Registration No. 333-
As filed with the Securities and Exchange Commission on February 16, 1999
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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CITICORP MORTGAGE SECURITIES, INC.
(Packager)
(Issuer in respect of the Certificates)
(Exact name of registrant as specified in its charter)
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909 Third Avenue
New York, New York 10043
(212) 559-6727
Delaware 13-4300717
(State or other (Address, including (I.R.S. Employer
jurisdiction of zip code, and telephone Identification Number)
incorporation number, including area code,
or organization) of registrant's principal
executive offices)
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CITICORP
(Guarantor)
(Issuer in respect of the Guaranty)
(Exact name of registrant as specified in its charter)
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399 Park Avenue
New York, New York 10043
Delaware (212) 559-1000 06-1515595
(State or other (Address, including (I.R.S. Employer
jurisdiction of zip code, and telephone Identification Number)
incorporation number, including area code,
or organization) of registrant's principal
executive offices)
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STEPHANIE B. MUDICK
GENERAL COUNSEL--CORPORATE LAW
Citigroup Inc.
153 East 53rd Street
New York, New York 10043
(212) 793-7855
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
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Approximate date of commencement of proposed sale to the public: From
time to time on or after the effective date of this Registration Statement.
If the only securities being registered on this form are to be
offered pursuant to dividend or interest reinvestment plans, please check the
following box.|_|
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, please check the following box.|X|
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration number of the earlier
effective registration statement for the same offering.|_|
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration number of the earlier registration statement for the same
offering.|_|
If delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box.|_|
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<TABLE>
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Maximum Maximum
Title of Securities Amount to Aggregate Aggregate Amount of
to be Registered be Registered Price Per Unit(2) Offering Price(2) Registration Fee
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<S> <C> <C> <C> <C>
Certificates
and Guaranties........................ $10,000,000,000(1) 100% $10,000,000,000 $2,780,000
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(1) $1,782,217,000 aggregate principal amount of Certificates and Guaranties
registered by the Registrants under Registration Statement No. 33-43167
referred to below are consolidated in this Registration Statement pursuant
to Rule 429. All registration fees in connection with such unsold amount
of Certificates and Guaranties have been previously paid by the
Registrants under the foregoing Registration Statement. Accordingly, the
total amount registered under the Registration Statement as so
consolidated as of the date of this filing is $11,782,217,000.
(2) Estimated solely for the purpose of calculating the registration fee.
The Registrants hereby amend this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
In accordance with Rule 429 under the Securities Act of 1933, the
Prospectus included herein also relates to Citicorp Mortgage Securities, Inc.'s
and Citicorp's Registration Statement on Form S-3 File No. 33-43167.
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EXPLANATORY NOTE
This Registration Statement contains a REMIC Pass-Through Certificates
Prospectus relating to public offerings from time to time by Citicorp Mortgage
Securities, Inc. of pass-through certificates, together with certain separate
pages of a REMIC Pass-Through Certificates Prospectus (the "MBIA Prospectus") to
be used in connection with offers and sales of pass-through certificates where
credit support is provided in the form of a financial guaranty insurance policy
issued by MBIA Insurance Corporation and a REMIC Pass-Through Certificates
Prospectus (the "FSA Prospectus") to be used in connection with offers and sales
of pass-through certificates where credit support is provided in the form of a
financial guaranty insurance policy issued by Financial Security Assurance Inc.
The REMIC Pass-Through Certificates Prospectus follows immediately after this
Explanatory Note. Following such Prospectus are the alternate pages of the MBIA
Prospectus and the FSA Prospectus. All other pages of the REMIC Pass-Through
Certificates Prospectus are also to be used for the MBIA Prospectus and the FSA
Prospectus.
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Prospectus
February 11, 1999
Citicorp Mortgage Securities, Inc.
909 Third Avenue
New York, NY 10043
(212) 559-6727
REMIC Pass-Through Certificates
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Holders of Certificates will have an interest in a Trust whose as-
sets consist principally of mortgage loans, or interests in mort-
gage loans, on one- to four-family residences or cooperative
apartments. Each Certificate will entitle its holder to a portion of
distributions of principal and interest payments that the Trust
receives on the mortgage loans or mortgage loan interest, as de-
scribed in this prospectus and the attached prospectus supple-
ment.
You should read "General risk factors," beginning
on page [...] of this prospectus, and any "Series
risk factors" section in the attached supplement,
before you purchase any Certificates.
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The Certificates are not insured or guaranteed by the
Federal Deposit Insurance Corporation or any other
governmental agency.
Neither the Securities and Exchange Commission nor any
state securities commission has approved the Certificates or
determined that this prospectus or the attached supplement
is accurate or complete. Any representation to the contrary
is a criminal offense.
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CONTENTS
Summary 6
The Certificates 6
Different classes of Certificates 6
REMIC election 6
Trusts of Certificates 7
General risk factors 7
Limited liquidity 7
Limited assets 7
Uncertainty of yields 7
Legal investment 8
Restrictions on transfer 8
Year 2000 8
Distributions on the Certificates 8
Scheduled payments on mortgage loans 8
Property of the Trust; the cut-off date 8
Distribution of scheduled payments 9
Calculation of interest; effective rate 9
Adequacy of scheduled payments 9
Delinquencies and their effect; advances 10
Prepayments on mortgage loans 11
Delay in distribution of prepayments 11
Effect of prepayments 11
Types of prepayment 12
Foreclosures and their effect 13
Subordination 13
Method of distribution 14
Distribution reports 14
Delinquency, foreclosure and loss
experience 14
Loss and delinquency considerations 14
Delinquency and foreclosure experience on affiliated
originators' serviced portfolio 14
Delinquency, foreclosure and loss experience on affiliated
originators' securitized portfolio 15
Delinquency, foreclosure and loss experience of third-
party originators 16
The mortgage loans 16
Warranties by CMSI 16
Adjustable rate mortgages, buydown loans and agency
certificates 17
Fixed rate mortgage loans 17
The mortgaged properties 17
Loan-to-value ratios 18
Primary mortgage insurance 18
Second mortgages 18
Defective mortgage loans 18
Repurchase or substitution 18
Insurance and other credit support 19
Homeowners' policies 19
Hazard insurance 19
Fidelity bond and errors and omissions policy 20
Other insurance 20
Other credit support 20
Mortgage documents 20
Assignments to Trustee 20
Recording of assignments 21
CMSI and its affiliates 21
Citicorp 21
Citicorp Mortgage Securities, Inc. 21
Citibank, N.A. 21
Citicorp Mortgage, Inc. 21
Citibank, Federal Savings Bank 22
Third-party originators 22
Mortgage loan underwriting 22
Procedures of affiliated originators 22
Lending guidelines 23
Leasehold loans 23
Refinancings 23
Appraisals 24
Lien records; title insurance 24
Mortgage loans purchased from third-party originators 24
Underwriting standards of third-party originators 24
Servicing 24
The servicer; delegation 24
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Resignation and removal 25
Collection procedures for affiliated mortgage loans 25
Enforcement of due-on-sale clauses 25
Real estate taxes and assessments 25
Primary mortgage insurance 25
Realizing on defaulted mortgage loans 26
Fees 26
CMSI's liability 26
Default by CMSI 26
Events of default 27
Actions on event of default 27
The Trustee 27
The Trustee's duties; limitation of liability 27
The pooling agreement 28
Legal action by CMSI 28
Legal action by Certificate holders 28
Liability of CMSI and Citicorp; indemnification 28
Amendments 28
Compliance reports 29
List of registered holders 29
No annual meeting 29
Successors 29
Termination of Trust 29
Book-entry and physical Certificates 31
Physical Certificates 32
ERISA considerations 32
"Plan asset" regulations 32
Class exemption 32
Trusts of Certificates 33
Underwriters' exemptions 33
Other prohibitions 33
Investor's responsibility 33
Legal investment considerations 34
SMMEA 34
State overrides of SMMEA 34
Federal depository institutions 34
Investor responsibility 34
Taxation of Certificate holders 35
Taxation of Certificates - general 35
Accrual method 35
Original issue discount 35
Calculation of OID 36
De minimis OID. 37
OID on retail class Certificates 37
Acquisition premium 38
OID on variable rate Certificates 38
Market discount 39
Premium 40
Losses 40
Election to treat interest under the constant yield
method 40
Sale or exchange of Certificates 41
Special types of holders 41
Foreign investors 42
Backup withholding 42
Reporting requirements 42
Taxation of the Trust 43
REMIC qualification 43
Taxes that may be imposed on the REMIC 43
Legal aspects of mortgage loans 44
Mortgages and deeds of trust 44
Foreclosure 44
Cooperatives 47
Rights of redemption 48
Anti-deficiency laws and other limitations on lenders 49
Due-on-sale clauses 52
Other limitations on foreclosure 53
Applicability of usury laws 53
Environmental considerations 53
Use of proceeds 55
Plan of Distribution 55
Additional information 56
SEC filings 56
Mortgage loan information 56
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Experts 56
Index of defined terms 57
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How to read this prospectus
This prospectus gives general background information that applies to all Series
of Certificates. The preceding supplement gives specific information about a
particular Series of Certificates. You should carefully read both this
prospectus and the supplement before investing.
The supplement may update or modify information in this prospectus; whenever
information in the supplement contradicts any information in this prospectus,
you should rely on the information in the supplement.
In deciding whether to purchase Certificates, you should rely solely on the
information in this prospectus and the supplement. We have not authorized anyone
to give you different information about the Certificates.
You will find a detailed table of contents for this prospectus and the
supplement immediately following the cover page of the supplement and an index
of all terms defined in this prospectus and the supplement at the end of this
prospectus.
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Summary
The Certificates Citicorp Mortgage Securities, Inc. (CMSI) will set up a Trust
that will purchase a pool of mortgage loans from CMSI. The Trustee for the Trust
is identified in the supplement. The Trustee is not affiliated with CMSI.
Each mortgage loan will be secured, usually by a first-priority mortgage on a
one- to four-family residential property. Some mortgage loans may be loans on
cooperative apartments, which will be secured by a first-priority lien on shares
in a cooperative apartment corporation and the related lease or occupancy
agreement. Other mortgage loans may be secured by leases of residential
property. The supplement describes the specific properties of the mortgage
loans.
The mortgage loans in the Trust may be either
o affiliated mortgage loans originated by CMSI or its affiliates or purchased
from third parties and serviced by CMSI or its affiliates, or
o third-party mortgage loansoriginated by third parties and sold to CMSI on a
"servicing retained" basis - that is, where a third-party continues to service
the loan.
The Trust will sell Certificates evidencing interests in one pool of mortgage
loans. The Certificates offered by the Trust will comprise a single Series of
Certificates. A Certificate holder will own, through the Trust, a portion of the
payments on the mortgage loans received by the Trust and other property held by
the Trust. Payments received by the Trust will, after deduction of servicing and
other costs, be distributed to the Certificate holders.
The Trust will receive scheduled payments of principal and interest on the
mortgage loans, prepayments of principal, proceeds of foreclosure proceedings on
the mortgaged properties securing the mortgage loans and payments of hazard or
other insurance on the mortgaged properties or mortgage loans. The Trust may
also receive other payments described in this prospectus or the supplement.
Other property of the Trust may include mortgaged properties acquired by
foreclosure, reserve funds or other credit support, and insurance policies. The
Trust's expenses will include fees paid to CMSI and/or others for servicing the
mortgage loans, expenses of foreclosure proceedings, and other expenses.
Different classes of Certificates
A Series of Certificates will usually consist of several classes of
Certificates. Some classes of Certificates may not be offered publicly but may
be sold privately (including sales to CMSI or an affiliated company). Only
Certificates rated as investment grade by a nationally recognized rating agency
will be offered to the public.
Holders of Certificates in different classes will be entitled to different
distributions out of payments received by the Trust. For example,
o Different classes may not receive interest at the same rate on their
principal balances. Some principal-only, or PO, classes may receive no interest
at all.
o Some classes may receive interest but not principal. Such interest-only (or
IO) classes will receive interest on a "notional" balance, but will not receive
distributions of any part of their notional balance.
o Some accrual classes may not receive interest distributions for a specified
period, with the deferred interest being added to the class's principal balance.
o Some classes may not receive distributions of some or all of their principal
for a stated time or until a stated event (such as reduction to zero of the
principal balance of another class ). As a result, some classes will have their
principal balances reduced faster than other classes.
o Some classes may be subordinated to other more senior classes. If there are
delinquencies or losses on the mortgage loans so that the Trust does not have
enough money to distribute the accrued interest and principal to all the
classes, the subordinated classes as a group will absorb a disproportionately
large amount of these shortfalls or losses.
A class of Certificates may be divided into subclasses. The supplement
describes each class of Certificates in the Series.
REMIC election
Each Trust will elect to be treated as a "real estate mortgage investment
conduit" (or REMIC) under US federal tax laws. Some Trusts may be comprised of
multiple REMICs. A REMIC is not subject to US federal corporate tax, so payments
of principal and in-
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terest received by the Trust can be distributed to Certificate holders without
deduction for those taxes.
Trusts of Certificates
Certain Trusts may contain in addition to, or instead of, mortgage loans,
mortgage-backed securities issued by the Government National Mortgage
Association (popularly known as Ginnie Mae), the Federal Home Loan Mortgage
Corporation (popularly known as Freddie Mac), Fannie Mae (formerly Federal
National Mortgage Association) (collectively, agency certificates) or by other
REMICs. Principal and interest received on agency certificates or REMIC
securities will be distributed to Certificate holders in much the same way as
principal and interest payments received on mortgage loans.
General risk factors
You should consider the following general risk factors, and any risk factors
described in the supplement that are specific to the Series, before you purchase
any Certificates.
Limited liquidity
The liquidity of the Certificates may be limited.
o A secondary market for a class of Certificates may not develop or, if it
does, it may not provide you with liquidity of investment or continue for the
life of the Certificates,
o While CMSI anticipates that the underwriter will establish a secondary
market for the Certificates, the underwriter will not have to do so or to
continue doing so for any period of time.
o CMSI does not intend to list any Certificates on a securities exchange or
automated quotation system.
Limited assets
The Trust's assets are generally limited to mortgage loans. If payments and
recoveries on the mortgage loans are insufficient to make all distributions of
interest and principal on the Certificates, there may be no other assets
available to make up the deficiency.
CMSI may advance its own funds to cover delinquent scheduled payments of
principal or interest on the mortgage loans it services, but is not obligated to
do so. CMSI intends to make advances to the extent it determines that the funds
advanced will be reimbursed to it from future payments and collections on the
related mortgage loans. If CMSI fails to make an advance, the Trustee, acting in
its individual capacity and not as Trustee, will make an advance to cover
delinquencies, but only to the extent it believes its advances will be
reimbursed from future payments and collections on the related mortgage loans.
