounts received which represent Late Collections (net of the related
Servicing Fees) of Monthly Payments on Mortgage Loans or REO Property
with respect to which such Advances were made and as further provided
in Section 3.15;
(iv) to reimburse itself, the Trustee or the Seller for
expenses incurred by or reimbursable to the Master Servicer, the
Trustee or the Seller pursuant to Sections 3.22, 6.03 or 10.01(c),
except as otherwise provided in such Sections;
(v) to reimburse itself or any Sub-Servicer for costs and
expenses incurred by or reimbursable to it relating to the prosecution
of any claims pursuant to Sections 3.13 or 3.25 that are in excess of
the amounts so recovered;
(vi) to reimburse itself or any Sub-Servicer for unpaid
Servicing Fees and unreimbursed Servicing Advances, the Master
Servicer's or any Sub-Servicer's right to reimbursement pursuant to
this clause (vi) with respect to any Mortgage Loan being limited to
late recoveries of the payments for which such advances were made
pursuant to Section 3.01 or Section 3.09 and any other related Late
Collections;
(vii) to pay itself as servicing compensation (in addition to
the Servicing Fee), on or after each Distribution Date, any interest or
investment income earned on funds deposited in the Custodial Account
for the period ending on such Distribution Date, subject to Section
8.05 and 3.23;
(viii) to reimburse itself or any Sub-Servicer for any Advance
previously made which the Master Servicer has determined to be a
Nonrecoverable Advance, provided that either (a) such Advance was made
with respect to a delinquency that ultimately constituted an Excess
Special Hazard Loss, Excess Fraud Loss, Excess Bankruptcy Loss or
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Extraordinary Loss or (b) the Security Principal Balances of the
Subordinate Securities have been reduced to zero; and
(ix) to clear and terminate the Custodial Account at the
termination of this Agreement pursuant to Section 9.01.
The Master Servicer shall keep and maintain separate
accounting records on a Mortgage Loan by Mortgage Loan basis, for the purpose of
justifying any withdrawal from the Custodial Account pursuant to such clauses
(ii), (iii), (iv), (vi), (vii) and (viii).
In connection with clause (viii) above, the Trustee shall
notify the Master Servicer in writing if and when the Security Principal
Balances of the Subordinate Securities have been reduced to zero.
SECTION 3.12. Permitted Instruments.
Any institution maintaining the Custodial Account shall at the
direction of the Master Servicer invest the funds in such account in Permitted
Instruments, each of which shall mature not later than the Business Day
immediately preceding the Security Account Deposit Date next following the date
of such investment (except that if such Permitted Instrument is an obligation of
the institution that maintains such account, then such Permitted Instrument
shall mature not later than such Security Account Deposit Date) and shall not be
sold or disposed of prior to its maturity. All income and gain realized from any
such investment as well as any interest earned on deposits in the Custodial
Account shall be for the benefit of the Master Servicer, subject to Section
3.23. The Master Servicer shall deposit in the Custodial Account (with respect
to investments made hereunder of funds held therein) an amount equal to the
amount of any loss incurred in respect of any such investment immediately upon
realization of such loss without right of reimbursement.
SECTION 3.13. Maintenance of Primary Hazard Insurance.
The Master Servicer shall cause to be maintained for each
Mortgage Loan primary hazard insurance with extended coverage on the related
Mortgaged Property in an amount equal to the replacement value of the
improvements, as determined by the insurance company, on such Mortgaged
Property. The Master Servicer shall also cause to be maintained on property
acquired upon foreclosure, or deed in lieu of foreclosure, of any Mortgage Loan,
fire insurance with extended coverage in an amount equal to the replacement
value of the improvements thereon. Pursuant to Section 3.10, any amounts
collected by the Master Servicer under any such policies (other than amounts to
be applied to the restoration or repair of the related Mortgaged Property or
property thus acquired or amounts released to the Mortgagor in accordance with
the Master Servicer's normal servicing procedures) shall be deposited in the
Custodial Account, subject to withdrawal pursuant to Section 3.11. Any cost
incurred by the Master Servicer in maintaining any such insurance shall not, for
the purpose of calculating monthly distributions
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to Securityholders, be added to the amount owing under the Mortgage Loan,
notwithstanding that the terms of the Mortgage Loan so permit. It is understood
and agreed that no earthquake or other additional insurance is to be required of
any Mortgagor or maintained on property acquired in respect of a Mortgage Loan
other than pursuant to such applicable laws and regulations as shall at any time
be in force and as shall require such additional insurance. Whenever the
improvements securing a Mortgage Loan are located in a federally designated
special flood hazard area, the Master Servicer shall cause flood insurance (to
the extent available) to be maintained in respect thereof. Such flood insurance
shall be in an amount equal to the lesser of (i) the replacement value of the
improvements, which are part of such Mortgaged Property on a replacement cost
basis 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 fire insurance policy with extended coverage 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 a policy
complying with the first two sentences of this Section 3.13 and there shall have
been a loss which would have been covered by such policy, deposit in the
Security Account the amount not otherwise payable under the blanket policy
because of such deductible clause. Any such deposit by the Master Servicer shall
be made on the Security Account Deposit Date next preceding the Distribution
Date which occurs in the month following the month in which payments under any
such policy would have been deposited in the Custodial Account. In connection
with its activities as administrator and servicer of the Mortgage Loans, the
Master Servicer agrees to present, on behalf of itself, the Trustee and
Securityholders, claims under any such blanket policy.
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 by any Mortgagor of the Mortgaged
Property (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 or the
Mortgage), exercise or cause to be exercised its rights to accelerate the
maturity of such Mortgage Loan under any "due-on-sale" clause applicable
thereto; provided, however, that the Master Servicer shall not exercise any such
rights if it reasonably believes that it is prohibited by law from doing so or
such exercise would result in the loss of insurance coverage under any related
Insurance Policy. If the Master Servicer is unable to enforce such "due-on-sale"
clause (as provided in the previous sentence) or if no "due-on-sale" clause is
applicable, the Master Servicer or the Sub-Servicer will enter into an
assumption and modification agreement with the Person to whom such property has
been conveyed or is proposed to be conveyed, pursuant to which such Person
becomes liable under
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the Mortgage Note and, to the extent permitted by applicable state law, the
Mortgagor remains liable thereon; provided, however, that the Master Servicer
shall not enter into any assumption and modification agreement if the coverage
provided under the Primary Mortgage Insurance Policy, if any, would be impaired
by doing so.. The Master Servicer is also authorized, with the approval of the
insurer under any related Primary Mortgage Insurance Policy, 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. Any fee collected by
or on behalf of the Master Servicer for entering into an assumption or
substitution of liability agreement will be retained by or on behalf of 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 Mortgage Rate, the amount of the Monthly Payment, and any other
term affecting the amount or timing of payment on the Mortgage Loan) may be
changed. The Master Servicer shall not enter into any substitution or assumption
if such substitution or assumption shall (i) both constitute a "significant
modification" effecting an exchange or reissuance of such Mortgage Loan under
the Code (or final, temporary or proposed Treasury regulations promulgated
thereunder) and cause either the Issuing REMIC or the Pooling REMIC to fail to
qualify as a REMIC under the REMIC Provisions or (ii) cause the imposition of
any tax on "prohibited transactions" or "contributions" after the Startup Day
under the REMIC Provisions. The Master Servicer shall notify the Trustee that
any such substitution or assumption agreement has been completed by forwarding
to the Trustee the original copy of such substitution or assumption agreement,
which copy 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 any assumption that the
Master Servicer may be restricted by law from preventing, for any reason
whatsoever, or if the exercise of such right would impair or threaten to impair
any recovery under any applicable Insurance Policy. For purposes of this Section
3.14, the term "assumption" is deemed to also include a sale of a Mortgaged
Property that is not accompanied by an assumption or substitution of liability
agreement.
SECTION 3.15. Realization Upon Defaulted Mortgage Loans.
The Master Servicer shall exercise reasonable efforts,
consistent with the terms of the related Mortgage, the Mortgage Note and
Accepted Servicing Practices, to foreclose upon or otherwise comparably convert
(which may include an REO Acquisition) 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, and which are not released from the Trust Fund
pursuant to any other provision hereof. The Master Servicer shall use reasonable
efforts to realize upon such defaulted
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Mortgage Loans in such manner as will maximize the receipt of principal and
interest by Securityholders, taking into account, among other things, the timing
of foreclosure proceedings. The foregoing is subject to the provisions 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
sole discretion (i) that such restoration will increase the net proceeds of
liquidation of the related Mortgage Loan to Securityholders after reimbursement
to itself for such expenses, and (ii) that such expenses will be recoverable by
the Master Servicer through Insurance Proceeds or Liquidation Proceeds from the
related Mortgaged Property, as contemplated in Section 3.11. The Master Servicer
shall be responsible for all other costs and expenses incurred by it in any such
proceedings; provided, however, that it shall be entitled to reimbursement
thereof from the related property, as contemplated in Section 3.11.
The proceeds of any Cash Liquidation or REO Disposition, as
well as any recovery resulting from a partial collection of Insurance Proceeds
or Liquidation Proceeds or any income from an REO Property, will be applied in
the following order of priority: first, to reimburse the Master Servicer or any
Sub-Servicer for any related unreimbursed Servicing Advances, pursuant to
Section 3.11(vi) or 3.22; second, to accrued and unpaid interest on the Mortgage
Loan or REO Imputed Interest, at the Mortgage Rate, to the last day of the month
in which the Cash Liquidation or REO Disposition occurred, or to the Due Date
prior to the Distribution Date on which such amounts are to be distributed if
not in connection with a Cash Liquidation or REO Disposition; and third, as a
recovery of principal of the Mortgage Loan. If the amount of the recovery so
allocated to interest is less than a full recovery thereof, that amount will be
allocated as follows: first, to unpaid Servicing Fees; and second, to interest
at the Net Mortgage Rate. The portion of the recovery so allocated to unpaid
Servicing Fees shall be reimbursed to the Master Servicer or any Sub-Servicer
pursuant to Section 3.11(vi). The portions of the recovery so allocated to
interest at the Net Mortgage Rate and to principal of the Mortgage Loan shall be
applied as follows: first, to reimburse the Master Servicer or any SubServicer
for any related unreimbursed Advances in accordance with Section 3.11(iii) or
3.22, and second, for distribution in accordance with the provisions of Section
4.01(b), subject to Section 3.22 with respect to certain recoveries from an REO
Disposition constituting Excess Proceeds.
SECTION 3.16. Trustee to Cooperate; Release of Mortgage
Files.
Upon the payment in full of any Mortgage Loan, the Master
Servicer will immediately notify the Trustee by a certification (which
certification shall include a statement to the effect that all amounts received
in connection with such payment which are required to be deposited in the
Custodial Account pursuant to Section 3.10 have been so deposited) of a
Servicing Officer and shall request delivery to it of the Mortgage File in the
form of the Request for Release attached hereto as Exhibit F-2. Upon receipt of
such certification and request, the Trustee shall promptly release the related
Mortgage File to the Master Servicer. Subject to the receipt by the Master
Servicer of the proceeds of such payment in full and the payment of all
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related fees and expenses, the Master Servicer shall arrange for the release to
the Mortgagor of the original canceled Mortgage Note. All other documents in the
Mortgage File shall be retained by the Master Servicer to the extent required by
applicable law. No expenses incurred in connection with any instrument of
satisfaction or deed of reconveyance shall be chargeable to the Custodial
Account, the Excess Proceeds Account or the Security 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 Loan, the Trustee shall, upon
request of the Master Servicer and delivery to the Trustee of a Request for
Release in the form attached hereto as Exhibit F-1, release the related Mortgage
File to the Master Servicer, and the Trustee shall execute such documents as the
Master Servicer shall prepare and request as being necessary to the prosecution
of any such proceedings. Such Request for Release shall obligate the Master
Servicer to return each document previously requested from the Mortgage File to
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 Custodial 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 Trustee a certificate of a Servicing Officer
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.
Upon receipt of a certification of a Servicing Officer in the form of the
Request for Release attached hereto as Exhibit F-1, stating that such Mortgage
Loan was liquidated and that all amounts received or to be received in
connection with such liquidation which are required to be deposited into the
Custodial Account have been or will be so deposited, or that such Mortgage Loan
has become an REO Property, a copy of such Request for Release shall be released
by the Trustee to the Master Servicer.
Upon written request of a Servicing Officer, the Trustee shall
execute and deliver to the Master Servicer any court pleadings, requests for
trustee's sale or other documents prepared by the Master Servicer that are
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 request that such
pleadings or documents be executed by the Trustee shall include a certification
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.
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SECTION 3.17. Servicing Compensation.
As compensation for its activities hereunder, the Master
Servicer shall be entitled to retain, from amounts representing payments or
recoveries of interest, the Servicing Fee with respect to each Mortgage Loan
(less any portion of such amounts retained by any Sub-Servicer). In addition,
the Master Servicer shall be entitled to recover unpaid Servicing Fees out of
related Late Collections to the extent permitted in Section 3.11.
The Master Servicer also shall be entitled pursuant to Section
3.11 to receive from the Custodial Account as additional servicing compensation
interest or other income earned on deposits therein, subject to Section 3.23,
all ancillary fees, including but not limited to any assumption fees,
reconveyance fees, prepayment fees and late fees, but only to the extent such
fees are collected by the Master Servicer and are in excess of any other amounts
due and payable with respect to the related Mortgage Loan. The Master Servicer
shall be required to pay all expenses incurred by it in connection with its
servicing activities hereunder (including payment of the premiums for any
blanket policy insuring against hazard losses pursuant to Section 3.13,
servicing compensation of the Sub-Servicer to the extent not retained by it and
the fees and expenses of the Trustee), and shall not be entitled to
reimbursement therefor except as specifically provided in Section 3.11. The
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.
SECTION 3.18. Maintenance of Certain Servicing Policies.
During the term of its service as Master Servicer, the Master
Servicer shall maintain in force (i) a policy or policies of insurance covering
errors and omissions in the performance of its obligations as servicer hereunder
and (ii) a fidelity bond in respect of its officers, employees or agents. Each
such policy or policies and bond shall, together, comply with the requirements
from time to time of FNMA or FHLMC for persons performing servicing for mortgage
loans purchased by such corporation. The Master Servicer shall prepare and
present, on behalf of itself, the Trustee and Securityholders, claims under any
such errors and omissions policy or policies or fidelity bond in a timely
fashion in accordance with the terms of such policy or bond, and upon the filing
of any claim on any policy or bond described in this Section, the Master
Servicer shall promptly notify the Trustee of any such claims and the Trustee
shall notify each Rating Agency of such claim.
SECTION 3.19. Annual Statement as to Compliance.
The Master Servicer will deliver to the Trustee and the Seller
on or before April 30th of each year, beginning with April 30, 1998, an
Officers' Certificate stating, as to each signatory thereof, that (i) a review
of the activities of the Master Servicer during the preceding fiscal year and of
its performance under this Agreement has been made under such officers'
supervision, and (ii) to the best of such officers' knowledge, based on such
review, the Master
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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 officers and the nature
and status thereof.
SECTION 3.20. Annual Independent Public Accountants'
Servicing Statement.
On or before April 30th of each year, beginning with April 30,
1998, the Master Servicer at its expense shall furnish to the Seller, the
Trustee and the Loan Seller (i) an opinion by a firm of independent certified
public accountants on the financial position of the Master Servicer at the end
of its fiscal year and the results of operations and changes in financial
position of the Master Servicer for such year then ended on the basis of an
examination conducted in accordance with generally accepted auditing standards,
and (ii) if the Master Servicer is then servicing any Mortgage Loans, a
statement from such independent certified public accountants to the effect that
based on an examination of certain specified documents and records relating to
the servicing of the Master Servicer's mortgage loan portfolio conducted
substantially in compliance with the audit program for mortgages serviced for
FNMA and FHLMC, the United States Department of Housing and Urban Development
Mortgage Audit Standards, or the Uniform Single Attestation Program for Mortgage
Bankers (the "Applicable Accounting Standards"), such firm is of the opinion
that such servicing has been conducted in compliance with the Applicable
Accounting Standards except for (a) such exceptions as such firm shall believe
to be immaterial and (b) such other exceptions as shall be set forth in such
statement. In rendering such statement, such firm may rely, as to matters
relating to direct servicing of mortgage loans by Sub-Servicers, upon comparable
statements for examinations conducted substantially in compliance with the
Uniform Single Attestation 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 Sub-Servicer. Copies
of such statement shall be provided by the Trustee to any Securityholder upon
request at the Master Servicer's expense, provided such statement is delivered
by the Master Servicer to the Trustee.
SECTION 3.21. Access to Certain Documentation.
(a) The Master Servicer shall provide to the OTS, the FDIC and
other federal banking regulatory agencies, and their respective examiners,
access to the documentation regarding the Mortgage Loans required by applicable
regulations of the OTS, the FDIC and such other agencies. Such access shall be
afforded without charge, but only upon reasonable and prior written request and
during normal business hours at the offices of the Master Servicer designated by
it. Nothing in this Section shall derogate from the obligation of the Master
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Mortgagors and the failure of the Master Servicer to provide
access as provided in this Section as a result of such obligation shall not
constitute a breach of this section.
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(b) The Master Servicer shall afford the Seller 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 the Seller
and the Trustee with its most recent financial statements and such other
information as the Master Servicer possesses regarding its business, affairs,
property and condition, financial or otherwise to the extent related to the
servicing of the Mortgage Loans. The Seller may, but is not obligated to,
enforce the obligations of the Master Servicer hereunder and may, but is not
obligated to, perform, or cause a designee to perform, any defaulted obligation
of the Master Servicer hereunder or exercise the rights of the Master Servicer
hereunder; provided that the Master Servicer shall not be relieved of any of its
obligations hereunder by virtue of such performance by the Seller or its
designee. The Seller 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.
SECTION 3.22. Title, Conservation and Disposition of REO
Property.
This Section shall apply only to REO Properties acquired for
the account of the Trust Fund, and shall not apply to any REO Property relating
to a Mortgage Loan which was purchased or repurchased from the Trust Fund
pursuant to any provision hereof. In the event that title to any such REO
Property is acquired, the deed or certificate of sale shall be issued to the
Trustee, or to its nominee, on behalf of the Securityholders. The Master
Servicer, on behalf of the Trust Fund, shall either sell any REO Property within
two years after the Trust Fund acquires ownership of such REO Property for
purposes of Section 860G(a)(8) of the Code or, at the expense of the Trust Fund,
request, more than 60 days before the day on which the two-year grace period
would otherwise expire, an extension of the two-year grace period, unless the
Master Servicer has delivered to the Trustee an Opinion of Counsel addressed to
the Trustee and the Master Servicer, to the effect that the holding by the Trust
Fund of such REO Property subsequent to two years after its acquisition will not
result in the imposition of taxes on "prohibited transactions" thereof, as
defined in Section 860F of the Code, or cause the Pooling REMIC or the Issuing
REMIC to fail to qualify as a REMIC under the REMIC Provisions or comparable
provisions of the laws of the any State at any time that any Securities are
outstanding. The Master Servicer shall manage, conserve, protect and operate
each REO Property for the Securityholders 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) or
result in the receipt by the Pooling REMIC or the Issuing REMIC of any "income
from non-permitted assets" within the meaning of Section 860F(a)(2)(B) of the
Code or any "net income from foreclosure property" which is subject to taxation
under the REMIC Provisions. Pursuant to its efforts to sell such REO Property,
the Master Servicer shall either itself or through an agent selected by the
Master Servicer protect and conserve such REO Property in the same manner and to
such extent as is customary in the locality where such REO Property is located
and in a manner consistent with Accepted Servicing Practices and may, incident
to its conservation and protection of the interests of the
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Securityholders, rent the same, or any part thereof, as the Master Servicer
deems to be in the best interest of the Securityholders for the period prior to
the sale of such REO Property.
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).
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. The Master Servicer
shall deposit, or cause to be deposited, on a daily basis in the Custodial
Account all revenues received with respect to the REO Properties, net of any
directly related expenses incurred and funds withheld therefrom that are
necessary for the proper operation, management and maintenance of the REO
Property.
If as of the date of acquisition of title to any REO Property
there remain outstanding unreimbursed Servicing Advances with respect to such
REO Property or any outstanding Advances allocated thereto the Master Servicer,
upon an REO Disposition, shall be entitled to reimbursement for any related
unreimbursed Servicing Advances and any unreimbursed related Advances as well as
any unpaid Servicing Fees from proceeds received in connection with the REO
Disposition, as further provided in Section 3.15.
The REO Disposition shall be carried out by the Master
Servicer at such price and upon such terms and conditions as the Master Servicer
shall determine; provided that, subject to the first paragraph of this Section,
the Master Servicer shall ensure that any action taken with respect to the sale
of an REO Property does not jeopardize the maximum benefits available under any
related Primary Mortgage Insurance Policy.
The Master Servicer shall deposit the proceeds from the REO
Disposition, net of any payment to the Master Servicer as provided above, in the
Custodial Account upon receipt thereof for distribution in accordance with
Section 4.01; provided that any such net proceeds which are in excess of the
applicable outstanding principal balance plus all unpaid REO Imputed Interest
thereon through the last day of the month in which the REO Disposition occurred
and any related Servicing Advances which remain outstanding ("Excess Proceeds")
shall be deposited into the Excess Proceeds Account in accordance with the
provisions of Section 3.24(a).
Notwithstanding the foregoing provisions of this Section 3.22,
with respect to any Mortgage Loan as to which the Master Servicer has received
notice of, or has actual knowledge of, the presence of any toxic or hazardous
substance on the Mortgaged Property, the Master Servicer shall not, on behalf of
the Trustee, either (i) obtain title to the related Mortgaged Property as a
result of or in lieu of foreclosure or otherwise, or (ii) otherwise acquire
possession of, the related Mortgaged Property, unless and until either (A) the
Master Servicer has, at least 30 days prior to taking such action, obtained and
delivered to the Seller and the Trustee an environmental audit report prepared
by a Person who regularly conducts environmental audits using customary industry
standards and (B) the Master Servicer deems that such action is in the
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best economic interest of the Trust Fund. In the event that the Master Servicer
determines not to foreclose or comparably convert any Mortgaged Property
pursuant to the immediately preceding sentence, then the Master Servicer shall
take such action as it deems to be in the best economic interest of the Trust
Fund (other than proceeding against the Mortgaged Property) and is hereby
authorized at such time as it deems appropriate to release such Mortgaged
Property from the lien of the related Mortgage.
The cost of the environmental audit report contemplated by
this Section 3.22 shall be advanced by the Master Servicer as an expense of the
Trust Fund, and the Master Servicer shall be reimbursed therefor from the
Custodial Account as provided in Section 3.11, any such right of reimbursement
being prior to the rights of the Securityholders to receive any amount in the
Custodial Account.
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 in 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 the Trust Fund. The cost of any such compliance,
containment, clean-up or remediation shall be advanced by the Master Servicer as
an expense of the Trust Fund, and the Master Servicer shall be entitled to be
reimbursed therefor from the Custodial Account as provided in Section 3.11, any
such right of reimbursement being prior to the rights of the Securityholders to
receive any amount in the Custodial Account.
The Master Servicer shall have the option to purchase from the
Trust Fund any Mortgage Loan that is 90 days or more delinquent (i.e., any
Mortgage Loan on which the related Mortgagor has failed to make four or more
consecutive Monthly Payments) and that the Master Servicer determines in good
faith will otherwise become subject to foreclosure proceedings (such
determination to be evidenced by an Officers' Certificate of the Master Servicer
delivered to the Trustee prior to purchase) for an amount equal to the Purchase
Price. The Purchase Price for any Mortgage Loan purchased pursuant to this
Section 3.22 shall be deposited in the Custodial Account, and upon receipt of
written certification from the Master Servicer of such deposit, the Trustee
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 to this Section 3.22.
SECTION 3.23. Additional Obligations of the Master Servicer.
On each Security Account Deposit Date, the Master Servicer
shall deliver to the Trustee for deposit in the Security Account from its own
funds and without any right of
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reimbursement therefor, a total amount equal to the aggregate of the Prepayment
Interest Shortfalls for such Distribution Date; provided that the Master
Servicer's obligations under this Section on any Distribution Date shall not be
more than the total amount of its servicing compensation payable in such month.
SECTION 3.24. Excess Proceeds Account.
(a) The Trustee shall establish and maintain one or more
accounts (collectively, the "Excess Proceeds Account") in which the Master
Servicer shall, on behalf of the Trust Fund, deposit or cause to be deposited on
a daily basis, or as and when received from the Sub-Servicers, the Excess
Proceeds, if any, with respect to each Mortgage Loan as to which an REO
Disposition occurs. The Excess Proceeds Account shall be maintained as a
segregated account, separate and apart from trust funds created for mortgage
pass-through Securities of other series, from funds of investors, from funds or
other assets of the Trustee, and from the other accounts of the Trustee.
(b) On or before 2:00 P.M. (Pacific Standard Time) on each
Security Account Deposit Date, the Trustee shall withdraw or cause to be
withdrawn from the Excess Proceeds Account, to the extent of the amount on
deposit therein at such time, and deposit or cause to be deposited in the
Security Account, by wire transfer of immediately available funds, an amount
equal to the lesser of (i) the amount, if any, on deposit in the Excess Proceeds
Account as of the close of business on the related Determination Date and
(ii)(A) the sum of the aggregate amount of all Realized Losses allocated among
the Securities on any previous Distribution Date pursuant to Section 4.04 and
the aggregate amount of all Realized Losses to be allocated among the Securities
on the related Distribution Date pursuant to Section 4.04 minus (B) the
aggregate amount of all distributions allocated among the Securityholders on any
previous Distribution Date relating to the reimbursement of Realized Losses.
(c) If the amount on deposit in the Excess Proceeds Account as
of the close of business on any Determination Date would exceed the product of
1.00% and the aggregate Security Principal Balance of all of the Securities
outstanding immediately after the close of business on the related Distribution
Date, the Trustee shall, on or before 2:00 P.M. (Pacific Standard Time) on the
related Security Account Deposit Date, withdraw or cause to be withdrawn from
the Excess Proceeds Account, to the extent of the amount on deposit therein at
such time, and deposit or cause to be deposited in the Security Account, by wire
transfer of immediately available funds, the excess of such amount over such
product.
(d) The Excess Proceeds Account shall be an Eligible Account
in accordance with the definition of "Excess Proceeds Account" in Section 1.01.
The Trustee shall, upon written request from the Master Servicer, invest or
cause the institution maintaining the Excess Proceeds Account to invest the
funds in the Excess Proceeds Account in one or more Permitted Instruments
designated in the name of the Trustee for the benefit of the Securityholders,
each of which Permitted Instruments shall be held to maturity, unless payable on
demand, and shall
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mature, unless payable on demand, not later than the Business Day immediately
preceding the Security Account Deposit Date next following the date of such
investment (except that if such Permitted Instrument is an obligation of the
institution with which the Excess Proceeds Account is maintained, then such
Permitted Instrument shall mature not later than such Security Account Deposit
Date). All income and gain realized from any such investment as well as any
interest earned on deposits in the Excess Proceeds Account shall be for the
benefit of the Securityholders and shall be held in the Excess Proceeds Account
(or in Permitted Instruments in which the funds in the Excess Proceeds Account
are invested) until transferred from the Excess Proceeds Account to the Security
Account in accordance with Section 3.24(b) or (c). The amount of any loss
incurred in respect of any such investment shall be borne by the Securityholders
without any right of reimbursement.
(e) As part of each Determination Date Report delivered to the
Trustee in accordance with Section 4.03(a), the Master Servicer shall provide
information with respect to the amount, if any, of Excess Proceeds deposited in
the Excess Proceeds Account in respect of each Mortgage Loan as to which an REO
Disposition occurred during the related Prepayment Period.
(f) The Trustee shall promptly provide notice to the Seller
and the Master Servicer of the initial location of the Excess Proceeds Account
and shall promptly provide notice to the Seller and the Master Servicer of the
location of the Excess Proceeds Account after any change in location of the
Excess Proceeds Account.
SECTION 3.25. Maintenance of the Primary Mortgage
Insurance Policies; Collections Thereunder.