Other servicers and master servicers of third-party mortgage loans must
advance their own funds to cover delinquent scheduled payments of principal and
interest on the loans they service, but only to the extent they determine that
the funds advanced will be reimbursed from future payments and collections on
the related mortgage loans.
To the extent that CMSI, other servicers and master servicers and the Trustee
do not make advances, the only source of cash for distributions on the
Certificates will be cash received on the mortgage loans.
Uncertainty of yields
The yield to maturity of each class of Certificates will be sensitive, in
varying degrees, to
o the rate of principal prepayments and other unscheduled receipts on the
mortgage loans,
o the allocation of prepayments and unscheduled receipts among the classes of
Certificates,
o the amount, timing and cause of losses and payment shortfalls on the mortgage
loans,
o the allocation of losses and distribution shortfalls among the classes of
Certificates and
o any difference between the purchase price of a Certificate and its principal
balance at the time of purchase.
If you purchase a Certificate at a discount, a slower than anticipated rate
of prepayment will result in an actual yield lower than the anticipated yield.
If you purchase a Certificate at a premium, a faster than anticipated rate of
prepayment will result in an actual yield lower than the anticipated yield. If
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losses or distribution shortfalls are allocated to your Certificates, your
actual yield will be adversely affected. You should therefore understand the
terms and conditions of any Certificates in which you are considering an
investment and the priorities for principal and interest distributions and
allocations of losses and shortfalls before you make an investment. See
"Distributions of principal," "Losses" and "Sensitivity of Certificates to
prepayment" below.
Legal investment
Institutions whose investment activities are subject to legal investment laws
and regulations or to regulatory review may be subject to restrictions on
investment in subordinated classes of Certificates. CMSI cannot represent that
any class of subordinated Certificates will be a legal investment for you. You
should consult your counsel on whether any subordinated class of Certificates is
a legal investments for you.
Restrictions on transfer
The purchase and holding of subordinated classes of Certificates by or on behalf
of an employee benefit plan subject to the Employee Retirement Security Act of
1974 (ERISA) may result in prohibited transactions under erisa, the Internal
Revenue Code or similar law. These laws may restrict the number and types of
investors that can buy subordinated classes of Certificates and could therefore
adversely affect the liquidity of these Certificates.
A sale or other transfer of Certificates of a subordinated class will not be
recognized and given effect by the Trustee unless the transferee satisfies the
conditions set forth in "ERISA considerations - Class exemptions" below.
Year 2000
The transition from the year 1999 to the year 2000 may disrupt the ability of
computerized systems to process information. The collection and posting of
payments on the mortgage loans, the servicing of the mortgage loans and the
distributions on the Certificates depend upon computer systems of Citicorp
Mortgage, Inc. (which will service affiliated mortgage loans as CMSI's delegate)
and its subservicers, any servicers or master servicers for third-party loans,
the Trustee and, for book-entry Certificates, the Depository Trust Company
(DTC).
Citicorp Mortgage has modified its computer systems and expects to be year
2000 ready. Citicorp Mortgage is also assessing the year 2000 readiness of key
vendors and subservicers. The Trustee has advised Citicorp Mortgage that it has
implemented measures to modify and validate its critical computer systems for
year 2000 readiness. Dtc has informed its participants that it is implementing a
program so that DTC's systems for timely distributions, book-entry deliveries
and settlement of trades will continue to function appropriately in 2000.
The failure of any of the above parties, or their key vendors and
subcontractors, to be year 2000 ready could result in incorrect or inadequate
servicing of mortgage loans and delayed or incorrect distributions to
Certificate holders.
Distributions on the Certificates
Scheduled payments on mortgage loans
Each mortgage loan will have a scheduled payment that is due on the first day of
each month. The scheduled payment will consist of
o interest on the unpaid principal amount (the principal balance) of the
mortgage loan for the preceding month, and
o a specified part of the principal balance.Scheduled payments may also
include payments for real estate taxes or other assessments and property
insurance. The homeowner usually has a grace period in which he or she can make
the payment without having to pay additional interest or a late payment charge.
(In this prospectus and the supplement, we often refer to the borrower under a
mortgage loan as the homeowner, even though he or she may be a tenant or a
cooperative apartment shareholder.)
Property of the Trust; the cut-off date
The principal balance of each mortgage loan in the Trust will be determined as
of the first day of the month in which the Certificates are issued (the cut-off
date). Prepayments of principal received on or before the cut-off date will not
be property of the Trust. Nor will scheduled payments of principal and interest
for months ending before the cut-off date, even if
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the homeowners make the payments on or after the cut-off date.
Example: A Trust issues Certificates on January 15. Then January 1 is the
cut-off date. Principal prepayments received on or before January 1 are not
property of the Trust, nor are scheduled payments of principal and interest due
on January 1, no matter when they are received. Principal prepayments received
after January 1 are property of the Trust as are scheduled payments due on
February 1 or later, even if the scheduled payments were received before the
cut-off date.
Distribution of scheduled payments
CMSI, as paying agent for the Trust, will distribute principal and interest on
the Certificates at regular intervals. For most Series of Certificates,
distributions will be made monthly, but distributions can be made quarterly,
semi-annually or at other intervals, provided there is at least one distribution
a year. In this prospectus, unless otherwise stated, it will be assumed that
distributions are monthly.
On the 18th day of each month (the determination day), CMSI will determine
how much of the scheduled principal and interest payments due on the first day
of that month has been received by the persons administering and servicing the
mortgage loans (the servicers) and forwarded to the Trust. After deduction of
the servicers' fees, these funds will be distributed on the 25th day of the
month (the distribution day) to the Certificate holders as principal and
interest on the Certificates. (If the 18th day of the month is not a business
day, the determination day will be the next business day after the 18th;
similarly for the distribution day.)
Interest will be paid on each class of Certificates at the rate stated for
the class in the supplement. The interest rate for a class of Certificates may
differ from the average interest rate on the mortgage loans or the rate on any
particular mortgage loan. Principal will be distributed to the various classes
of Certificates in accordance with the priorities stated in the supplement.
In addition to those regular classes of Certificates that have a principal
balance and/or an interest rate, there will be a single residual class of
Certificates that will have no interest rate and may have no principal balance.
The residual class will receive in each month only part or all of any amounts
that were available for distribution but that exceeded the distributions to be
made to the regular classes.
Calculation of interest; effective rate
Monthly distributions of interest on those Certificates having a fixed rate of
interest are calculated on the basis of a 360-day year of twelve 30-day months.
This means that
o interest for a calendar month will be calculated by multiplying the
principal balance by 1/12 of the annual interest rate for the Certificate,
regardless of the number of days in the month, and
o interest for a part of a calendar month will be calculated by multiplying
the principal balance by the annual interest rate for the Certificate times
a fraction that is the number of days in the month for which interest is
owed over 360.
Calculation of interest for any Certificates bearing a variable or floating rate
of interest are described in the supplement.
Interest accrued on mortgage loans during a calendar month will be due from
the homeowner on the first day of the following month, along with the scheduled
principal payment due on that first day, but will not be distributed to
Certificate holders until the distribution day. These payments of principal and
interest will not accrue interest from the first day of the month to the
distribution day. For example, interest accrued during January on the principal
balances of the mortgage loans, and the scheduled payments of principal, will be
due from the homeowners on February 1 but will not earn interest from February 1
to the February 25 distribution day. This delay in the Certificate holder's
receipt of principal and interest for a period during which no additional
interest accrues means that the effective interest rate on a Certificate will be
lower than its stated interest rate.
Adequacy of scheduled payments
The Certificates in each Series will usually be structured so that the aggregate
principal balances of the mortgage loans in the Trust at the cut-off date
(without regard to principal prepayments received on or before the cut-off date
or scheduled payments due on or before the cut-off date) will equal the
aggregate principal balances of the Certificates. Moreover, the aggregate
principal balance of the Certificates on each distribution day after the
distribution has been made will equal the aggregate scheduled principal balance
of the mortgage loans.
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The scheduled principal balance of a mortgage loan on a distribution day will
equal its actual principal balance, except that it is assumed that
o no prepayments (whole or partial) have been made during that month, and
o the homeowner has made all scheduled payments of principal and interest that
have become due, and has not made a scheduled payment that is not yet due.
If each homeowner were to make all of his or her scheduled monthly payments
of principal and interest before the determination day for the month, and never
prepay any principal (see below), the Trust would have sufficient funds (1) to
distribute interest to all the classes of Certificates at their interest rates
on each distribution day and (2) to distribute the last installment of the
aggregate principal balance of the Certificates by no later than the
distribution day following the last scheduled payment of principal and interest
on any mortgage loan. While it is extremely unlikely that no homeowner will be
late or otherwise default on a mortgage loan payment, or that no homeowner will
make a principal prepayment, understanding the adequacy of the scheduled
payments on the mortgage loans to provide funds for full distributions on the
Certificates will help you understand the effects of the Trust's receipt of
payments that are larger or smaller than scheduled.
If the Trust does not have enough money on a distribution day to distribute
all the principal and interest required to be distributed to a particular class,
available funds will first be used to distribute current interest, then past due
interest and lastly principal to the class. Money available for distribution may
be applied to principal or interest on a class without regard to whether it was
received as principal or interest on a mortgage loan. Thus, cash received by the
Trust as principal payments on mortgage loans may be distributed to Certificate
holders as interest, and vice-versa. Principal and interest will be distributed
to the Certificates within a single class in proportion to the principal
balances of the Certificates.
You should note that when we say that the Trust does not have enough money on
a distribution day to distribute all required principal and interest, we mean
only that the Trust has not received enough money that is available for
distribution on the distribution day. For instance, a scheduled payment that the
Trust receives after the determination day is not available to be distributed on
the following distribution day. Also, as described below, prepayments will not
be available for distribution until a later distribution day, and escrowed or
other funds held by the Trust or a servicer for a special purpose (such as the
payment of real estate taxes on the mortgaged properties) will not be available
for distribution at all.
Delinquencies and their effect; advances
Homeowners from time to time delay making scheduled payments of principal and
interest until after the determination day for the month. Even a small number of
delinquent payments could mean that the Trust will not have enough money
available to make full distribution of principal and interest to all the
Certificates on the distribution day.
If the Trust does not have enough money on a distribution day to distribute
full interest and principal to all classes of Certificates, it could use money
received as principal payments on mortgage loans to pay interest to Certificate
holders. If the Trust were to do so, it would have to allocate a principal loss
to some classes of Certificates. A loss allocation would be required to keep the
aggregate scheduled principal balance of the mortgage loans the same as the
aggregate principal balance of the Certificates.
To avoid a loss allocation to a class of Certificates,
o the Trust may advance prepayments received in the month of the distribution
day to cover shortfalls, and
o if such prepayments are not adequate to enable the Trust to make a full
distribution, CMSI, any third-party servicers and the Trustee may advance
money to the Trust to enable it to make full distributions on the
Certificates.
If the Trust uses prepayments received in the month of the distribution day to
cover shortfalls on that distribution day, the Trust will reimburse itself out
of payments received for the following month.
While not required to do so, CMSI may make a voluntary advance to the Trust
of a delinquent payment on an affiliated mortgage loan, and a third-party
servicer may make a voluntary advance of a delinquent payment on a third-party
mortgage loan. A delinquent payment, and the advance, may be for principal,
interest, taxes or insurance premiums.
CMSI intends to make a voluntary advance for a delinquent payment on an
affiliated mortgage loan if it believes the advance will be recoverable from
future payments and proceeds on the loan. The Trust will reimburse CMSI or a
third-party servicer for a
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voluntary advance, without interest, out of later payments received on the
mortgage loan for which the advance was made, or if CMSI determines that the
advance will not be recoverable from payments on that mortgage loan, from
payments on other mortgage loans.
If on a distribution day, the scheduled payments due in that month that have
actually been received from homeowners, prepayments received in that month and
voluntary advances made by CMSI and any third-party servicers are less than the
scheduled payments due in that month from homeowners, the Trustee will advance
the difference to the Trust, but only up to an amount the Trustee determines
will be recoverable from future payments, proceeds or recoveries on the mortgage
loans. The Trustee will make separate determinations and advances for the
affiliated mortgage loans and for the third-party mortgage loans. In determining
whether to make, and in making, an advance, the Trustee will be acting in its
individual capacity, and not as a trustee. Advances by the Trustee on affiliated
mortgage loans will be reimbursed from future payments on affiliated mortgage
loans received by the Trust, and similarly for advances on third-party mortgage
loans.
Prepayments on mortgage loans
A homeowner may prepay part or all of his or her mortgage loan at any time. That
is, a homeowner can pay more principal than he or she is scheduled to pay. The
homeowner can include this additional payment with the scheduled payment of
principal and interest, or can pay it at some other time. A homeowner will
usually not incur an additional prepayment charge for prepaying a mortgage loan.
A mortgage loan may also be prepaid in other circumstances, described in "Types
of prepayment" below.
CMSI anticipates that a significant number of mortgage loans will be prepaid
in whole or in part. Homeowner mobility, economic conditions, enforceability of
due-on-sale clauses, mortgage market interest rates and the availability of
mortgage funds will all influence the level of prepayments.
Delay in distribution of prepayments
Prepayments received by the servicers in a calendar month will generally not be
distributed as principal to Certificate holders until the distribution day in
the following month. For example, if $1,000 of prepayments are received in
March, the Trust will distribute these prepayments to the Certificate holders on
the April 25 distribution day. Accordingly, if a homeowner on March 1 makes the
scheduled payment due on that date, and simultaneously makes a full or partial
prepayment, the homeowner's scheduled payment will be distributed on the March
25 distribution day but the prepayment will not be available for distribution
until the April 25 distribution day.
(Prepayments received in a month may be advanced by the Trust to cover
shortfalls on a distribution day in that month, as described in "Delinquencies
and their effect; advances" above.)
Effect of prepayments
Prepayments can have a number of effects on the Certificates:
o Prepayments increase the speed at which the principal balance of the
Certificates will be distributed. Principal distributions that are faster or
slower than anticipated can profoundly affect the return, or yield, on a
Certificate. Consider for example a Series consisting of just two classes - an
interest-only (IO) class and a principal-only (PO) class. (This is an unlikely
structure for a Series, but one in which the effect of prepayments can be
clearly seen.) If prepayments on the mortgage loans are greater than
anticipated, the PO class will be paid off faster, and the IO class will receive
less interest, than anticipated. In the extremely unlikely event that all the
mortgage loans are completely prepaid in the first month, the PO class will be
paid off on the first distribution day, greatly increasing its rate of return,
while the IO class will receive only one distribution of interest. Conversely,
if prepayments are less than anticipated, the IO class would benefit, but the PO
class would see its yield reduced.