The Master Servicer shall not take any action which would
result in non-coverage under any applicable Primary Mortgage Insurance Policy of
any loss which, but for the actions of the Master Servicer, would have been
covered thereunder. The Master Servicer shall use reasonable efforts to keep in
force and effect each such Primary Mortgage Insurance Policy applicable to a
Mortgage Loan for so long as the related Mortgagor is obligated to maintain such
Primary Mortgage Insurance Policy under the terms of the related Mortgage Loan
or until the Loan-to-Value Ratio of the related Mortgage Loan has been reduced
to less than 80%, whichever is earlier. The Master Servicer shall not cancel or
refuse to renew any such Primary Mortgage Insurance Policy applicable to a
Mortgage Loan that is in effect at the Closing Date and is required to be kept
in force hereunder unless a replacement Primary Mortgage Insurance Policy for
such canceled or non-renewed policy is obtained from and maintained with a
Qualified Mortgage Insurer. In connection with any assumption or modification
agreement entered into or to be entered into pursuant to Section 3.14, the
Master Servicer shall promptly notify the insurer under the related Primary
Mortgage Insurance Policy, if any, of such assumption or modification in
accordance with the terms of such policy and shall take all actions which may be
required by such insurer as a condition to the continuation of coverage under
the Primary Mortgage Insurance Policy. If such Primary Mortgage Insurance Policy
is terminated as a result
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of such assumption or substitution of liability, the Loan Seller shall obtain a
replacement Primary Mortgage Insurance Policy as provided above. Any amounts
advanced by the Master Servicer to maintain Primary Mortgage Insurance shall be
recoverable by the Master Servicer pursuant to Section 3.11 out of Liquidation
Proceeds, Insurance Proceeds or otherwise.
The Master Servicer shall present, on behalf of the Trustee
and Securityholders, claims to the insurer under any Primary Mortgage Insurance
Policies and, in this regard, take such reasonable action as shall be necessary
to permit recovery under any Primary Mortgage Insurance Policies respecting
defaulted Mortgage Loans. Pursuant to Section 3.10, any amounts collected by the
Master Servicer under any Primary Mortgage Insurance Policies shall be deposited
in the Collection Account, subject to withdrawal pursuant to Section 3.11.
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ARTICLE IV
PAYMENTS TO SECURITYHOLDERS
SECTION 4.01. Security Account; Distributions.
(a) The Trustee shall establish and maintain a Security
Account, in which the Master Servicer shall cause to be deposited on behalf of
the Trustee on or before 12:00 P.M. (Pacific Standard Time) on each Security
Account Deposit Date by wire transfer of immediately available funds an amount
equal to the sum of (i) any Advance (other than a Servicing Advance) for the
immediately succeeding Distribution Date, (ii) any amount required to be
deposited in the Security Account pursuant to Sections 3.13, 3.22, 3.23 or 3.24
and (iii) all other amounts constituting the aggregate Available Distribution
Amount for the immediately succeeding Distribution Date.
(b) On each Distribution Date, the Trustee shall be deemed to
have distributed from the Security Account the Subaccount Distribution Amount to
the Subaccounts and from the Security Account shall distribute to the Class RP
Securityholders the amounts to be distributed to the Class RP Securityholders
pursuant to Sections (b)(1) and (b)(2) hereof for such Distribution Date, all in
accordance with written statements prepared pursuant to Section 4.03(b), by wire
transfer in immediately available funds or by any other means of payment
acceptable to the Class RP Securityholder. Notwithstanding any other provision
of this Agreement, no actual distributions pursuant to this Section 4.01(b)
shall be made on account of the deemed distributions described in this paragraph
other than amounts distributable to the Class RP Securities.
(1) For any Distribution Date prior to the Credit Support
Depletion Dates the Available Distribution Amount shall be
deemed to be distributed to the Subaccounts in the order and
priority as follows:
(a) with respect to the Class FX Subaccounts, to the
extent of the Available Distribution Amounts for
Group I Mortgage Loans:
(i) first, to the Class FXP Subaccount, the
Class FXP Principal Distribution Amount;
(ii) second, to the Class FXA and Class FXS
Subaccounts on a pro rata basis (based on
the aggregate Accrued Interest payable
thereon), Accrued Interest for such
Distribution Date, plus any Accrued Interest
thereon remaining unpaid from any previous
Distribution Dates;
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(iii) third, to the Class FXA Subaccounts, as
principal, the Class FXA Principal
Distribution Amount in the order as follows:
(A) first, to the Class FXA-2
Subaccount, an amount, up to the
amount of the Class FXA-2 Principal
Distribution Amount, until the
Subaccount Principal Balance of the
Class FXA-2 Subaccount has been
reduced to zero;
(B) second, concurrently, 46.8750007782%
and 53.1249992218% of the Class FXA
Principal Distribution Amount
remaining after the distributions in
clause (A) above to the Class FXA-1
and Class FXA-8 Subaccounts,
respectively, until the Subaccount
Principal Balance of the Class FXA-1
Subaccount has been reduced to zero;
(C) third, concurrently, 65.2173932559%
and 34.7826067441% of the Class FXA
Principal Distribution Amount
remaining after the distributions in
clauses (A) and (B) above to the
Class FXA-3 and Class FXA-8
Subaccount, respectively, until the
Subaccount Principal Balance of the
Class FXA-3 Subaccount has been
reduced to zero;
(D) fourth, concurrently 75% and 25% of
the Class FXA Principal Distribution
Amount remaining after the
distributions in clauses (A), (B)
and (C) above to the Class FXA-4 and
Class FXA-8 Subaccounts,
respectively, until the Subaccount
Principal Balances of the Class
FXA-4 and Class FXA-8 Subaccounts
have been reduced to zero;
(E) fifth, to the Class FXA-5, Class
FXA-6 and Class FXA-7 Subaccounts,
sequentially, all of the Class FXA
Principal Distribution Amount
remaining after the distributions in
clauses (A), (B), (C) and (D) above,
until the Subaccount Principal
Balance of each such Class has been
reduced to zero; and
(F) sixth, all of the Class FXA
Principal Distribution Amount
remaining after the distributions in
clauses (A), (B), (C), (D) and (E)
above, to the Class FXA-2
Subaccount, until the Subaccount
Principal Balance of the Class FXA-2
Subaccount has been reduced to zero;
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(iv) fourth, for so long as the Subordinate
Securities are outstanding, to the Class FXP
Subaccount, the sum of (a) principal in an
amount equal to the Discount Fraction of any
Realized Losses on a Group I Discount
Mortgage Loan other than Excess Special
Hazard Losses, Excess Fraud Losses, Excess
Bankruptcy Losses or Extraordinary Losses to
the extent of amounts otherwise available to
pay the Subordinate Principal Distribution
Amount (without regard to clause (B) of such
definition) on such Distribution Date and
(b) the sum of amounts, if any, by which the
amount described in Section 4.01(b)(1)(b)
above on each prior Distribution Date
exceeded the amount actually distributed in
respect thereof on such prior Distribution
Dates and not subsequently distributed, to
the extent of the Subordinate Principal
Distribution Amount on such Distribution
Date (any amounts distributed in respect of
losses pursuant to this paragraph shall not
cause a further reduction in the Subaccount
Principal Balance of the Class FXP
Subaccount); provided, that if the amounts
otherwise available to pay the Subordinate
Principal Distribution Amount for any such
Distribution Date are insufficient to cover
such outstanding principal losses for the
Class FXP Subaccount as provided above and
Class P Subaccount as provided in Section
4.01(b)(1) (b)(iv) below, then the amounts
otherwise available to pay the Subordinate
Principal Distribution Amount will be
allocated pro rata to the Class FXP and
Class P Subaccounts based on the amount such
Subaccounts are entitled to receive pursuant
to this clause, in the case of the Class FXP
Subaccount, and paragraph (b)(v) below, in
the case of the Class P Subaccount;
(c) With respect to either the Class FX or the Class II
Subaccounts, in addition to the amounts to be
distributed in Section 4.01(b)(1)(a) and
4.01(b)(1)(b), the remaining Available Distribution
Amount shall be deemed distributed to the Subaccounts
in the order and priority as follows:
(i) if the Subaccount Principal Balance of
either of the Class FX or the Class II
Subaccounts have been reduced to zero and
(x) the then current Class B Percentage is
less than two (2) times the initial Class B
Percentage as of the Closing Date, or (y)
the average outstanding Stated Principal
Balance of the Mortgage Loans in either Loan
Group that are delinquent sixty (60) days or
more over the last six months, as a
percentage of the related Class B Loan Group
Component Balance is greater than or equal
to 50%, then to the remaining Class FX or
Class II Subaccounts in the order and
priority set forth in Sections
4.01(b)(1)(a)(ii) - (iv)
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(with respect to deemed distributions on the
Class FX Subaccounts) or Sections
4.01(b)(1)(b)(ii) - (iv), as appropriate;
and
(ii) if either of the Class FX Subaccounts or the
Class II Subaccounts are
Undercollateralized, then the
Overcollateralized Amount, if any, shall be
distributed to the Undercollateralized
Subaccounts in the order and priority set
forth in Sections 4.01(b)(1)(a)(ii) - (iv),
with respect to deemed distributions on the
Class FX Subaccounts, or Sections
4.01(b)(1)(b)(ii) - (iv), with respect to
deemed distributions on the Class II
Subaccounts, as appropriate, until the
aggregate Subaccount Principal Balance of
the Undercollateralized Subaccounts equals
the aggregate Stated Principal Balance of
the Mortgage Loans in the related Loan Group
less the Discount Fraction of any Discount
Mortgage Loans in such Loan Group.
(d) with respect to the Class II Subaccounts and the
Class RP Securities, to the extent of the Available
Distribution Amount for the Group II Mortgage Loans
remaining following prior distributions, if any, on
such Distribution Date:
(i) first, to the Class P Subaccount, the Class
P Principal Distribution Amount;
(ii) second, to the Class II Subaccounts (other
than the Class P Subaccount) and the Class
RP Security, on a pro rata basis (based upon
the Accrued Interest payable thereon),
Accrued Interest for such Distribution Date,
plus any Accrued Interest thereon remaining
unpaid from any previous Distribution Dates;
(iii) third, to the Class A and Class R Subaccount
and the Class RP Securities, as principal,
the Class A Principal Distribution Amount in
the following order:
(A) first, to the Class R Subaccount and
the Class RP Securities, pro rata,
until the Subaccount Principal
Balance and Security Principal
Balance, respectively, thereof have
been reduced to zero;
(B) second, to the Class A-4 Subaccount,
an amount, up to the amount of the
Class A-4 Principal Distribution
Amount, until the Subaccount
Principal Balance of the Class A-4
Subaccount has been reduced to zero;
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(C) third, to the Class A-1 Subaccount,
all of the Class A Principal
Distribution Amount remaining after
the distributions in clauses (A) and
(B) above, until the Subaccount
Principal Balance of the Class A-1
Subaccount
has been reduced to zero;
(D) fourth, to the Class A-2 Subaccount,
all of the Class A Principal
Distribution Amount remaining after
the distributions in clauses (A),
(B) and (C) above, until the
Subaccount Principal Balance of the
Class A-2 Subaccount
has been reduced to zero;
(E) fifth, to the Class A-3 Subaccount,
all of the Class A Principal
Distribution Amount remaining after
the distributions in clauses (A),
(B), (C) and (D) above, until the
Subaccount Principal Balance of the
Class A-3 Subaccount has been
reduced to zero; and
(F) sixth, all of the Class A Principal
Distribution Amount remaining after
the distributions in clauses (A),
(B), (C), (D) and (E) above, to the
Class A-4 Subaccount, until the
Subaccount Principal Balance of the
Class A-4 Subaccount
has been reduced to zero;
(iv) fourth, for so long as the Subordinate
Securities are outstanding, to the Class P
Subaccount, the sum of (x) principal in an
amount equal to the Discount Fraction of any
Realized Losses on a Group II Discount
Mortgage Loan other than Excess Special
Hazard Losses, Excess Fraud Losses,
Extraordinary Losses or Excess Bankruptcy
Losses to the extent of amounts otherwise
available to pay the Subordinate Principal
Distribution Amount (without regard to
clause (B) of such definition) on such
Distribution Date and (y) the sum of
amounts, if any, by which the amount
described in Section 4.01(b)(1)(a) above on
each prior Distribution Date exceeded the
amount actually distributed in respect
thereof on such prior Distribution Dates and
not subsequently distributed, to the extent
of the Subordinate Principal Distribution
Amount on such Distribution Date (any
amounts distributed in respect of losses
pursuant to this paragraph shall not cause a
further reduction in the Subaccount
Principal Balance of the Class P
Subaccount); provided, that if the amounts
otherwise available to pay the Subordinate
Principal Distribution Amount for any such
Distribution Date are insufficient to cover
such outstanding
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principal losses for the Class P Subaccount
as provided above and Class FXP Subaccount
as provided in paragraph 4.01(b)(1)(b)(iv)
above, then the amounts otherwise available
to pay the Subordinate Principal
Distribution Amount will be allocated pro
rata to the Class FXP and Class P
Subaccounts based on the amount such
Subaccounts are entitled to receive pursuant
to this clause, in the case of the Class P
Subaccount, and paragraph 4.01(b)(1)(b)(iv)
above, in the case of the Class FXP
Subaccount;
(c) With respect to the Class B Subaccount and the Class
RP Securities, subject to the payment of the Class FX
and Class II Subaccounts and the Class RP Securities
as described above in Section 4.01(b)(1)(a) and
4.01(b)(1)(b), and to the extent of the Available
Distribution Amount for both Mortgage Loan Groups
remaining, if any, following prior distributions on
such Distribution Date:
(i) first, to the Class B-1 Subaccount, Accrued
Interest for such Distribution Date, plus
any Accrued Interest thereon remaining
unpaid from any previous Distribution Date;
(ii) second, to the Class B-1 Subaccount, the pro
rata share of the Subordinate Principal
Distribution Amount (based upon such Class'
Subaccount Principal Balance as a percentage
of the Subaccount Principal Balance of all
of the Subordinate Subaccounts);
(iii) third, to the Class B-2 Subaccount, Accrued
Interest for such Distribution Date, plus
any Accrued Interest thereon remaining
unpaid from any previous Distribution Date;
(iv) fourth, to the Class B-2 Subaccount, the pro
rata share of the Subordinate Principal
Distribution Amount (based upon such Class'
Subaccount Principal Balance as a percentage
of the Subaccount Principal Balance of all
of the Subordinate Subaccounts);
(v) fifth, to the Class B-3 Subaccount, Accrued
Interest for such Distribution Date, plus
any Accrued Interest thereon remaining
unpaid from any previous Distribution Date;
(vi) sixth, to the Class B-3 Subaccount, the pro
rata share of the Subordinate Principal
Distribution Amount (based upon such Class'
Subaccount Principal Balance as a percentage
of the Subaccount Principal Balance of all
of the Subordinate Subaccounts);
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(vii) seventh, to the Class B-4 Subaccount,
Accrued Interest for such Distribution Date,
plus any Accrued Interest thereon remaining
unpaid from any previous Distribution Date;
(viii) eighth, to the Class B-4 Subaccount, the pro
rata share of the Subordinate Principal
Distribution Amount (based upon such Class'
Subaccount Principal Balance as a percentage
of the Subaccount Principal Balance of all
of the Subordinate Subaccounts);
(ix) ninth, to the Class B-5 Subaccount, Accrued
Interest for such Distribution Date, plus
any Accrued Interest thereon remaining
unpaid from any previous Distribution Date;
(x) tenth, to the Class B-5 Subaccount, the pro
rata share of the Subordinate Principal
Distribution Amount (based upon such Class'
Subaccount Principal Balance as a percentage
of the Subaccount Principal Balance of all
of the Subordinate Subaccounts);
(xi) eleventh, to the Class B-6 Subaccount,
Accrued Interest for such Distribution Date,
plus any Accrued Interest thereon remaining
unpaid from any previous Distribution Date;
(xii) twelfth, to the Class B-6 Subaccount, the
pro rata share of the Subordinate Principal
Distribution Amount (based upon such Class'
Subaccount Principal Balance as a percentage
of the Subaccount Principal Balance of all
of the Subordinate Subaccounts);
(xiii) thirteenth, to each Class of the Subordinate
Subaccounts in the order of seniority, the
remaining portion, if any, of the Available
Distribution, up to the amount of
unreimbursed Realized Losses previously
allocated to such Class, if any, provided
distribution of any amount pursuant to this
paragraph shall not cause a further
reduction in the Subaccount Principal
Balances of such Class of Subordinate
Subaccounts; and
(xiv) fourteenth, to the Class RP Securities, the
remaining portion, if any, of the Available
Distribution Amount for such Distribution
Date.
(2) On each Distribution Date on or after the Credit Support
Depletion Date, distributions will be made in the order and
priority as follows:
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(a) With respect to the Class FX Subaccounts and Class RP
Securities, subject, in each case, to the extent of
the Available Distribution for Group I remaining
following prior distributions, if any, on such
Distribution Date:
(i) first, to the Class FXP Subaccount, the
Class FXP Fraction of all principal received
on or in respect of each Group I Discount
Mortgage Loan;
(ii) second, to the Class FX Subaccounts (other
than the Class FXP Subaccount), Accrued
Interest for such Distribution Date, plus
any Accrued Interest thereon remaining
unpaid from any previous Distribution Date;
(iii) third, to the Class FXA Subaccounts, the
Class FXA Principal Distribution Amount, pro
rata according to their respective
Subaccount Principal Balances;
(iv) fourth, to the Class A Subaccounts, the
remaining portion, if any, of the Available
Distribution for Group I for such
Distribution Date, to be distributed
pursuant to paragraph (2)(b) hereof; and
(v) fifth, to the Class RP Securities, the
remaining portion, if any, of the Available
Distribution Amount for Group I for such
Distribution Date.
(b) with respect to the Class II Subaccounts and the
Class RP Securities, subject, in each case, to the
extent of the Available Distribution for Group II
remaining following prior distributions, if any, on
such Distribution Date:
(i) first, to the Class P Subaccount, the Class
P Fraction of all principal received on or
in respect of each Group II Discount
Mortgage Loan;
(ii) second, to the Class II Subaccounts (other
than the Class P Subaccount), and the Class
RP Securities, Accrued Interest for such
Distribution Date, plus any Accrued Interest
thereon remaining unpaid from any previous
Distribution Date;
(iii) third, to the Class A and Class R Subaccount
and the Class RP Securities, the Class A
Principal Distribution Amount, pro rata
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according to their respective Subaccount
Principal Balances or Security Principal
Balance;
(iv) fourth, to the Class FX Subaccount, the
remaining portion, if any, of the Available
Distribution for Group II for such
Distribution Date, to be distributed
pursuant to paragraph (2)(a) hereof; and
(v) fifth, to the Class RP Securities, the
remaining portion, if any, of the Available
Distribution Amount for Group II for such
Distribution Date.
(c) On each Distribution Date, the Trustee shall withdraw from
the Security Account the Available Distribution Amount for such Distribution
Date and shall distribute, from the amount so withdrawn, to the extent of the
Available Distribution Amount, the Security Distribution Amount to the
Securities (other than the Class RP Securities), in accordance with written
statements received from the Master Servicer pursuant to Section 4.03(b), by
wire transfer in immediately available funds for the account of, or by check
mailed to, each Securityholder and Class R Securityholder of record on the
immediately preceding Record Date (other than as provided in Section 9.01
respecting the final distribution), as specified by each such Securityholder and
at the address of such Holder appearing in the Security Register.
For any Distribution Date, the Available Distribution Amount shall be
distributed to the Securityholders of each Class in the order and priority as
follows:
(1) all interest deemed paid on each Subaccount on each
Distribution Date shall be distributed as interest as
follows:
(i) (A) interest deemed paid on (x) the Class
FXA-1, Class FXA-3, Class FXA-4 and Class
FXA-8 Subaccounts shall be distributed to
the Corresponding Classes in an amount equal
to the Accrued Interest for such
Distribution Date, plus any Accrued Interest
thereon remaining unpaid from any previous
Distribution Date, and (y) the Class FXA-2,
Class FXA-5, Class FXA-6, Class FXA-7 and
Class FXS Subaccounts shall be distributed
to the Corresponding Classes in an amount
equal to the Accrued Interest for such
Classes with respect to such Distribution
Date, plus any Accrued Interest thereon
remaining unpaid from any previous
Distribution Date, with any interest
shortfall on such Distribution Date being
allocated pro rata among all such Classes of
Securities based on their respective Accrued
Interest for such Distribution Date; and (B)
interest deemed paid on the Class A, Class S
and Class R Subaccounts shall be distributed
to the Corresponding Classes, with any
interest shortfall on such Distribution Date
being
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allocated pro rata among all such Classes of
Securities based on their respective Accrued
Interest;
(ii) interest deemed paid on the Class B
Subaccounts shall be distributed to the
Corresponding Classes in an amount equal to
the Accrued Interest for such Classes; and
(2) All principal deemed paid on, and Realized Losses
allocated to, each Subaccount on each Distribution
Date shall be distributed on such Distribution Date
as principal to the Corresponding Classes; and
(3) Any amounts remaining in the Custodial Account or
Security Account on any Distribution Date after all
payments required to be made by this Agreement have
been made and any amounts remaining in the Pooling
REMIC or the Issuing REMIC after payment in full of
the Regular Interests therein, and any administrative
expenses associated with the Trust, will be
distributed pro rata to the Holders of the Class RP
and Class R Securities, respectively (but will not
reduce the Security Principal Balance thereof).
(d) On each Distribution Date the Trustee shall distribute to
the Master Servicer, prior to any distributions on the Securities out of the
Available Distribution Amount for such Distribution Date, any Advance
Reimbursement Amount for such Distribution Date, to the extent not previously
reimbursed by the Master Servicer through withdrawals from the Custodial
Account, and to each Securityholder of record on the related Record Date (other
than as provided in Section 9.01 respecting the final distribution) either in
immediately available funds (by wire transfer or otherwise) to the account of
such Securityholder at a bank or other entity having appropriate facilities
therefor, if such Securityholder has so notified the Trustee at least 5 Business
Days prior to the related Record Date and such Securityholder is the registered
owner of Securities the aggregate Initial Security Principal Balance of which is
not less than $1,000,000 (or, with respect to any Class of Strip Securities or
the Class FXA-9 Securities, is the registered owner of an initial Notional
Amount of not less than $1,000,000 of such Class), or otherwise by check mailed
to such Securityholder at the address of such Holder appearing in the Security
Register, such Securityholder's share (based on the aggregate of the Percentage
Interests represented by Securities of the applicable Class held by such Holder)
of the Security Distribution Amounts, in each case to the extent of the related
Available Distribution Amount.
(e) The Trustee shall, upon written request from the Master
Servicer, invest or cause the institution maintaining the Security Account to
invest the funds in the Security Account in Permitted Instruments designated in
the name of the Trustee for the benefit of the Securityholders, which shall
mature not later than the Business Day next preceding the Distribution Date next
following the date of such investment (except that (i) any investment in
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obligations of the institution with which the Security Account is maintained may
mature on such Distribution Date and (ii) any other investment may mature on
such Distribution Date if the Trustee shall agree to advance funds on such
Distribution Date to the Security Account in the amount payable on such
investment on such Distribution Date, pending receipt thereof to the extent
necessary to make distributions on the Securities) and shall not be sold or
disposed of prior to maturity. All income and gain realized from any such
investment shall be for the benefit of the Master Servicer and shall be subject
to its withdrawal or order from time to time. The amount of any losses incurred
in respect of any such investments shall be deposited in the Security Account by
the Master Servicer out of its own funds immediately as realized without right
of reimbursement.
(f) Except as otherwise provided in Section 9.01, whenever the
Trustee expects that the final distribution with respect to any Class of
Securities will be made on the next Distribution Date, the Trustee shall, no
later than five days after the Determination Date, mail to each Holder on such
date of such Class of Securities a notice to the effect that:
(i) the Trustee expects that the final distribution
with respect to such Class of Securities will be made on such
Distribution Date but only upon presentation and surrender of such
Securities at the office of the Trustee therein specified, and
(ii) no interest shall accrue on such Securities from
and after the end of the related Interest Accrual Period.
Any funds not distributed to any Holder or Holders of
Securities of such Class on such Distribution Date because of the failure of
such Holder or Holders to tender their Securities shall, on such date, be set
aside and held in trust uninvested and credited to the account of the
appropriate non-tendering Holder or Holders. If any Securities as to which
notice has been given pursuant to this Section 4.01(f) 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
Securityholders instructing such Securityholders to surrender their Securities
for cancellation in order to receive the final distribution with respect
thereto. If within six months after the second notice all such Securities shall
not have been surrendered for cancellation, the Trustee shall take reasonable
steps as directed by the Seller, or appoint an agent to take reasonable steps,
to contact the remaining non-tendering Securityholders concerning surrender of
their Securities. The costs and expenses of maintaining the funds in trust and
of contacting such Securityholders shall be paid out of the assets remaining in
the Trust Fund. If within nine months after the second notice any such
Securities shall not have been surrendered for cancellation, the Class R and
Class RP Securityholders shall be entitled to all unclaimed funds and other
assets which remain subject hereto. No interest shall accrue or be payable to
any Securityholder on any amount held in trust as a result of such
Securityholder's failure to surrender its Security(s) for final payment thereof
in accordance with this Section 4.01(f).
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(g) On each Distribution Date, the Trustee shall distribute to
each Securityholder of record on the related Record Date (other than as provided
in Section 9.01 respecting the final distribution), in the manner set forth in
Section 4.01(b), such Securityholder's share (based on the aggregate of the
Percentage Interests represented by the Securities of the applicable Class held
by such Securityholder) of the amount transferred from the Excess Proceeds
Account to the Security Account on the related Security Account Deposit Date in
accordance with Section 3.24(b), in the following order of priority; first, to
the Class FX and Class II Securities (other than the Class FXP and Class P
Securities) on a pro rata basis, to the extent of and in proportion to the
interest portion of the aggregate amount of all Realized Losses allocated to the
Securities of such Classes on such Distribution Date or any previous
Distribution Date in accordance with Section 4.04 and not subsequently recovered
through any distribution in accordance with this Section 4.01(g), and then
second, to the Class FX and Class II Securities (other than the Class FXA-9, the
Class FXS and the Class S Securities) on a pro rata basis, to the extent of and
in proportion to the principal portion of the aggregate amount of all Realized
Losses allocated to the Securities of such Classes on such Distribution Date or
any previous Distribution Date in accordance with Section 4.04 and not
subsequently recovered through any distribution in accordance with Section
4.01(c), or in accordance with this Section 4.01(g), third, to the Holders of
the Class B-1 Securities, fourth, to the Holders of the Class B-2 Securities,
fifth, to the Holders of the Class B-3 Securities, sixth, to the Holders of the
Class B-4 Securities, seventh, to the Holders of the Class B-5 Securities,
eighth, to the Holders of the Class B-6 Securities, in each case to the extent
of the aggregate amount of all Realized Losses allocated to the Security of such
Class on such Distribution Date or any previous Distribution Date in accordance
with Section 4.04 and not subsequently recovered through any distribution in
accordance with Section 4.01(c) or in accordance with this Section 4.01(g), and
then ninth, to the Holders of the Class RP Securities. There shall be
corresponding deemed distributions with respect to the Corresponding Classes of
Subaccounts. The distribution of any amount in accordance with this Section
4.01(g) shall not have the effect of reducing the Security Principal Balance of
any Security (or the Subaccount Principal Balance of any Subaccount) to which
such distribution is allocated.
(h) On each Distribution Date, the Trustee shall distribute to
each Class RP Securityholder of record on the next preceding Record Date (other
than as provided in Section 9.01 respecting the final distribution), each Class
RP Securityholder's share (based on the aggregate of the Percentage Interests
represented by Class RP Securities held by such Class RP Securityholder, as
applicable) of the amount transferred from the Excess Proceeds Account to the
Security Account on the related Security Account Deposit Date in accordance with
Section 3.24(c).
SECTION 4.02. Statements to Securityholders.