Generally speaking, if the price of a Certificate is greater than its
principal balance (which is always true for an IO class, since it has no
principal balance), greater than anticipated prepayments will reduce the rate of
return while lesser than anticipated prepayments will increase the rate of
return. The opposite generally holds where the price of a Certificate is less
than its principal balance: greater than anticipated prepayments will increase
the rate of return and lesser than anticipated prepayments will reduce the rate
of return. The extent to which greater or lesser prepayments will affect the
rate of return on a class of Certificates depends on the particular properties
of the class. The supplement describes the extent to
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<PAGE>
which certain classes of the Series could be affected by changes in the rate of
prepayment, based on a set of assumptions (called a prepayment model) described
in the supplement.
o Prepayments can increase or decrease the average interest rate on the
mortgage loans. For example, if (ignoring servicing fees) half of the mortgage
loans (by principal balance) in a pool have an interest rate of 6%, and half
have an interest rate of 8%, the average interest rate for the pool will be 7%.
Suppose the Certificates all carry an interest rate of 7%. If the mortgage loans
with an 8% rate prepay faster than the mortgage loans with a 6% rate, then,
other things being equal, the weighted average interest rate on the mortgage
loans will fall below 7%, so that interest received on the mortgage loans may be
less than the interest required to be distributed on the Certificates. (This
problem is often solved by the structuring technique of "ratio stripping,"
which, if used, is described in the supplement.)
Mortgages with higher interest rates have historically prepaid faster than
mortgages with lower rates. The result is that if a pool contains mortgage loans
with significantly different interest rates, the higher interest rate mortgage
loans can be expected to pay off faster, with the result that the weighted
average interest rate on the mortgage loans would decline.
o When a homeowner makes a prepayment, he or she will often not pay any
interest on the prepayment. Since the Trust does not distribute this prepayment
until the following month, the prepayment amount will usually earn less interest
than the mortgage loan rate or the interest rate on any class of Certificates.
Example: a homeowner prepays $1,000 on January 10, and pays no interest with
this prepayment. The homeowner's February 1 scheduled payment also does not
include any interest on the $1,000 prepayment. The $1,000 prepayment will be
distributed to the Certificate holders on the February 25 distribution day. The
Trust will also be required to distribute interest on the $1,000 for the entire
month of January - interest that was not paid by the homeowner. The prepayment
may have been reinvested for the Trust at short-term rates, but the interest
earned at these short-term rates will probably be less than one month's interest
at the mortgage loan rate.
If there are a substantial number of prepayments in a month, the drop in
interest payments by the homeowners for that month could result in a shortfall
of funds available to distribute principal and interest on the Certificates on
the distribution day. However, CMSI and the other servicers will have to make up
for at least part of such prepayment interest shortfalls out of their servicing
fees, as described in the supplement.
Types of prepayment
In addition to voluntary prepayments by a homeowner, there are other
circumstances in which part or all of a mortgage loan may be prepaid.
o The homeowner may refinance the mortgage loan by prepaying the mortgage
loan in full and taking out a new mortgage loan, or the homeowner and the lender
may agree to modify the terms of the mortgage loan as an alternative to
refinancing. Refinanced or modified mortgage loans will be treated as fully
prepaid and removed from the Trust. Originators affiliated with CMSI are
permitted to refinance or modify mortgage loans and may offer homeowners special
refinancing or modification incentives.
o CMSI permits participation in "prepayment programs" offered by unaffiliated
service agencies in which homeowners generally make 26 bi-weekly payments during
a calendar year. Each payment equals one-half of the homeowner's scheduled
monthly payment, with the result that the homeowner makes payments in a calendar
year equal to 13 scheduled monthly payments, rather than 12. The extra amount is
applied as a prepayment of the mortgage loan.
o Most fixed rate mortgage loans permit the servicer to demand payment of the
entire principal balance of the loan upon a sale of the mortgaged property (a
due-on-sale clause) rather than allowing the purchaser to assume the mortgage
loan. CMSI will generally exercise a due-on-sale clause if (1) for a fixed rate
mortgage loan, CMSI believes the clause is legally enforceable, and (2) for an
adjustable-rate mortgage loan, the assumption will impair the Trust's security.
o If a mortgaged property is damaged by fire or other hazard insured under a
hazard insurance policy (described below), insurance payments received by the
Trust may be used to reduce the principal balance of the mortgage loan. (They
may also be used to restore the property, which would not be a prepayment.)
o If the mortgage loan is foreclosed (described below), the foreclosure
proceeds, less the expenses of
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<PAGE>
foreclosure and accrued interest, will be used to reduce the principal balance
of the mortgage loan.
o When the aggregate principal balance of all the mortgage loans in a
Series is reduced to less than a stated percentage (usually 5%) of the original
principal balance of the mortgage loans in the Series, CMSI or the holders of
the residual Certificate may purchase all the mortgage loans for their principal
balances plus accrued interest. Such a purchase would, in effect, simultaneously
prepay all the mortgage loans. This type of prepayment is called a clean-up
call.
o CMSI will make various warranties about the mortgage loans to the
Trust. If a mortgage loan does not conform to these warranties, CMSI may have to
repurchase the loan. See "Defective mortgage loans" below.
Foreclosures and their effect
After a mortgage loan has become seriously delinquent, CMSI may take steps to
foreclose. Foreclosure involves seizure and sale of the mortgaged property. The
proceeds of the sale are used first to pay CMSI's expenses of foreclosure and
advances, then to pay accrued interest, and lastly to pay the principal balance
of the mortgage loan. The foreclosure process and some alternatives to
foreclosure are described below in "Servicing - Realizing on defaulted mortgage
loans."
If the net proceeds of foreclosure are insufficient to pay all accrued
interest and the full principal balance of the mortgage loan, the shortfall, or
loss, will be allocated to the Certificates as described in the supplement. When
a loss is allocated to a Certificate, it permanently reduces the principal
balance of the Certificate and may also reduce an interest distribution.
Mortgage loan originators take certain precautions to reduce the risk of
foreclosure and of foreclosure losses. These primarily involve checking the
creditworthiness of potential homeowners and the value of the mortgaged
property. The mortgage loan underwriting policies of the affiliated originators
are described below under "Mortgage loan underwriting."
Certificate holders may also be protected against losses by various types of
insurance and credit support, including the subordination of some classes of
Certificates.
Subordination
Subordination involves the disproportionate allocation of losses and
distribution shortfalls among Certificates. Subordination thus protects more
senior classes of Certificates against losses and distribution shortfalls at the
expense of more subordinated classes .
As a simple example, suppose that a Series consists of two classes of
Certificates, A and B, which are alike in all respects except that all losses
and shortfalls will be allocated to the subordinated B class until the principal
balance of the B class is reduced, by principal distribution or allocation of
principal losses, to zero.
A more realistic example would involve several levels of subordination. There
might be a senior class A, a subordinated class B, and a middle "mezzanine" or
"senior subordinated" class M. In this structure, all losses would be allocated
to class B as long as it is outstanding (ie, until its principal balance is
reduced to zero). Losses would then be allocated to class M until its principal
balance is reduced to zero. Class M is thus subordinated to class A but senior
to class B. A Series may be structured with even more levels of subordination.
Subordination protects against distribution shortfalls as well as losses. If
on a distribution day, the Trust does not have enough money available to
distribute the required principal and interest to all the Certificates,
subordinated classes may not receive full distribution of principal and
interest.
Cash available for distribution is generally distributed in order of
seniority - that is, first to the most senior class, then to the next most
senior class, and so on until a full distribution has been made or the available
cash is exhausted. Losses are generally allocated in order of subordination -
that is, first to the most subordinated class until its principal balance is
reduced to zero, then to the next most subordinated class until its principal
balance is reduced to zero, and so on until the loss has been fully allocated.
Distribution shortfalls are also generally allocated in order of subordination,
but only up to the amount to have been distributed to the class on that
distribution day.
Subordination can be limited in amount or time (eg, a class is subordinated
only for five years) or to certain types and amounts of losses (eg, a
subordinated class is allocated a specific type of losses up to a fixed dollar
limit). Losses that are not covered by subordination are allocated among all the
classes pro-
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<PAGE>
portionately. The supplement describes the subordinated classes and the precise
limits of the subordination.
Once principal or interest is distributed to Certificates in a subordinated
class, the distributions do not have to be refunded even if, on a later
distribution day, full distributions can not be made to a more senior class .
Method of distribution
The Trustee will generally make distributions by wire transfer (if it receives
appropriate instructions) to registered holders of Certificates with an initial
principal balance (or notional balance) of $1 million.
Distribution reports
On each distribution day, the Trustee will send a report to each person who is a
registered holder of a Certificate on the related record day. Beneficial owners
of Certificates may obtain copies of these reports free of charge from the
Trustee upon request to the address or telephone number given in the supplement.
The report will include information for each class and subclass on
o the amounts of interest and principal distributed on the Certificates in the
class, and the aggregate amounts of principal and interest for all classes,
o the amount of any losses allocated to the Certificates, by class,
o for accrual Certificates, the accrued interest that has been added to the
Certificate's principal balance,
o the principal balances of the Certificates in the class, and the aggregate
principal balances for all classes, both before and after the distribution,
o the aggregate payments received on the mortgage loans from the second day of
the preceding month through the first day of the current month, and the
aggregate principal balance of the mortgage loans after giving effect to the
payments,
o the number and aggregate principal balances of mortgage loans delinquent 30
days and 60 or more days,
o the book value of any real estate acquired by the Trust through foreclosure
or otherwise,
o the amount remaining under any form of credit support,
o CMSI's servicing compensation since the preceding report, and
o other customary information that CMSI believes Certificate holders need to
prepare their tax returns.
CMSI will provide Certificate holders that are federally insured savings and
loan associations, on request, reports and access to information and
documentation on the mortgage loans sufficient to permit the associations to
comply with applicable regulations of the Office of Thrift Supervision.
The Trustee or CMSI will file with the IRS and state and local taxing
authorities, and make available to Certificate holders, information as required
by federal or other tax law.
Delinquency, foreclosure and loss experience
Loss and delinquency considerations
The following tables show the recent delinquency, foreclosure and loss
experience of CMSI and originators affiliated with CMSI (affiliated
originators). The loans represented in the tables include fixed and adjustable
interest rate loans (ARMs), including buydown loans, loans with stated
maturities of 10 to 30 years and other types of mortgage loans. Potential
investors should realize that the loan portfolios on which these tables are
based may not be representative of the mortgage loans in the Trust described in
the supplement. There may be important differences in, for example, the types of
loans, their maturities and the geographic location of the mortgaged properties.
Also, prevailing national or local economic conditions or real estate values may
have been quite different at the times the loans were originated. Accordingly,
the future delinquency, foreclosure and loss experience on the mortgage loans
described in the supplement is likely to diverge, and may sharply diverge, from
the historical experience of the mortgage loans shown in the following tables.
Delinquency and foreclosure experience on affiliated originators' serviced
portfolio The following table shows delinquency and foreclosure experience on
one- to four-family conventional residential first mortgage loans (including
coopera-
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<PAGE>
tive apartment loans) originated or acquired by affiliated originators and
serviced by Citicorp Mortgage, Inc., an affiliate of CMSI. The table also
includes mortgage loans serviced by Citicorp Mortgage that have been sold to
Fannie Mae or Freddie Mac. The table does not include loans purchased strictly
for servicing revenue or loans originated by the Florida branches of Citibank,
Federal Savings Bank (CITI FSB), an affiliate of CMSI, prior to their
acquisition by Citicorp in January 1984. Since June 20, 1997, Citicorp Mortgage
has transferred the servicing of 803 delinquent loans and loans in foreclosure
totaling $106.0 million.
<PAGE>
<TABLE>
<CAPTION>
Delinquency and foreclosure experience on serviced portfolio
December 31, 1996 December 31, 1997 December 31, 1998
----------------- ----------------- -----------------
Principal Principal Principal
balance balance balance
Number ($ millions) Number ($ millions) Number ($ millions)
------ ------------ ------ ------------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
309,754 $ 34,084.8 303,896 $ 35,955.8 310,628 $41,115.1
Loans
Days past due
30-59 10,487 $ 1,014.9 9,368 $ 906.9 7,466 $ 766.9
60-89 2,444 $ 253.1 1,947 $ 194.3 1,603 $ 160.1
90 or more 3,291 $ 371.8 2,646 $ 286.1 2,074 $ 226.8
Delinquent loans 16,222 $ 1,639.8 13,961 $ 1,387.3 11,143 $ 1,153.8
Ratio of delin- 5.24% 4.81% 4.59% 3.86% 3.59% 2.81%
quent loans to all
loans
Foreclosures 5,822 $ 696.0 3,539 $ 406.3 2,726 $ 293.7
begun
Ratio offoreclo- 1.88% 2.04% 1.16% 1.13% 0.88% 0.71%
sures begun to all
loans
</TABLE>
Delinquency, foreclosure and loss experience on affiliated originators'
securitized portfolio The following two tables show the delinquency, foreclosure
and loss experience on one- to four-family conventional residential first
mortgage loans (including cooperative apartment loans) originated or acquired by
affiliated originators and serviced by Citicorp Mortgage that were later
securitized (ie, mortgage loans assembled into pools for which ownership
interests were sold in public offerings registered under the federal securities
laws).
<TABLE>
<CAPTION>
Delinquency and foreclosure experience on securitized portfolio
December 31, 1996 December 31, 1997 December 31, 1998
----------------- ----------------- -----------------
Principal Principal Principal
balance balance balance
Number ($ millions) Number ($ millions) Number ($ millions)
------ ----------- ------ ------------ ------ ------------
<S> <C> <C> <C> <C> <C> <C>
40,489 $5,503.2 37,050 $ 5,738.4 34,350 $ 7,056.0
Loans
Days past due
30-59 1,339 $ 151.6 1,073 $ 126.0 715 $ 93.9
60-89 321 $ 40.3 237 $ 26.7 152 $ 21.2
90 or more 411 $ 58.7 313 $ 45.8 200 $ 28.7
Delinquent loans 2,071 $ 250.6 1,623 $ 198.5 1,067 $ 143.8
Ratio of delin- 5.11% 4.55% 4.38% 3.46% 3.11% 2.04%
quent loans
to all loans
Foreclosures 993 $ 146.6 653 $ 90.5 392 $ 53.7
begun
Ratio of 2.45% 2.66% 1.76% 1.58% 1.14% 0.76%
foreclo-
sures begun to all
loans
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Loss experience on securitized portfolio
Cumulative net losses
Aggregage principal as percentage of aggre-
Cumulative net losses balance of securities gate principal balance
($ millions)(1) ($ millions)(2) of securities
--------------- --------------- -------------
<S> <C> <C> <C>
December 31, 1996 $ 413.8 $ 25,857.4 1.60%
December 31, 1997 $ 469.8 $ 27,214.6 1.73%
December 31, 1998 $ 501.2 $ 31,040.7 1.61%
- -------------------
(1) Calculated without giving effect to any credit enhancement.
(2) Issued securities that have had at least one distribution day.
</TABLE>
Delinquency, foreclosure and loss experience of third-party originators
The supplement will describe the delinquency, foreclosure and loss experience of
any third-party originator who has originated more than 10% (by principal
balance on the cut-off date) of the mortgage loans in the Trust.
The mortgage loans
Each mortgage loan will generally
o have a principal balance of less than $2.5 million at the cut-off date and
an original maturity of 10 to 30 years, and
o have monthly payments due on the first day of each month.
The mortgage loan pool may contain cooperative apartment loans. The
"homeowner" of a cooperative apartment owns shares issued by the private
non-profit housing corporation that owns the apartment building and has a
proprietary lease or occupancy agreement that gives the homeowner the exclusive
right to occupy a designated apartment in the building. In a cooperative
apartment loan, the homeowner's shares and lease or occupancy agreement are the
collateral for the loan.
Each mortgage loan will be selected by CMSI from mortgage loans originated or
acquired by originators in the ordinary course of their businesses. The
originators will often be affiliates of CMSI. A portion of the interest
component of a mortgage loan may be retained by the originator and not
transferred to the Trust.
The interest rate, the principal balance, the maturity date, the homeowner's
identity, the principal amortization schedule or other terms of a mortgage loan
may have been modified before the Trust bought the mortgage loan. If a mortgage
loan has been so modified, the terms "original," "originated" or "origination"
when applied to the mortgage loan mean
o if only the interest rate has been changed (and, as a result, the monthly
payment), the original date of the extension of credit under the mortgage loan,
but with the modified interest rate and monthly payment, and
o for other changes, the mortgage loan as modified at the effective date of the
modification.
Warranties by CMSI
CMSI will warrant to the Trustee that on the closing date
o the mortgage loans conform in all material respects with their descriptions
in this prospectus, the supplement and the schedule of mortgage loans CMSI
delivered to the Trustee (including maximum loan-to-value ratios and primary
mortgage insurance coverage, as described below),
o at the cut-off date, no mortgage loan was 30 days or more past due or had
been 30 days or more past due more than once in the preceding 12 months, there
are no delinquent tax or assessment liens against the mortgaged properties,
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<PAGE>
o each mortgaged property is free of material damage and in good repair,
o each mortgage loan (other than a cooperative apartment loan) had at its
origination a lender's title and insurance policy or binder (or other customary
assurance of title), which remains in force,
o any mechanics' lien or claim for work, labor or material on a mortgaged
property is subordinate to the mortgage (except for liens or claims covered by
title insurance),
o CMSI had good title to each mortgage loan immediately before its transfer to
the Trust, and has taken all necessary steps to confer good title on the
Trustee,
o each mortgage is a valid first lien on the mortgaged property, subject only
to (1) liens for current real property taxes and assessments, (2) covenants,
conditions and restrictions, rights of way, easements and other matters of
public record as of the recording of the mortgage that are generally acceptable
to mortgage lending institutions or specifically reflected in the appraisal of
the mortgaged property at origination and (3) other matters to which similar
properties are commonly subject that do not materially interfere with the
benefits of the mortgage, and
o each mortgage loan complied at origination in all material respects
with applicable state and federal laws, including usury, equal credit
opportunity and disclosure laws.
Adjustable rate mortgages, buydown loans and agency certificates
The mortgage loans in a Trust will, on the closing date, generally consist
entirely of fixed rate mortgage loans or entirely of ARMs. Most Trusts sponsored
by CMSI in the past few years have consisted of fixed rate loans. Accordingly,
most of the description of the mortgage loans in this prospectus will assume
that the mortgage loans are fixed rate loans held directly by the Trust and that
they are not "buy-down loans." An appendix to this prospectus describes the
characteristics of ARMs, buy-down loans and agency certificates. If a Series
does not contain a material amount of ARMs, buy-down loans or agency
certificates, the appendix may be omitted.
Fixed rate mortgage loans
A fixed rate mortgage loan may be
o a fully amortizing mortgage loan with level monthly payments of principal and
interest,
o a balloon mortgage loan that amortizes over a fixed number of years but has a
shorter term to maturity, so that the entire remaining principal balance of the
loan is due at maturity, or
o a fully amortizing graduated-payment mortgage loan that has lower periodic
payments, or payments of interest only, during the early years of the loan,
followed by payments of principal and interest that increase periodically until
the loan is repaid or for a specified number of years, after which level
periodic payments begin.
No fixed rate mortgage loan will have "negative amortization" - ie, scheduled
payments will not be less than accrued interest at the mortgage loan interest
rate.
A fixed rate mortgage loan may have originally been an ARM that was
converted, at the homeowner's option, into a fixed rate fully amortizing
mortgage loan providing for level monthly payments over a term not exceeding its
remaining term to maturity. Such a mortgage loan was subject at origination to
the same underwriting guidelines as a comparable ARM and is not underwritten
again at conversion. The fixed interest rate for the converted mortgage loan may
be higher than the interest rate at origination or the adjustable interest rate
that would otherwise be payable currently, which could reduce the homeowner's
capacity to repay the loan.
The mortgaged properties
The mortgaged properties will usually be detached homes, attached homes (ie,
one- to four-family units with a common wall), units located in condominiums or
planned unit developments, or interests in cooperative apartments. The mortgaged
properties will be located in the 50 United States, the District of Columbia or
Puerto Rico.
The mortgaged properties may include investment properties and vacation and
second homes. However, CMSI anticipates that most mortgaged properties will be
the homeowner's primary residence. CMSI will determine whether a mortgaged
property is a homeowner's primary residence based solely on either
o the homeowner's representation at origination that he or she will use the
property for at least six months every year or that the homeowner intends to use
the property as a primary residence, or
o the mortgaged property being the homeowner's mailing address in the
originator's records.
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<PAGE>
The determination of whether a mortgaged property is a primary residence is
not reexamined if the mortgage loan is assumed by a new homeowner after
origination.
Loan-to-value ratios
Each mortgage loan will have an original principal balance that is not more than
95% of the value of the mortgaged property (a 95% loan-to-value ratio). For
these purposes, "value" is the lesser of the sale price of the property or the
appraised value at origination, and the "principal balance" includes any part of
an origination fee that is financed. The financed portion of the origination fee
will always be less than 5% of the loan amount. (The loan-to-value ratio of
mortgage loans originated or acquired by the California and Florida branches of
Citi FSB may be reduced by a new appraisal delivered after origination.)
Primary mortgage insurance
Affiliated mortgage loans that have original loan-to-value ratios greater than
90% will be covered, and mortgage loans having original loan-to-value ratios
greater than 80% may be covered, by primary mortgage insurance. This insurance
will remain in effect until the loan-to-value ratio is reduced to 80% through
principal payments by the homeowner. Primary mortgage insurance will cover
losses from a homeowner's default of from 12% to 30% of the principal balance of
the mortgage loan.
Prior to 1986, the affiliated originators did not generally make one- to
four-family mortgage loans with loan-to-value ratios above 80% without primary
mortgage insurance coverage. From 1986 through January 1993, affiliated
originators originated mortgage loans with loan-to-value ratios from 80% to 90%
without obtaining primary mortgage insurance. Since February 1993, it has been
the policy of each affiliated originator not to make one- to four-family
mortgage loans with loan-to-value ratios above 80% without obtaining primary
mortgage insurance.
Affiliated originators offer corporate relocation programs to employees of
approved corporations. These programs permit single family real estate loans
with loan-to-value ratios above 80% without requiring primary mortgage
insurance. For these loans, however, the corporate employer generally guarantees
the excess of the mortgage loan over the 80% loan-to-value amount. Some other
corporate relocation programs permit the corporate employer to provide
subordinate financing at the origination of the first priority mortgage loan by
an affiliated originator.
In nine states, homeowners can cancel their primary mortgage insurance (and
thus save the cost of premiums for the insurance) once the loan-to-value ratio
of their mortgage falls below a specified percentage. The states are California,
Connecticut, Illinois, Maryland, Massachusetts, Minnesota, New York, Texas and
Washington.
Second mortgages
A mortgaged property may be encumbered by a subordinated (or second) mortgage
loan. Subordinated loans are not included in loan-to-value calculations.
The subordinated mortgage loan may have been originated by an affiliated
originator, either at the origination of the mortgage loan or later. It is the
policy of the affiliated originators to provide a subordinated loan in
connection with the origination of a first priority mortgage loan only if the
combined amount of the loans would result in a loan-to-value ratio of 90% or
less. Primary mortgage insurance is generally not required for these loans.
Defective mortgage loans
Repurchase or substitution
The Trustee will review the mortgage loan documents (see "Mortgage documents"
below) within 90 days of receipt. If the Trustee discover that a document
evidencing a mortgage loan or necessary to the effectiveness of the mortgage is
missing or materially defective, CMSI must, within 180 days (90 days for defects
that could affect the Trust's REMIC status) cure the defect or repurchase the
mortgage loan.
If CMSI or the Trustee discovers at any time that a warranty that CMSI gave
to the Trustee on a mortgage loan is false to an extent that materially and
adversely affects the Certificates, then CMSI will have 60 days to cure the
false warranty or repurchase the mortgage loan.
The repurchase price for a mortgage loan will be
18
<PAGE>
o the sum of the loan's principal balance and accrued unpaid interest (after
deduction of servicing fees) to the first day of the month following repurchase,
minus
o any unreimbursed payments under guaranties or other credit support or
voluntary advances on the loan.
Repurchase of a mortgage loan will not diminish the amount available under
any credit support. During the first two years following the closing date, CMSI
may, within the periods required for a repurchase, substituteanother mortgage
loan instead of repurchasing a mortgage loan. A substituted mortgage loan must
o be current in payments,
o have a principal balance that is not less than the aggregate principal
balance of the loans for which it is substituted (except that CMSI may make up
any difference in the principal balances with a cash payment to be distributed
to Certificate holders),
o have an interest rate that is not less than the highest interest rate of the
loans for which it is substituted,
o have an original term to maturity equal to that of the loans for which it is
substituted
o have a maturity date that is no later than, and not more than one year
earlier than, any of the loans for which it is substituted, and
o be suitable for a REMIC.
CMSI will indemnify the Trust for any losses not reimbursed by the repurchase
or substitution. If CMSI does not cure a defect in a mortgage loan, the
Trustee's and the Certificate holders' only remedy is to require CMSI to
repurchase the mortgage loan or substitute another satisfactory mortgage loan.
Insurance and other credit support
Homeowners' policies
Most mortgaged properties will be covered by homeowners' insurance policies
that, in addition to the standard form of fire and extended coverage, provide
coverage for certain other risks. These homeowners' policies typically contain a
"coinsurance" clause that, in effect, requires the buildings on the mortgaged
property to be insured for at least a specified percentage (generally 80% to
90%) of their full replacement value. If coverage is less than the specified
percentage, the insurer's liability for a partial loss will not exceed the
proportion of the loss that the amount of insurance bears to the specified
percentage of the full replacement cost of the buildings.
Example: If a residence is only insured for 60% of its value, and sustains
$10,000 of damage covered by the homeowners' policy, the insurer will only pay
$6,000 - ie, 60% of the loss.
Since the amount of hazard insurance required to be maintained on the
buildings may decline, and since residential properties generally have
historically appreciated in value over time, coinsurance may cause hazard
insurance proceeds to be less than needed to restore fully the damaged property.
Part or all of this shortfall may be covered, however, by any credit support.
Hazard insurance
Mortgaged properties will generally be covered by hazard insurance against fire
and certain other hazards that may not be fully covered by homeowners' policies.
The amount of hazard insurance coverage will depend on the relationship
between the principal balance of the mortgage loan and the maximum insurable
value of the buildings on the mortgaged property. (Maximum insurable value is
established by the insurer.)
o If the principal balance is greater than the maximum insurable value,
coverage will be limited to the maximum insurable value.
o If the principal balance is between 80% and 100% of maximum insurable value,
coverage will equal the principal balance.
o If the principal balance is less than 80% of maximum insurable value,
coverage will be 80% of the maximum insurable value.
CMSI may maintain a blanket policy insuring all the mortgage loans against
hazard losses rather than maintaining separate policies on each mortgaged
property. If the blanket policy contains a deductible clause, cmsi will pay the
Trust the deductible for each hazard loss.
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The standard form of fire and extended coverage policy generally covers
damage caused by fire, lightning, explosion, smoke, windstorm and hail, riot,
strike and civil commotion. The policy typically does not cover damage from war,
revolution, governmental actions, floods and other water-related causes, earth
movement (including earthquakes, landslides and mud flows), nuclear reactions,
wet or dry rot, vermin, rodents, insects or domestic animals, theft and, in some
cases, vandalism. However, flood insurance will be maintained for mortgaged
properties located in federally designated special flood hazard zones.
The hazard insurance policies for the mortgaged properties will be
underwritten by different insurers and therefore will not contain identical
terms and conditions. The preceding paragraph therefore merely indicates certain
kinds of insured and uninsured risks and is not intended to be all-inclusive.
While hazard insurance, and flood insurance if applicable, will be required
for cooperative apartment buildings, no hazard or flood insurance will be
required for individual cooperative apartments.
If a homeowner defaults on his or her payment obligations on a mortgage loan,
the Certificate holders will bear all risk of loss resulting from hazard losses
not covered by hazard insurance or other credit support.
Fidelity bond and errors and omissions policy
CMSI will maintain a fidelity bond and an errors and omissions policy or their
equivalent. These cover losses from an officer's or employee's misappropriation
of funds or errors and omissions in failing to maintain insurance, subject to
limitations as to amount of coverage, deductible amounts, conditions, exclusions
and exceptions. The policies will conform to Fannie Mae and Freddie Mac
requirements.