On each Distribution Date the Trustee shall forward or cause
to be forwarded by mail to each Holder of a Security and to the Seller, the Loan
Seller and the Master Servicer a statement as to such distribution setting
forth:
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(i)(a) the amount of such distribution to the
Securityholders of each Class applied to reduce the Security Principal
Balance thereof, (b) the aggregate amount included therein representing
Principal Prepayments, (c) the Class FXA Prepayment Percentage with
respect to the Class FXA Securities, the Class A Prepayment Percentage
with respect to the Class A Securities, the Class FXA-2 Prepayment
Percentage with respect to the Class FXA-2 Securities, the Class A-4
Prepayment Percentage with respect to the Class A-4 Securities and the
Class B Percentage applicable to such distribution and (d) the
aggregate of the Stated Principal Balances of any Mortgage Loans
repurchased during the related Prepayment Period (on aggregate basis
and on a Loan Group by Loan Group basis);
(ii) the amount of such distribution to the
Securityholders of such Class allocable to interest;
(iii) the amount of related servicing compensation and the
amount of servicing compensation attributable to penalties and fees
received by or on behalf of the Master Servicer and any Sub-Servicers
with respect to such Distribution Date and such other customary
information as the Master Servicer deems necessary or desirable and
supplies to the Trustee, or which a Securityholder reasonably requests,
to enable Securityholders to prepare their tax returns;
(iv) the amount of Advances (other than Servicing Advance),
presented in the aggregate and the amount of principal and the amount
of interest Advances included in such distribution on such Distribution
Date;
(v) the number and aggregate Stated Principal Balance of the
Mortgage Loans at the close of business on such Distribution Date (on
an aggregate basis and on a Loan Group-by-Loan Group basis);
(vi) the Security Principal Balance of a Single Security of
such Class, the aggregate Security Principal Balance of the Class FXA-1
Securities, Class FXA-2 Securities, Class FXA-3 Securities, Class FXA-4
Securities, Class FXA-5 Securities, Class FXA-6 Securities, Class FXA-7
Securities, Class FXA-8 Securities, Class A-1 Securities, Class A-2
Securities, Class A-3 Securities, Class A-4 Securities, Class FXP
Securities, Class P Securities, Class B-1 Securities, Class B-2
Securities, Class B-3 Securities, Class B-4 Securities, Class B-5
Securities and Class B-6 Securities, respectively, the Notional Amounts
for the Class FXS Securities, the Class S Securities and the Class
FXA-9 Securities, the Class FXA Percentage, the Class A Percentage, the
Class B-1 Percentage, the Class B-2 Percentage, the Class B-3
Percentage, the Class B-4 Percentage, Class B-5 Percentage and the
Class B-6 Percentage 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 (on an aggregate basis and on a Loan Group-by-Loan Group
basis);
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(vii) the number and aggregate Stated Principal Balance of
Mortgage Loans (a) delinquent 31 to 60 days, (b) delinquent 61 to 90
days and (c) delinquent 91 days or more (on an aggregate basis and on a
Loan Group-by-Loan Group basis) as of the close of business on the
Determination Date to which such distribution relates;
(viii) the number and aggregate Stated Principal Balance of
Mortgage Loans as to which foreclosure proceedings have been commenced
in each case as of the related Determination Date and which are (a)
delinquent 31 to 60 days, (b) delinquent 61 to 90 days and (c)
delinquent 91 days or more (on an aggregate basis and on a Loan
Group-byLoan Group basis) as of the close of business on the
Determination Date to which such distribution relates;
(ix) the number and aggregate Stated Principal Balance of
Mortgage Loans as to which bankruptcy proceedings have been commenced
in each case as of the related Determination Date and which are (a)
delinquent 31 to 60 days, (b) delinquent 61 to 90 days and (c)
delinquent 91 days or more (on an aggregate basis and on a Loan
Group-byLoan Group basis) as of the close of business on the
Determination Date to which such distribution relates;
(x) with respect to any Mortgage Loan that became a REO
Property during the preceding calendar month, the loan number and
Stated Principal Balance of such Mortgage Loan as of the close of
business on the Distribution Date in such month and the date of
acquisition thereof;
(xi) the book value of any REO Property as of the
close of business on the last Business Day of the calendar month
preceding the Distribution Date;
(xii) the Pass-Through Rate in effect for the preceding
calendar month with respect to each Class of Securities (other than the
Principal Only Securities and the Residual Securities);
(xiii) the remaining aggregate Security Principal Balance of
each Class of Securities, after giving effect to the distribution made
on such Distribution Date;
(xiv) the Special Hazard Amount, Fraud Loss Amount
and Bankruptcy Amount remaining available immediately after such
Distribution Date;
(xv) the aggregate Realized Losses incurred since the
Cut-off Date (on an aggregate basis and on a Loan Group-by-Loan Group
basis); and
(xvi) the amount of any Excess Proceeds distributed to each
Class of Securities and the remaining balance of the Excess Proceeds
Account, if any, on such Distribution Date, after giving effect to
distributions made on such date.
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In the case of information furnished pursuant to subclauses
(i)-(iii) above, the amounts shall also be expressed as a dollar amount per
Single Security.
Within a reasonable period of time after the end of each
calendar year, the Trustee shall prepare and forward, to each Person who at any
time during the calendar year was a Holder of a Security (other than the Class R
or Class RP Securities) a statement containing the information set forth in
subclauses (i)-(iii) above, aggregated for such calendar year or applicable
portion thereof during which such person was a Securityholder. Such obligation
of the Trustee shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Trustee pursuant
to any requirements of the Code and regulations thereunder as from time to time
are in force.
On each Distribution Date the Trustee shall prepare and
forward, to each Holder of a Class R or Class RP Security a copy of the reports
forwarded to each of the Securityholders (other than the Class R or Class RP
Securityholders) on such Distribution Date and a statement setting forth the
amounts actually distributed with respect to the Class R or Class RP Securities
on such Distribution Date.
Within a reasonable period of time after the end of each
calendar year, the Trustee shall prepare and forward, to each Person who at any
time during the calendar year was a Holder of a Class R or Class RP Security a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class R or Class RP Securityholder. Such obligation of the
Trustee shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Trustee pursuant to any
requirements of the Code as from time to time are in force.
SECTION 4.03. Remittance Reports; Advances by the Master
Servicer.
(a) On the second Business Day following each Determination
Date, the Master Servicer shall deliver to the Trustee a report, prepared as of
the close of business on the Determination Date (the "Determination Date
Report"), in the form of an electromagnetic tape or disk. The Determination Date
Report and any written information supplemental thereto shall include such
information with respect to the Mortgage Loans that is reasonably available to
the Master Servicer and that is required by the Trustee for purposes of making
the calculations referred to in the following paragraph, as set forth in Exhibit
K hereto. Not later than 10:00 A.M. (Pacific Standard Time) on the Business Day
preceding each Security Account Deposit Date, the Trustee shall furnish by
telecopy to the Master Servicer a statement (the information in such statement
to be made available to Securityholders or the Seller by the Master Servicer on
request) setting forth (i) the Available Distribution Amount (in the aggregate
and on a LoanGroup-by Loan Group basis) and (ii) the amounts required to be
withdrawn from the Custodial Account and deposited into the Security Account on
the immediately succeeding Security Account Deposit Date pursuant to clause
(iii) of Section 4.01(a). The Trustee shall have no
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obligation to recompute, recalculate or verify any information provided to it by
the Master Servicer. The determination by the Trustee of such amounts shall, in
the absence of obvious error, be presumptively deemed to be correct for all
purposes hereunder.
(b) Prior to the close of business on the Business Day
preceding each Security Account Deposit Date, the Trustee shall notify the
Master Servicer of the amount of Advances (other than Servicing Advances) (in
the aggregate and on a Loan-Group-by-Loan Group basis) required to be made for
the related Distribution Date, which shall be in an aggregate amount equal to
the aggregate amount of Monthly Payments, (with each interest portion thereof
adjusted to the Net Mortgage Rate) less the amount of any related Debt Service
Reductions or reductions in the amount of interest collectable from the
Mortgagor pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940, on
the Outstanding Mortgage Loans as of the related Due Date, which Monthly
Payments were delinquent as of the close of business as of the related
Determination Date; no Advance shall be made if it would be a Nonrecoverable
Advance. On or before 12:00 P.M. (Pacific Standard Time) on each Security
Account Deposit Date, the Master Servicer shall either (i) deposit in the
Security Account from its own funds, or funds received therefor from the
Sub-Servicers, an amount equal to the Advances to be made by the Master Servicer
in respect of the related Distribution Date, (ii) withdraw from amounts on
deposit in the Custodial Account and deposit in the Security Account all or a
portion of the amounts held for future distribution in discharge of any such
Advance, or (iii) make advances in the form of any combination of (i) and (ii)
aggregating the amount of such Advance. Any portion of the amounts held for
future distribution so used shall be replaced by the Master Servicer by deposit
in the Security Account on or before 11:00 A.M. (Pacific Standard Time) on any
future Security Account Deposit Date to the extent that funds attributable to
the Mortgage Loans that are available in the Custodial Account for deposit in
the Security Account on such Security Account Deposit Date shall be less than
payments to Securityholders required to be made on the following Distribution
Date. The amount of any reimbursement in respect of outstanding Advances on any
Distribution Date shall be allocated to specific Monthly Payments due but
delinquent for previous Due Periods, which allocation shall be made, to the
extent practicable, to Monthly Payments which have been delinquent for the
longest period of time. Such allocations shall be conclusive for purposes of
reimbursement to the Master Servicer from recoveries on related Mortgage Loans
pursuant to Section 3.11. The determination by the Master Servicer that it has
made a Nonrecoverable Advance or that any proposed Advance, if made, would
constitute a Nonrecoverable Advance, shall be evidenced by a certificate of a
Servicing Officer delivered to the Loan Seller and the Trustee. The Trustee
shall deposit all funds it receives pursuant to this Section 4.03 into the
Security Account.
(c) In the event that the Master Servicer determines as of the
Business Day preceding any Security Account Deposit Date that it will be unable
to deposit in the Security Account an amount equal to the Advance required to be
made for the immediately succeeding Distribution Date in the amount determined
by the Trustee pursuant to paragraph (b) above, it shall give notice in the form
of an Officers' Certificate to the Trustee of its inability to advance (such
notice may be given by telecopy), not later than 11:00 A.M. (Pacific Standard
Time), on
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such Business Day, specifying the portion of such amount that it will be unable
to deposit. Not later than 2:30 P.M. (Pacific Standard Time), on the Security
Account Deposit Date, unless by such time the Master Servicer shall have
directly or indirectly deposited in the Security Account the entire amount of
the Advances required to be made for the related Distribution Date, pursuant to
Section 7.01, the Trustee shall (a) terminate all of the rights and obligations
of the Master Servicer under this Agreement in accordance with Section 7.01 and
(b) assume the rights and obligations of the Master Servicer hereunder,
including the obligation to deposit in the Security Account an amount equal to
the Advance for the immediately succeeding Distribution Date; provided, however,
that the Trustee's obligation to advance such amounts shall be as of the related
Distribution Date.
SECTION 4.04. Allocation of Realized Losses.
Prior to each Distribution Date, the Master Servicer shall
determine the total amount of Realized Losses (in the aggregate and on a Loan
Group-by-Loan Group basis), if any, that resulted from any Cash Liquidation,
Debt Service Reduction, Deficient Valuation or REO Disposition that occurred
during the related Prepayment Period. The amount of each Realized Loss shall be
evidenced by an Officers' Certificate by the Master Servicer. Realized Losses
shall be allocated among the various Classes of Securities as determined by the
Trustee in accordance with the following provisions. All Realized Losses in
respect of the Mortgage Loans, other than Excess Special Hazard Losses,
Extraordinary Losses, Excess Bankruptcy Losses or Excess Fraud Losses, shall be
allocated first to the Class B-6 Securities until the Security Principal Balance
of the Class B-6 Securities has been reduced to zero, then, to the Class B-5
Securities until the Security Principal Balance of the Class B-5 Securities has
been reduced to zero, then, to the Class B-4 Securities until the Security
Principal Balance of the Class B-4 Securities has been reduced to zero, then, to
the Class B-3 Securities until the Security Principal Balance of the Class B-3
Securities has been reduced to zero, then, to the Class B-2 Securities until the
Security Principal Balance of the Class B-2 Securities has been reduced to zero,
then, to the Class B-1 Securities until the Security Principal Balance of the
Class B-1 Securities has been reduced to zero, and, thereafter, (x) any Realized
Losses on the Group I Mortgage Loans will be allocated, if any such loss is on a
Group I Discount Mortgage Loan, to the Class FXP Securities in an amount equal
to the related Discount Fraction of the principal portion of such Realized Loss,
and the remainder of such Realized Losses and the entire amount of such Realized
Losses on any other Group I Mortgage Loans to the Classes of Class FXA and Class
FXS Securities on a pro-rata basis of the then outstanding Security Principal
Balances thereof in the case of the principal portion of a Realized Loss or
based on the Accrued Interest thereon in the case of an interest portion of a
Realized Loss, and (y) any Realized Losses on the Group II Mortgage Loans will
be allocated, if any such loss is on a Group II Discount Mortgage Loan, to the
Class P Securities in an amount equal to the related Discount Fraction of the
principal portion of such Realized Loss, and the remainder of such Realized
Losses and the entire amount of such Realized Losses on any other Group II
Mortgage Loans to the Classes of Class A and Class S Securities on a pro-rata
basis of the then outstanding Security Principal Balances thereof in the case of
the principal portion of a Realized Loss or based on the Accrued
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Interest thereon in the case of an interest portion of a Realized Loss. Any
Excess Special Hazard Losses, Excess Bankruptcy Losses, Excess Fraud Losses and
Extraordinary Losses on Non-Discount Mortgage Loans will be allocated among all
Classes of the Securities (other than the Class FXP and the Class P Securities)
pursuant to a Pro Rata Allocation. The principal portion of such losses on Group
I Discount Mortgage Loans will be allocated to the Class FXP Securities in an
amount equal to the related Discount Fraction thereof and the principal portion
of such losses on Group II Discount Mortgage Loans will be allocated to the
Class P Securities in an amount equal to the related Discount Fraction thereof,
and the remainder of the principal portion of such losses, and the interest
portion of such losses on Discount Mortgage Loans will be allocated among all
Classes of Securities (other than the Class FXP and the Class P Securities)
pursuant to a Pro Rata Allocation. Any Realized Losses or interest shortfalls
allocated to any Class of Securities shall be allocated to the Subaccount
bearing the same designation to reduce the related Subaccount Principal Balance
thereof with any interest shortfalls with respect to the FXA-9 Securities being
allocated to the FXA-8 Subaccount.
SECTION 4.05. Information Reports to be Filed by the
Master Servicer.
The Master Servicer or Sub-Servicers shall file information
reports 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, and
promptly deliver upon such filing to the Trustee an Officers' Certificate
stating that such reports have been filed. 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 4.06. Compliance with Withholding Requirements.
Notwithstanding any other provision of this Agreement, the
Trustee shall comply with all federal withholding requirements respecting
payments to Securityholders of interest or original issue discount on the
Mortgage Loans, that the Trustee reasonably believes are applicable under the
Code. The consent of Securityholders shall not be required for such withholding.
In the event the Trustee withholds any amount from interest or original issue
discount payments or advances thereof to any Securityholder pursuant to federal
withholding requirements, the Trustee shall, together with its monthly report to
such Securityholders pursuant to Section 4.02 hereof, indicate such amount
withheld.
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ARTICLE V
THE SECURITIES
SECTION 5.01. The Securities.
(a) The Securities will be substantially in the respective
forms annexed hereto as Exhibits A, B-1 and B-2. The Securities will be issuable
in registered form only. Except as provided in Section 5.01(b) below, each of
the Class FXA-5, Class FXA-6, Class FXA-7, Class A-2 and Class A-3 and the
Principal Only Securities will be issuable in denominations evidencing initial
Security Principal Balances of not less than $1,000 and integral multiples of
$1,000 in excess thereof and each of the Class FXA-1, Class FXA-2, Class FXA-3,
Class FXA- 4, Class FXA-8, Class A-1, Class A-4, and the Class B Securities will
be issuable in denominations evidencing initial Security Principal Balances of
not less than $250,000 and integral multiples of $1,000 in excess thereof,
except that one Security of each such Class may be issued in an amount (whether
greater or less than the applicable minimum denomination) such that the
denomination of such Security and the aggregate denomination of all other
outstanding Securities of such Class together equal the aggregate Security
Principal Balance of such Class. Except as provided in Section 5.01(b) below,
each Class of the Strip Securities, and Class FXA- 9 Securities will be issuable
in denominations evidencing an initial Notional Amount of not less than $1.00
and integral multiples of $1.00 in excess thereof, except that one Security of
each such Class will be issuable in an amount such that the denomination of such
Security and the aggregate denomination of all other outstanding Securities of
such Class together equal the related initial Notional Amount of such Class. The
Class R and Class RP Securities will each be issuable in denominations of any
Percentage Interest representing 5.00% and multiples of 0.01% in excess thereof.
Upon original issue, the Securities shall, upon the written
request of the Seller executed by an officer of the Seller, be executed and
delivered by the Trustee, authenticated by the Trustee and delivered to or upon
the order of the Seller upon receipt by the Trustee of the documents specified
in Section 2.01. The Securities shall be executed by manual or facsimile
signature on behalf of the Trustee in its capacity as trustee hereunder by a
Responsible Officer. Securities 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 Securities or
did not hold such offices at the date of such Securities. No Security shall be
entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Security a certificate of authentication
substantially in the form provided for herein executed by the Trustee by manual
signature, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder. All Securities issued on the Closing Date shall be dated
the Closing Date and any Securities delivered thereafter shall be dated the date
of their authentication.
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(b) None of the Principal Only Securities, Class B Securities,
the Strip Securities, Class R Securities are Class RP Securities shall be
Book-Entry Securities. Each Class of the Strip Securities, the Class FXA
Securities and the Class A Securities shall initially be issued as one or more
Securities registered in the name of the Depository or its nominee and, except
as provided below, registration of such Securities may not be transferred by the
Trustee except to another Depository that agrees to hold such Securities for the
respective Security Owners with Ownership Interests therein. The Security Owners
shall hold their respective Ownership Interests in and to each of the Class FXS
Securities, the Class FXA Securities, and the Class A Securities through the
book-entry facilities of the Depository and, except as provided below, shall not
be entitled to Definitive Securities in respect of such Ownership Interests. All
transfers by Security Owners of their respective Ownership Interests in the
Book-Entry Securities shall be made in accordance with the procedures
established by the Depository Participant or brokerage firm representing such
Security Owner. Each Depository Participant shall transfer the Ownership
Interests only in the Book-Entry Securities of Security Owners it represents or
of brokerage firms for which it acts as agent in accordance with the Depositor's
normal procedures.
The Trustee, the Master Servicer and the Seller may for all
purposes (including the making of payments due on the respective Classes of
Book-Entry Securities) deal with the Depository as the authorized representative
of the Security Owners with respect to the respective Classes of Book-Entry
Securities for the purposes of exercising the rights of Securityholders
hereunder. The rights of Security Owners with respect to the respective Classes
of Book-Entry Securities shall be limited to those established by law and
agreements between such Security Owners and the Depository Participants and
brokerage firms representing such Security Owners. Multiple requests and
directions from, and votes of, the Depository as Holder of any Class of
Book-Entry Securities with respect to any particular matter shall not be deemed
inconsistent if they are made with respect to different Security Owners. The
Trustee shall utilize the next available record date in connection with
solicitations of consents from or voting by Securityholders and shall give
notice to the Depository of such record date.
If (i)(A) the Seller or the Master Servicer advises the
Trustee in writing that the Depository is no longer willing or able to properly
discharge its responsibilities as Depository and (B) Neither the Seller or the
Master Servicer is able to locate a qualified successor or (ii) either the
Seller or the Master Servicer at its option advises the Trustee in writing that
it elects to terminate the book-entry system through the Depository, the Trustee
shall notify all Security Owners, through the Depository, of the occurrence of
any such event and of the availability of Definitive Securities to Security
Owners requesting the same. Upon surrender to the Trustee of the Book-Entry
Securities by the Depository, accompanied by registration instructions from the
Depository for registration of transfer, the Trustee shall, at the Master
Servicer's; or, if so requested by the Seller, the Seller's expense, issue the
Definitive Securities. Such Definitive Securities will be issued in minimum
denominations of $1,000, except that any certificate that was represented by a
Book-Entry Security in an amount less than $1,000 immediately prior to the
issuance of a Definitive Security shall be issued in a minimum denomination
equal to the
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amount represented by such Book-Entry Security. Neither the Seller, the Master
Servicer, the Loan Seller nor the Trustee shall be liable for any actions taken
by the Depository or its nominee, including, without limitation, any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions. Upon the issuance of Definitive
Securities all references herein to obligations imposed upon or to be performed
by the Depository in connection with the issuance of the Definitive Securities
pursuant to this Section 5.01 shall be deemed to be imposed upon and performed
by the Trustee, and the Trustee and the Master Servicer shall recognize the
Holders of the Definitive Securities as Securityholders hereunder.
SECTION 5.02. Registration of Transfer and Exchange of
Securities.
(a) The Trustee shall maintain a Security Register in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Securities and of transfers and exchanges of
Securities as herein provided.
(b) Except as provided in Section 5.02(c), no transfer, sale,
pledge or other disposition of a Class B-4 Security, Class B-5 Security, or
Class B-6 Security, 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 (the "Act"), and any applicable state securities laws or is
made in accordance with said Act and laws. In the event that a transfer of a
Class B-4 Security, Class B-5 Security, or Class B-6 Security is to be made
under this Section 5.02(b), (i) except with respect to sales by the Initial
Purchaser, the Seller may direct the Trustee to require an Opinion of Counsel
acceptable to and in form and substance satisfactory to the Trustee and the
Seller that such transfer shall 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 Seller or the Master Servicer, provided that such
Opinion of Counsel will not be required in connection with the initial transfer
of any such Security by the Seller or any affiliate thereof, to an affiliate of
the Seller or the Initial Purchaser and (ii) the Trustee shall require the
transferee to execute a representation letter, substantially in the form of
Exhibit G-1 hereto, and the Trustee shall require the transferor to execute a
representation letter, substantially in the form of Exhibit G-2 hereto, each
acceptable to and in form and substance satisfactory to the Seller and the
Trustee certifying to the Seller and the Trustee the facts surrounding such
transfer, which representation letters shall not be an expense of the Trustee,
the Seller or the Master Servicer; provided however that such representation
letters will not be required in connection with any transfer of any such
Security by the Seller to an affiliate of the Seller, or the Initial Purchaser
and the Trustee shall be entitled to conclusively rely upon a representation
(which, upon the request of the Trustee, shall be a written representation) from
the Seller of the status of such transferee as an affiliate of the Seller. Any
such Securityholder (other than the Initial Purchaser) desiring to effect such
transfer shall, and does hereby agree to, indemnify the Trustee, the Seller, the
Loan Seller and the Master Servicer against any liability that may result
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if the transfer is not so exempt or is not made in accordance with such
applicable federal and state laws.
(c) Transfers of Securities may be made in accordance with
this Section 5.02(c) if the prospective transferee of a Security provides the
Trustee and the Seller with an investment letter substantially in the form of
Exhibit H attached hereto, which investment letter shall not be an expense of
the Trustee, the Seller or the Master Servicer, and which investment letter
states that, among other things, such transferee is a "qualified institutional
buyer" as defined under Rule 144A. Such transfers shall be deemed to have
complied with the requirements of Section 5.02(b) hereof; provided, however,
that no Transfer of any of the Securities may be made pursuant to this Section
5.02(c) by the Seller. Any such Securityholder desiring to effect such transfer
shall, and does hereby agree to, indemnify the Trustee, the Seller and the
Master Servicer against any liability that may result if the transfer is not so
exempt or is not made in accordance with such applicable federal and state laws.
(d) The Trustee shall require an Opinion of Counsel (a
"Benefit Plan Opinion") from a prospective transferee prior to the transfer of
any Class B Security, Class RP Security or Class R Security to any employee
benefit plan or other retirement arrangement, including individual retirement
accounts and Keogh plans, that is subject to Section 406 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA") or Section 4975 of
the Code (any of the foregoing, a "Plan"), to a trustee or other Person acting
on behalf of any Plan, or to any other person who is using "plan assets" of any
Plan to effect such acquisition (a "Plan Investor") other than an insurance
company. Such Benefit Plan Opinion must establish to the satisfaction of the
Seller and the Trustee or the Security Registrar that such acquisition will not
violate the prohibited transaction provisions of Sections 406 and 407 of ERISA
and Section 4975 of the Code. Neither the Seller, the Master Servicer nor the
Trustee shall bear the expense of obtaining such Opinion of Counsel on behalf of
any prospective transferee. The permission of any transfer in violation of the
restriction on transfer set forth in this paragraph shall not constitute a
default or an Event of Default.
A Plan Investor that is an insurance company may, in lieu of a Benefit
Plan Opinion, deliver to the Trustee a representation letter, in the form of
Exhibit G-5 hereto, stating that (i) the source of funds used to purchase the
Class B, Class R or Class RP Security is an "insurance company general account"
(as such term is defined in Section V(e) of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60"), 60 Fed. Reg. 35925 (July 12, 1995)), (ii) there
is no Plan with respect to which the amount of such general account's reserves
and liabilities for the contract(s) held by or on behalf of such Plan and all
other Plans maintained by the same employer (or affiliate thereof as defined in
Section V(a)(1) of PTCE 95-60) or by the same employee organization exceeds 10%
of the total of all reserves and liabilities of such general account (as such
amounts are determined under Section I(a) of PTCE 95-60) at the date of
acquisition, (iii) the purchase of the Class B, Class R or Class RP Security is
not part of an agreement, arrangement, or understanding designed to benefit a
party in interest, and (iv) the
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conditions of the Exemption (except for the conditions stated in Section
II(A)(2) and (3) thereof) are met.
(e) (i) Each Person who has or who acquires any Ownership
Interest in a Class RP Security or Class R Security 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 RP Security or Class R Security are
expressly subject to the following provisions:
(A) Each Person holding or acquiring any Ownership Interest in
a Class RP Security or Class R Security shall be a Permitted Transferee and
shall promptly notify the Trustee of any change or impending change in its
status as a Permitted Transferee.
(B) In connection with any proposed Transfer of any Ownership
Interest in a Class RP Security or Class R Security, the Trustee shall require
delivery to it, and shall not register the Transfer of any Class RP Security or
Class R Security until its receipt of (I) an affidavit and agreement (a
"Transferee Affidavit and Agreement") in the form attached hereto as Exhibit G-3
from the proposed Transferee, in form and substance satisfactory to the Master
Servicer and the Trustee representing and warranting, among other things, that
it is a Permitted Transferee, that it is not acquiring its Ownership Interest in
the Class RP Security or Class R Security 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 RP
Security or Class R Security, it will endeavor to remain a Permitted Transferee,
and that it has reviewed the provisions of this Section 5.02 and agrees to be
bound by them, and (II) a certificate, in the form attached hereto as Exhibit
G-4, from the Holder wishing to transfer the Class RP Security or Class R
Security, in form and substance satisfactory to the Master Servicer and the
Trustee representing and warranting, among other things, that no purpose of the
proposed Transfer is to impede the assessment or collection of tax.
(C) Notwithstanding the delivery of a Transfer Affidavit and
Agreement by a proposed Transferee under clause (B) above, if a Responsible
Officer of the Trustee assigned to this transaction has actual knowledge that
the proposed Transferee is not a Permitted Transferee, no Transfer of an
Ownership Interest in a Class RP Security or Class R Security to such proposed
Transferee shall be effected.
(D) Each Person holding or acquiring any Ownership Interest in
a Class RP Security or Class R Security shall agree (x) to require a Transferee
Affidavit and Agreement from any other Person to whom such Person attempts to
transfer its Ownership Interest in a Class RP Security or Class R Security and
(y) not to transfer its Ownership Interest unless it provides a certificate to
the Trustee in the form attached hereto as Exhibit G-4.
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(E) Each Person holding or acquiring an Ownership Interest in
a Class RP Security or Class R Security, by purchasing an Ownership Interest in
such Security, agrees to give the Trustee written notice that it is a
"pass-through interest holder" within the meaning of Temporary Treasury
Regulations Section 1.67-3T(a)(2)(i)(A) immediately upon acquiring an Ownership
Interest in a Class RP Security or Class R Security, if it is "a pass-through
interest holder", or is holding an Ownership Interest in a Class RP Security or
Class R Security on behalf of a "pass-through interest holder."
(ii) The Trustee will register the Transfer of any Class RP
Security or Class R Security only if it shall have received the Transferee
Affidavit and Agreement in the form attached hereto as Exhibit G-3, a
certificate of the Holder requesting such transfer in the form attached hereto
as Exhibit G-4 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 RP Security or Class R Securities to Non-United States Persons and
Disqualified Organizations are prohibited.