Other insurance
The Trust may obtain the following additional insurance coverage:
o Primary mortgage insurance may be supplemented by pool insurance. Pool
insurance covers certain losses from homeowner defaults that are not covered by
primary mortgage insurance.
o Since hazard insurance policies do not cover all possible causes of physical
damage to mortgage properties, the Trust may obtain special hazard insurance
against some additional hazards.
o Some losses from homeowner bankruptcies may be covered under a mortgagor
bankruptcy bond.
The supplement will describe any additional insurance maintained for the
Series.
Other credit support
Additional credit support for a Series may be provided by a guaranty, letter of
credit, financial guaranty insurance policy or one or more reserve funds, which
may be issued or provided by an affiliate of CMSI or by a third party. The
supplement will describe any additional credit support.
Mortgage documents
Assignments to Trustee
On the closing date, CMSI will assign the mortgage loans to the Trust, together
with any principal and interest on the mortgage loans that belong to the Trust.
In addition, CMSI will deliver to the Trust for each mortgage loan, other
than a cooperative apartment or leasehold loan,
o the endorsed mortgage note,
o any assumption, modification, buydown or conversion to fixed interest rate
agreement,
o any certificate of primary mortgage insurance, and
o the original recorded mortgage (or, temporarily, copies if recorded documents
cannot be immediately delivered due to recording delays).
For a cooperative apartment loan, CMSI will deliver to the Trust
o the endorsed promissory note evidencing the loan,
o the original security agreement,
o the proprietary lease or occupancy agreement,
o the recognition agreement,
o a signed financing statement (if required at origination),
o and the stock certificate with signed stock powers.
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Recording of assignments
CMSI will deliver a mortgage assignment in recordable form or a blanket
assignment, which will not be in recordable form, together with a power of
attorney empowering the Trustee to act for the originator in preparing,
executing, delivering and recording in the Trust's name any instruments for
assigning or recording the mortgages.
CMSI does not expect to record assignments of the mortgage loans to the Trust
after the issuance of the Certificates. Recording is not necessary to make the
assignment to the Trust effective between the Trustee and the originator or
CMSI. However, so long as the Trust is not the mortgagee of record, the Trustee
might not be able to enforce the mortgage directly, but may have to act
indirectly through the record holder of the mortgage (who will be the originator
or an affiliate of the originator). In addition, if any of the originators or
CMSI were to sell, assign, satisfy or discharge a mortgage loan before the
recording of its assignment to the Trust, the other party to the sale,
assignment, satisfaction or discharge might have rights superior to the Trust's.
If the originator or CMSI acted without authority, it would be liable to the
Trust or the Certificate holders. If the originator or CMSI became bankrupt
before the assignment to the Trust was recorded, creditors of the originator or
CMSI might have rights in the mortgage loan superior to the Trust's.
CMSI and its affiliates
Citicorp
Citicorp, a Delaware corporation, is a holding company whose principal
subsidiary is Citibank, N.A. CMSI, Citicorp Mortgage and Citi FSB are all wholly
owned subsidiaries of Citicorp. Citicorp is itself a wholly owned subsidiary of
Citigroup Inc., a publicly-owned Delaware corporation. Citicorp's principal
offices are at 399 Park Avenue, New York, New York 10043, telephone (212)
559-1000.
Through its subsidiaries and affiliates, Citicorp is a multinational
financial services organization serving the financial needs of businesses,
governments, financial institutions and individuals in the United States and
throughout the world.
Citicorp Mortgage Securities, Inc.
CMSI was incorporated in Delaware in 1987. It is not expected that CMSI will
have any business operations other than offering mortgage-backed securities and
related activities. CMSI's principal offices are at 909 Third Avenue, New York,
New York 10043, telephone (212) 559-6727.
Citibank, N.A.
Citibank is a commercial bank offering a wide range of banking services to its
customers in the New York City metropolitan area and around the world.
Citibank's domestic deposits are insured by the Federal Deposit Insurance
Corporation (the FDIC). Citibank has been an active one- to four-family
residential real estate mortgage lender since 1960. Citibank has also been an
active cooperative apartment lender. Except for its issuance of mortgage
pass-through certificates, Citibank has not engaged in any significant servicing
activities on behalf of unaffiliated persons for conventional residential
mortgage or cooperative apartment loans. Citibank's residential mortgage lending
is conducted in New York City and four surrounding counties (Westchester,
Nassau, Suffolk and Rockland).
Citibank's principal offices are at 399 Park Avenue, New York, New York
10043, telephone (212) 559-1000.
Citicorp Mortgage, Inc.
Citicorp Mortgage was incorporated in Delaware in 1979 and began making mortgage
loans in 1980. Citicorp Mortgage derives income primarily from interest on
mortgages that it owns, secondary mortgage market sales, mortgage loan servicing
fees and mortgage origination fees and charges.
Citicorp Mortgage has been approved as a mortgagee and seller/servicer by the
Federal Housing Administration, the Veterans Administration, Fannie Mae, Ginnie
Mae and Freddie Mac. Citicorp Mortgage's origination operations are subject to
operational guidelines and regulations of, as well as audits by, some of these
agencies.
Citicorp Mortgage's principal offices are at 750 Washington Blvd., Stamford,
Connecticut 06091, telephone (800) 285-3000.
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Citibank, Federal Savings Bank
Citi FSB is a federal savings bank based in San Francisco, California. It became
a wholly owned subsidiary of Citicorp in 1982. From 1990 to 1993, Citicorp
Savings of Illinois, Citicorp Savings of Washington, D.C. and Citicorp Savings
of Florida, all wholly owned subsidiaries of Citicorp, were merged into Citi
FSB. In 1993, Citi FSB acquired the branches of Citibank (Maryland), N.A., and
in 1994 it acquired the branches of Citibank (Florida), N.A.
Citi FSB has been an active one- to four-family residential mortgage lender
since 1983. Citi FSB's deposits are insured by the FDIC.
Citibank Service Corporation, an affiliate of Citi FSB, acts as trustee for
substantially all deeds of trust for mortgaged property located in California
that secure mortgage loans originated or acquired by Citi FSB. A trustee under a
California deed of trust forecloses on the mortgaged property upon notice from
the beneficiary of a delinquency and executes full and partial reconveyances of
the mortgaged property at the beneficiary's direction.
Citi FSB's principal offices are at 1 Sansome Street, San Francisco,
California 94104, telephone (415) 627-6000.
Third-party originators
The supplement identifies any originators of third party loans with an aggregate
principal balance greater than 10% of the aggregate principal balance of all the
mortgage loans in the Trust. Each third party originator will generally be a
savings and loan association, savings bank, commercial bank, credit union,
insurance company or a mortgagee approved by the Secretary of Housing and Urban
Development.
Third party originators must be experienced in originating mortgage loans of
the types in the pool in accordance with accepted practices and prudent
guidelines.
Mortgage loan underwriting
Mortgage loan underwriting assesses a prospective borrower's ability to repay,
and the adequacy of the property as collateral for, a requested loan.
Procedures of affiliated originators
Each affiliated originator's real estate lending process for one- to four-family
residential mortgage loans follows a standard procedure, established to comply
with federal and state laws and regulations. For some residential mortgage
loans, the affiliated originators have contracted with or delegated the
underwriting process to unaffiliated third parties.
Since January 1995, each affiliated originator has used a credit scoring
system as part of its underwriting process. The credit scoring system assesses a
prospective borrower's ability to repay a mortgage loan based upon predetermined
mortgage loan characteristics and credit risk factors. Prospective borrowers
remain subject to verification of employment, income, assets and credit history,
as described below. All credit scored loans are rated "strong," "satisfactory"
or "inconclusive." Mortgage loans rated strong or satisfactory do not undergo
the full loan underwriting process described below, but are subject to
verification of property value as described in "Appraisals" below. Mortgage
loans rated inconclusive are underwritten in accordance with the affiliated
originators' normal underwriting policies.
Initially, a prospective borrower must fill out an application that gives
information about the prospective borrower, the property to be financed and the
type of loan desired. The prospective borrower must also provide
o a current balance sheet and a statement of income and expenses,
o proof of income, such as a paycheck stub or W-2 form (except for certain
self-employed prospective borrowers),
o proof of liquid assets (required since April 1991), telephone verification of
employment (required since April 1991), which may be verified by a third party
national employment verification service, and
o a credit report that summarizes the prospective borrower's credit history
with local merchants and lenders and any record of bankruptcy.
Since July 1993, facsimile copies of some verification documents (such as
bank statements and verification of employment) have been accepted in lieu of
originals.
From February 1991 until May 1997, affiliated originators would obtain at
least two credit reports
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(which could be in the form of a merged credit bureau report) on a prospective
borrower. Since May 1997, affiliated originators have obtained the single most
comprehensive readily available credit bureau report on the prospective
borrower.
Before May 1997, self-employed prospective borrowers had to submit their
federal income tax returns for the most recent two years and a separate
statement of income and expenses. Since May 1997, self-employed prospective
borrowers have only had to submit a copy of their most recent federal income tax
return, without schedules.
If a proposed mortgage loan's loan-to-value ratio does not exceed 65% (before
December 1992, 80%), self-employed prospective borrowers may be excused from
providing financial statements, federal income tax returns or proof of income.
During 1990 and 1991 the affiliated originators implemented telephone
verification of employment. Certain high net worth prospective borrowers with
ongoing banking relationships with Citibank's private banking group may be
exempted from employment verification.
Lending guidelines
Once the employment verification and credit reports are received, the affiliated
originator decides
o whether the prospective borrower has enough monthly income to meet monthly
obligations on the proposed loan and related expenses
o as well as the prospective borrower's other financial obligations and monthly
living expenses, and since April 1991, whether the prospective borrower has
enough liquid assets to acquire the mortgaged property, taking into account,
among other things, proceeds from the sale of a prior residence. This decision
may be made from evidence such as a contract for sale of a prior residence and
bank statements supplied by the prospective borrower.
Each affiliated originator has established as lending guidelines that the
mortgage payments, plus applicable real property taxes and any condominium or
homeowner association common charges and hazard insurance, should not exceed 33%
(34% for ARMs) of the borrower's gross income, or that all monthly payments,
including those mentioned above and other fixed obligations, such as car
payments (together, the debt burden), should not exceed 38% of gross income.
Since May 1997, loans that meet the affiliated originator's minimum credit score
and delinquency requirements may have debt burden ratios up to 45% and, for some
corporate relocation loans, 50%. Where two individuals co-sign the mortgage note
or documents, the income and debt of both are included in the computation.
For mortgage loans originated by the California branches of Citi FSB before
June 1991, the actual mortgage payments may be higher due to a higher mortgage
rate at the time the loan documents were prepared, but the mortgage rate
generally does not exceed the anticipated rate used in the analysis by more than
one percent.
Often, other credit considerations may cause a loan underwriter to depart
from the guidelines, and a loan underwriter may require additional information
or verification to compensate for the departure.
Leasehold loans
Leasehold loans are approved in accordance with the affiliated originator's
standard underwriting criteria. An ALTA leasehold title insurance policy is
required, which
o contains no exceptions for any adjustable features of the lease and
o assures that the mortgage is not subordinated to any lien or encumbrance
other than the land lease.
The term of the land lease must extend at least ten years beyond the
scheduled maturity of the mortgage loan and must give the originator the right
to receive notice of and to cure any default by the borrower. The leasehold must
be assignable or transferable if it is subjected to the mortgage lien.
(California branches of CITI FSB may require a consent to assignment of lease
and/or subordination agreement be obtained and recorded.) Payments due pursuant
to the land lease are taken into account in debt ratio calculations.
Refinancings
Since May 1997, affiliated originators have not required income or asset
verification for their current homeowners seeking to refinance their mortgage
loans if the refinancing meets the originator's minimum seasoning, payment
history and credit score requirements. For other homeowners seeking to refinance
their mortgage loans, affiliated originators do not require asset verification
and allow a debt burden ratio of up to 45% for loans that meet
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the affiliated originator's minimum seasoning, payment history and credit score
requirements. For ARMs, the calculation of debt burden is based on the initial
mortgage rate, even though the initial rate may be lower than the rate that
would generally apply under the terms of the ARM.
Appraisals
The affiliated originators require the value of the mortgaged property to
support the principal balance of the mortgage loan, with enough excess value to
protect against minor declines in real estate values.
Each affiliated originator requires an appraisal of each property to be
financed. The appraisal is conducted by an independent fee appraiser. The
appraiser personally visits the property and estimates its market value on the
basis of comparable properties. Since April 1997, each affiliated originator
accepts, in lieu of originals, electronic appraisals without photographs from
appraisers who utilize approved appraisal software packages.
The independent appraisers do not receive any compensation dependent upon
either the amount of the loan or its consummation. In normal practice, the
affiliated originator's judgment of the appraisal determines the maximum amount
of the mortgage loan.
Where an affiliated mortgage loan is refinanced, a current appraisal of the
property may be omitted if the principal balance of the mortgage loan is only
increased by an amount that is used to pay off junior liens on the property plus
the homeowner's out-of-pocket costs for the refinancing. A current appraisal may
also be omitted for modification of the interest rate on an existing mortgage
loan.
Lien records; title insurance Each affiliated originator obtains at origination
a search of the recorded liens on the property being financed. Title insurance,
or an attorney's opinion of title in jurisdictions where the practice is
acceptable, is required for all mortgage loans, except that for cooperative
apartment loans, an affiliated originator will not require title insurance or a
title search of the cooperative apartment building.
Mortgage loans purchased from third-party originators
The affiliated originators purchase mortgage loans originated by third parties.
These mortgage loans, other than those acquired in a bulk purchase, are reviewed
for compliance with the affiliated originator's underwriting criteria, and the
affiliated originator may reject loans that fail to conform to its criteria. For
mortgage loans acquired in a bulk purchase of more than $15 million from a
financially sound mortgage loan originator, the affiliated originator will
review the selling originator's underwriting policies and procedures for
compliance with the affiliated originator's or Fannie Mae / Freddie Mac
underwriting standards and will credit score each loan. The affiliated
originator will also conduct a limited mortgage loan file review.
Underwriting standards of third-party originators
The underwriting policies and guidelines of third party originators may differ
from those of the affiliated originators. In purchasing third party loans,
Citicorp Mortgage will review a sample of the loans to determine whether they
generally conform to Citicorp Mortgage's underwriting standards. Citicorp
Mortgage will fully or partly credit score or re-underwrite the third party
loans to determine whether the original underwriting process adequately assessed
the borrower's ability to repay and the adequacy of the property as collateral,
based on Citicorp Mortgage's underwriting standards.
Servicing
The servicer; delegation
CMSI will be responsible for administering and servicing the mortgage loans.
CMSI will act as servicer for affiliated mortgage loans and as master servicer
for third-party mortgage loans.