(iii) (A) If any Disqualified Organization shall become a
Holder of a Class RP Security or Class R Security, 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 RP Security or Class R Security. If a NonUnited
States Person shall become a Holder of a Class RP Security or Class R Security,
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 RP Security or Class R
Security. If a transfer of a Class RP Security or Class R Security is
disregarded pursuant to the provisions of Treasury Regulations Section 1.860E-1
or Section 1.860G-3, then the last preceding Permitted Transferee shall be
restored, to the extent permitted by law, to all rights and obligations as
Holder thereof retroactive to the date of registration of such Transfer of such
Class RP Security or Class R Security. The Trustee shall be under no liability
to any Person for any registration of Transfer of a Class RP Security or Class R
Security that is in fact not permitted by this Section 5.02 or for making any
payments due on such Security 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 RP Security or Class R Security in violation of the restrictions in
this Section 5.02 and to the extent that the retroactive restoration of the
rights of the Holder of such Class RP Security or Class R Security 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 RP Security or Class R Security, to sell such Class RP Security or
Class R Security 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 RP Security or Class R Security in accordance with the instructions
of the Trustee. Such purchaser may be the Trustee itself. The proceeds of such
sale, net of the commissions (which may include commissions payable to the
Trustee),
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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 RP Security or Class R Security as a result of its exercise of such
discretion.
(iv) The Trustee shall make available to the Internal Revenue
Service and those Persons specified by the REMIC Provisions, all information
necessary to compute any tax imposed (A) as a result of the transfer of an
ownership interest in a Class RP Security or Class R Security to any Person who
is a Disqualified Organization, including the information regarding "excess
inclusions" of such Class RP Security or Class R Securities 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 RP Security or Class R
Security having as among its record holders at any time any Person who is a
Disqualified Organization. The Trustee may charge and shall be entitled to
reasonable compensation for providing such information as may be required from
those Persons which may have had a tax imposed upon them as specified in clauses
(A) and (B) of this paragraph for providing such information.
(f) Subject to the preceding paragraphs, upon surrender for
registration of transfer of any Security at the office of the Trustee maintained
for such purpose, the Trustee shall execute and the Trustee or the
authenticating agent shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of the same
Class of a like aggregate initial Security Principal Balance. Every Security
surrendered for transfer shall be accompanied by notification of the account of
the designated transferee or transferees for the purpose of receiving
distributions pursuant to Section 4.01 by wire transfer, if any such transferee
desires and is eligible for distribution by wire transfer.
(g) At the option of the Securityholders, Securities may be
exchanged for other Securities of authorized denominations of the same Class of
a like aggregate initial Security Principal Balance, upon surrender of the
Securities to be exchanged at the office of the Trustee. Whenever any Securities
are so surrendered for exchange the Trustee shall execute, authenticate and
deliver the Securities which the Securityholder making the exchange is entitled
to receive. Every Security presented or surrendered for transfer or exchange
shall (if so required by the Trustee or the Security Registrar) be duly endorsed
by, or be accompanied by a written instrument of transfer in the form
satisfactory to the Trustee or the Security Registrar duly executed by, the
Holder thereof or his attorney duly authorized in writing.
(h) No service charge shall be made to the Securityholders for
any transfer or exchange of Securities, 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 Securities.
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(i) All Securities surrendered for transfer and exchange shall
be canceled and retained by the Trustee in accordance with the Trustee's
standard procedures.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen
Securities.
If (i) any mutilated Security is surrendered to the Trustee
and the Trustee receives evidence to its satisfaction of the destruction, loss
or theft of any Security, and (ii) there is delivered to the Trustee such
security or indemnity as may be required by it to save it harmless, then, in the
absence of notice to the Trustee that such Security has been acquired by a bona
fide purchaser, the Trustee shall execute, authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Security, a new
Security of the same Class and initial Security Principal Balance. Upon the
issuance of any new Security under this Section, the Trustee may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including the fees
and expenses of the Trustee) connected therewith. Any replacement Security
issued pursuant to this Section shall constitute complete and indefeasible
evidence of ownership in the Trust Fund, as if originally issued, whether or not
the lost, stolen or destroyed Security shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
The Seller, the Master Servicer, the Trustee and any agent of
any of them may treat the person in whose name any Security is registered as the
owner of such Security for the purpose of receiving distributions pursuant to
Section 4.01 and for all other purposes whatsoever, and neither the Seller, the
Master Servicer, the Trustee nor any agent of any of them shall be affected by
notice to the contrary.
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ARTICLE VI
THE SELLER AND THE MASTER SERVICER
SECTION 6.01. Liability of the Seller and the Master
Servicer.
The Seller and the Master Servicer each shall be liable in
accordance herewith only to the extent of the obligations specifically imposed
upon and undertaken by the Seller and the Master Servicer herein.
SECTION 6.02. Merger, Consolidation or Conversion of the
Seller or the Master Servicer.
The Seller and the Master Servicer each will keep in full
effect its existence, rights and franchises as a corporation under the laws of
the state of its incorporation, and each will obtain and preserve its
qualification to do business as a foreign corporation in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Securities or any of the Mortgage Loans
and to perform its respective duties under this Agreement.
Any Person into which the Seller may be merged, consolidated
or converted, or any corporation resulting from any merger or consolidation to
which the Seller shall be a party, or any Person succeeding to the business of
the Seller, shall be the successor of the Seller 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.
Any Person into which the Loan Seller or Master Servicer may
be merged, consolidated or converted, or any corporation resulting from any
merger or consolidation to which the Loan Seller or Master Servicer shall be a
party, as the case may be, or any Person succeeding to the business of the Loan
Seller or Master Servicer (including by a transfer of servicing portfolio or
operations by the Loan Seller or Master Servicer), shall be the successor of the
Loan Seller or Master Servicer hereunder, as the case may be, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or surviving Person to the Loan Seller or Master
Servicer must meet the criteria set forth in Section 7.02 for a successor Master
Servicer and shall be qualified to sell mortgage loans to and service mortgage
loans for FNMA or FHLMC.
SECTION 6.03. Limitation on Liability of the Seller, the
Master Servicer and Others.
Neither the Seller, the Master Servicer nor any of the
directors, officers, employees or agents of the Seller or the Master Servicer
shall be under any liability to the Trust
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Fund or the Securityholders for any action taken or for refraining from the
taking of any action in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the Seller or
the Master Servicer (but this provision shall protect the above described
persons) against any breach of warranties or representations made herein, or
against any specific liability imposed on the Master Servicer pursuant to
Section 3.01 or any other Section hereof; and provided further that this
provision shall not protect the Seller, the Master Servicer or any such person,
against any liability which would otherwise be imposed by reason of willful
misfeasance, bad faith or gross negligence in the performance of duties or by
reason of reckless disregard of obligations and duties hereunder. The Seller,
the Master Servicer and any director, officer, employee or agent of the Seller
or the Master Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Seller, the Master Servicer and any director, officer,
employee or agent of the Seller 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
Securities, other than any loss, liability or expense related to Master
Servicer's servicing obligations with respect 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 related to the Master Servicer's
obligations under Section 3.01, 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 Seller nor the Master Servicer shall be under any
obligation to appear in, prosecute or defend any legal action which is not
incidental to its respective duties under this Agreement and which in its
opinion may involve it in any expense or liability; provided, however, that the
Seller or the Master Servicer may in its sole 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
Securityholders hereunder. In such event, the legal expenses and costs of such
action and any liability resulting therefrom (except any action or liability
related to the Master Servicer's obligations under Section 3.01) shall be
expenses, costs and liabilities of the Trust Fund, and the Seller and the Master
Servicer shall be entitled to be reimbursed therefor from the Security Account
as provided in Section 3.11, any such right of reimbursement being prior to the
rights of Securityholders to receive any amount in the Security Account.
SECTION 6.04. Limitation on Resignation of the Master
Servicer.
The Master Servicer shall not resign from the obligations and
duties hereby imposed on it except (a) upon appointment of a successor servicer
and receipt by the Trustee of a letter from each Rating Agency that such a
resignation and appointment will not, in and of itself, result in a withdrawal
or downgrading of the Securities or (b) upon determination that its duties
hereunder are no longer permissible under applicable law and cannot be cured.
Any such determination permitting the resignation of the Master Servicer shall
be evidenced by an Opinion of Counsel (at the expense of the resigning Master
Servicer) to such effect delivered to the Trustee. No such resignation shall
become effective until the Trustee or a successor servicer
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shall have assumed the Master Servicer's responsibilities, duties, liabilities
and obligations hereunder.
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ARTICLE VII
DEFAULT
SECTION 7.01. Events of Default.
"Event of Default", 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 Securityholders any payment (other than an Advance)
required to be made under the terms of the Securities or this Agreement which
continues unremedied for a period of five days after the date upon which written
notice of such failure, requiring the same to be remedied, shall have been given
to the Master Servicer by the Seller or the Loan Seller (with a copy to the
Trustee) or the Trustee, or to the Master Servicer, the Seller and the Trustee
by the Holders of Securities entitled to at least 25% of the Voting Rights; or
(ii) any failure on the part of the Master Servicer duly to
observe or perform in any material respect any other of the covenants or
agreements on the part of the Master Servicer contained in the Securities or in
this Agreement (including any breach of the Master Servicer's representations
and warranties pursuant to Section 2.03(a) which materially and adversely
affects the interests of the Securityholders) which continues unremedied for a
period of 30 days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Master Servicer
by the Seller or the Loan Seller (with a copy to the Trustee) or the Trustee, or
to the Master Servicer, the Seller and the Trustee by the Holders of Securities
entitled to at least 25% of the Voting Rights; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction 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,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Master Servicer and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 consecutive days; or
(iv) the Master Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to
the Master Servicer or of or relating to all or substantially all of its
property; or
(v) the Master Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take advantage
of or otherwise voluntarily commence a case or proceeding under any applicable
bankruptcy, insolvency, reorganization or
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other similar statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations; or
(vi) the Master Servicer shall notify the Trustee pursuant to
Section 4.03(b) and shall fail to deposit in the Security Account on any
Security Account Deposit Date by the time required therein an amount equal to
any required Advance in accordance with the procedures set forth in Section
4.03(b).
If an Event of Default described in clauses (i) - (v) of this
Section shall occur, then, and in each and every such case, so long as such
Event of Default shall not have been remedied, the Seller or the Trustee may,
and at the direction of the Holders of Securities entitled to at least 51% of
the Voting Rights, the Trustee shall, by notice to the Master Servicer (and to
the Seller and the Loan Seller if given by the Trustee or to the Trustee and the
Loan Seller if given by the Seller terminate all of the rights and obligations
of the Master Servicer (but not as Loan Seller in the event they are the same
Person) under this Agreement and in and to the Trust Fund, other than its rights
as a Securityholder hereunder. If an Event of Default described in clause (vi)
hereof shall occur, the Trustee shall, by notice to the Master Servicer, the
Seller and the Loan Seller, terminate all of the rights and obligations of the
Master Servicer under this Agreement and in and to the Trust Fund, other than
its rights as a Securityholder hereunder. On or after the receipt by the Master
Servicer of such notice, all authority and power of the Master Servicer under
this Agreement, whether with respect to the Securities (other than as a holder
thereof) 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 to execute and deliver, on behalf of the
Master Servicer, as attorney-in-fact or otherwise, any and all documents and
other instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement or assignment of the Mortgage Loans and
related documents, or otherwise. The Master Servicer agrees to cooperate with
the Trustee in effecting the termination of the Master Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to the Trustee or its appointed agent for administration by it of all
cash amounts which shall at the time be deposited by the Master Servicer or
should have been deposited to the Custodial Account, the Excess Proceeds Account
or the Security Account or thereafter be received with respect to the Mortgage
Loans. The Trustee shall not be deemed to have breached any obligation hereunder
as a result of a failure to make or delay in making any distribution as and when
required hereunder caused by the failure of the Master Servicer to remit any
amounts received on it or to deliver any documents held by it with respect to
the Mortgage Loans. For purposes of this Section 7.01, the Trustee shall not be
deemed to have knowledge of an Event of Default unless a Responsible Officer of
the Trustee assigned to and working in the Trustee's Corporate Trust Office has
actual knowledge thereof or unless notice of any event which is in fact such an
Event of Default is received by the Trustee and such notice references the
Securities, the Trust Fund or this Agreement.
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Notwithstanding any termination of the activities of North
American Mortgage Company ("NAMC") in its capacity as Master Servicer hereunder,
NAMC shall be entitled to receive, out of any Late Collection of a Monthly
Payment on a Mortgage Loan which was due prior to the notice terminating NAMC's
rights and obligations as Master Servicer hereunder and received after such
notice, that portion to which NAMC would have been entitled pursuant to Sections
3.11(ii), (iii), (iv), (v) and (viii) and Section 4.01(b) as well as its
Servicing Fee in respect thereof, and any other amounts payable to NAMC
hereunder the entitlement to which arose prior to the termination of its
activities hereunder.
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Master Servicer receives a notice of
termination pursuant to Section 7.01, the Trustee or its appointed agent 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 thereafter to all the responsibilities, duties
and liabilities relating thereto placed on the Master Servicer including the
obligation to make Advances which have been or will be required to be made
(except for the responsibilities, duties and liabilities contained in Section
2.03 and its obligations to deposit amounts in respect of losses pursuant to
Sections 3.12 and 4.01(c)) by the terms and provisions hereof; 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 4.03
shall not be considered a default by the Trustee hereunder. As compensation
therefor, the Trustee shall be entitled to all funds relating to the Mortgage
Loans which the Master Servicer would have been entitled to charge to the
Custodial Account and the Security Account if the Master Servicer 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 (exclusive of the
obligations set forth in Section 4.03) or if the Holders of Securities entitled
to at least 51% of the Voting Rights so request in writing to the Trustee,
appoint, or petition a court of competent jurisdiction to appoint, any mortgage
loan servicing institution (acceptable to the Rating Agencies) having a net
worth of not less than $10,000,000 (or other amount acceptable to the Rating
Agencies) as the successor to the Master Servicer hereunder in the assumption of
all or any part of the responsibilities, duties or liabilities of the Master
Servicer hereunder. Pending appointment of a successor to the Master Servicer
hereunder, the Trustee shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trustee may make such
arrangements for the compensation of such successor out of payments on Mortgage
Loans as it and such successor shall agree; provided, however, that no such
compensation shall be in excess of that permitted the Master Servicer hereunder.
The Loan Seller, the Seller, the Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
Any successor, including the Trustee, to the Master Servicer
shall maintain in force during its term as master servicer hereunder policies
and fidelity bonds to the same extent as the Master Servicer is so required
pursuant to Section 3.18.
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SECTION 7.03. Notification to Securityholders.
(a) Upon any such termination or appointment of a successor to
the Master Servicer, the Trustee shall give prompt notice thereof to
Securityholders.
(b) Within 60 days after the occurrence of any Event of
Default, the Trustee shall transmit by mail to all Holders of Securities notice
of each such Event of Default hereunder known to the Trustee, unless such Event
of Default shall have been cured or waived.
SECTION 7.04. Waiver of Events of Default.
The Holders representing at least 66% of the Voting Rights of
Securities affected by a default or Event of Default hereunder, may waive such
default or Event of Default; provided, however, that (a) a default or Event of
Default under clause (i) of Section 7.01 may be waived only by all of the
Holders of Securities affected by such default or Event of Default and (b) no
waiver pursuant to this Section 7.04 shall affect the Holders of Securities in
the manner set forth in the third paragraph of Section 11.01 or have a material
adverse affect on any non-consenting Securityholder. Upon any such waiver of a
default or Event of Default by the Holders representing the requisite percentage
of Voting Rights of Securities affected by such default or Event of Default,
such default or Event of Default shall cease to exist and shall be deemed to
have been remedied for every purpose hereunder. No such waiver shall extend to
any subsequent or other default or Event of Default or impair any right
consequent thereon except to the extent expressly so waived.
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ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default
and after the curing or waiver of all Events of Default which may have occurred,
undertakes to perform such duties and only such duties as are specifically set
forth in this Agreement. If an Event of Default occurs and is continuing, 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 man would exercise or use under the circumstances in the conduct of his
own affairs unless it is acting as Master Servicer, in which case it shall use
the degree of care and skill as is required of the Master Servicer under this
Agreement. 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 request that the presenting Person have the instrument corrected.
The Trustee shall sign on behalf of the Trust Fund any tax
return that the Trustee is required to sign pursuant to applicable federal,
state or local tax laws.
The Trustee covenants and agrees that it shall perform its
obligations hereunder in a manner so as to maintain the status of either the
Pooling REMIC or the Issuing REMIC as a REMIC under the REMIC Provisions and to
prevent the imposition of any federal, state or local income, prohibited
transaction, contribution or other tax on the Trust Fund to the extent that
maintaining such status and avoiding such taxes are reasonably within the
control of the Trustee and are reasonably within the scope of its duties under
this Agreement.
The Trustee shall cooperate to the extent practicable, with
the Seller in the preparation of any information, for the Holder of any
Security, which the Seller in its sole discretion deems necessary and
appropriate for purposes of satisfying applicable information reporting
requirements under Rule 144A or otherwise.
No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct; provided, however, that:
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(i) Prior to the occurrence of an Event of Default,
and after the curing or waiver of all such Events of Default which may have
occurred, the duties and obligations of the Trustee shall be determined solely
by the express provisions of this Agreement, 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 and conforming 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;
(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 Holders of Securities entitled to at least
25% of the Voting Rights relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any trust
or power conferred upon the Trustee, under this Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01:
(a) 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;
(b) The Trustee may consult with counsel and on the
advice of such counsel 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 therewith;
(c) The Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this Agreement or to make
any investigation of matters arising hereunder or to institute, conduct or
defend any litigation hereunder or in relation hereto at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Agreement, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; nothing contained herein shall,
however, relieve the Trustee of the obligation, upon the occurrence of an Event
of Default (which has not been cured or waived), to exercise such of the
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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 man would exercise or use under
the circumstances in the conduct of his own affairs;
(d) 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;
(e) Prior to the occurrence of an Event of Default
hereunder and after the curing or waiver of all Events of Default which may have
occurred, the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing to do so by Holders of Securities
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 the
security afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or liability as a condition to taking
any such action. The reasonable expense of every such reasonable examination
shall be paid by the Master Servicer or, if paid by the Trustee, shall be repaid
by the Master Servicer upon demand; and
(f) The Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, affiliates, custodians or attorneys; provided that the Trustee
shall remain directly liable with respect to the execution of such trusts or
powers and the performance of such duties without regard to the presence of such
agents or attorneys.
SECTION 8.03. Trustee Not Liable for Securities or
Mortgage Loans.
The recitals contained herein and in the Securities, other
than the signature of the Trustee on the Securities and the certificate of
authentication, shall be taken as the statements of the Seller or the Master
Servicer, as the case may be, 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 or of the Securities or of any
Mortgage Loan or related document, other than the signature of the Trustee on
the Securities and the Security of Authentication. The Trustee shall not be
accountable for the use or application by the Seller or the Master Servicer of
any of the Securities or of the proceeds of such Securities, or for the use or
application of any funds paid to the Loan Seller in respect of the Mortgage
Loans or deposited in or withdrawn from the Custodial Account, the Excess
Proceeds Account or the Security Account or any other account by or on behalf of
the Seller or the Master Servicer, other than any funds on deposit with the
Trustee held by or on behalf of the Trustee in accordance with Section 3.10.
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SECTION 8.04. Trustee May Own Securities.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Securities with the same rights it would have if it were
not Trustee.
SECTION 8.05. Master Servicer to Pay Trustee's Fees.
The Master Servicer covenants and agrees to pay to the Trustee
from time to time, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts hereby created and in the exercise and
performance of any of the powers and duties hereunder or of the Trustee. Except
as otherwise provided in this Agreement, the Trustee and any director, officer,
employee or agent of the Trustee shall be indemnified by the Trust Fund and held
harmless against any claim, loss, liability or expense incurred in connection
with any Event of Default, any breach of this Agreement, any claim or legal
action, including any pending or threatened claim or legal action relating to
the acceptance or administration of its trusts hereunder or the Securities,
other than any claim, loss, liability or expense incurred in connection with a
breach constituting willful misfeasance, bad faith or negligence of the Trustee
in the performance of its duties hereunder or by reason of reckless disregard of
its obligations and duties hereunder. The provisions of this Section 8.05 shall
survive the resignation or removal of the Trustee and the termination of this
Agreement.
The Master Servicer shall indemnify, defend, and hold harmless
the Trustee, its directors, employees, officers, and agents, from and against
all losses, claims, damages, and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties herein
contained, except to the extent that such loss, claim, damage, or liability: (a)
shall be due to the willful misfeasance, bad faith, or negligence of the
Trustee, its directors, employees, officers, and agents, or (b) shall be one as
to which the Trust Fund is required to indemnify the Trustee. Indemnification
under this Section shall include reasonable fees and expenses of counsel and
expenses of litigation and shall survive the termination of this Agreement and
of the Master Servicer for actions or inactions by the Master Servicer when it
acted as such.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a corporation or a
national banking association organized and doing business under the laws of any
state or the United States of America or the District of Columbia, 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. In addition, the Trustee shall at all times be
acceptable to each Rating Agency rating the Securities. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purposes of this Section the combined capital and surplus
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of such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section, the Trustee shall resign immediately in the manner and with the
effect specified in Section 8.07. The corporation or national banking
association serving as Trustee may have normal banking and trust relationships
with the Loan Seller and its affiliates or the Master Servicer and its
affiliates; provided, however, that such corporation cannot be an affiliate of
the Master Servicer other than the Trustee in its role as successor to the
Master Servicer.
SECTION 8.07. Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the
trusts hereby created by giving notice thereof to the Seller, the Master
Servicer and to all Securityholders; provided, that such resignation shall not
be effective until a successor trustee is appointed and accepts appointment in
accordance with the following provisions. Upon receiving such notice of
resignation, the Master Servicer shall promptly appoint a successor trustee who
meets the eligibility requirements of Section 8.06 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
Securityholders and the Master Servicer by the Seller. If no successor trustee
shall have been so appointed and have accepted appointment within 60 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee;
provided, however, that the resigning Trustee shall not resign and be discharged
from the trusts hereby created until such time as the Rating Agency rating the
Securities approves the successor trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 8.06 and shall fail to resign after
written request therefor by the Master Servicer, or if at any time the Trustee
shall become incapable of acting, or shall be adjudged bankrupt or insolvent, or
a receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or if
the rating of the long-term debt obligations of the Trustee is not acceptable to
the Rating Agency in respect of mortgage pass-through certificates having a
rating equal to the then current rating on the Securities, then the Master
Servicer may remove the Trustee and appoint a successor trustee who meets the
eligibility requirements of Section 8.06 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
Securityholders and the Master Servicer by the Seller.
The Holders of Securities 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 Master Servicer, one complete set to the Trustee
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so removed and one complete set to the successor so appointed. A copy of such
instrument shall be delivered to the Securityholders and the Master Servicer by
the Seller.
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 Master Servicer and to its
predecessor trustee an instrument accepting such appointment hereunder, and
thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with 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 held by it
hereunder, and the Master Servicer and the predecessor trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for more fully and certainly vesting and confirming in the successor trustee all
such rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 8.06.
Upon acceptance of appointment by a successor trustee as
provided in this Section, the Master Servicer shall mail notice of the
succession of such trustee hereunder to all Holders of Securities at their
addresses as shown in the Security Register. If the Master Servicer fails to
mail such notice within ten days after acceptance of appointment by the
successor trustee, the successor trustee shall cause such notice to be mailed at
the expense of the Master Servicer.
SECTION 8.09. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or
converted or with which it may be consolidated or any corporation resulting from
any merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation succeeding to the business of the Trustee, shall be the
successor of the Trustee hereunder, provided such corporation shall be eligible
under the provisions of Section 8.06, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
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SECTION 8.10. Appointment of Co-Trustee or Separate
Trustee.
Notwithstanding any other provisions hereof, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust Fund or property securing the same may at the time be located,
the Seller and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee to act as co-trustee or co-trustees, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity, such title to the Trust
Fund, or any part thereof, and, subject to the other provisions of this Section
8.10, such powers, duties, obligations, rights and trusts as the Seller and the
Trustee may consider necessary or desirable. If the Seller shall not have joined
in such appointment within 15 days after the receipt by it of a request so to
do, or in case an Event of Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. 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
Securities 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 (whether as Trustee hereunder or
as successor to the Master Servicer hereunder), the Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such rights, powers,
duties and obligations (including the holding of title to the Trust Fund or any
portion thereof in any such jurisdiction) shall be exercised and performed by
such separate trustee or co-trustee at the direction of the Trustee.
Any notice, request or other writing given to the Trustee
shall be deemed to have been given to each of the then separate 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 trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
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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. Securities and Exchange Act Reporting.
Based upon reports, documents, and other information provided
to the Trustee pursuant to the terms of this Agreement, the Trustee, at its cost
and expense, shall file with the Commission, in respect of the Trust and the
Securities, copies of the annual reports and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the
Securities and Exchange Commission (the "Commission") may from time to time by
rules and regulations prescribe) required to be filed with the Commission
pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934, as
amended. In addition, the Seller shall file with the Commission, within fifteen
days after the Closing Date, a Current Report on Form 8-K together with this
Agreement. Upon the request of the Trustee, each of the Master Servicer, the
Loan Seller and the Seller shall cooperate with the Trustee in the preparation
of any such report and shall provide to the Trustee in a timely manner all such
information or documentation as the Trustee may reasonably request in connection
with the performance of its duties and obligations under this section.
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ARTICLE IX
TERMINATION
SECTION 9.01. Termination Upon Repurchase or Liquidation
of All Mortgage Loans.
Subject to Section 9.02, the respective obligations and
responsibilities of the Seller, the Master Servicer and the Trustee created
hereby (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 to Securityholders as hereafter set forth) shall
terminate upon payment to the Securityholders of all amounts held by or on
behalf of the Trustee and required to be paid to them hereunder following the
earlier to occur of (i) the repurchase by the Master Servicer of all Mortgage
Loans and each REO Property in respect thereof remaining in the Trust Fund at a
price equal to (a) 100% of the unpaid principal balance of each Mortgage Loan
(other than one as to which a REO Property was acquired) on the day of
repurchase together with accrued interest on such unpaid principal balance at
the Net Mortgage Rate to the first day of the month in which the proceeds of
such repurchase are to be distributed, plus (b) the appraised value of any REO
Property (but not more than the outstanding principal balance of the related
Mortgage Loan, together with accrued interest on that balance at the Net
Mortgage Rate to the first day of the month of repurchase), less the good faith
estimate of the Master Servicer of liquidation expenses to be incurred in
connection with its disposal thereof, such appraisal to be conducted by an
appraiser mutually agreed upon by the Master Servicer and the Trustee; and (ii)
the final payment or other liquidation (or any Advance with respect thereto) of
the last Mortgage Loan remaining in the Trust Fund (or the disposition of all
REO Property in respect thereof); 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. In the case of any repurchase by the Master Servicer pursuant to clause
(i), the Master Servicer shall include in such repurchase price the amount of
any Advances that will be reimbursed to the Master Servicer pursuant to Section
3.11(iii) and the Master Servicer shall exercise reasonable efforts to cooperate
fully with the Trustee in effecting such repurchase and the transfer of the
Mortgage Loans and related Mortgage Files and related records to the Master
Servicer.
The right of the Master Servicer to repurchase all Mortgage
Loans pursuant to (i) above shall be conditioned upon the aggregate Stated
Principal Balance of such Mortgage Loans at the time of any such repurchase
aggregating an amount equal to or less than 5% of the aggregate Stated Principal
Balance of the Mortgage Loans at the Cut-off Date. If such right is exercised,
the Master Servicer upon such repurchase shall provide to the Trustee, the
certification required by Section 3.16.
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Notice of any termination, specifying the Distribution Date
upon which the Securityholders may surrender their Securities to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Master Servicer by letter to the Trustee and the Securityholders mailed (a)
in the event such notice is given in connection with the Master Servicer's
election to repurchase, not earlier than the 15th day and not later than the
25th day of the month next preceding the month of such final distribution 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 final payment of the Securities will be made upon presentation
and surrender of Securities at the office of the Security Registrar therein
designated, (ii) the amount of any such final payment and (iii) that the Record
Date otherwise applicable to such Distribution Date is not applicable, payments
being made only upon presentation and surrender of the Securities at the office
of the Security Registrar therein specified. In the event such notice is given
in connection with the Master Servicer's election to repurchase, the Master
Servicer shall deliver to the Trustee for deposit in the Security Account on the
Business Day immediately preceding the Distribution Date specified in such
notice an amount equal to the above-described repurchase price payable out of
its own funds. Upon presentation and surrender of the Securities by the
Securityholders, the Trustee shall distribute to the Securityholders (i) the
amount otherwise distributable on such Distribution Date, if not in connection
with the Master Servicer's election to repurchase, or (ii) if the Master
Servicer elected to so repurchase, an amount determined as follows: with respect
to each Class of Subaccounts (other than the Class FXS Subaccount and the Class
S Subaccount) and the Class RP Securities, the outstanding Subaccount Principal
Balance, or Security Principal Balance thereof, as applicable, plus one month's
interest thereon at the applicable Pass-Through Rate and any previously unpaid
Accrued Interest; with respect to the Class FXS Subaccount and the Class S
Subaccount, one month's interest thereon at the applicable Pass-Through Rate and
any previously unpaid Accrued Interest; and with respect to each Class RP
Security, the Percentage Interest evidenced thereby multiplied by the
difference, if any, between the above described repurchase price and the
aggregate amount to be distributed to the Subaccounts. Upon certification to the
Trustee by a Servicing Officer, following such final deposit, the Trustee shall
promptly release the Mortgage Files as directed by the Master Servicer for the
remaining Mortgage Loans, and the Trustee shall execute all assignments,
endorsements and other instruments required by the Master Servicer as being
necessary to effectuate such transfer.
In the event that all of the Securityholders shall not
surrender their Securities for cancellation within six months after the time
specified in the above-mentioned notice, the Trustee shall give a second notice
to the remaining Securityholders instructing such Securityholders to surrender
their Securities for cancellation and receive the final distribution with
respect thereto. If within six months after the second notice all of the
Securities shall not have been surrendered for cancellation, the Trustee shall
take reasonable steps as directed by the Seller, or appoint an agent to take
reasonable steps, to contact the remaining Securityholders concerning surrender
of their Securities, and the cost thereof shall be paid out of the funds and
other assets which remain subject hereto. If, within nine months after the
second notice, all of the Securities shall not have been surrendered for
cancellation, the Class R and Class RP Securityholders shall be
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entitled to all unclaimed funds and other assets of the Issuing REMIC and the
Pooling REMIC, respectively, which remain subject hereto.
SECTION 9.02. Additional Termination Requirements.
(a) In the event the Master Servicer repurchases the Mortgage
Loans as provided in Section 9.01, the Pooling REMIC and, in turn, the Issuing
REMIC shall be terminated in accordance with the following additional
requirements, unless the Master Servicer, at its own expense, obtains for the
Trustee an Opinion of Counsel to the effect that the failure to comply with the
requirements of this Section 9.02 will not (i) result in the imposition of taxes
on the net income derived from "prohibited transactions" of either the Pooling
REMIC or the Issuing REMIC, as defined in Section 860F of the Code or (ii) cause
either the Pooling REMIC or Issuing REMIC to fail to qualify as a REMIC under
the REMIC Provisions at any time that any Securities are outstanding:
(i) The Trustee shall establish a 90-day liquidation period
for the REMICs and specify the first day of such period in a statement attached
to the final Tax Returns of the REMICs pursuant to Treasury Regulation Section
1.860F-1. The Trustee shall satisfy all the requirements of a qualified
liquidation under Section 860F of the Code and any regulations thereunder, as
evidenced by an Opinion of Counsel obtained at the expense of the Master
Servicer;
(ii) During such 90-day liquidation period, and at or prior to
the time of making of the final payment on the Subaccounts and, in turn, on the
Securities, the Trustee shall sell all of the non-cash assets of the Pooling
REMIC and the Issuing REMIC for cash; and
(iii) At the time of the making of the final payment on the
Subaccounts and, in turn, on the Securities, the Trustee shall distribute or
credit, or cause to be distributed or credited, to the Holders of the Class R
and Class RP Securities all cash on hand in the Issuing REMIC and Pooling REMIC,
respectively, (other than cash retained to meet claims), and the Trust Fund
shall terminate at that time.
(b) By their acceptance of the Class R and Class RP
Securities, the Holders thereof hereby agree to authorize the Trustee to specify
the 90-day liquidation period for the Issuing REMIC and Pooling REMIC,
respectively, which authorization shall be binding upon all successor Class R
and Class RP Securityholders.
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ARTICLE X
REMIC PROVISIONS
SECTION 10.01. REMIC Administration.
(a) The Trustee shall make elections to treat the Trust Fund
as two REMICs under the Code and, if necessary, under applicable state law. 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 Securities are issued. For the
purposes of the REMIC elections in respect of the Trust Fund, the Class FX
Securities, the Class II Securities, and the Class B Securities shall be
designated as the "regular interests" and the Class R Securities shall be
designated as the sole class of "residual interest" in the Issuing REMIC. The
Subaccounts shall be designated as the "regular interests" and the Class RP
Securities shall be designated as the sole class of "residual interest" in the
Pooling REMIC. The Trustee shall not permit the creation of any "interests" in
the Trust Fund (within the meaning of Section 860G of the Code) other than the
interests represented by the Subaccounts and the Securities.
(b) The Closing Date is hereby designated as the "Startup Day"
of the Trust Fund within the meaning of Section 860G(a)(9) of the Code.
(c) The Trustee shall pay out of its own funds, without any
right of reimbursement from the Trust Fund, 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 thereto that
involved the Internal Revenue Service or state tax authorities), other than the
expense of obtaining any tax related Opinion of Counsel not obtained in
connection with such an audit and other than taxes, in either case except as
specified herein; provided, however, that if such audit resulted from the
negligence of the Master Servicer or the Seller, then the Master Servicer or the
Seller, as the case may be, shall pay such expenses. The holder of the largest
Percentage Interest of the Class R Securities shall be the tax matters person of
the Issuing REMIC and the holder of the largest Percentage Interest of the Class
RP Securities shall be the tax matters person of the Pooling REMIC, in each case
in the manner provided under Treasury Regulations Section 1.860F-4(d) and
Temporary Treasury Regulations Section 301.6231(a)(7)-1T and the Trustee is
hereby irrevocably designated and shall serve as attorney-in-fact and agent for
any such Persons that are tax matters persons. The Trustee, as designated by the
tax matters persons, shall (i) act on behalf of the Issuing REMIC and Pooling
REMIC in relation to any tax matter or controversy involving either the Issuing
REMIC or the Pooling REMIC and (ii) represent the Issuing REMIC and Pooling
REMIC in any administrative or judicial proceeding relating to an examination or
audit by any governmental taxing authority with respect thereto. To the extent
authorized under the Code and the regulations promulgated thereunder, each
Holder of a Class R and a Class RP Security hereby irrevocably appoints and
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authorizes the Trustee to be its attorney-in-fact for purposes of signing any
Tax Returns required to be filed on behalf of the related REMIC.
(d) The Trustee shall prepare or cause to be prepared, sign
and file all of the Tax Returns in respect of the REMICs created hereunder,
other than Tax Returns required to be filed by the Master Servicer pursuant to
Section 4.05. The expenses of preparing and filing such returns shall be borne
by the Trustee without any right of reimbursement therefor.
(e) The Trustee shall perform on behalf of the Trust Fund all
reporting and other tax compliance duties that are the responsibility of the
Trust Fund under the Code, 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 Class
R or a Class RP Security such information as is necessary for the application of
any tax relating to the transfer of a Class R or a Class RP Security to any
Person who is not a Permitted Transferee, (ii) to Securityholders 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) and (iii) to the Internal
Revenue Service the name, title, address and telephone number of the person who
will serve as the representative of the Trust Fund. In addition, the Seller
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
Securities, including, without limitation, the price, yield, prepayment
assumption and projected cash flow of the Securities.
(f) The Trustee shall take such action and shall cause the
Trust Fund created hereunder to take such action as shall be necessary to create
or maintain the status of the Issuing REMIC and the Pooling REMIC as REMICs
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
either the Issuing REMIC or the Pooling REMIC to take any action or fail to take
(or fail to cause to be taken) any action that, under the REMIC Provisions, if
taken or not taken, as the case may be, could (i) endanger the status of the
either the Issuing REMIC or the Pooling REMIC 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 (at the expense of the party seeking to take such action but in no
event shall such Opinion of Counsel be an expense of the Trustee) to the effect
that the contemplated action will not, with respect to either the Issuing REMIC
or the Pooling REMIC created hereunder, endanger such status or result in the
imposition of such a tax. The Master Servicer shall not 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 (which such Opinion of
Counsel shall not be an expense of the Trustee) to the effect that an Adverse
REMIC Event could occur with respect
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to such action. In addition, prior to taking any action with respect to the
Trust Fund or its assets, or causing either the Issuing REMIC or the Pooling
REMIC to take any action which is not expressly permitted 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 either the Issuing REMIC or the Pooling
REMIC , and the Master Servicer shall not take any such action or cause either
the Issuing REMIC or the Pooling REMIC 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 take no action,
nor permit any such action, that it knows will cause substantially all of the
assets of the Trust Fund to not 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 either the Issuing REMIC or the Pooling REMIC created hereunder
as defined in Section 860F(a)(2) of the Code, on "net income from foreclosure
property" of either the Issuing REMIC or the Pooling REMIC as defined in Section
860G(c) of the Code, on any contributions to either the Issuing REMIC or the
Pooling 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 10.03 hereof, if such tax arises out of or results from a breach by
the Trustee of any of its obligations under this Article X, (ii) to the Master
Servicer pursuant to Section 10.03 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 X, or otherwise (iii) against amounts on deposit in the Security
Account and shall be paid by withdrawal therefrom.
(h) On or before April 15 of each calendar year, commencing
April 15, 1998, 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 X.
(i) The Master Servicer and the Trustee shall, for federal
income tax purposes, maintain books and records with respect to the Trust Fund
on a calendar year and on an accrual basis.
(j) Neither the Trustee, the Seller, nor the Master Servicer
shall permit the acquisition of any assets by either the Issuing REMIC or the
Pooling REMIC unless it shall have received an Opinion of Counsel (which such
Opinion of Counsel shall not be an expense of the Trustee) to the effect that
the inclusion of such assets in either the Issuing REMIC or the Pooling REMIC
will not cause either the Issuing REMIC or the Pooling REMIC to fail to qualify
as a REMIC at any time that any Securities are outstanding or subject either the
Issuing REMIC or
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the Pooling 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 either the Issuing REMIC or the Pooling REMIC will
receive a fee or other compensation for services nor permit either of such
REMICs to receive any income from assets other than "qualified mortgages" as
defined in Section 860G(a)(3) of the Code or "permitted investments" as defined
in Section 860G(a)(5) of the Code.
(l) Solely for purposes of satisfying Section
1.860G-1(a)(4)(iii) of the Treasury Regulations, the "latest possible maturity
date" by which the Subaccount Principal Balances of each Class of Subaccounts
and the Security Principal Balances of each Class of Securities (other than the
Class R and Class RP Securities) would be reduced to zero is the Distribution
Date in May 2027, which is the Distribution Date immediately following the
latest scheduled maturity of any Mortgage Loan.
SECTION 10.02. Prohibited Transactions and Activities.
Neither the Seller, the Master Servicer nor 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 the Trust Fund, (iii) the
termination of the Trust Fund pursuant to Article IX of this Agreement or (iv) a
purchase of Mortgage Loans pursuant to Article II or III of this Agreement, nor
acquire any assets for the Trust Fund, nor sell or dispose of any investments in
the Custodial Account, the Excess Proceeds Account or the Security Account for
gain, nor accept any contributions to the Trust Fund after the Closing Date, nor
permit any modifications of a material term of a Mortgage Loan that is not in
default or with respect to which default is reasonably foreseeable, unless it
has received an Opinion of Counsel (at the expense of the party seeking to cause
such sale, disposition, substitution, acquisition, or modification but in no
event shall such Opinion of Counsel be an expense of the Trustee) that such
sale, disposition, substitution, acquisition, contribution or modification will
not (a) affect adversely the status of either the Issuing REMIC or the Pooling
REMIC as a REMIC or (b) cause either the Issuing REMIC or the Pooling REMIC to
be subject to a tax on "prohibited transactions" or "contributions" pursuant to
the REMIC Provisions.
SECTION 10.03. Master Servicer and Trustee Indemnification.
(a) The Trustee agrees to indemnify the Trust Fund, the
Seller, the Loan Seller 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 Seller or the Master Servicer, as a result of a
breach of the Trustee's covenants set forth in this Article X.
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(b) The Master Servicer agrees to indemnify the Trust Fund,
the Seller, the Loan Seller and the Trustee for any taxes and costs (including,
without limitation, any reasonable attorneys' fees) imposed on or incurred by
the Trust Fund, the Seller or the Trustee, as a result of a breach of the Master
Servicer's covenants set forth in this Article X or in Article III with respect
to compliance with the REMIC Provisions, including without limitation, any
penalties arising from the Trustee's execution of Tax Returns prepared by the
Master Servicer that contain errors or omissions.
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ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. Amendment.
This Agreement may be amended from time to time by the Seller,
the Master Servicer, the Loan Seller and the Trustee without notice to or the
consent of any of the Securityholders, (i) to cure any ambiguity, (ii) to
correct or supplement any provisions herein which may be defective or
inconsistent with any other provisions herein, (iii) to amend this Agreement in
any respect subject to the provisions below, (iv) to modify, eliminate, or add
to any of its provisions to such extent as shall be necessary or appropriate to
maintain the qualifications of the Issuing REMIC and the Pooling REMIC as REMICs
under the Code at all times that any Securities are outstanding, or (v) if such
amendment, as evidenced by an Opinion of Counsel (provided by the Person
requesting such amendment) delivered to the Trustee, otherwise is reasonably
necessary to comply with any requirements imposed by the Code or any successor
or amendatory statute or any temporary or final regulation, revenue ruling,
revenue procedure or other written official announcement or interpretation
relating to federal income tax laws or any proposed such action which, if made
effective, would apply retroactively to the Trust Fund at least from the
effective date of such amendment; provided that such action (except any
amendment described in (iv) above) shall not, as evidenced by an Opinion of
Counsel (provided by the Person requesting such amendment) delivered to the
Trustee, adversely affect in any material respect the interests of any
Securityholder (other than Securityholders who shall consent to such amendment).
This Agreement may also be amended from time to time by the
Seller, the Master Servicer, the Loan Seller and the Trustee with the consent of
the Holders of Securities 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 Securities; 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 Security without the
consent of the Holder of such Security, (ii) adversely affect in any material
respect the interests of the Holders of any Class of Securities in a manner
other than as described in (i), without the consent of the Holders of Securities
of such Class evidencing at least 66% of the Voting Rights of such Class, or
(iii) reduce the aforesaid percentage of Securities the Holders of which are
required to consent to any such amendment, without the consent of the Holders of
all Securities then outstanding. Notwithstanding any other provision of this
Agreement, for purposes of the giving or withholding of consents pursuant to
this Section 11.01, Securities registered in the name of the Loan Seller or the
Master Servicer or any affiliate thereof shall be entitled to Voting Rights with
respect to matters described in (i), (ii) and (iii) of this paragraph.
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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 (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on the Trust Fund pursuant to the REMIC Provisions or
cause either the Pooling REMIC or the Issuing REMIC to fail to qualify as a
REMIC at any time that any of the Securities are outstanding.
Promptly after the execution of any such amendment the Trustee
shall furnish a statement describing the amendment to each Securityholder.
It shall not be necessary for the consent of Securityholders
under this Section 11.01 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 Securityholders shall be subject to
such reasonable regulations as the Trustee may prescribe.
Prior to executing any amendment pursuant to this Section, the
Trustee shall be entitled to receive an Opinion of Counsel (provided by the
Person requesting such amendment) to the effect that such amendment is
authorized or permitted by this Agreement. The cost of an Opinion of Counsel
delivered pursuant to this Section 11.01 shall be an expense of the party
requesting such amendment, but in any case shall not 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 11.02. 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 Seller on direction by
the Trustee, but only upon direction accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Securityholders.
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.
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SECTION 11.03. Limitation on Rights of Securityholders.
The death or incapacity of any Securityholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Securityholder'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 Securityholder shall have any right to vote (except as
expressly provided for herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Securities, be
construed so as to constitute the Securityholders from time to time as partners
or members of an association; nor shall any Securityholder be under any
liability to any third party by reason of any action taken by the parties to
this Agreement pursuant to any provision hereof.
No Securityholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have given to the Trustee a notice of an Event of
Default, or of a default by the Loan Seller or the Trustee in the performance of
any obligation hereunder, and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Securities 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 60 days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding. It is understood and intended, and expressly covenanted by each
Securityholder with every other Securityholder and the Trustee, that no one or
more Holders of Securities shall have any right in any manner whatever by virtue
of any provision of this Agreement to affect, disturb or prejudice the rights of
the Holders of any other of such Securities, 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 Securityholders. For the protection and
enforcement of the provisions of this Section, each and every Securityholder and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 11.04. Governing Law.
This Agreement and the Securities shall be construed in
accordance with the laws of the State of New York without reference to any
choice of law doctrine (but with reference to Section 5-1401 of the New York
General Obligations Law, which by its terms is applicable
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to this Agreement) the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
SECTION 11.05. Notices.
All demands, notices and direction hereunder shall be in
writing and shall be deemed effective upon receipt when delivered to (a) in the
case of the Seller, 901 East Byrd Street, Richmond, Virginia, Attention: R.
Walter Jones, IV, or such other address as may hereafter be furnished to the
Trustee and the Master Servicer in writing by the Seller, (b) in the case of the
Trustee, to the Corporate Trust Office, Attention: FASI/NAMC 1997-1 or such
other address as may hereafter be furnished to the Master Servicer and the
Seller in writing by the Trustee, (c) in the case of the Master Servicer, North
American Mortgage Company, 3883 Airway Drive, AU 750A, Santa Rosa, California,
95403, Attention: Lynn Pelletier, or such other address as may hereafter be
furnished to the Seller and the Trustee in writing and (d) in the case of the
Loan Seller, North American Mortgage Company, 3883 Airway Drive, AU 750A, Santa
Rosa, California, 95403, Attention: Marilyn Hardin, or such other address as may
hereafter be furnished to the Trustee, the Master Servicer and the Seller in
writing. Any notice required or permitted to be mailed to a Securityholder shall
be given by first class mail, postage prepaid, at the address of such Holder as
shown in the Security Register. Any notice so mailed within the time prescribed
in this Agreement shall be conclusively presumed to have been duly given,
whether or not the Securityholder receives such notice.
SECTION 11.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Securities or the rights of the Holders thereof.
SECTION 11.07. Successors and Assigns; Third Party
Beneficiary.
The provisions of this Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the parties
hereto, and all such provisions shall inure to the benefit of the Trustee and
the Securityholders.
SECTION 11.08. Article and Section Headings.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
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SECTION 11.09. Notice to Rating Agencies and
Securityholder.
The Trustee shall use its best efforts to promptly provide
notice to each Rating Agency referred to below 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 Event of Default that has not
been cured;
3. The resignation or termination of the Master Servicer
or the Trustee;
4. The repurchase of Mortgage Loans pursuant to Section
2.03;
5. The final payment to Securityholders; and
6. Any change in the location of the Custodial Account,
the Excess Proceeds Account or the Security Account.
In addition, the Trustee shall promptly furnish to each Rating
Agency copies of the following:
1. Each report to Securityholders described in Section
4.02; and
2. Each annual independent public accountants' servicing
report described in Section 3.20.
Any such notice pursuant to this Section 11.09 shall be in
writing and shall be deemed to have been duly given if personally delivered or
mailed by first class mail, postage prepaid, or by express delivery service to
(i) in the case of Standard & Poor's, 25 Broadway, New York, New York 10007,
Attention: Surveillance Department, (ii) in the case of DCR, 55 E. Monroe
Street, 35th Floor, Chicago, Illinois 60603, Attention: MBS Monitoring, and
(iii) in the case of Fitch, One State Street Plaza, New York, New York, 10004
or, in each case, such other address as such Rating Agency may designate in
writing to the parties thereto.
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IN WITNESS WHEREOF, the Seller, the Master Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized all as of the day and year first above written.
FINANCIAL ASSET SECURITIZATION, INC.
as Seller
By: /s/ William E. Hardy
Name: William E. Hardy
Title: Executive Vice President
NORTH AMERICAN MORTGAGE
COMPANY, as Master Servicer and as
Loan Seller
By: /s/ David A. Hurt III
Name: David A. Hurt III
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By: /s/ Richard C. Tarnas
Name: Richard C. Tarnas
Title: Vice President
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COMMONWEALTH OF VIRGINIA )
) ss.:
CITY OF RICHMOND )
On the 30th day of April, 1997 before me, a notary public in
and for said State, personally appeared William E. Hardy, known to me to be an
Executive Vice President of Financial Asset Securitization, 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.
/s/ Chanda D. Walker
Notary Public
[Notarial Seal] My Commission Expires September 30, 1997
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COMMONWEALTH OF VIRGINIA )
) ss.:
CITY OF RICHMOND )
On the 30th day of April, 1997 before me, a notary public in
and for said State, personally appeared David A. Hurt III, known to me to be a
Vice President of North American Mortgage Company, 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.
/s/ Chanda D. Walker
Notary Public
[Notarial Seal] My Commission Expires September 30, 1997
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COMMONWEALTH OF VIRGINIA )
) ss.:
CITY OF RICHMOND )
On the 30th day of April, 1997 before me, a notary public in
and for said State, personally appeared Richard C. Tarnas, known to me to be a
Vice President of The First National Bank of Chicago, 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.
/s/ Chanda D. Walker
Notary Public
[Notarial Seal] My Commission Expires September 30, 1997
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EXHIBIT A
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE TRUSTEE OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT MADE TO CEDE &
CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.
THIS CLASS ____ SECURITY REPRESENTS A REMIC REGULAR INTEREST FOR
FEDERAL INCOME TAX PURPOSES.
THE PRINCIPAL OF THIS CLASS ____ SECURITY IS SUBJECT TO PREPAYMENT FROM TIME TO
TIME WITHOUT SURRENDER OF OR NOTATION ON THIS SECURITY. ACCORDINGLY, THE
SECURITY PRINCIPAL BALANCE OF THIS SECURITY MAY BE LESS THAN THAT SET FORTH
BELOW. ANYONE ACQUIRING THIS SECURITY MAY ASCERTAIN ITS CURRENT SECURITY
PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE.
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FINANCIAL ASSET SECURITIZATION, INC.
MORTGAGE PARTICIPATION SECURITIES, SERIES 1997-NAMC 1
CLASS ____ SECURITY
PASS-THROUGH RATE
PER ANNUM:
AGGREGATE INITIAL SECURITY
PRINCIPAL BALANCE OF THE CLASS
____ SECURITIES: $
PERCENTAGE INTEREST:
DENOMINATION: $
DATE OF POOLING AND
SERVICING AGREEMENT:
AS OF APRIL 1, 1997
CLOSING DATE:
APRIL 30, 1997
FIRST DISTRIBUTION DATE:
MAY 27, 1997
STATED PRINCIPAL BALANCE AS OF
THE CUT-OFF DATE OF THE
MORTGAGE LOANS HELD BY THE
TRUST: $
MASTER SERVICER: NORTH
AMERICAN MORTGAGE COMPANY
TRUSTEE: THE FIRST NATIONAL
BANK OF CHICAGO
NO.
CUSIP NO. 31738V
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MORTGAGE PARTICIPATION SECURITIES, SERIES 1997-NAMC 1
CLASS ____ SECURITY
evidencing a beneficial ownership interest in a Trust consisting of the
entire beneficial ownership of conventional, one- to four-family, fixed
rate, first lien Mortgage Loans formed and sold by
FINANCIAL ASSET SECURITIZATION, INC.
THIS SECURITY DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN FINANCIAL ASSET
SECURITIZATION, INC., THE MASTER SERVICER, THE TRUSTEE, THE UNDERWRITER, OR ANY
OF THEIR AFFILIATES. NEITHER THIS SECURITY NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT:
is the registered owner of the Percentage Interest evidenced by this Security in
the Class ____ Securities (the "Class ____ Securities") issued by the trust (the
"Trust") created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Pooling and Servicing Agreement"), among Financial Asset
Securitization, Inc. (hereinafter called "FASI," which term includes any
successor entity under the Pooling and Servicing Agreement), North American
Mortgage Company, as Loan Seller and Master Servicer, and the Trustee, a summary
of certain of the pertinent provisions of which is set forth hereafter. The
Trust consists primarily of the Mortgage Loans. This Security is issued under
and is subject to the terms, provisions and conditions of the Pooling and
Servicing Agreement, to which Pooling and Servicing Agreement the Holder of this
Security, by virtue of the acceptance hereof, assents and by which such Holder
is bound.
Distributions of principal of and interest on this Security (including
the final distribution on this Security) will be made out of the related
Available Distribution Amount, to the extent and subject to the limitations set
forth in the Pooling and Servicing Agreement, on the 25th day of each month or,
if such 25th day is not a Business Day, the next succeeding Business Day (each,
a "Distribution Date"), commencing on the first Distribution Date specified
above, to the Person in whose name this Security is registered at the close of
business on the last Business Day of the month immediately preceding the month
of such distribution (the "Record Date"). All sums distributable on this
Security are payable in the coin or currency of the United States of America as
at the time of payment is legal tender for the payment of public and private
debts.
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<PAGE>
Principal and interest on this Security will be paid in accordance with
the terms of the Pooling and Servicing Agreement. Principal and interest
allocated to this Security on any Distribution Date will be an amount equal to
this Security's Percentage Interest of the related Available Distribution Amount
to be distributed on this Class of Securities as of such Distribution Date, with
a final distribution to be made upon retirement of this Security as set forth in
the Pooling and Servicing Agreement.
This Security is one of a duly authorized issue of Securities
designated as Mortgage Participation Securities, Series 1997-NAMC 1 (herein
called the "Securities"), and representing a Percentage Interest in the Class of
Securities specified on the face hereof equal to the quotient, expressed as a
percentage, obtained by dividing the denomination of this Security specified on
the face hereof by the aggregate Initial Security Principal Balance of all the
Class ____ Securities. The Securities are issued in multiple Classes designated
as specifically set forth in the Pooling and Servicing Agreement. The Securities
will evidence in the aggregate 100% of the beneficial ownership of the Trust.
Realized Losses and interest shortfalls on the Mortgage Loans shall be
allocated among the Classes of Securities on the applicable Distribution Date in
the manner set forth in the Pooling and Servicing Agreement. To the extent
provided in the Pooling and Servicing Agreement, with respect to Realized Losses
and interest shortfalls, the Subordinate Securities will be subordinated to the
other Classes of Securities and each of the Subordinate Securities will be
subordinated to each of the other Subordinate Securities with a lower numerical
designation, if any. All Realized Losses and interest shortfalls on the Mortgage
Loans allocated to any Class of Securities will be allocated pro rata among the
outstanding Securities of such Class, as described in the Pooling and Servicing
Agreement.
The Securities are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
in the Pooling and Servicing Agreement. As provided in the Pooling and Servicing
Agreement, withdrawals from the Custodial Account and related accounts shall be
made from time to time for purposes other than distributions to Holders, such
purposes including reimbursement of Advances made, or certain expenses incurred,
with respect to the Mortgage Loans and administration of the Trust.
So long as this Security is registered in the name of a Depository or
its nominee, the Trustee will make payments of principal of and interest on this
Security by wire transfers of immediately available funds to the Depository or
its nominee. Otherwise, all distributions on this Security under the Pooling and
Servicing Agreement will be made by or on behalf of the Trustee either by (i)
check mailed to the address of the Holder entitled thereto, as such name and
address shall appear on the Security Register or (ii) wire transfer of
immediately available funds, upon request to the Trustee in writing by five
Business Days prior to the Record Date immediately prior to the related
Distribution Date of any Holder of this Security having an aggregate Initial
Security Principal Balance of at least $1,000,000. Notwithstanding the above,
the final distribution on this Security will be made after due notice by the
Trustee or the Master
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<PAGE>
Servicer of the pendency of such distribution and only upon presentation and
surrender of this Security at its principal Corporate Trust Office or such other
offices or agencies appointed by the Trustee for that purpose and such other
locations provided in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement permits, with certain exceptions
therein provided, the amendment thereof and the modification of the rights and
obligations of FASI, the Master Servicer, and the Trustee and the rights of the
Holders under the Pooling and Servicing Agreement at any time by FASI, the Loan
Seller, the Master Servicer, and the Trustee with the consent of the Holders of
Securities entitled to at least 66% of the Voting Rights. Any such consent by
the Holder of this Security shall be conclusive and binding on such Holder and
upon all future Holders of this Security and of any Security issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Security. The Pooling and Servicing Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of the Holders of any of the Securities.