CMSI may delegate or subcontract servicing or master servicing duties to
affiliated or non-affiliated qualified corporations. CMSI will delegate its
servicing duties for affiliated mortgage loans to Citicorp Mortgage, Inc., a
CMSI affiliate. Citicorp Mortgage may further delegate its servicing duties.
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CMSI will delegate its master servicing duties for third-party mortgage loans
to an unaffiliated master servicer named in the supplement. The master servicer
will delegate the primary servicing duties on the third-party mortgage loans to
the third-party originators.
CMSI will in all cases remain ultimately responsible for servicing both the
affiliated and the third party mortgage loans. References to the servicer and
the master servicer in this prospectus and the supplement will refer to CMSI,
acting by itself or through delegated or subcontracted subservicers or master
servicers. References to actions taken by CMSI after the issuance of the
Certificates will refer to CMSI acting in its capacity as servicer and/or master
servicer, usually through other persons to whom it has delegated servicing
and/or master servicing duties.
Resignation and removal
CMSI may only resign as servicer/master servicer if
o it receives a legal opinion that remaining as servicer would be illegal or
o the Trustee and 2/3 of the registered holders of Certificates (by principal
balance) consent to the resignation.
A resignation will become effective when the Trustee or a successor servicer
assumes CMSI's servicing obligations. The Trustee may remove CMSI as servicer/
master servicer only if CMSI does not, within 60 days after notice from the
Trustee, remedy a failure to perform its servicing duties.
The remainder of this "Servicing" section will describe servicing procedures
for affiliated mortgage loans.
Collection procedures for affiliated mortgage loans
CMSI will make reasonable efforts to collect all payments on affiliated mortgage
loans, following collection procedures it believes advisable. CMSI may
o waive any prepayment charge and
o arrange with a homeowner a schedule for eliminating delinquencies within 180
days, provided that the scheduling will not affect any primary mortgage
insurance coverage. Credit support payments will continue to be governed by the
original payment schedule on the mortgage loan, not the new schedule for
eliminating deficiencies.
Enforcement of due-on-sale clauses
If a homeowner transfers a mortgaged property to a new homeowner, and the
mortgage loan includes a due-on-sale clause, CMSI will usually accelerate the
maturity of the mortgage loan. If CMSI reasonably believes it will not be able
to enforce the due-on-sale clause, and if any primary mortgage insurance
coverage will not be affected, CMSI will enter into an assumption agreement with
the new homeowner making him or her liable under the mortgage loan. The original
homeowner will also, if local law permits, remain secondarily liable under the
agreement (except for mortgage loans originated by Citi FSB). The mortgage rate
on the mortgage loan will not be decreased under the agreement. The interest
rate may be increased, however, under the terms of the mortgage loan. CMSI will
retain as additional servicing compensation any fees it receives for entering
into the assumption agreement.
Real estate taxes and assessments
CMSI will deposit all homeowner payments of taxes, assessments or comparable
items in a special servicing ACCOUNT. CMSI will use the servicing account only
to pay taxes, assessments and comparable items on the mortgaged properties, to
reimburse CMSI for any costs incurred in paying taxes and assessments or for
otherwise preserving or protecting the value of the mortgages, to refund to the
homeowner any overages, and to pay any required interest to homeowners on
balances in the servicing account.
Primary mortgage insurance
CMSI will present claims and take reasonable steps to recover on defaulted
mortgage loans under any primary mortgage insurance policy.
CMSI will exercise its best reasonable efforts to maintain primary mortgage
insurance for as long as required. CMSI will pay premiums for primary mortgage
insurance on a timely basis if the homeowner does not make the payments, and
will be reimbursed by the Trust for such payments.
CMSI may replace primary mortgage insurance by substantially equivalent
insurance if
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o each rating agency that initially rated the Series advises CMSI that the
replacement will not adversely affect the current rating of the Series, or
o the rating agencies rate the claims-paying ability of the substitute primary
mortgage insurance company no lower than the Series.
Realizing on defaulted mortgage loans
Regardless of whether recovery under primary mortgage insurance or other credit
support is available, CMSI will follow those normal practices and procedures it
believes advisable to realize on a defaulted mortgage loan. However, CMSI need
not spend its own money to foreclose on a loan or to restore a damaged property
unless it decides that the expenditure will increase the net proceeds of
liquidation, after reimbursement to CMSI for the expenditure.
Certificate holders will realize a loss to the extent that
o liquidation proceeds and payments under credit support for a mortgaged
property are less than
o the principal balance and accrued interest on the mortgage loan plus CMSI's
unreimbursed expenses and advances.
If a mortgage loan goes into default, a provider of credit support may have
to purchase the liquidated loan. To avoid draws under credit support, CMSI may
pay the purchase price of the loan on behalf of the credit support provider. The
ultimate net recovery on the loan will be used to replenish the credit support
up to the amount of the unreimbursed payments under the credit support for the
loan, and any excess will be retained by Citicorp, for a guaranty it issued, or
by CMSI. Although Certificate holders will have no right to the excess proceeds,
the reduction in an issuer's obligations under credit support will have been
fully restored.
Credit support providers do not have to purchase a defaulted mortgage loan or
cover delinquencies if the remaining obligations under the credit support are
less than the purchase price of the mortgage loan.
If CMSI does not foreclose on a defaulted mortgage loan, CMSI may accept less
than the principal balance and accrued interest of the mortgage loan on a sale
or a retention by the homeowner of the mortgaged property. If cmsi does
foreclose on a defaulted mortgage loan, CMSI may sell the property, negotiate
with the homeowner for a deed in lieu of foreclosure or, if a deficiency
judgment is available, foreclose on the property and pursue a deficiency against
the homeowner. CMSI does not have to pursue a deficiency judgment on a mortgage
loan, even if legally permitted.
Fees
The Trust will pay CMSI a servicing fee that is generally a fixed annual
percentage of the principal balance of each mortgage loan. Alternatively, the
servicing fee may be based on the excess of the mortgage interest rate over a
specified rate. In addition, CMSI will keep all prepayment and late payment
charges, assumption fees and similar charges as additional servicing
compensation. In CMSI's experience, this additional servicing compensation has
been negligible.
CMSI will pay
o the subservicer's fees,
o the Trustee's and independent accountants fees and expenses,
o expenses for distributing reports to Certificate holders, and
o fees and expenses for realizing on defaulted mortgage loans.
CMSI will be reimbursed for certain expenses in liquidating a defaulted
mortgage loan (including expenditures for the preservation, protection or
restoration of the mortgaged property, as well as legal fees, appraisal costs,
etc) out of payments by the homeowner, credit support or from foreclosure
proceedings before those payments are distributed to Certificate holders. CMSI
may retain this reimbursement even if the remaining funds are inadequate to
distribute to Certificate holders the full principal balance and accrued
interest on the mortgage loan.
CMSI's liability
CMSI, as servicer and/or master servicer, will not be liable to Certificate
holders except for its willful misfeasance, bad faith or gross negligence in the
performance of its servicing duties.
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Default by CMSI
Events of default
The following are events of default:
o CMSI, if it is the paying agent, fails to distribute to the registered
Certificate holders the full amount of a required distribution or, if it is not
the paying agent, fails to pay over to the paying agent for distribution to the
registered Certificate holders the full amount of a required distribution, and
does not remedy its failure (1) within 10 business days of receiving notice of
the failure if the failure was due to an error in calculating the required
payment or distribution or (2) within three business days of receiving notice of
the failure if the failure was due to any other cause.
o CMSI fails to (1) repurchase a mortgage loan as required or (2) observe or
perform any other obligation that materially affects the rights of Certificate
holders, and does not remedy the failure for 60 days after either the Trustee
notifies CMSI, or the registered holders of 2/3 of the principal balance of the
Certificates notify CMSI and the Trustee, of the failure.
o Certain events indicate CMSI's insolvency, reorganization or inability to pay
its obligations.
Actions on event of default
As long as an event of default remains unremedied, the Trustee or the registered
holders of 2/3 of the principal balance of the Certificates may have the Trustee
take over CMSI's responsibilities, duties and liabilities under similar
compensation arrangements. CMSI will be paid for its prior services
notwithstanding the termination of its activities as servicer and/or master
servicer. Termination of CMSI as servicer and/or master servicer will not affect
the obligations of any credit support provider.
If the Trustee is unwilling or unable to act as servicer or master servicer,
it may appoint, or ask a court to appoint, a housing and home finance
institution with a net worth of at least $5 million to be a successor servicer
or master servicer for a servicing compensation no greater than CMSI's servicing
compensation.
The Trustee
The Trustee is named in the supplement. The Trustee may appoint agents
(including CMSI and its affiliates) to perform any of its responsibilities, but
the Trustee will continue to be responsible for its duties and obligations.
To meet legal requirements of certain local jurisdictions, CMSI and the
Trustee may jointly appoint co-trustees or separate trustees for some or all of
the mortgage loans. Each separate trustee or co-trustee will have all of the
Trustee's rights and obligations, which they will exercise solely at the
Trustee's direction.
The Trustee may have normal banking relationships with CMSI or any
originator, or any of their affiliates.
The Trustee may resign at any time. The Trustee may be removed by the
registered holders of 50% of the principal balance of the Certificates and 50%
of the residual Certificates. The Trustee may also be removed by CMSI if
o the Trustee ceases to be eligible to serve as Trustee under the pooling
agreement,
o the Trustee is insolvent,
o the Trustee breaches a duty that materially and adversely affects the
Certificate holders, or
o through the Trustee's performance or non-performance of certain actions, or
because of a downgrade of the Trustee's credit rating, the rating assigned to
the Certificates would be lowered.
If the Trustee resigns or is removed, the resignation or removal will not be
effective until CMSI appoints a successor Trustee.
The Trustee's duties; limitation of liability
If no event of default has occurred, the Trustee need only perform those duties
specifically required of it under the pooling agreement. However, the Trustee
must examine the various certificates, reports or other instruments required to
be furnished to it to determine if they conform to the requirements of the
pooling agreement.
The Trustee is not responsible for CMSI's deposit to or withdrawal from the
Trust of any funds, the validity or sufficiency of the pooling agreement, the
Certificates or any mortgage loan or related docu-
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ment, and is not accountable for the use or application by CMSI of funds paid to
it on the mortgage loans.
The Trustee will not be liable for any losses incurred as a result of the
Trust's failure to qualify as a remic, termination of its REMIC status or any
"prohibited transaction" for a REMIC, unless the losses were caused by the
Trustee's negligence, bad faith or failure to perform its duties.
The pooling agreement
The Certificates of each Series are governed by a separate pooling and servicing
agreement (the pooling agreement) between CMSI and the Trustee, which provides
for the transfer of the mortgage loans to the Trust, the issuance of the
Certificates, repurchase or substitution of mortgage loans by CMSI, the
collection of payments on the mortgage loans and other servicing activities, the
distributions to the Certificate holders, and otherwise sets forth the specific
rights and obligations of CMSI and the Trustee.
The Trustee will send a copy of the pooling agreement (without exhibits) to
any registered holder or beneficial owner of a Certificate upon written request.
The pooling agreement also contains the following provisions:
Legal action by CMSI
Neither CMSI nor Citicorp, if Citicorp has issued a guaranty, will have to
appear in, prosecute or defend any legal action that is not incidental to CMSI's
servicing responsibilities and that it believes may cause it expense or
liability. CMSI may, however, take any legal action it believes desirable to
enforce the pooling agreement or to protect its own rights or the rights of the
Trustee or the Certificate holders under the pooling agreement. The Trust will
pay, or reimburse CMSI or Citicorp for, the expenses of the action and any
resulting liability out of Trust assets.
Legal action by Certificate holders
A registered Certificate holder can not institute a legal proceeding to enforce
the pooling agreement unless
o the holder gives the Trustee written notice of default and
o the registered holders of 2/3 of the principal balances of the Certificates
request the Trustee in writing to institute the proceeding and offer the Trustee
reasonable indemnity, and the Trustee for 60 days neglects or refuses to
institute proceedings.
However, the Trustee is not required to exercise its powers, investigate matters
arising, or institute, conduct or defend a litigation under the pooling
agreement at a registered Certificate holder's request unless the holder offers
the Trustee reasonable security or indemnity against expenses and liabilities.
Liability of CMSI and Citicorp; indemnification
Neither CMSI nor Citicorp, if Citicorp has issued a guaranty, nor any of their
directors, officers, employees or agents, will be liable to the Trust or the
Certificate holders for taking or not taking any action, or for their errors in
judgment, except for liability caused by their willful misfeasance, bad faith or
gross negligence in the performance of their duties, or reckless disregard of
their obligations and duties, under the pooling agreement.
The Trust will indemnify CMSI and Citicorp, if Citicorp has issued a
guaranty, and their directors, officers, employees or agents, out of Trust
assets against any loss, liability or expense they incur in connection with any
legal proceedings, other than loss, liability or expense caused by their willful
misfeasance, bad faith or gross negligence in the performance of their duties,
or reckless disregard of their obligations, under the pooling agreement.
Amendments
CMSI, the issuers of credit support and the Trustee may together amend the
pooling agreement and any credit support without the registered Certificate
holders' consent
o to cure ambiguities,
o to resolve inconsistencies,
o to make other changes consistent with the pooling agreement or credit
support, including replacing the credit support in whole or part by other forms
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of credit support described in this prospectus or the supplement,
o to comply with federal tax law, including amendments to maintain the Trust
as a REMIC, or
o to establish a "qualified reserve fund" for a REMIC.
CMSI, the issuers of credit support and the Trustee may also amend the
pooling agreement and any credit support without registered Certificate holder
consent if CMSI delivers an opinion of counsel acceptable to the Trustee that
the amendment will not materially adversely affect the Certificate holders.
CMSI and the Trustee may also amend the pooling agreement and any form of
credit support in any respect with the consent of the registered holders of 2/3
of the principal balances of the Certificates affected by the amendment, except
that
o if the amendment affects any class of Certificates differently in any
material respect than the other classes, the registered holders of 2/3 of the
principal balances of the Certificates in the differently affected class must
consent to the amendment, and
o the amendment may not (1) decrease or delay the collections on mortgage loans
or the distributions to a registered Certificate holder without the holder's
consent or (2) reduce the percentage of principal balances of Certificates whose
registered holders must consent to an amendment without the consent of the
registered holders of all Certificates of each affected class.
Compliance reports
Beginning three months after the closing date, a firm of independent public
accountants selected by CMSI will provide a compliance report to the Trustee by
March 31 of each year for affiliated mortgage loans and by September 30 of each
year for third-party loans on the servicing of the affiliated or third-party
mortgage loans.