The Securities are issuable in fully registered form only, without
coupons, in denominations specified in the Pooling and Servicing Agreement. As
provided in the Pooling and Servicing Agreement and subject to any limitations
on transfer of this Security by a Depository or its nominee and certain
limitations set forth in the Pooling and Servicing Agreement, the transfer of
this Security is registrable in the Security Register upon surrender of this
Security for registration of transfer at the principal Corporate Trust Office of
the Trustee or such other offices or agencies appointed by the Trustee for that
purpose and such other locations provided in the Pooling and Servicing
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 Security Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Securities of
the same Class in the same aggregate Initial Security Principal Balance will be
issued to the designated transferee or transferees.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, this Security is exchangeable for a new
Security of the same Class in the same denomination. No service charge will be
made for any such registration of transfer or exchange, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Securities.
FASI, the Master Servicer, the Trustee and the Security Registrar and
any agent of FASI, the Master Servicer, the Trustee or the Security Registrar
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, and none of FASI, the Master Servicer, the Trustee, the
Security Registrar or any such agent shall be affected by notice to the
contrary.
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<PAGE>
The obligations created by the Pooling and Servicing Agreement and the
Trust created thereby shall terminate upon distribution to the Securityholders
of all amounts held by or on behalf of the Trustee and required to be
distributed to Securityholders pursuant to the Pooling and Servicing Agreement
following the earlier of (i) the purchase by the Master Servicer of all Mortgage
Loans and each REO Property in respect thereof remaining in the Trust Fund, or
(ii) the final payment on, or other liquidation (or any Advance with respect
thereto) of, the last Mortgage Loan remaining in the Trust (or the disposition
of all REO Property in respect thereof). The Pooling and Servicing Agreement
permits, but does not require the Master Servicer to purchase from the Trust all
Mortgage Loans and all property acquired in respect of any Mortgage Loan at a
price determined as provided for in the Pooling and Servicing Agreement. The
exercise of the Master Servicer's right will effect early retirement of the
Securities; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
or equal to 5% of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date. Upon the termination of the Trust, payment of all
amounts due on the Securities and payment of all administrative expenses
associated with the Trust, any remaining amounts attributable to the Mortgage
Loans comprising (i) the Pooling REMIC will be distributed pro rata to the
holders of the Class RP Securities and (ii) the Issuing REMIC will be
distributed pro rata to the holders of the Class R Securities, as set forth in
the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been executed by
the Security Registrar, by manual signature, this Security shall not be entitled
to any benefit under the Pooling and Servicing Agreement or be valid for any
purpose.
THIS SECURITY AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK.
The Trustee has executed this Security on behalf of the Trust not in
its individual capacity but solely as Trustee under the Pooling and Servicing
Agreement, and the Trustee shall be liable hereunder only in respect of the
assets of the Trust.
Capitalized terms used herein and not defined herein shall have the
meaning given them in the Pooling and Servicing Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Security to be duly
executed.
Dated: THE FIRST NATIONAL BANK OF CHICAGO,
NOT IN ITS INDIVIDUAL
CAPACITY, BUT SOLELY AS
TRUSTEE
BY: _______________________________
AUTHORIZED OFFICER
CERTIFICATION OF AUTHENTICATION
THIS IS THE CLASS ____ SECURITY REFERRED TO IN THE WITHINMENTIONED
POOLING AND SERVICING AGREEMENT.
THE FIRST NATIONAL BANK OF CHICAGO,
AS SECURITY REGISTRAR
BY: _______________________________
AUTHORIZED SIGNATORY
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<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Security, shall be construed as though they were written out in full according
to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM-as tenants in common UNIF GIFT MIN ACT-...........Custodian.............
TEN ENT-as tenants by the (Cus) (Minor)
entireties Under Uniform Gifts to Minors
JT TEN-as joint tenants with
rights of survivor- Act ............................
ship and not as Tenants (State)
in Common
</TABLE>
Additional abbreviations may also be used
though not in the above list.
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<PAGE>
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
- ------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF
ASSIGNEE ______________________________________________________________________
- -------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Security and does hereby irrevocably constitute and appoint
________________________ (Attorney) to transfer the said Security in the
Security Register of the within-named Trust, with full power of substitution in
the premises.
Dated: __________________ ___________________________________________________
NOTICE: The signature to
this assignment must
correspond with the name as
written upon the face of
this Security in every
particular without
alteration or enlargement
or any change whatever.
- ---------------------------------------
SIGNATURE GUARANTEED: The signature must be guaranteed by a commercial bank or
trust company or by a member firm of the New York Stock Exchange or another
national securities exchange. Notarized or witnessed signatures are not
acceptable.
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<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distribution 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 reports and statements
should be mailed to ____________________________. This information is provided
by _______________________________, the assignee named above, or
___________________________, as its agent.
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<PAGE>
EXHIBIT B-1
NO TRANSFER OF THIS SECURITY MAY BE MADE TO AN EMPLOYEE BENEFIT PLAN, OR PERSON
USING "PLAN ASSETS" OF ANY PLAN TO EFFECT SUCH ACQUISITION (INCLUDING ANY
INSURANCE COMPANY UNDER THE CIRCUMSTANCES DESCRIBED IN THE AGREEMENT), SUBJECT
TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE, UNLESS THE TRANSFEREE PROVIDES
AN OPINION OF COUNSEL OR REPRESENTATION LETTER (UNDER THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE AGREEMENT), SATISFACTORY TO THE TRUSTEE, THAT SUCH DISPOSITION
WILL NOT VIOLATE THE PROHIBITED TRANSACTION PROVISIONS OF SECTION 406 OF ERISA
AND SECTION 4975 OF THE CODE.
THIS CLASS B SECURITY IS SUBORDINATED TO THE EXTENT DESCRIBED HEREIN AND IN THE
POOLING AND SERVICING AGREEMENT REFERENCED HEREIN.
THIS CLASS B SECURITY REPRESENTS A REMIC REGULAR INTEREST FOR FEDERAL
INCOME TAX PURPOSES.
THE PRINCIPAL OF THIS CLASS B SECURITY IS SUBJECT TO PREPAYMENT FROM TIME TO
TIME WITHOUT SURRENDER OF OR NOTATION ON THIS SECURITY. ACCORDINGLY, THE
SECURITY PRINCIPAL BALANCE OF THIS SECURITY MAY BE LESS THAN THAT SET FORTH
BELOW. ANYONE ACQUIRING THIS SECURITY MAY ASCERTAIN ITS CURRENT SECURITY
PRINCIPAL BALANCE BY INQUIRY OF THE TRUSTEE.
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<PAGE>
FINANCIAL ASSET SECURITIZATION, INC.
MORTGAGE PARTICIPATION SECURITIES, SERIES 1997-NAMC 1
CLASS B PASS-THROUGH SECURITY
PASS-THROUGH RATE:
PERCENTAGE INTEREST:
DENOMINATION: $
AGGREGATE INITIAL SECURITY
PRINCIPAL BALANCE OF THE CLASS
B SECURITIES: $
DATE OF POOLING AND
SERVICING AGREEMENT:
AS OF APRIL 1, 1997
STATED PRINCIPAL BALANCE AS OF
THE CUT-OFF DATE OF THE
MORTGAGE LOANS HELD BY THE
TRUST: $
CLOSING DATE:
APRIL 30, 1997
MASTER SERVICER:
NORTH AMERICAN MORTGAGE
COMPANY
FIRST DISTRIBUTION DATE:
MAY 27, 1997
TRUSTEE: THE FIRST NATIONAL
BANK OF CHICAGO
NO.
CUSIP NO. 31738V
MORTGAGE PARTICIPATION SECURITIES, SERIES 1997-NAMC 1
CLASS B PASS-THROUGH SECURITY
evidencing a beneficial ownership interest in a Trust consisting of the entire
beneficial ownership of conventional, one- to four-family, fixed rate, first
lien Mortgage Loans formed and sold by
FINANCIAL ASSET SECURITIZATION, INC.
THIS SECURITY DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN FINANCIAL ASSET
SECURITIZATION, INC., THE MASTER SERVICER, THE TRUSTEE, THE UNDERWRITER OR ANY
OF THEIR AFFILIATES. NEITHER THIS SECURITY NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT:
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<PAGE>
is the registered owner of the Percentage Interest evidenced by this Security in
the Class B Securities (the "Class B Securities") issued by the trust (the
"Trust") created pursuant to a pooling and servicing agreement, dated as
specified above (the "Pooling and Servicing Agreement"), among Financial Asset
Securitization, Inc. (hereinafter called "FASI", which term includes any
successor entity under the Pooling and Servicing Agreement), North American
Mortgage Company, as Loan Seller and Master Servicer and the Trustee, a summary
of certain of the pertinent provisions of which is set forth hereafter. The
Trust consists primarily of the Mortgage Loans. This Security is issued under
and is subject to the terms, provisions and conditions of the Pooling and
Servicing Agreement, to which Pooling and Servicing Agreement the Holder of this
Security, by virtue of the acceptance hereof, assents and by which such Holder
is bound.
Distributions of principal of and interest on this Security will be
made out of the Available Distribution, to the extent and subject to the
limitations set forth in the Pooling and Servicing Agreement, on the 25th day of
each month or, if such 25th day is not a Business Day, the next succeeding
Business Day (each, a "Distribution Date"), commencing on the first Distribution
Date specified above, to the Person in whose name this Security is registered at
the close of business on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"). All sums
distributable on this Security are payable in the coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts.
Principal and interest on this Security will be paid in accordance with
the terms of the Pooling and Servicing Agreement. Principal and interset
allocated to this Security on any Distribution Date will be an amount equal to
this Security's Percentage Interest of the Available Distribution Amount to be
distributed on this Class of Securities as of such Distribution Date, with a
final distribution to be made upon retirement of this Security as set forth in
the Pooling and Servicing Agreement.
This Security is one of a duly authorized issue of Securities
designated as Mortgage Participation Securities, Series 1997-NAMC 1 (herein
called the "Securities"), and representing a Percentage Interest in the Class of
Securities specified on the face hereof equal to the quotient, expressed as a
percentage, obtained by dividing the denomination of this Security specified on
the face hereof by the aggregate initial principal amount of the Class B
Securities. The Securities are issued in multiple Classes designated as
specifically set forth in the Pooling and Servicing Agreement. The Securities
will evidence in the aggregate 100% of the beneficial ownership of the Trust.
Realized Losses and interest shortfalls on the Mortgage Loans shall be
allocated among the Classes of Securities on the applicable Distribution Date in
the manner set forth in the Pooling and Servicing Agreement. To the extent
provided in the Pooling and Servicing Agreement, with respect to Realized Losses
and interest shortfalls, the Subordinate Securities will be subordinated to the
other Classes of Securities and each Class of the Subordinate
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<PAGE>
Securities will be subordinated to each of the other Classes of Subordinate
Securities with a lower numerical designation, if any. All Realized Losses and
interest shortfalls on the Mortgage Loans allocated to any Class of Securities
will be allocated pro rata among the outstanding Securities of such Class, as
described in the Pooling and Servicing Agreement.
The Securities are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
in the Pooling and Servicing Agreement. As provided in the Pooling and Servicing
Agreement, withdrawals from the Custodial Account and related accounts shall be
made from time to time for purposes other than distributions to Holders, such
purposes including reimbursement of Advances made, or certain expenses incurred,
with respect to the Mortgage Loans and administration of the Trust.
All distributions on this Security under the Pooling and Servicing
Agreement will be made by or on behalf of the Trustee either by (i) check mailed
to the address of the Holder entitled thereto, as such name and address shall
appear on the Security Register or (ii) wire transfer of immediately available
funds, upon request to the Trustee in writing by five business days prior to the
Record Date immediately prior to the related Distribution Date of any Holder of
this Security having an aggregate Initial Security Principal Balance of at least
$1,000,000. Notwithstanding the above, the final distribution on this Security
will be made after due notice by the Trustee or the Master Servicer of the
pendency of such distribution and only upon presentation and surrender of this
Security at its principal Corporate Trust Office or such other offices or
agencies appointed by the Trustee for that purpose and such other locations
provided in the Pooling and Servicing Agreement.
The Pooling and Servicing Agreement permits, with certain exceptions
therein provided, the amendment thereof and the modification of the rights and
obligations of FASI, the Master Servicer, and the Trustee and the rights of the
Holders under the Pooling and Servicing Agreement at any time by FASI, the Loan
Seller, the Master Servicer and the Trustee with the consent of the Holders of
Securities entitled to at least 66% of the Voting Rights. Any such consent by
the Holder of this Security shall be conclusive and binding on such Holder and
upon all future Holders of this Security and of any Security issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Security. The Pooling and Servicing Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of the Holders of any of the Securities.
The Securities are issuable in fully-registered, certificated form
without coupons in minimum denominations as specified in the Pooling and
Servicing Agreement. As provided in the Pooling and Servicing Agreement and
subject to certain limitations set forth therein, the transfer of this Security
is registrable in the Security Register upon surrender of this Security for
registration or transfer at the principal Corporate Trust Office of the Trustee
or such other offices or agencies appointed by the Trustee for that purpose and
such other locations provided in the Pooling and Servicing 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
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<PAGE>
the Security Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Securities of
the same Class in the same aggregate Security Principal Balance will be issued
to the designated transferee or transferees.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, this Security is exchangeable for a new
Security of the same Class in the same denomination. No service charge will be
made for any such registration of transfer or exchange, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Securities.
Because this Class B Security is a subordinated security, it will not
satisfy the requirements of certain prohibited transaction exemptions. As a
result, the purchase or holding of the beneficial interest in this Class B
Security by a Plan, a person acting on behalf of a Plan, or a person using the
assets of a Plan (each, a "Plan Investor") may constitute a non-exempt
prohibited transaction or result in the imposition of excise taxes or penalties.
Accordingly, the beneficial interest in this Class B Security may not be
transferred to a Plan Investor unless the Plan Investor provides the Trustee
with a Benefit Plan Opinion or subject to certain conditions described in the
Pooling and Servicing Agreement and representation letter. In the absence of the
receipt of such Benefit Plan Opinion or representation letter, each purchaser of
the beneficial interest in this Class B Security is deemed, by virtue of its
acquisition of the beneficial interest of such Security, to have represented
that it is not a Plan Investor.
FASI, the Master Servicer, the Trustee and the Security Registrar and
any agent of FASI, the Master Servicer, the Trustee or the Security Registrar
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, and none of FASI, the Master Servicer, the Trustee, the
Security Registrar or any such agent shall be affected by notice to the
contrary.
The obligations created by the Pooling and Servicing Agreement and the
Trust created thereby shall terminate upon distribution to the Securityholders
of all amounts held by or on behalf of the Trustee and required to be
distributed to Securityholders pursuant to the Pooling and Servicing Agreement
following the earlier of (i) the purchase by the Master Servicer of all Mortgage
Loans and each REO Property in respect thereof remaining in the Trust Fund, or
(ii) the final payment on, or other liquidation (or any Advance with respect
thereto) of, the last Mortgage Loan remaining in the Trust (or the disposition
of all REO Property in respect thereof). The Pooling and Servicing Agreement
permits, but does not require the Master Servicer to purchase from the Trust all
Mortgage Loans and all property acquired in respect of any Mortgage Loan at a
price determined as provided for in the Pooling and Servicing Agreement. The
exercise of the Master Servicer's right will effect early retirement of the
Securities; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
or equal to 5% of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date. Upon the termination of the Trust, payment of all
amounts due on the Securities and payment of all administrative
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<PAGE>
expenses associated with the Trust, any remaining amounts attributable to the
Mortgage Loans comprising (i) the Pooling REMIC will be distributed pro rata to
the holders of the Class RP Securities and (ii) the Issuing REMIC will be
distributed pro rata to the holders of the Class R Securities, as set forth in
the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been executed by
the Security Registrar, by manual signature, this Security shall not be entitled
to any benefit under the Pooling and Servicing Agreement or be valid for any
purpose.
THIS SECURITY AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK.
The Trustee has executed this Security on behalf of the Trust not in
its individual capacity but solely as Trustee under the Pooling and Servicing
Agreement, and the Trustee shall be liable hereunder only in respect of the
assets of the Trust.
Capitalized terms used herein and not defined herein shall have the
meaning given them in the Pooling and Servicing Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Security to be duly
executed.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
BY: ________________________________________
Authorized Officer
CERTIFICATION OF AUTHENTICATION
This is one of the Class B Securities referred to in the
within-mentioned Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
BY: _______________________________________
Authorized Officer
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<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Security, shall be construed as though they were written out in full according
to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM-as tenants in common UNIF GIFT MIN ACT-.....Custodian.....
TEN ENT-as tenants by the (Cus) (Minor)
entireties Under Uniform Gifts to Minors
JT TEN-as joint tenants with
rights of survivor- Act ............................
ship and not as Tenants (State)
in Common
</TABLE>
Additional abbreviations may also be used
though not in the above list.
-159-
<PAGE>
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
- ------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF
ASSIGNEE _____________________________________________________________________
- ------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Security and does hereby irrevocably constitute and appoint
________________________ (Attorney) to transfer the said Security in the
Security Register of the within-named Trust, with full power of substitution in
the premises.
Dated: __________________ __________________________________
NOTICE: The signature to
this assignment must
correspond with the name as
written upon the face of
this Security in every
particular without
alteration or enlargement
or any change whatever.
- ------------------------------
SIGNATURE GUARANTEED: The signature must be guaranteed by a commercial bank or
trust company or by a member firm of the New York Stock Exchange or another
national securities exchange. Notarized or witnessed signatures are not
acceptable.
-160-
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distribution 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 reports and statements should be mailed to
_____________________. This information is provided by
_________________________________________________, the assignee named above, or
________________________________, as its agent.
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<PAGE>
EXHIBIT B-2
THIS SECURITY HAS BEEN DESIGNATED AS A "RESIDUAL INTEREST" IN A "REAL ESTATE
MORTGAGE INVESTMENT CONDUIT" CREATED BY THE POOLING AND SERVICING AGREEMENT (THE
"AGREEMENT") REFERRED TO HEREIN PURSUANT TO THE RELATED PROVISIONS OF THE
INTERNAL REVENUE CODE OF 1986 (THE "CODE").
NO TRANSFER OF THIS SECURITY MAY BE MADE TO AN EMPLOYEE BENEFIT PLAN, OR PERSON
USING "PLAN ASSETS" OF ANY PLAN TO EFFECT SUCH ACQUISITION (INCLUDING ANY
INSURANCE COMPANY UNDER THE CIRCUMSTANCES DESCRIBED IN THE AGREEMENT), SUBJECT
TO SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"), OR SECTION 4975 OF THE CODE, UNLESS THE TRANSFEREE PROVIDES
AN OPINION OF COUNSEL OR REPRESENTATION LETTER (UNDER THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE AGREEMENT), SATISFACTORY TO THE TRUSTEE, THAT SUCH DISPOSITION
WILL NOT VIOLATE THE PROHIBITED TRANSACTION PROVISIONS OF SECTION 406 OF ERISA
AND SECTION 4975 OF THE CODE.
THIS SECURITY AND THE AGREEMENT MAY BE AMENDED WITHOUT THE CONSENT OF THE HOLDER
HEREOF, AND IN A MANNER THAT MAY ADVERSELY AFFECT THE INTERESTS OF THE HOLDER
HEREOF, IF NECESSARY TO PREVENT THE DISQUALIFICATION OF THE TRUST FUND AS A
REMIC.
ANY RESALE, TRANSFER, OR OTHER DISPOSITION OF THIS SECURITY MAY BE MADE ONLY IF
THE PROPOSED TRANSFEREE PROVIDES AN AFFIDAVIT TO THE TRUSTEE THAT (1) SUCH
TRANSFEREE IS NOT (A) 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 FEDERAL HOME LOAN
MORTGAGE CORPORATION, A MAJORITY OF ITS BOARD OF DIRECTORS IS NOT SELECTED BY
SUCH GOVERNMENTAL UNIT), (B) ANY FOREIGN GOVERNMENT, ANY INTERNATIONAL
ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF THE FOREGOING, (C) 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
(UNLESS SUCH ORGANIZATION IS SUBJECT TO THE TAX IMPOSED BY SECTION 511 OF THE
CODE ON UNRELATED BUSINESS TAXABLE INCOME), (D) A RURAL ELECTRIC AND TELEPHONE
COOPERATIVE DESCRIBED IN SECTION 1381(a)(2)(C) OF THE CODE, AND (E) ANY
<PAGE>
OTHER PERSON SO DESIGNATED BY THE TRUSTEE BASED ON AN OPINION OF COUNSEL (ANY
SUCH PERSON DESCRIBED IN THE FOREGOING CLAUSES (A), (B), (C), (D), OR (E) BEING
HEREINAFTER REFERRED TO AS A "DISQUALIFIED ORGANIZATION"), OR (2) AN AGENT OF A
DISQUALIFIED ORGANIZATION. NOTWITHSTANDING THE REGISTRATION IN THE SECURITY
REGISTER OR ANY TRANSFER, SALE, OR OTHER DISPOSITION OF THIS SECURITY 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 SECURITYHOLDER FOR ANY PURPOSE
HEREUNDER, INCLUDING, BUT NOT LIMITED TO, THE RECEIPT OF DISTRIBUTIONS ON THIS
SECURITY. EACH HOLDER OF THIS SECURITY, BY ACCEPTANCE OF THIS SECURITY, SHALL BE
DEEMED TO HAVE CONSENTED TO THE PROVISIONS OF THIS PARAGRAPH.
IF ANY RESALE, TRANSFER, OR OTHER DISPOSITION OF THIS SECURITY IS MADE TO ANY OF
CERTAIN "PASS-THROUGH ENTITIES" DESCRIBED IN SECTION 860E(e)(6) OF THE CODE, AND
A DISQUALIFIED ORGANIZATION IS THE RECORD HOLDER OF AN INTEREST IN SUCH ENTITY,
THEN A TAX MAY BE IMPOSED ON SUCH ENTITY.
NO TRANSFER OF THE SECURITY MAY BE MADE TO A PERSON THAT IS NOT A UNITED STATES
PERSON (AS DEFINED IN THE AGREEMENT).
THE PRINCIPAL OF THIS CLASS R SECURITY IS SUBJECT TO PREPAYMENT FROM TIME TO
TIME WITHOUT SURRENDER OF OR NOTATION ON THIS SECURITY. ACCORDINGLY, THE
SECURITY PRINCIPAL BALANCE OF THIS SECURITY MAY BE LESS THAN THAT SET FORTH
BELOW.
<PAGE>
FINANCIAL ASSET SECURITIZATION, INC.
MORTGAGE PARTICIPATION SECURITIES, SERIES 1997-NAMC 1
CLASS R SECURITY
PASS-THROUGH RATE
PER ANNUM:
PERCENTAGE INTEREST:
DENOMINATION: $
AGGREGATE INITIAL SECURITY
BALANCE OF THE CLASS R
SECURITIES: $
DATE OF POOLING AND
SERVICING AGREEMENT:
AS OF APRIL 1, 1997
CLOSING DATE:
APRIL 30, 1997
FIRST DISTRIBUTION DATE:
MAY 27, 1997
STATED PRINCIPAL BALANCE AS OF
THE CUT-OFF DATE OF THE
MORTGAGE LOANS HELD BY THE
TRUST: $
MASTER SERVICER: NORTH
AMERICAN MORTGAGE COMPANY
TRUSTEE: THE FIRST NATIONAL
BANK OF CHICAGO
NO.
CUSIP NO. 31738V
<PAGE>
MORTGAGE PARTICIPATION SECURITIES, SERIES 1997-NAMC 1
CLASS R SECURITY
evidencing a beneficial ownership interest in a Trust consisting of the
entire beneficial ownership of conventional, one- to four-family, fixed
rate, first lien Mortgage Loans formed and sold by
FINANCIAL ASSET SECURITIZATION, INC.
THIS SECURITY DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN FINANCIAL ASSET
SECURITIZATION, INC., THE MASTER SERVICER, THE TRUSTEE, THE UNDERWRITER, OR ANY
OF THEIR AFFILIATES. NEITHER THIS SECURITY NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED BY ANY AGENCY OR INSTRUMENTALITY OF THE UNITED STATES.
THIS CERTIFIES THAT:
is the registered owner of the Percentage Interest evidenced by this Security in
the Class R Securities (the "Class R Securities") issued by the trust (the
"Trust") created pursuant to a Pooling and Servicing Agreement, dated as
specified above (the "Pooling and Servicing Agreement"), among Financial Asset
Securitization, Inc. (hereinafter called "FASI," which term includes any
successor entity under the Pooling and Servicing Agreement), North American
Mortgage Company, as Loan Seller and Master Servicer, and the Trustee, a summary
of certain of the pertinent provisions of which is set forth hereafter. The
Trust consists primarily of the Mortgage Loans. This Security is issued under
and is subject to the terms, provisions and conditions of the Pooling and
Servicing Agreement, to which Pooling and Servicing Agreement the Holder of this
Security, by virtue of the acceptance hereof, assents and by which such Holder
is bound.
Distributions of principal and interest on this Security (including the
final distribution on this Security) will be made out of the Available
Distribution Amount, to the extent and subject to the limitations set forth in
the Pooling and Servicing Agreement, on the 25th day of each month or, if such
25th day is not a Business Day, the next succeeding Business Day (each, a
"Distribution Date"), commencing on the first Distribution Date specified above,
to the Person in whose name this Security is registered at the close of business
on the last Business Day of the month immediately preceding the month of such
distribution (the "Record Date"). All sums distributable on this Security are
payable in the coin or currency of the United States of America as at the time
of payment is legal tender for the payment of public and private debts.
-165-
<PAGE>
Principal and interest on this Security will be paid in accordance with
the terms of the Pooling and Servicing Agreement. Principal and interest
allocated to this Security on any Distribution Date will be an amount equal to
this Security's Percentage Interest of the Available Distribution Amount to be
distributed on this Class of Securities as of such Distribution Date, with a
final distribution to be made upon retirement of this Security as set forth in
the Pooling and Servicing Agreement.
This Security is one of a duly authorized issue of Securities
designated as Mortgage Participation Securities, Series 1997-NAMC 1 (herein
called the "Securities"), and representing a Percentage Interest specified on
the face hereof equal to the quotient, expressed as a percentage, obtained by
dividing the denomination of this Security by the aggregate Initial Security
Principal Balance of the Class R Securities. The Securities are issued in
multiple Classes designated as specifically set forth in the Pooling and
Servicing Agreement. The Securities will evidence in the aggregate 100% of the
beneficial ownership of the Trust.
Realized Losses and interest shortfalls on the Mortgage Loans shall be
allocated among the Classes of Securities on the applicable Distribution Date in
the manner set forth in the Pooling and Servicing Agreement. To the extent
provided in the Pooling and Servicing Agreement, with respect to Realized Loses,
the Subordinate Securities will be subordinated to the other Classes of
Securities and each of the Subordinate Securities will be subordinated to each
of the other Subordiante Securities with a lower numerical designation. All
Realized Losses and interest shortfalls on the Mortgage Loans will be allocated
to any Class of Securities will be allocated pro rata among the outstanding
Securities of such Class, as described in the Pooling and Servicing Agreement.
The Securities are limited in right of payment to certain collections
and recoveries respecting the Mortgage Loans, all as more specifically set forth
in the Pooling and Servicing Agreement. As provided in the Pooling and Servicing
Agreement, withdrawals from the Custodial Account and related accounts shall be
made from time to time for purposes other than distributions to Holders, such
purposes including reimbursement of Advances made, or certain expenses incurred,
with respect to the Mortgage Loans and administration of the Trust.
All distributions on this Security under the Pooling and Servicing
Agreement will be made by or on behalf of the Trustee either by (i) check mailed
to the address of the Holder entitled thereto, as such name and address shall
appear on the Security Register or (ii) wire transfer of immediately available
funds, upon request to the Trustee in writing by five Business Days prior to the
Record Date immediately prior to the related Distribution Date of any Holder of
this Security having an aggregate Initial Security Principal Balance of at least
$1,000,000. Notwithstanding the above, the final distribution on this Security
will be made after due notice by the Trustee or the Master Servicer of the
pendency of such distribution and only upon presentation and surrender of this
Security at its principal Corporate Trust Office or such other offices or
agencies appointed by the Trustee for that purpose and such other locations
provided in the Pooling and Servicing Agreement.
-166-
<PAGE>
No transfer of any Class R Security shall be made to any employee
benefit plan or other retirement arrangement, including individual retirement
accounts and Keogh plans, that is subject to the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"; any of foregoing, a "Plan"), to any
Person acting on behalf of a Plan, or to any other person who is using "plan
assets" to effect such acquisition (including any insurance company using funds
in its general or separate accounts that may constitute "plan assets"), unless
the prospective transferee of a Securityholder desiring to transfer its
Securities provides to the Trustee a Benefit Plan Opinion (or, in the limited
circumstances described in the Agreement, a representation letter) which
establishes to the satisfaction of the Trustee or the Security Registrar that
such disposition will not violate the prohibited transaction provisions of
Section 406 of ERISA and Section 4975 of the Internal Revenue Code of 1986, as
amended.
The Pooling and Servicing Agreement permits, with certain exceptions
therein provided, the amendment thereof and the modification of the rights and
obligations of FASI, the Master Servicer, and the Trustee and the rights of the
Holders under the Pooling and Servicing Agreement at any time by FASI, the Loan
Seller, the Master Servicer, and the Trustee with the consent of the Holders of
Securities entitled to at least 66% of the Voting Rights. Any such consent by
the Holder of this Security shall be conclusive and binding on such Holder and
upon all future Holders of this Security and of any Security issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Security. The Pooling and Servicing Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of the Holders of any of the Securities.
The Securities are issuable in fully registered, certificated form
only, without coupons, in denominations specified in the Pooling and Servicing
Agreement. As provided in the Pooling and Servicing Agreement and subject to any
limitations on transfer of this Security set forth therein, the transfer of this
Security is registrable in the Security Register upon surrender of this Security
for registration or transfer at the principal Corporate Trust Office of the
Trustee or such other offices or agencies appointed by the Trustee for that
purpose and such other locations provided in the Pooling and Servicing
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 Security Registrar duly executed by, the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Securities of
the same Class in the same aggregate Initial Security Principal Balance will be
issued to the designated transferee or transferees.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth, this Security is exchangeable for a new
Security of the same Class in the same denomination. No service charge will be
made for any such registration of transfer or exchange, but the Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any transfer or exchange of
Securities.
-167-
<PAGE>
FASI, the Master Servicer, the Trustee and the Security Registrar and
any agent of FASI, the Master Servicer, the Trustee or the Security Registrar
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, and none of FASI, the Master Servicer, the Trustee, the
Security Registrar or any such agent shall be affected by notice to the
contrary.
The obligations created by the Pooling and Servicing Agreement and the
Trust created thereby shall terminate upon distribution to the Securityholders
of all amounts held by or on behalf of the Trustee and required to be
distributed to Securityholders pursuant to the Pooling and Servicing Agreement
following the earlier of (i) the purchase by the Master Servicer of all Mortgage
Loans and each REO Property in respect thereof remaining in the Trust Fund, or
(ii) the final payment on, or other liquidation (or any Advance with respect
thereto) of, the last Mortgage Loan remaining in the Trust (or the disposition
of all REO Property in respect thereof). The Pooling and Servicing Agreement
permits, but does not require the Master Servicer to purchase from the Trust all
Mortgage Loans and all property acquired in respect of any Mortgage Loan at a
price determined as provided for in the Pooling and Servicing Agreement. The
exercise of the Master Servicer's right will effect early retirement of the
Securities; however, such right to purchase is subject to the aggregate Stated
Principal Balance of the Mortgage Loans at the time of purchase being less than
or equal to 5% of the aggregate Stated Principal Balance of the Mortgage Loans
as of the Cut-off Date. Upon the termination of the Trust, payment of all
amounts due on the Securities and payment of all administrative expenses
associated with the Trust, any remaining amounts attributable to the Mortgage
Loans comprising (i) the Pooling REMIC will be distributed pro rata to the
holders of the Class RP Securities and (ii) the Issuing REMIC will be
distributed pro rata to the holders of the Class R Securities, as set forth in
the Pooling and Servicing Agreement.
Unless the certificate of authentication hereon has been executed by
the Security Registrar, by manual signature, this Security shall not be entitled
to any benefit under the Pooling and Servicing Agreement or be valid for any
purpose.
THIS SECURITY AND THE POOLING AND SERVICING AGREEMENT SHALL BE
CONSTRUED IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE
STATE OF NEW YORK.
The Trustee has executed this Security on behalf of the Trust not in
its individual capacity but solely as Trustee under the Pooling and Servicing
Agreement, and the Trustee shall be liable hereunder only in respect of the
assets of the Trust.
Capitalized terms used herein and not defined herein shall have the
meaning given them in the Pooling and Servicing Agreement.
-168-
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Security to be duly
executed.
THE FIRST NATIONAL BANK OF CHICAGO,
NOT IN ITS INDIVIDUAL
CAPACITY, BUT SOLELY AS
TRUSTEE
BY: _______________________________
AUTHORIZED OFFICER
CERTIFICATION OF AUTHENTICATION
THIS IS THE CLASS R SECURITY REFERRED TO IN THE WITHIN-MENTIONED
POOLING AND SERVICING AGREEMENT.
THE FIRST NATIONAL BANK OF CHICAGO,
AS SECURITY REGISTRAR
BY: _______________________________
AUTHORIZED SIGNATORY
-169-
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this
Security, shall be construed as though they were written out in full according
to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM-as tenants in common UNIF GIFT MIN ACT-...........Custodian.............
TEN ENT-as tenants by the (Cus) (Minor)
entireties Under Uniform Gifts to Minors
JT TEN-as joint tenants with
rights of survivor- Act ............................
ship and not as Tenants (State)
in Common
</TABLE>
Additional abbreviations may also be used
though not in the above list.
-170-
<PAGE>
FORM OF TRANSFER
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
- ------------------------------------------------------------------------------
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF
ASSIGNEE ______________________________________________________________________
- -------------------------------------------------------------------------------
(Please print or typewrite name and address of assignee)
the within Security and does hereby irrevocably constitute and appoint
________________________ (Attorney) to transfer the said Security in the
Security Register of the within-named Trust, with full power of substitution in
the premises.
Dated: __________________ ___________________________________________________
NOTICE: The signature to
this assignment must
correspond with the name as
written upon the face of
this Security in every
particular without
alteration or enlargement
or any change whatever.
- ---------------------------------------
SIGNATURE GUARANTEED: The signature must be guaranteed by a commercial bank or
trust company or by a member firm of the New York Stock Exchange or another
national securities exchange. Notarized or witnessed signatures are not
acceptable.
-171-
<PAGE>
DISTRIBUTION INSTRUCTIONS
The assignee should include the following for purposes of distribution:
Distribution 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 reports and statements
should be mailed to ____________________________. This information is provided
by _______________________________, the assignee named above, or
___________________________, as its agent.
RI-AS:\FASI\NAMC\97-1\SECURITY\R2.FM
-172-
<PAGE>
EXHIBIT C
FORM OF TRUSTEE INITIAL CERTIFICATION
[DATE]
Financial Asset Securitization, Inc.
901 East Byrd Street
Richmond, Virginia 23219
North American Mortgage Corporation
3883 Airway Drive
Santa Rosa, California 95403
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of April 1, 1997, among Financial Asset
Securitization, Inc., as Seller, North American Mortgage Company, as
Loan Seller and Master Servicer, and The First National Bank of
Chicago, as Trustee, Mortgage Participation Securities, Series
1997-NAMC 1
Ladies and Gentlemen:
In accordance with Section 2.02 of the 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 has reviewed the Mortgage File and the
Mortgage Loan Schedule and has determined that, except as noted on the Schedule
of Exceptions attached hereto: (i) all documents required to be included in the
Mortgage File are in its possession, (ii) such documents have been reviewed by
it and appear regular on their face and relate to such Mortgage Loan, and (iii)
based on examination by it, and only as to such documents, the information set
forth in items (i)-(vi), (xiv) and (xv) of the definition or description of
"Mortgage Loan Schedule" is correct.
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
representation that any documents specified in clause (vi) of Section 2.01
should be included in any Mortgage File. The Trustee makes no representations as
to and shall not be responsible to verify: (i) the validity, legality,
sufficiency, enforceability, due authorization, recordability, or genuineness of
any of the documents contained in each Mortgage File of any of the Mortgage
Loans identified on the Mortgage Loan Schedule, (ii) the collectability,
insurability, effectiveness, or suitability of any such Mortgage Loan, or (iii)
the existence of any assumption, modification, written assurance or substitution
agreement with respect to any Mortgage File if no such documents appear in the
Mortgage File delivered to the Trustee.
C-173
<PAGE>
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO
By:
Name:
Title:
C-174
<PAGE>
EXHIBIT D
FORM OF TRUSTEE FINAL CERTIFICATION
[DATE]
Financial Asset Securitization, Inc.
901 East Byrd Street
Richmond, Virginia 23219
North American Mortgage Corporation
3883 Airway Drive
Santa Rosa, California 95403
Re: Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement"), dated as of April 1, 1997, among Financial Asset
Securitization, Inc., as Seller, North American Mortgage Company, as
Loan Seller and Master Servicer, and The First National Bank of
Chicago, as Trustee, Mortgage Participation Securities, Series
1997-NAMC 1
Ladies and Gentlemen:
In accordance with Section 2.02 of the 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 has received the documents set forth in
Section 2.01.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond the review specifically required in the
Pooling and Servicing Agreement. The Trustee makes no representation that any
documents specified in clause (vi) of Section 2.01 should be included in any
Mortgage File. The Trustee makes no representations as to and shall not be
responsible to verify: (i) the validity, legality, sufficiency, enforceability,
due authorization, recordability, or genuineness of any of the documents
contained in each Mortgage File of any of the Mortgage Loans identified on the
Mortgage Loan Schedule, (ii) the collectability, insurability, effectiveness, or
suitability of any such Mortgage Loan, or (iii) the existence of any assumption,
modification, written assurance or substitution agreement with respect to any
Mortgage File if no such documents appear in the Mortgage File delivered to the
Trustee.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the Pooling and Servicing Agreement.
THE FIRST NATIONAL BANK OF CHICAGO
By:
Name:
Title:
C-175
<PAGE>
-176-
EXHIBIT E
[Reserved]
C-176
<PAGE>
-177-
EXHIBIT F-1
FORM OF REQUEST FOR RELEASE
[For Trustee]
Loan Information
Name of Mortgagor: ___________________________
Master Servicer
Loan No.: ___________________________
Trustee
Name: ___________________________
Address: ___________________________
---------------------------
Trustee
Mortgage File No.: ___________________________
Request for Requesting Documents (check one):
<TABLE>
<S> <C>
1. _______ Mortgage Loan Liquidated.
(The Master Servicer hereby certifies that all
proceeds of foreclosure, insurance or other
liquidation have been finally received and deposited
into the Custodial Account to the extent required
pursuant to the Pooling and Servicing Agreement.)
2. _______ Mortgage Loan in Foreclosure.
3. _______ Mortgage Loan Repurchased Pursuant to Section 9.01 of the Pooling and
Servicing Agreement.
4. _______ Mortgage Loan Repurchased Pursuant to Article II of the Pooling and Servicing
Agreement.
(The Master Servicer hereby certifies that the repurchase price has been
deposited into the Custodial Account pursuant to the Pooling and Servicing
Agreement.)
</TABLE>
C-177
<PAGE>
-178-
5. _______ Other (explain). ____________________________________________
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
The undersigned Master Servicer hereby acknowledges that it has
received from The First National Bank of Chicago, as Trustee for the Holders of
Mortgage Participation Securities, Series 1997-NAMC 1, 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 April 1, 1997 (the "Pooling and Servicing
Agreement"), among Financial Asset Securitization, Inc., North American Mortgage
Company, and the Trustee.
<TABLE>
<S> <C>
( ) 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.
( ) ---------------------------------------------
( ) ---------------------------------------------
( ) ---------------------------------------------
</TABLE>
C-178
<PAGE>
-179-
( ) ---------------------------------------------
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 knowingly 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.
(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 Custodial 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.
NORTH AMERICAN MORTGAGE
COMPANY
By:
Name:
Title:
Date: _____________________, 19__
C-179
<PAGE>
-180-
EXHIBIT F-2
FORM OF REQUEST FOR RELEASE
[Mortgage Loans Paid in Full]
OFFICER'S CERTIFICATE AND TRUST RECEIPT
MORTGAGE PARTICIPATION SECURITIES
SERIES 1997-NAMC 1
______________________________________ 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 CUSTODIAL ACCOUNT PURSUANT TO SECTION
3.10 OF THE POOLING AND SERVICING AGREEMENT, HAVE BEEN OR WILL BE CREDITED.
DATED: ____________________ _______________________________
/ / VICE PRESIDENT
/ / ASSISTANT VICE PRESIDENT
C-180
<PAGE>
-1-
EXHIBIT G-1
FORM OF INVESTOR REPRESENTATION LETTER
[DATE]
Financial Asset Securitization, Inc.
901 East Byrd Street
Richmond, Virginia 23219
First National Bank of Chicago
One First National Plaza
Mail Station 0129
Chicago, Illinois 60670-0129
Financial Asset Securitization, Inc.
Mortgage Participation Securities, Series 1997-NAMC 1
Ladies and Gentlemen:
__________________________________________ (the "Transferee")
intends to purchase from __________________________________________________ (the
"Transferor") $________________ Initial Security Principal Balance of Mortgage
Participation Securities, Series 1997-NAMC 1, Class ___ (the "Securities"),
issued pursuant to the Pooling and Servicing Agreement (the "Agreement"), dated
as of April 1, 1997, among Financial Asset Securitization, Inc., as Seller,
North American Mortgage Company, as Loan Seller and as Master Servicer, and The
First National Bank of Chicago, as Trustee (the "Trustee"). Capitalized terms
used herein and not otherwise defined shall have the meanings assigned thereto
in the Agreement.
In connection with such acquisition, the Transferee hereby
certifies and agrees:
1. The Transferee is acquiring the Securities either (a) for
its own account or for accounts for which it exercises sole investment
discretion and not with a view to or for sale in connection with any
distribution thereof, subject nevertheless to any requirement of law
that the disposition of the Transferee's property shall at all times be
and remain within its control, or (b) for resale to "Qualified
Institutional Buyers" within the meaning of Rule 144A under the 1933
Act or an "accredited investor" of the type specified in Rule
3a-7(a)(2)(i) of the Investment Company Act of 1940, as amended (the
"1940 Act") and in accordance with the provisions of the Agreement.
2. The Transferee has received, and has had an opportunity to
review, [(a) a copy of the Private Placement Memorandum dated April 30,
1997 relating to the Securities (the "Memorandum"), (b)] a copy of the
Agreement and [(b)][(c)] such other
G-1-1
<PAGE>
-2-
information concerning the Securities, the Trust and the Seller as has
been requested by the Transferee and is relevant to the Transferee's
decision to purchase the Securities. The Transferee has had any
questions arising from such review answered by the Seller or the
Initial Seller to the satisfaction of the Transferee. If the Transferee
did not acquire the Securities from the Transferor in connection with
the initial distribution of the Securities and was provided with a copy
of the Memorandum related to the original sale (the "Original Sale") of
the Securities by the Seller, the Transferee acknowledges that such
Memorandum was provided to it by the Transferor, that the Memorandum
was prepared by the Seller solely for use in connection with the
Original Sale and neither the Seller nor any of its affiliates
participated in or facilitated in any way the acquisition of the
Securities by the Transferee from the Transferor, and the Transferee
agrees that it will look solely to the Transferor and not to the Seller
or any of its affiliates with respect to any damage, liability, claim
or expense arising out of, resulting from or in connection with (i) any
error or omission, or alleged error or omission, contained in the
Memorandum or (ii) any information, development or event arising after
the date of the Memorandum.
3. The Transferee is an "accredited investor" of the type
specified in Rule 3a-7(a)(2)(i) under the 1940 Act, and has such
expertise, knowledge and sophistication in financial and business
matters generally, and in financial and business matters related to
securities similar to the Securities in particular, as to be capable of
evaluating the merits and risks of an investment in the Securities. The
Transferee (or any account referred to above) is able to bear the
economic risks of such an investment.
4. The Transferee will comply with all applicable federal and
state securities laws in connection with any subsequent resale of the
Securities by the Transferee.
5. The Transferee understands that (a) the Securities have not
been and will not be registered under the Securities Act of 1933, as
amended (the "1933 Act"), (b) the Seller is not required to so register
the Securities, (c) the Securities may be resold only if registered
pursuant to the provisions of the 1933 Act, or if an exemption from
such registration is available, (d) the Securities may not be resold if
such transfer would result in the registration of the Trust as an
"investment company" under the 1940 Act, (e) the Agreement contains
restrictions regarding the transfer of the Securities, (f) the
Securities will bear a legend to the foregoing effect and (g) a stop
order may be placed in the Security Register relating to the Securities
against the transfer of any Security subject to compliance with the
1933 Act, the rules and regulations thereunder and state securities
laws.
G-1-2
<PAGE>
-3-
[6. *The Transferee is not an employee benefit plan subject to
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the Internal Revenue Code of 1986, as amended (the
"Code"), nor a Person acting, directly or indirectly, on behalf of any
such plan, and understands that registration of transfer of any
Security to any such employee benefit plan, or to any person acting on
behalf of such plan, will not be made unless such employee benefit plan
delivers a certification of facts and an opinion of its counsel,
addressed and satisfactory to the Trustee and the Seller to the effect
that such transfer will not (a) cause the assets of the Trust Fund to
be treated as "plan assets" within the meaning of Department of Labor
regulations set forth in 29 C.F.R. ss. 2510.3-101, (b) give rise to any
fiduciary duty under ERISA on the part of the Seller, the Trustee or
the Master Servicer, or (c) be treated as, or result in, a prohibited
transaction under Sections 406 or 407 of ERISA or Section 4975 of the
Code.]
7. The Transferee will not nor has it authorized or will it
authorize any person to (a) offer, pledge, sell, dispose of or
otherwise transfer any Security, any interest in any Security or any
other similar security to any person in any manner, (b) solicit any
offer to buy or to accept a pledge, disposition or other transfer of
any Security, any interest in any Security or any other similar
security from any person in any manner, (c) otherwise approach or
negotiate with respect to any Security, any interest in any Security 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 Security under the
1933 Act, that would render the disposition of any Security a violation
of Section 5 of the 1933 Act or any state securities law, that would
result in the registration of the Trust as an "investment company"
under the 1940 Act, or that would require registration or qualification
pursuant thereto. The Transferee will not sell or otherwise transfer
any of the Securities, except in compliance with the provisions of the
Agreement. Without limiting the generality of the foregoing sentence,
if the Transferee sells any of the Securities, the Transferee will
comply with any
- --------
* In the case of a transfer of the Class B-1, Class B-2, Class
B-3, Class B-4, Class B-5, Class B-6, Class RP and Class R
Securities to an insurance company, the above paragraph 6
shall be deleted and a certification in the form of Exhibit
G-5 shall be executed.
G-1-3
<PAGE>
-4-
applicable requirements set forth in Section 5.02 of the Agreement, and
if the Transferee sells any of the Securities, the Transferee will
obtain from any purchaser any representations required pursuant to
Section 5.02 of the Agreement.
Very truly yours,
(Transferee)
By:
Name:
Title:
G-1-4
<PAGE>
-1-
EXHIBIT G-2
FORM OF TRANSFEROR REPRESENTATION LETTER
[DATE]
Financial Asset Securitization, Inc.
901 East Byrd Street
Richmond, Virginia 23219
The First National Bank of Chicago
One First National Plaza
Mail Station 0129
Chicago, Illinois 60670-0129
Financial Asset Securitization, Inc.
Mortgage Participation Securities, Series 1997-NAMC 1
Dear Sirs:
In connection with the sale by (the "Transferor") to (the
"Purchaser") of $ Initial Security Principal Balance of Mortgage Participation
Securities, Series 1997-NAMC 1, Class (the "Securities"), issued pursuant to the
Pooling and Servicing Agreement (the "Agreement"), dated as of April 1, 1997,
among Financial Asset Securitization, Inc., as Seller, North American Mortgage
Company, as Loan Seller and Master Servicer, and The First National Bank of
Chicago, as Trustee (the "Trustee"). The Transferor hereby certifies, represents
and warrants to, and covenants with, the Seller and the Trustee that:
Neither the Transferor nor anyone acting on its behalf has (a)
offered, pledged, sold, disposed of or otherwise transferred any Security, any
interest in any Security 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 Security, any interest in any Security or any other
similar security from any person in any manner, (c) has otherwise approached or
negotiated with respect to any Security, any interest in any Security 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 Securities under the Securities Act of 1933
(the "Act"), that would render the disposition of any Security a violation of
Section 5 of the Act or any state securities law, or that would require
registration or qualification pursuant thereto. The Transferor will not act in
any manner set forth in the foregoing sentence with respect to any Security. The
Transferor has not and will not sell or otherwise transfer any of the
Securities, except in compliance with the provisions of the Agreement.
G-2-1
<PAGE>
-2-
Very truly yours,
(Transferor)
By:
Name:
Title:
G-2-2
<PAGE>
-1-
EXHIBIT G-3
FORM OF TRANSFEREE AFFIDAVIT AND AGREEMENT
[DATE]
STATE OF )
) ss.:
COUNTY OF )
___________________, being first duly sworn, deposes,
represents and warrants:
1. That he is [Title of Officer] of [Name of Owner] a [savings
institution] [corporation] duly organized and existing under the laws of [the
State of ___________] [the United States], (the "Owner"), record or beneficial
owner of Financial Asset Securitization, Inc. Mortgage Participation Securities,
Series 1997-NAMC 1, [Class R/Class RP] (the "[Class R/Class RP] Securities"), on
behalf of which he makes this affidavit and agreement. The [Class R/Class RP]
Securities were issued pursuant to the Pooling and Servicing Agreement (the
"Agreement"), dated as of April 1, 1997, among Financial Asset Securitization,
Inc., as Seller, North American Mortgage Company, as Loan Seller and as Master
Servicer, and The First National Bank of Chicago, as Trustee (the "Trustee").
2. That the Owner (i) is and will be a "Permitted Transferee" as of
_______________, 199__ and (ii) is acquiring the [Class R/Class RP] Securities
for its own account or for the account of another Owner from which it has
received an affidavit in substantially the same form as this affidavit. A
"Permitted Transferee" is any person other than a "disqualified organization" or
a Non-United States Person. For this purpose, a "disqualified organization"
means any of the following: (i) the United States, any State or political
subdivision thereof, any possession of the United States, or any agency or
instrumentality of any of the foregoing (other than an instrumentality which is
a corporation if all of its activities are subject to tax and, except for the
FHLMC, a majority of its board of directors is not selected by such governmental
unit), (ii) a foreign government, any international organization, or any agency
or instrumentality of any of the foregoing, (iii) any organization (other than
certain farmers' cooperatives described in Section 521 of the Internal Revenue
Code of 1986 (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 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 based upon an Opinion of Counsel that the holding
of an Ownership Interest in a [Class R/Class RP] Security by such Person may
cause the Trust or any Person having an Ownership Interest in any Class of
Securities, other than such Person, to incur a liability for any federal tax
imposed under the Code that would not otherwise be imposed but for the Transfer
of an Ownership Interest in a [Class R/Class RP] Security to such Person. The
G-3-1
<PAGE>
-2-
terms "United States," "State" and "international organization" shall have the
meanings set forth in Section 7701 of the Code or successor provisions.
3. That the Owner is aware (i) of the tax that would be imposed on the
Trust if a [Class R/Class RP] Security is transferred to a disqualified
organization under Section 860E(e) of the Code and that any Owner that is a
disqualified organization will be obligated to reimburse the Trust for any such
tax; (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/Class RP]
Securities may be "noneconomic residual interests" within the meaning of
Treasury regulation section 1.860E- 1(c)(2) and that the transferor of an
ownership interest in 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 is to enable the transferor to impede the
assessment or collection of tax.
4. That the Owner is aware of the tax imposed on a "pass-through
entity" holding the [Class R/Class RP] Securities 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/Class RP] Securities unless the transferee, or the
transferee's agent, delivers to the Trustee, among other things, an affidavit in
substantially the same form as this affidavit. 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 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/Class RP] Securities will
only be owned, directly or indirectly, by Owners that are Permitted Transferees.
7. That the Owner's taxpayer identification number is __________.
8. That the Owner has reviewed the restrictions set forth on the face
of the [Class R/Class RP] Securities and the provisions of Section 5.02 of the
Agreement under which the [Class R/Class RP] Securities were issued (and, in
particular, the Owner is aware that such Section authorizes the Trustee to
deliver payments to a person other than the Owner and negotiate a mandatory sale
by the Trustee in the event that the Owner holds such [Class R/Class RP]
Securities in violation of Section 5.02); and that the Owner expressly agrees to
be bound by and to comply with such restrictions and provisions.
G-3-2
<PAGE>
-3-
9. That the Owner is not acquiring and will not transfer the [Class
R/Class RP] Securities in order to impede the assessment or collection of any
tax.
10. That the Owner anticipates that it will, so long as it holds the
[Class R/Class RP] Securities, have sufficient assets to pay any taxes owed by
the holder of such [Class R/Class RP] Securities.
11. That the Owner has no present knowledge that it may become
insolvent or subject to a bankruptcy proceeding for so long as it holds the
[Class R/Class RP] Securities.
12. That the Owner has no present knowledge or expectation that it will
be unable to pay any United States taxes owed by it so long as any of the [Class
R/Class RP] Securities remain outstanding. In this regard, the Owner hereby
represents to and for the benefit of the Person from whom it acquired the [Class
R/Class RP] Securities that the Owner intends to pay taxes associated with
holding the [Class R/Class RP] Securities as they become due, fully
understanding that it may incur tax liabilities in excess of any cash flows
generated by the [Class R/Class RP] Securities.
13. That the Owner is not acquiring the [Class R/Class RP] Securities
with the intent to transfer the [Class R/Class RP] Securities to any person or
entity that will not have sufficient assets to pay any taxes owed by the holder
of such [Class R/Class RP] Securities, or that may become insolvent or subject
to a bankruptcy proceeding, for so long as the [Class R/Class RP] Securities
remain outstanding.
14. That Owner will, in connection with any transfer that it makes of
the [Class R/Class RP] Securities, obtain from its transferee the
representations required by Section 5.02(d) of the Agreement under which the
[Class R/Class RP] Securities were issued and will not consummate any such
transfer if it knows, or knows facts that should lead it to believe, that any
such representations are false.
15. That Owner will, in connection with any transfer that it makes of
the [Class R/Class RP] Securities, represent and warrant that it is not
transferring the [Class R/Class RP] Securities to impede the assessment or
collection of any tax and that it has no actual knowledge that the proposed
transferee: (i) has insufficient assets to pay any taxes owed by such transferee
as holder of the [Class R/Class RP] Securities; (ii) may become insolvent or
subject to a bankruptcy proceeding, for so long as the [Class R/Class RP]
Securities remain outstanding; and (iii) is not a "Permitted Transferee."
16. That the Owner is a United States Person.
G-3-3
<PAGE>
-4-
IN WITNESS WHEREOF, the Owner has caused this instrument to be executed
on its behalf, by its [TITLE OF OFFICER], attested by its [Assistant Secretary],
this ___ day of _______, 199__.
[NAME OF OWNER]
By:
Name: [NAME OF OFFICER]
Title: [TITLE OF OFFICER]
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 a [TITLE OF OFFICER] of the Owner, and acknowledged to me
that he or she executed the same as his or her free act and deed and the free
act and deed of the Owner.
Subscribed and sworn before me this _____ day of _______, 1997.
NOTARY PUBLIC
COUNTY OF
STATE OF
My Commission expires the day of
, 19 .
G-3-4
<PAGE>
-1-
EXHIBIT G-4
FORM OF TRANSFEROR CERTIFICATE
[DATE]
Financial Asset Securitization, Inc.
901 East Byrd Street
Richmond, Virginia 23219
The First National Bank of Chicago
One First National Plaza
Mail Station 0129
Chicago, Illinois 60670-0129
Financial Asset Securitization, Inc.