Beginning three months after the closing date, an officer of CMSI will
deliver a certificate to the Trustee and to any registered holder of more than
50% of the Certificates by March 31 of each year for affiliated mortgage loans
and by September 30 of each year for third-party loans stating that CMSI has
fulfilled its servicing obligations throughout the preceding calendar year or
describing each default in the performance of these obligations.
Certificate holders may obtain copies of these reports or certificates by
written request to the Trustee.
List of registered holders
Unless the Trustee is also the certificate registrar, CMSI will provide the
Trustee within 15 days after receipt of the Trustee's written request the names
and addresses of all registered Certificate holders as of the most recent record
date. Upon written request of three or more registered Certificate holders, for
purposes of communicating with other registered Certificate holders about their
rights under the pooling agreement, the Trustee will give the requesting
Certificate holders access during business hours to the most recent list of
registered Certificate holders held by the Trustee. If the list is more than 90
days old on the date of the request, the Trustee will promptly request a current
list from CMSI and will give the requesting Certificate holders access to the
new list promptly after receipt.
No annual meeting
There will not be any annual or other meetings of Certificate holders.
Successors
A corporation
o that is a successor to CMSI due to a merger or consolidation, or that
otherwise succeeds to the business of CMSI, or
o any entity that is more than 50% owned by Citicorp that assumes CMSI's
obligations, will be CMSI's successor under the pooling agreement. The
assumption will not, however, release CMSI from any obligation under the pooling
agreement.
Termination of Trust
The Trust will terminate upon the distribution to the registered Certificate
holders of all amounts required to be distributed to them. The Trust can not,
however, continue for more than 21 years after the death of the last survivor of
the descendants of a certain person specified in the pooling agreement living at
the date of the pooling agreement.
CMSI will direct the Trustee to notify each registered Certificate holder in
writing in advance of the termination of the Trust. Registered holders must
surrender their Certificates in order to receive their
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final distribution. Interest will not accrue on the Certificates after the date
specified in the notice for return of the Certificates
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Book-entry and physical Certificates
Most classes of Certificates offered to the public will be book-entry
securities. That is, a single certificate for each of these classes will be
registered in the name of The Depository Trust Company, a securities depository
(DTC). DTC will thus be the only registered holder of these Certificates. Other
people will hold their Certificates in these classes indirectly through
securities intermediaries - banks, brokerage houses and other institutions that
maintain securities accounts for their customers. The securities depository will
maintain accounts showing the Certificate holdings of its participants (all of
whom will be securities intermediaries), and these securities intermediaries
will in turn maintain accounts showing the Certificate holdings of their
customers (some of whom may themselves be securities intermediaries holding
Certificates for their customers). Thus, each holder of a book-entry Certificate
will hold that Certificate through a hierarchy of intermediaries, with DTC at
the "top" and the holder's own securities intermediary at the "bottom." A person
holding a book-entry Certificate for its own account through a securities
intermediary will be the beneficial owner of the Certificate.
The Certificates of each holder of a book-entry security other than DTC will
be evidenced solely by entries on the books of the holder's securities
intermediary. A holder of a book-entry Certificate will not be able to obtain a
physical (paper) certificate evidencing the holder's ownership of the
Certificate. The book-entry system for holding Certificates through accounts
with a hierarchy of securities intermediaries leading up to a securities
depository is the system through which most publicly traded common stock is held
in the United States.
In this prospectus and the supplement, references to "Certificate holders" of
book-entry securities will generally mean the beneficial owners of Certificates.
However, for book-entry Certificates, references to actions taken by Certificate
holders will mean actions taken by DTC upon instructions from its participants,
and references to payments and notices of redemption to Certificate holders will
mean payments and notices of redemption to DTC as the registered holder of the
Certificates for distribution to participants in accordance with DTC's
procedures.
Beneficial owners of book-entry Certificates should realize that, unless
otherwise stated in this prospectus or the supplement, the Trust will make all
distributions on their Certificates to DTC, and will send all required reports
and notices solely to DTC. Similarly, the Trustee will accept notices and
directions solely from the registered holders of Certificates, which for
book-entry Certificates will mean DTC. DTC and the securities intermediaries are
generally required by law to deposit the distributions in the appropriate
customers' accounts and to transmit notices and directions from the Trust to
their customers and from their customers to the Trust through the chain of
intermediaries. However, beneficial owners of book-entry Certificates may find
it somewhat more difficult to pledge their Certificates because of the lack of a
physical certificate, and may experience delays in receiving distributions on
their Certificates, since distributions will be initially made to DTC and must
then travel down the hierarchy of intermediaries to the beneficial owner's own
account with its securities intermediary.
Neither the Trustee, CMSI nor any of their affiliates will be responsible for
any action or failure to act of a securities depository or securities
intermediary, including any action or inaction involving a securities
depository's or securities intermediary's
o distributions to its participants or customers,
o transmission of notices, directions and other communications to or from
beneficial owners of Certificates, or
o record keeping
and will not be liable to beneficial owners of Certificates for any such action
or failure to act. Nor will the Trustee, CMSI or any of their affiliates have
any obligation to beneficial owners to monitor, supervise or review any actions
or procedures of a securities depository or securities intermediary.
DTC is a limited purpose trust company organized under the laws of the State
of New York, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code and a "clearing
agency" registered under section 17A of the Securities Exchange Act of 1934.
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Physical Certificates
Physical Certificates will be transferable and exchangeable at the offices of
the Trustee. No service charge will be imposed for any registration of transfer
or exchange, but the Trustee may require a payment sufficient to cover any tax
or other governmental charge incurred.
Beneficial owners of book-entry Certificates will receive physical
Certificates representing their ownership interests only if
o CMSI advises the Trustee in writing that DTC is no longer willing or able to
discharge properly its responsibilities as depository for the book-entry
Certificates and CMSI is unable to locate a qualified successor,
o CMSI, at its option, elects to terminate the book-entry system, or
after CMSI's resignation or dismissal as servicer under the pooling agreement,
beneficial owners of at least 51% of each outstanding class of book-entry
Certificates advise the Trustee, through the securities depository, in writing
that continuation of the book-entry system is no longer in the beneficial
owners' best interest.
The Trustee will notify all beneficial owners, through DTC, of the availability
of physical Certificates.
ERISA considerations
The Employee Retirement Income Security Act of 1974 (ERISA) prohibits some
transactions between those employee benefit plans to which it applies (ERISA
plans) and persons who have specified relationships to the ERISA plan. (For
purposes of this discussion, an individual retirement account established under
the Internal Revenue Code (an IRA) will be an ERISA plan.)
"Plan asset" regulations
If an ERISA plan purchases Certificates, the underlying assets of the Trust -
for example, mortgage loans - might be considered assets of the ERISA plan, or
"plan assets." As a consequence, the plan's fiduciary might be considered to
have delegated asset management responsibility to the Trustee. In such
circumstances, some operation of the Trust might be considered prohibited
transactions under ERISA.
ERISA does not define "plan assets." However, regulations under ERISA state
conditions under which an ERISA plan, in acquiring an "equity interest" in an
entity (eg, a Certificate in a Trust) would be considered to acquire the
underlying assets of the entity (such as the mortgage loans). These underlying
assets would therefore become "plan assets." Because of the factual nature of
the regulations, CMSI cannot predict whether the Trust's assets would be "plan
assets." For example, the regulations state that the underlying assets of an
entity are not "plan assets" as long as less than 25% of the value of each class
of equity interest is held by ERISA plans, iras, and employee benefit plans not
subject to ERISA.
Class exemption
U.S. Department of Labor Prohibited Transaction Class Exemption 83-1 for certain
transactions involving mortgage pool investment trusts (PTE 83-1) exempts the
acquisition and holding of certain residential mortgage pool pass-through
interests by ERISA plans from ERISA's prohibited transaction provisions. PTE
83-1 sets forth "general conditions" and "specific conditions" to its
applicability. CMSI believes that the general conditions would be met for the
purchase and holding of senior classes of Certificates in a Trust that holds
mortgage loans other than cooperative apartment loans. PTE 83-1 might not apply,
however, to the purchase and holding of
o senior classes of Certificates in a Trust that holds cooperative apartment
loans,
o senior classes of Certificates of a PO or IO class,
o subordinated classes of Certificates or
o residual Certificates.
Accordingly, CMSI will not permit the registration of a transfer of a
Certificate of a subordinated or residual class unless the transferee
o executes a representation letter satisfactory to the Trustee stating
that (1) it is not, and is not acting on behalf of an ERISA plan or using an
ERISA plan's assets to effect the purchase or (2) if it is an insurance company,
the source of funds used to purchase subordinated Certificates is an "insurance
company
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general account" (as defined in Prohibited Transaction Class Exemption 95-60
("PTE 95-60")), and there is no ERISA plan for which the general account's
reserves and liabilities for the contract(s) held by or on behalf of the plan
and all other ERISA plans maintained by the same employer (or an affiliate as
defined in PTE 95-60) or by the same employee organization, exceed 10% of the
total of all reserves and liabilities of the general account (as determined
under PTE 95-60) at the date of acquisition or
o delivers (1) an opinion of counsel satisfactory to the Trustee and CMSI that
the purchase or holding of the Certificate by or on behalf of the plan will not
result in the assets of the Trust being deemed to be "plan assets" and subject
to the prohibited transaction provisions of ERISA and the Internal Revenue Code
or any similar law and will not subject CMSI (or its designee) or the Trustee to
any obligation in addition to those undertaken in the pooling agreement and (2)
such other opinions of counsel, officers' certificates and agreements as the
Trustee and CMSI may require in connection with the transfer.
Trusts of Certificates
It is not clear whether PTE 83-1 applies to senior class Certificates in a Trust
that itself holds interests in a REMIC or similar entity.
The regulations state that plan assets do not include the mortgages
underlying an agency certificate. Accordingly, even if Certificates in a Trust
were owned largely or entirely by ERISA plans, the mortgages underlying agency
certificates held by the Trust would not be plan assets. Accordingly, if CMSI
sponsors a Series where the Trust holds interests in a REMIC or similar entity,
and if no other ERISA prohibited transaction exemption appears applicable, CMSI
intends to include no such interests in a REMIC except agency certificates or
other interests that would meet the general conditions of PTE 83-1 if purchased
directly by an ERISA plan. CMSI further intends to structure the offering of the
Series and the operations of the Trust and to take other actions that are
reasonable and appropriate to reduce the risk of an ERISA prohibited
transactions should PTE 83-1 be held inapplicable to the acquisition and holding
of such certificates.
Underwriters' exemptions
Most underwriters of mortgage-backed securities have obtained ERISA prohibited
transaction exemptions that are in some respects broader than PTE 83-1. These
exemptions only apply to mortgage-backed securities that are sold in offerings
for which the underwriter is the sole or a managing underwriter, or a selling or
placement agent. The supplement will describe any such exemption.
Other prohibitions
An ERISA plan may not purchase Certificates with assets of the ERISA plan if an
affiliate of CMSI (such as Citibank or Salomon Smith Barney Inc.) or of the
Trustee either
o has discretion to invest such assets,
o has authority or responsibility to give, or regularly gives, investment
advice for such assets for a fee and pursuant to an agreement or understanding
that the advice will serve as a primary basis for investment decisions for the
assets and that such advice will be based on the particular investment needs of
the ERISA plan, or
o is an employer maintaining or contributing to the ERISA plan. By agreeing to
acquire a Certificate for an ERISA plan, an ERISA plan fiduciary represents and
warrants to the underwriter and to CMSI that the assets of the ERISA plan used
in the purchase are not come described in the preceding sentence.
Investor's responsibility
Due to the complexity of the ERISA rules and the severity of the penalties
imposed upon persons involved in prohibited transactions, it is important that
potential ERISA plan investors consult with their counsel regarding the
consequences under ERISA of their acquisition and ownership of Certificates.
Employee benefit plans that are not subject to ERISA may be subject to
similar federal, state, or local laws. Fiduciaries of such plans should make
their own determinations of the need for and availability of exemptive relief
under any such laws.
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Legal investment considerations
SMMEA
The senior classes of Certificates will generally be, and the subordinated
classes of Certificates and the residual Certificates may be, "mortgage related
securities" under the Secondary Mortgage Market Enhancement Act of 1984 (SMMEA).
The supplement states which classes of Certificates are mortgage related
securities.
Mortgage related securities under SMMEA are legal investments for an entity
created or existing under state or federal law whose authorized investments are
subject to state regulation to the same extent that obligations issued or
guaranteed by the United States or any of its agencies or instrumentalities are
legal investments for the entity.
A Certificate will be a SMMEA mortgage related security so long as
o it is rated in one of the two highest rating categories by at least one
nationally recognized statistical rating organization and
o it is part of a Series of Certificates in a Trust consisting of mortgage
loans originated by the types of originators specified in SMMEA.
State overrides of SMMEA
SMMEA permitted states that acted before October 3, 1991 to override some of its
provisions. Some states have overridden parts of SMMEA and limited the ability
of some entities (in particular, insurance companies) to invest in "mortgage
related securities," usually by requiring the investors to rely solely upon
existing state law rather than SMMEA. Investors governed by the laws of these
states may be limited in their ability to invest in Certificates.
Federal depository institutions
SMMEA also permits
o federal savings and loan associations and federal savings banks to invest in,
sell or otherwise deal in mortgage related securities without limit,
o federal credit unions to invest in mortgage related securities, and
o national banks to purchase mortgage related securities for their own account
without regard to the limitations generally applicable to investment securities,
subject in each case to regulations of their federal regulators.
In this connection,
o the Comptroller of the Currency has authorized national banks to purchase and
sell mortgage related securities for their own account, without limitation as to
a percentage of the bank's capital and surplus (but subject to compliance with
general standards of "safety and soundness" and retention of credit
information),
o the National Credit Union Administration has authorized federal credit
unions to invest in mortgage related securities (other than stripped mortgage
related securities, residual interests in mortgage related securities and
commercial mortgage related securities) under limited circumstances, and
o the Office of Thrift Supervision has issued guidelines for thrift
institutions to follow in managing interest rate risk in purchasing investment
securities.
Investor responsibility
Depository institutions considering an investment in the Certificates should
also review the "Supervisory policy statement on investment securities and
end-user derivatives activities" of the Federal Financial Institutions
Examination Council, which has been adopted by the Federal Reserve Board, the
FDIC, the Comptroller of the Currency, the Office of Thrift Supervision and the
National Credit Union Administration. The policy statement sets forth guidelines
that depository institutions must follow in managing risks (including market,
credit, liquidity, operational (transaction), and legal risks) applicable to all
securities (including mortgage pass-through securities and mortgage-derivative
products) used for investment purposes.