Mortgage Participation Securities, Series 1997-NAMC 1
Dear Sirs:
This letter is delivered to you in connection with the sale by
___________________________ (the "Transferor") to _____________________________
(the "Purchaser") of a ___% Percentage Interest in the Mortgage Participation
Securities, Series 1997-NAMC 1, [Class R/Class RP] (the "Securities"), issued
pursuant to Section 5.02 of the Pooling and Servicing Agreement (the
"Agreement"), dated as of April 1, 1997, among Financial Asset Securitization,
Inc., as Seller, North American Mortgage Company, as Loan Seller and Master
Servicer, and The First National Bank of Chicago, as Trustee (the "Trustee").
All terms used herein and not otherwise defined shall have the meaning set forth
in the Agreement. The Transferor hereby certifies, represents and warrants to,
and covenants with, the Seller and the Trustee that:
1. No purpose of the Transferor relating to the sale of the
Securities by the Transferor to the Purchaser is or will be to impede the
assessment or collection of any tax.
2. The Transferor understands that the Purchaser has delivered to
the Trustee and the Master Servicer a transferee affidavit and agreement in the
form attached to the Agreement as Exhibit G-3. The Transferor does not know or
believe that any representation contained therein is false.
3. The Transferor has at the time of the transfer conducted a
reasonable investigation of the financial condition of the Purchaser as
contemplated by Treasury Regulations Section 1.860E-1(c)(4)(i) and, as a result
of that investigation, the Transferor has determined that the Purchaser has
historically paid its debts as they have become due and has found no significant
G-4-1
<PAGE>
-2-
evidence to indicate that the Purchaser will not continue to pay its debts as
they become due in the future. The Transferor understands that the transfer of
the Securities may not be respected for United States income tax purposes (and
the Transferor may continue to be liable for United States income taxes
associated therewith) unless the Transferor has conducted such an investigation.
4. The Transferor has no actual knowledge that the proposed
Transferee is a Disqualified Organization, an agent of a Disqualified
Organization or a Non-United States Person.
Very truly yours,
(Transferor)
By:
Name:
Title:
G-4-2
<PAGE>
-1-
EXHIBIT G-5
FORM OF INVESTOR REPRESENTATION LETTER FOR
INSURANCE COMPANIES/BANK COLLECTIVE INVESTMENT FUNDS
[DATE]
Financial Asset Securitization, Inc.
901 East Byrd Street
Richmond, Virginia 23219
First National Bank of Chicago
One First National Plaza
Mail Station 0129
Chicago, Illinois 60670-0129
Financial Asset Securitization, Inc.
Mortgage Participation Securities, Series 1997-NAMC 1
Ladies and Gentlemen:
__________________________________ (the "Transferee") intends to
acquire from _____________________ (the "Transferor") $____________ Initial
Security Principal Balance of Financial Asset Securitization, Inc. Mortgage
Participation Securities, Series 1997-NAMC 1, Class ___ (the "Securities"),
issued pursuant to the Pooling and Servicing Agreement (the "Agreement"), dated
as of April 1, 1997, among Financial Asset Securitization, Inc., as Seller,
North American Mortgage Company, as Loan Seller and as Master Servicer, and The
First National Bank of Chicago, as Trustee (the "Trustee"). Capitalized terms
used herein and not otherwise defined shall have the meanings assigned thereto
in the Trust Agreement.
The Transferee hereby certifies, represents and warrants to, and
covenants with, the Seller and the Trustee that:
1. The Transferee will be neither an employee benefit plan
subject to 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"), nor a Person acting, directly or
indirectly, on behalf of any such plan, and the Transferee will
understand that registration of transfer of any Security to any
such employee benefit plan, or to any person acting on behalf of
such plan, will not be made unless such employee benefit plan
delivers a certification of facts and an opinion of its counsel,
addressed and satisfactory to the Trustee and the Seller to the
effect that such
G-5-1
<PAGE>
-2-
transfer will not (a) cause the assets of the Trust Fund to be
treated as "plan assets" within the meaning of Department of Labor
regulations set forth in 29 C.F.R. ss. 2510.3-101, (b) give rise to
any fiduciary duty under ERISA on the part of the Seller, the
Trustee or the Master Servicer, or (c) be treated as, or result in,
a prohibited transaction under Sections 406 or 407 of ERISA or
Section 4975 of the Code.
2. Either (a) the Transferee is an insurance company and (i)
(A) the source of funds used to purchase the Securities, is an
"insurance company general account" (as such term is defined in
Prohibited Transaction Class Exemption 95-60 ("PTCE 95- 60") issued
by the United States Department of Labor (the "DOL"), (B) there is
no employee benefit plan or other retirement arrangement including
individual retirement accounts and Keogh plans that is subject to
Section 406 of ERISA or Section 4975 of the Code (any of the
foregoing, a "Plan") with respect to which the amount of such
general account's reserves and liabilities for contracts held by or
on behalf of such Plan and all other plans maintained by the same
employer (or "affiliate" thereof, as defined in PTCE 95-60), or by
the same employee organization, exceed 10% of the total reserves
and liabilities of such general account (as determined under PTCE
95- 60) as of the date of acquisition of the Securities, and (C)
the purchase of the Securities is not part of an agreement,
arrangement, or understanding designed to benefit a party in
interest, or (ii) the source of funds used to purchase the
Securities is an "insurance company pooled separate account" (as
such term is defined in Prohibited Transaction Class Exemption 90-1
issued by the DOL ("PTCE 90-1")) and that there is no Plan with
respect to which the amount of such general account's reserves and
liabilities for contracts held by or on behalf of such Plan and all
other Plans maintained by the same employer (or any "affiliate"
thereof, as defined in PTCE 90-1), or by the same employee
organization, exceed 10% of the total of all reserves and
liabilities of such pooled separate account (as determined under
PTCE 90-1) as of the date of acquisition of the Securities or (b)
the Transferee is a bank collective investment fund and the source
of funds used to purchase the Securities is a "collective
investment fund" (as defined in Prohibited Transaction Class
Exemption 91-38 issued by the DOL ("PTCE 91-38")) and that there is
no Plan, the interests of which together with the interests of any
other Plans maintained by the same employer or employee
organization in the collective investment fund does not
G-5-2
<PAGE>
-3-
exceed 10% of the total of all assets in the collective investment
fund (as determined under PTCE 91-38) as of the date of acquisition
of the Securities.
Very truly yours,
(Transferee)
By:
Name:
Title:
G-5-3
<PAGE>
-1-
EXHIBIT H
FORM OF RULE 144A INVESTMENT REPRESENTATION
Description of Rule 144A Securities, including
numbers:
FINANCIAL ASSET SECURITIZATION, INC.
Mortgage Participation Securities, Series 1997-NAMC 1
The undersigned seller, as registered holder (the "Transferor"),
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
Transferor hereby certifies the following facts: Neither the Transferor 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, 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, which would constitute a
distribution of the Rule 144A Securities under the Securities Act of 1933, as
amended (the "1933 Act"), or which 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 Transferor 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
Transferor, the Trustee and the Seller pursuant to Section 4.02 of the Trust
Agreement as follows:
a. The Buyer understands that the Rule 144A Securities have
not been registered under the 1933 Act or the securities laws of any
state.
b. The Buyer considers itself a substantial, sophisticated
institutional investor having such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of investment in the Rule 144A Securities.
c. The Buyer has been furnished with all information regarding
the Rule 144A Securities that it has requested from the Transferor and
the Trustee.
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
H-1
<PAGE>
-2-
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 account of other qualified institutional buyers and 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 is not an employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or the
Internal Revenue Code of 1986, as amended (the "Code"), nor a Person acting,
directly or indirectly, on behalf of any such plan, and understands that
registration of transfer of any Security to any such employee benefit plan, or
to any person acting on behalf of such plan, will not be made unless such
employee benefit plan delivers a certification of facts and an opinion of its
counsel, addressed and satisfactory to the Trustee and the Seller to the effect
that such transfer will not (a) cause the assets of the Trust Fund to be treated
as "plan assets" within the meaning of Department of Labor regulations set forth
in 29 C.F.R. ss. 2510.3-101, (b) give rise to any fiduciary duty under ERISA on
the part of the Seller, the Trustee or the Master Servicer, or (c) be treated
as, or result in, a prohibited transaction under Sections 406 or 407 of ERISA or
Section 4975 of the Code.
[3/4]. This document may be executed in one or more counterparts
and by the different parties hereto on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same document.
H-2
<PAGE>
-3-
IN WITNESS WHEREOF, each of the parties has executed this document
as of the date set forth below.
Print Name of Transferor Print Name of Buyer
By: By:
Name: Name:
Title: Title:
Taxpayer Identification: Taxpayer Identification:
No. No.
Date: Date:
H-3
<PAGE>
-1-
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:
17. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
18. 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 $______________________2 in securities (except for the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year (such amount being calculated in accordance with Rule 144A) and (ii)
the Buyer satisfies the criteria in the category marked below.
___ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code.
___ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by the State or
territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
___ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over any such institutions or is a foreign savings
and loan association
- --------
2 Buyer must own and/or invest on a discretionary basis at least $100,000,000 in
securities unless Buyer is a dealer, and, in that case, Buyer must own and/or
invest on a discretionary basis at least $10,000,000 in securities.
ANNEX 1 TO EXHIBIT H - 1
<PAGE>
-2-
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,
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.
19. 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.
20. 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
ANNEX 1 TO EXHIBIT H - 2
<PAGE>
-3-
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.
21. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Securities
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.
22. Will the Buyer be purchasing the Rule 144A Securities only for the
Buyer's own account?
Yes____ No____.
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.
23. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein
during the period between the date of this certification and the date the Buyer
purchases the Rule 144A Securities. Unless such notice is given, the Buyer's
purchase of the 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:
ANNEX 1 TO EXHIBIT H - 3
<PAGE>
-1-
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.
ANNEX 2 TO EXHIBIT H - 1
<PAGE>
-2-
5. The Buyer is familiar with Rule 144A and understands that each of
the parties to which this certification is made are relying and will continue to
rely on the statements made herein because one or more sales to the Buyer will
be in reliance on Rule 144A. In addition, the Buyer will only purchase for the
Buyer's own account.
6. The Buyer will notify each of the parties to which this
certification is made of any changes in the information and conclusions herein
during the period between the date of this certification and the date the Buyer
purchases the Rule 144A Securities. Unless such notice is given, the Buyer's
purchase of the Rule 144A Securities will constitute a reaffirmation of this
certification as of the date of such purchase.
Print Name of Buyer
By:
Name:
Title:
IF AN ADVISER:
Print Name of Buyer
Date:
ANNEX 2 TO EXHIBIT H - 2
<PAGE>
-3-
EXHIBIT I
Mortgage Loan Schedule
Intentionally Omitted
<PAGE>
-4-
EXHIBIT J
Schedule of Discount Fractions
Intentionally Omitted
<PAGE>
-5-
EXHIBIT K
LOAN DATA REQUIREMENTS - MONTHLY DATA
Financial Asset Securitization, Inc., 1997-NAMC 1
<TABLE>
<CAPTION>
Field Description
<S> <C>
DEALID Deal Name (Character)
GROUP Group Number (1 or 2) (Numeric)
LOAN Loan Number (Numeric)
BEG_SCHED Stated Principal Balance as of the Beginning of the Due Period (Numeric)
END_SCHED Stated Principal Balance as of the End of the Due Period (Numeric)
PMT Monthly Payment for the related Due Period (Numeric)
SCHED_I Interest portion of the Monthly Payment for the related Due Period (Numeric)
SCHED_P Principal portion of the Monthly Payment for the related Due Period (Numeric)
ADVANC_I Interest portion of the Advance for the related Due Period determined as of the
Determination Date (Numeric)
ADVANC_P Principal portion of the Advance for the related Due Period determined as of the
Determination Date (Numeric)
RATE Interest Rate used to calculate the Accrued Interest payable in the related Due Period
(Numeric)
PREPAY Prepayments received during the related Prepayment Period (Numeric)
CURTAIL Curtailments received during the related Prepayment Period (Numeric)
PREP_DAT Prepayment/Curtailment Date during the related Prepayment Period (19910528)
(Character)
PPIS Prepayment Interest Shortfall (Excess as negative number) (Numeric)
NEXT PAYMENT Next Payment Due Date as of the Determination Date (19910528) (Character)
DUE DATE
DEL Delinquency Code (for following status: 31-60 days, 61-90 days, 91+ days) as of
the related Determination Date (Numeric)
<PAGE>
-6-
STATUS Status Code (for following status: foreclosure, bankruptcy, REO) as of the related
Determination Date (Numeric)
BOOK Book Value of REO as of the end of the related Prepayment Period (Numeric)
</TABLE>
<PAGE>
-7-
Exhibit 99.1
The tables below set forth certain geographic concentrations of the
Mortgage Pool and the Mortgage Loan Groups as of April 1, 1997 (the "Cut-off
Date"), including the number, aggregate principal balance and percentage of the
Mortgage Loans (by aggregate principal balance as of the Cut-off Date of such
Mortgage Loans relative to the aggregate principal balance of all of the
Mortgage Loans or of all Mortgage Loans in the related Mortgage Loan Group, as
applicable). As used herein, "principal balance" with respect to the Mortgage
Loans refers to the "Scheduled Principal Balance" (as defined in the Prospectus)
of the referenced Mortgage Loans. The sum of the amount and the percentages in
the tables below may not equal the totals due to rounding.
<TABLE>
SAN FRANCISCO METROPOLITAN AREA
FOR ALL MORTGAGE LOANS
<CAPTION>
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
<S> <C>
94002 1 $ 260,000.00
94015 1 231,487.35
94018 1 291,414.93
94037 1 600,000.00
94044 3 840,012.05
94070 1 397,500.00
94080 1 146,306.64
94116 2 685,687.36
94122 2 819,975.35
94123 1 389,751.30
94124 1 170,899.03
94131 1 295,521.33
94402 1 466,686.64
94404 1 224,555.46
94536 1 153,144.90
94539 7 3,209,693.17
94542 1 316,911.04
94546 1 116,169.99
94550 1 295,811.25
94555 1 223,880.79
94563 1 387,246.52
94583 1 295,406.63
94587 3 732,345.93
94595 1 249,827.95
94598 1 235,800.00
94610 1 299,606.17
94611 1 99,881.50
<PAGE>
San Francisco Metropolitan Area (cont'd)
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
94804 1 $ 223,864.30
94901 1 244,000.00
94920 1 455,499.97
94941 1 287,000.00
94947 1 287,838.54
94949 1 449,690.31
94954 2 608,623.75
94960 1 369,250.47
95003 2 389,409.67
95014 2 597,629.03
95035 2 329,293.45
95037 1 447,600.00
95051 2 549,248.40
95060 1 299,788.26
95065 1 373,914.19
95070 4 2,172,440.59
95073 1 312,000.00
95076 1 234,699.26
95112 1 220,652.96
95118 2 534,785.98
95120 1 320,000.00
95123 2 402,519.81
95126 1 277,827.20
95134 1 614,765.80
95135 1 235,950.00
95403 3 612,308.35
95404 1 452,000.00
95405 1 164,889.28
95407 1 283,170.71
95472 1 278,822.09
95476 2 856,703.60
95687 1 140,832.90
95688 1 219,169.16
--- --------------
Total 85 $26,681,711.31(1)
- --------------
(1)Represents approximately 15.16% (by aggregate principal balance) of all Mortgage Loans.
-2-
<PAGE>
SAN FRANCISCO METROPOLITAN AREA
FOR GROUP I MORTGAGE LOANS
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
94002 1 $ 260,000.00
94037 1 600,000.00
94070 1 397,500.00
94080 1 146,306.64
94116 1 322,669.00
94123 1 389,751.30
94124 1 170,899.03
94539 7 3,209,693.17
94542 1 316,911.04
94546 1 116,169.99
94550 1 295,811.25
94555 1 223,880.79
94587 3 732,345.93
94611 1 99,881.50
94804 1 223,864.30
94901 1 244,000.00
94947 1 287,838.54
94949 1 449,690.31
94954 1 315,000.00
94960 1 369,250.47
95003 2 389,409.67
95035 1 100,000.00
95037 1 447,600.00
95051 2 549,248.40
95065 1 373,914.19
95070 2 808,000.00
95073 1 312,000.00
95118 2 534,785.98
95123 1 182,274.47
95126 1 277,827.20
95403 3 612,308.35
95404 1 452,000.00
95472 1 278,822.09
95476 2 856,703.60
95687 1 140,832.90
--- --------------
Total 50 $15,487,190.11(1)
- ---------------
(1)Represents approximately 14.82% (by aggregate principal balance) of all Group
I Mortgage Loans.
-3-
<PAGE>
SAN FRANCISCO METROPOLITAN AREA
FOR GROUP II MORTGAGE LOANS
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
94015 1 $ 231,487.35
94018 1 291,414.93
94044 3 840,012.05
94116 1 363,018.36
94122 2 819,975.35
94131 1 295,521.33
94402 1 466,686.64
94404 1 224,555.46
94536 1 153,144.90
94563 1 387,246.52
94583 1 295,406.63
94595 1 249,827.95
94598 1 235,800.00
94610 1 299,606.17
94920 1 455,499.97
94941 1 287,000.00
94954 1 293,623.75
95014 2 597,629.03
95035 1 229,293.45
95060 1 299,788.26
95070 2 1,364,440.59
95076 1 234,699.26
95112 1 220,652.96
95120 1 320,000.00
95123 1 220,245.34
95134 1 614,765.80
95135 1 235,950.00
95405 1 164,889.28
95407 1 283,170.71
95688 1 219,169.16
--- ----------
Total 35 $11,194,521.20(1)
- ---------------
(1)Represents approximately 15.67% (by aggregate principal balance) of all Group
II Mortgage Loans.
-4-
<PAGE>
LOS ANGELES METROPOLITAN AREA
FOR ALL MORTGAGE LOANS
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
90018 1 $ 151,016.15
90019 1 157,600.00
90038 1 156,000.00
90043 1 123,125.36
90044 1 103,935.35
90049 1 649,223.56
90062 2 247,280.48
90065 2 329,600.00
90066 1 239,676.85
90068 1 319,558.09
90220 1 92,880.99
90248 1 216,500.00
90265 4 1,727,310.33
90266 1 253,446.36
90274 1 436,000.00
90275 4 1,079,218.79
90277 3 1,044,992.39
90280 1 91,652.45
90301 1 69,912.66
90305 1 112,712.78
90501 1 292,303.73
90505 2 579,785.94
90630 1 268,000.00
90638 1 227,749.99
90640 1 137,250.00
90703 1 279,700.84
90731 1 265,421.79
90745 1 187,224.29
91006 1 569,324.52
91007 1 236,356.72
91040 1 239,861.91
91202 1 287,000.00
91301 2 742,596.83
91302 1 352,796.90
-5-
<PAGE>
Los Angeles Metropolitan Area (cont'd)
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
91311 1 $ 261,945.22
91316 3 838,456.60
91321 1 333,000.00
91326 2 345,588.83
91345 1 93,697.44
91351 1 299,900.00
91354 2 429,667.76
91356 1 592,102.44
91360 1 69,462.03
91364 1 378,300.00
91367 2 455,804.68
91403 1 240,800.00
91423 1 216,000.00
91436 2 971,425.14
91604 1 340,000.00
91605 1 66,463.67
91709 1 149,915.90
91745 1 299,900.00
91754 1 74,901.53
91765 2 892,563.86
92352 2 923,987.01
92399 1 263,822.86
92604 1 236,840.97
92612 1 224,689.29
92630 1 195,761.66
92648 2 709,848.86
92649 1 838,952.14
92651 1 299,585.73
92653 1 236,155.02
92660 1 330,972.07
92667 1 150,000.00
92670 1 327,285.77
92673 1 363,497.34
92677 2 445,952.27
92679 1 155,700.48
92688 2 397,154.00
92691 1 183,798.23
-6-
<PAGE>
Los Angeles Metropolitan Area (cont'd)
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
92706 1 $ 192,000.00
92714 1 274,955.68
92782 2 451,280.43
92804 1 135,921.75
92807 1 177,900.21
92808 1 162,687.96
92845 1 137,020.73
92867 2 778,210.90
92887 1 249,438.43
93004 2 366,955.30
93535 2 166,952.43
---- --------------
Total 109 $28,994,238.67(1)
- ---------------
(1)Represents approximately 16.48% (by aggregate principal balance) of all Mortgage Loans.
-7-
<PAGE>
LOS ANGELES METROPOLITAN AREA
FOR GROUP I MORTGAGE LOANS
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
90018 1 $ 151,016.15
90019 1 157,600.00
90038 1 156,000.00
90043 1 123,125.36
90044 1 103,935.35
90049 1 649,223.56
90062 2 247,280.48
90065 2 329,600.00
90220 1 92,880.99
90265 4 1,727,310.33
90266 1 253,446.36
90274 1 436,000.00
90275 1 199,072.97
90280 1 91,652.45
90301 1 69,912.66
90305 1 112,712.78
90638 1 227,749.99
90640 1 137,250.00
90703 1 279,700.84
91006 1 569,324.52
91302 1 352,796.90
91326 2 345,588.83
91345 1 93,697.44
91354 1 175,901.33
91360 1 69,462.03
91367 2 455,804.68
91423 1 216,000.00
91436 1 619,661.33
91605 1 66,463.67
91709 1 149,915.90
91754 1 74,901.53
92352 1 273,987.01
92630 1 195,761.66
92648 1 361,592.60
92667 1 150,000.00
92679 1 155,700.48
92688 1 162,400.00
-8-
<PAGE>
Los Angeles Metropolitan Area (cont'd)
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
92691 1 $ 183,798.23
92706 1 192,000.00
92782 1 191,639.48
92804 1 135,921.75
92807 1 177,900.21
92845 1 137,020.73
93004 1 176,000.00
93535 2 166,952.43
--- --------------
Total 53 $11,395,663.01(1)
- ---------------
(1)Represents approximately 10.90% (by aggregate principal balance) of all Group
I Mortgage Loans.
-9-
<PAGE>
LOS ANGELES METROPOLITAN AREA
FOR GROUP II MORTGAGE LOANS
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
90066 1 $ 239,676.85
90068 1 319,558.09
90248 1 216,500.00
90275 3 880,145.82
90277 3 1,044,992.39
90501 1 292,303.73
90505 2 579,785.94
90630 1 268,000.00
90731 1 265,421.79
90745 1 187,224.29
91007 1 236,356.72
91040 1 239,861.91
91202 1 287,000.00
91301 2 742,596.83
91311 1 261,945.22
91316 3 838,456.60
91321 1 333,000.00
91351 1 299,900.00
91354 1 253,766.43
91356 1 592,102.44
91364 1 378,300.00
91403 1 240,800.00
91436 1 351,763.81
91604 1 340,000.00
91745 1 299,900.00
91765 2 892,563.86
92352 1 650,000.00
92399 1 263,822.86
92604 1 236,840.97
92612 1 224,689.29
92648 1 348,256.26
92649 1 838,952.14
92651 1 299,585.73
92653 1 236,155.02
92660 1 330,972.07
92670 1 327,285.77
92673 1 363,497.34
92677 2 445,952.27
-10-
<PAGE>
Los Angeles Metropolitan Area (cont'd)
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
92688 1 $ 234,754.00
92714 1 274,955.68
92782 1 259,640.95
92808 1 162,687.96
92867 2 778,210.90
92887 1 249,438.43
93004 1 190,955.30
--- -------------
Total 56 $17,598,575.66(1)
- ---------------
(1)Represents approximately 24.64% (by aggregate principal balance) of all Group
II Mortgage Loans.
-11-
<PAGE>
STATE OF TEXAS
FOR ALL GROUP I MORTGAGE LOANS
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
75028 1 $ 204,913.07
75034 1 339,286.96
75060 1 44,753.36
75062 1 41,975.83
75150 2 125,868.84
75214 1 151,708.03
75231 1 143,837.20
75237 1 195,884.28
75244 1 192,000.00
76006 1 105,711.48
76013 2 670,421.14
76016 1 44,380.34
76031 1 214,801.64
76040 1 48,675.00
76054 1 115,858.96
76067 1 124,820.35
76116 1 45,849.65
76137 1 49,940.74
76226 1 150,000.00
76522 1 76,459.29
76543 1 57,391.76
76574 1 40,500.00
77015 3 126,557.34
77018 1 90,198.07
77064 1 81,108.60
77096 1 39,954.98
77379 1 647,127.46
77381 1 253,889.94
77450 1 59,518.31
77510 1 68,000.00
77546 1 147,200.00
77571 1 80,449.96
77573 1 329,628.62
77586 1 52,442.42
77872 1 155,785.58
78070 1 108,250.00
78133 1 85,898.09
78208 1 50,571.63
-12-
<PAGE>
State of Texas (cont'd)
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
78216 1 $ 240,000.00
78248 1 183,732.79
78250 1 99,875.24
78501 2 349,465.56
78504 1 45,000.00
78521 1 199,740.84
78628 2 170,164.00
78704 2 140,923.49
78738 2 889,507.02
78744 1 85,500.00
78746 1 219,452.73
78747 1 83,850.12
78748 5 384,772.70
78749 1 133,514.80
78751 1 97,600.00
78852 1 89,968.11
79601 1 80,157.32
79912 1 65,710.17
79925 1 73,600.00
--- ---------------
Total 69 $9,194,153.81(1)
- ---------------
(1)Represents approximately 8.80% (by aggregate principal balance) of all Group
I Mortgage Loans.
-13-
<PAGE>
STATE OF TEXAS
FOR ALL GROUP II MORTGAGE LOANS
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
75024 1 $ 312,000.00
75025 1 306,000.00
75069 1 364,972.91
75082 1 297,750.04
76262 1 262,400.00
77379 1 249,600.00
77429 1 257,681.41
77441 1 335,000.00
78550 1 247,750.00
78552 2 636,455.00
78733 1 224,828.79
78738 1 238,162.25
79606 1 343,154.44
--- ----------------
Total 14 $ 4,075,754.84(1)
- ---------------
(1)Represents approximately 5.71% (by aggregate principal balance) of all Group
II Mortgage Loans.
-14-
<PAGE>
STATE OF FLORIDA
FOR ALL GROUP I MORTGAGE LOANS
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
32082 1 $ 227,382.06
32204 1 64,800.00
32210 1 47,930.45
32608 1 89,462.74
32806 1 51,246.59
32824 2 181,833.08
33016 1 51,150.00
33019 1 184,000.00
33020 1 114,624.16
33065 1 127,928.24
33068 1 71,359.96
33125 1 118,750.00
33126 1 130,000.00
33149 1 224,746.77
33157 1 67,500.00
33174 1 86,310.92
33175 1 55,938.59
33181 1 156,307.66
33183 1 131,839.49
33193 1 54,938.09
33304 1 79,600.00
33311 1 122,550.00
33312 1 77,700.00
33325 1 139,825.34
33326 1 85,000.00
33460 1 60,300.00
33462 1 48,697.91
33477 1 233,868.81
33480 1 140,000.00
33617 2 170,018.12
33629 1 138,858.94
33635 1 75,000.00
33703 2 158,961.88
33714 1 53,868.98
33716 1 227,729.79
33777 1 43,300.00
33785 1 114,330.69
33837 1 119,330.38
-15-
<PAGE>
State of Florida (cont'd)
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
33908 1 $ 153,918.04
33971 1 68,323.00
34207 1 50,969.88
34235 1 85,549.46
34616 2 88,450.00
34621 1 49,472.24
34684 1 39,975.76
34685 1 167,387.61
34690 1 49,000.00
34746 1 83,673.97
34772 1 75,914.45
--- ---------------
Total 53 $ 5,239,624.05(1)
- ---------------
(1)Represents approximately 5.01% (by aggregate principal balance) of all Group
I Mortgage Loans.
-16-
<PAGE>
STATE OF NEW JERSEY
FOR ALL GROUP II MORTGAGE LOANS
Zip Number of Aggregate
Code Mortgage Loans Principal Balance
07646 1 $ 219,607.53
07747 1 274,505.17
07920 1 259,612.87
07931 2 568,395.68
07936 1 248,709.49
08057 4 1,045,055.52
08088 1 291,813.80
08540 1 488,000.00
08551 3 778,885.13
08691 3 1,016,965.35
08736 1 259,725.82
--- ---------------
Total 19 $ 5,451,276.36(1)
- ---------------
(1)Represents approximately 7.63% (by aggregate principal balance) of all Group
II Mortgage Loans.
</TABLE>
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