Institutions whose investment activities are subject to regulation by federal
or state authorities should review rules, policies and guidelines of these
authorities before purchasing any Certificates, as some Certificates (in
particular, Certificates that are entitled solely or disproportionately to
distributions of principal or interest) may be considered unsuitable
investments, or may otherwise be re-
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stricted, under such rules, policies or guidelines (in some instances
irrespective of SMMEA).
The foregoing does not consider the applicability of statutes, rules,
regulations, orders, guidelines or agreements generally governing investments
made by particular investors, including "prudent investor" provisions,
percentage-of-assets limits and provisions that restrict or prohibit investment
in securities that are not "interest-bearing" or "income-paying" or are issued
in book-entry form.
Except for the status of some Certificates as "mortgage related securities,"
no representation is made as to the proper characterization of any Certificates
for legal investment purposes, financial institution regulatory purposes, or
other purposes, or as to the ability of particular investors to purchase
Certificates under legal investment restrictions. The uncertainties described
above (and any unfavorable future determinations concerning legal investment or
financial institution regulatory characteristics of the Certificates) may
adversely affect the liquidity of the Certificates.
Accordingly, investors whose investment activities are subject to legal
investment laws and regulations, regulatory capital requirements or review by
regulatory authorities should consult with their own legal advisors in
determining whether and to what extent the Certificates of any class will be
legal investments or be subject to investment, capital or other restrictions,
and whether SMMEA has been overridden in any jurisdiction relevant to the
investor.
Taxation of Certificate holders
The following taxation sections discuss in general terms the anticipated
material federal income tax consequences to Certificate holders of the purchase,
ownership and disposition of Certificates representing regular interests in the
REMIC. The Trust will consist of one or more REMICs. The discussion does not
address all federal income tax consequences that may be applicable to particular
categories of investors, some of whom may be subject to special rules. Moreover,
the discussion is based on statutes, regulations and other authorities that are
subject to change or differing interpretations, and any change or interpretation
could apply retroactively. Investors should consult their own tax advisors in
determining the federal, state, local and other tax consequences to them of the
purchase, ownership and disposition of Certificates. In this tax discussion,
references to the "Certificate holder" or "holder" generally mean the beneficial
owner of a Certificate. Unless otherwise stated, all section references are to
the Internal Revenue Code.
Taxation of Certificates - general
Certificates will generally be taxed as if they were newly originated debt
instruments. In particular, interest, original issue discount (discussed below)
and market discount (discussed below) on a Certificate will be ordinary income
to the holder, and distributions of principal on a Certificate will be a return
of capital to the extent of the holder's basis in the Certificate.
Accrual method
Each Certificate holder must use the accrual method of accounting for
Certificates, regardless of the method of accounting it otherwise uses.
Original issue discount
All accrual Certificates will be issued with original issue discount (or OID),
and others classes of Certificates may be issued with OID. OID for a debt
instrument generally refers to the amount by which the instrument's original
issue price is less than its stated redemption price at maturity.
Holders of Certificates issued with OID must generally include the OID in
ordinary income for federal income tax purposes as it accrues, in accordance
with a constant yield method that takes into account the compounding of
interest. This generally means that a Certificate holder will pay tax on accrued
OID before the holder receives the related cash distribution.
The Internal Revenue Code and implementing regulations for OID (the OID
rules) do not adequately address some issues relevant to securities that, like
the Certificates, may be prepaid. To the extent the OID rules do not address an
issue, CMSI, in calculating OID, will generally apply the methodology described
in the Conference Committee Report to the
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Internal Revenue Code of 1986 Act (the Conference Committee Report). Investors
should realize, however, that the Internal Revenue Service (the IRS) may take a
different position on the issue. Moreover, the OID rules include an anti-abuse
rule that allows the IRS to depart from the OID rules to ensure a reasonable tax
result.
CMSI will calculate the accrued OID and will report the OID to registered
holders and beneficial owners of Certificates as described in "- Reporting
requirements" below.
Calculation of OID
A Certificate will generally be treated as a single debt instrument on which
the principal is payable in installments for purposes of determining the OID
includible in a Certificate holder's income. (There is an exception for retail
class Certificates, discussed below.)
Unless the OID is de minimis (described below), a Certificate holder must
generally include in gross income for a taxable year the sum of the "daily
portions" of accrued OID for each day on which it holds the Certificate during
an accrual period, including the date of purchase but excluding the date of
disposition. CMSI will treat the monthly period ending on the day before each
distribution day as the accrual period.
Determining the daily portions of OID depends on determining (1) the amount
of OID and (2) when principal is payable on the instrument, which together
determine the rate at which OID accrues. As discussed below, principal on the
Certificates is assumed to be paid at the prepayment rate assumed in structuring
the Series.
Amount of OID. The amount of OID on a Certificate is the excess of its
"stated redemption price at maturity" over its "issue price."
The issue price of a Certificates is generally the first price at which a
substantial amount of Certificates of the same class are sold to the public
(excluding bond houses, brokers and underwriters). Although unclear under the
OID rules, CMSI intends to treat the issue price of Certificates of a class for
which there is no substantial sale as of the issue date or that are retained by
CMSI as the fair market value of the Certificate on the issue date.
The issue price of a Certificate also includes any amount the initial
Certificate holder pays for accrued interest for a period prior to the issue
date of the Certificate, unless the holder elects on its federal income tax
return to exclude that amount from the issue price and to recover it on the
first distribution day.
The stated redemption price at maturity of a Certificate always includes its
principal balance at the cut-off date. The stated redemption price at maturity
may also include distributions of interest unless the distributions are of
"qualified stated interest." Under the OID rules, qualified stated interest
generally means interest payable at a single fixed rate or at a "qualified
variable rate" (described below), provided that the interest distributions are
unconditionally distributable at intervals of one year or less during the entire
term of the Certificate. Because there is no penalty or default remedy for
nonpayment of interest on a Certificate, it is possible that no interest on any
class of Certificates will be treated as qualified stated interest. However,
except as provided in the next paragraph, because the underlying mortgage loans
provide for remedies in the event of default, CMSI intends to treat interest on
Certificates as qualified stated interest.
Distributions on the following types of Certificates will not be qualified
stated interest:
o Certificates in an accrual class,
o Certificates for which interest distributions may be deferred and added to
the principal balance, or
o Certificates in an interest-only class or a class on which interest is
substantially disproportionate to its principal amount (a so-called
"super-premium" class)
Accordingly, the stated redemption price at maturity of these Certificates will
include both their initial principal balance and all other distributions on the
Certificates. Also, if the interval between the issue date and the first
distribution day on a Certificate is shorter than the interval between
subsequent distribution days, the interest attributable to the additional days
will be included in the stated redemption price at maturity.
Any deferred interest (as defined in the supplement for a Series) that
accrues on a class of Certificates will constitute income to the holders of
those Certificates prior to the receipt of cash distributions of deferred
interest. Under the OID rules, all interest payments on Certificates that may
have deferred interest must be treated as non-qualified stated interest payments
and included in the stated redemp-
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tion price at maturity of the Certificates in computing OID.
Rate of accrual. The OID accruing in a full accrual period on a Certificate
is generally the increase in the present value of the Certificate over the
period, adjusted for distributions that are not qualified stated interest. This
amount would be the excess of
o the sum of (1) the "present value of the remaining distributions" to be made
on the Certificate as of the end of that accrual period and (2) the
distributions made on the Certificate during the accrual period that are
included in the Certificate's stated redemption price at maturity, over
o the "adjusted issue price" of the Certificate at the beginning of the accrual
period. For these purposes, the adjusted issue price of a Certificate at the
beginning of an accrual period is its issue price, increased by the aggregate
amount of OID accrued in all prior accrual periods and reduced by any
distributions included in the Certificate's stated redemption price at maturity
that were made in those prior periods.
Based on the Conference Committee Report, the present value of the remaining
distributions is calculated using the original yield to maturity of the
Certificate as the discount rate and the schedule of payments on the Certificate
at the prepayment rate assumed in structuring the Series (which is stated in the
attached supplement), adjusted for events, including actual prepayments, that
occur before the end of the accrual period.
The OID accruing during an accrual period is then divided by the number of
days in the period to determine the daily portion of OID for each day in the
period. For an initial accrual period that is shorter than a full accrual
period, the daily portions of OID must be determined according to an appropriate
allocation under any reasonable method.
Under the method described above, the daily portions of OID will generally
increase if prepayments on the mortgage loans exceed the prepayment rate assumed
in structuring the Series, and will generally decrease (but not below zero for
any period) if prepayments on the mortgage loans are slower than the assumed
prepayment rate. However, for some classes of Certificates, an increase or
decrease in prepayments on the mortgage loans can result in a change in the
priority of principal payments for that class that could increase or decrease
the daily portions of OID for those Certificates.
De minimis OID.
OID on a Certificate will be considered to be zero if the OID is less than 0.25%
of the Certificate's stated redemption price at maturity multiplied by the
weighted average maturity of the Certificate. For this purpose, weighted average
maturity is the sum of the amounts determined by multiplying (1) the number of
full years (ie, rounding down partial years) from the issue date until each
scheduled distribution of principal or OID by (2) the ratio of the amount of the
distribution to the total stated redemption price at maturity. The schedule of
distributions should be determined in accordance with the prepayment rate
assumed in structuring the Series.
Certificate holders must generally report de minimis OID pro rata as
distributions of stated redemption price at maturity are received. Such income
will be capital gain if the Certificate is held as a capital asset. However,
Certificates holders may elect to accrue all de minimis OID, as well as market
discount and market premium, under the constant yield method. See "- Election to
treat interest under the constant yield method" below.
OID on retail class Certificates
For Certificates on which principal distributions are made in a single
installment upon the request of a Certificate holder or by random lot (retail
class Certificates), CMSI intends to determine the yield to maturity based on
the anticipated payment characteristics of the class as a whole under the
prepayment rate assumed in structuring the Series. In general, OID accruing on a
retail class Certificate in a full accrual period would be its allocable share
of the OID for the entire class, as determined above. However, if there is a
distribution in reduction of all or part of the principal balance of a retail
class Certificate
o the remaining unaccrued OID allocable to the Certificate (or part) will
accrue at the time of the distribution, and
o the accrual of OID allocable to each remaining Certificate of the
class (or the principal balance of a retail class Certificate after a principal
distribution has been received) will be adjusted by reducing the present value
of the remaining payments on the class and the adjusted issue price of the class
by the principal distributed.
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CMSI believes that this treatment of retail class Certificates is consistent
with the "pro rata prepayment" rules of the OID rules, but with the rate of
accrual of OID determined based on the prepayment rate assumed in structuring
the Series.
Acquisition premium
A purchaser of a Certificate at a price greater than its adjusted issue price
but less than its stated redemption price at maturity will be required to
include in gross income the daily portions of OID on the Certificate, reduced
pro rata by a fraction, the numerator of which is the excess of its purchase
price over the adjusted issue price and the denominator of which is the excess
of the remaining stated redemption price at maturity over the adjusted issue
price. Alternatively, the purchaser may elect to treat the acquisition premium
under the constant yield method, as described in "- Election to treat interest
under the constant yield method" below.
OID on variable rate Certificates
Certificates may provide for interest based on a variable rate (variable rate
Certificates). Under the OID rules, interest is generally treated as payable at
a variable rate if
o the issue price does not exceed the original principal balance by more than a
specified amount and the interest compounds or is payable at
o least annually at current values of (1) one or more "qualified floating
rates," (2) a single fixed rate and one or more qualified floating rates, (3) a
single "objective rate," or (4) a single fixed rate and a single objective rate
that is a "qualified inverse floating rate."
A floating rate is a qualified floating rate if variations in the rate can
reasonably be expected to measure contemporaneous variations in the cost of
newly borrowed funds, where the rate is subject to a multiple that is greater
than 0.65 but not greater than 1.35. The rate may also be increased or decreased
by a fixed spread or subject to a fixed cap or floor, or a cap or floor that is
not reasonably expected as of the issue date to affect the yield of the
instrument significantly.
An objective rate is a rate (other than a qualified floating rate) that is
determined using a single fixed formula and that is based on objective financial
or economic information that is not within the control, or unique to the
circumstances, of the issuer or a related party.
A qualified inverse floating rate is a rate equal to a fixed rate minus a
qualified floating rate that inversely reflects contemporaneous variations in
the cost of newly borrowed funds. (An inverse floating rate that is not a
qualified inverse floating rate may nevertheless be an objective rate.)
OID for a Certificate bearing a variable rate of interest will accrue in the
manner described above under "Original issue discount," with the yield to
maturity and future distributions on the Certificate generally determined by
assuming that interest will be payable for the life of the Certificate based on
its initial rate (or, if different, the value of the applicable variable rate on
the pricing date). CMSI intends to treat variable interest as qualified stated
interest, other than variable interest on an interest-only or super-premium
class, which will be treated as non-qualified stated interest includible in the
stated redemption price at maturity. OID reported for an accrual period will be
adjusted for subsequent changes in the interest rate.
Although unclear under the OID rules, CMSI intends to treat Certificates
bearing an interest rate that is a weighted average of the net interest rates on
mortgage loans having fixed or adjustable rates as having qualified stated
interest. For ARMs, the applicable index used to compute interest on the
mortgage loans in effect on the pricing date (or possibly the issue date) will
be deemed to be in effect beginning with the period in which the first weighted
average adjustment date occurring after the issue date occurs. Adjustments will
be made in each accrual period either increasing or decreasing the amount of OID
reportable to reflect the actual interest rate on the Certificates.
Under the REMIC regulations, a Certificate bearing
o a variable rate under the OID rules that is tied to current values of a
variable rate (or the highest, lowest or average of two or more variable rates,
including a rate based on the average cost of funds of one or more financial
institutions), or a positive or negative multiple of such a rate (plus or minus
a specified number of basis points) or that represents a weighted average of
rates on some or all of the mortgage loans that bear either a fixed rate or a
variable rate, including such a rate that is subject to one or more caps or
floors, or
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o one or more such variable rates for one or more periods, and a different
variable rate or fixed rate for other periods,
qualifies as a regular interest in a REMIC. For OID reporting purposes, CMSI
intends to treat Certificates that qualify as regular interests under this rule
in the same manner as obligations bearing a variable rate.
A class of Certificates may not have a variable rate under the preceding
rules - for example, if the class bears different rates at different times so
that it is considered significantly "front-loaded" or "back-loaded" within the
meaning of the OID rules. Such a class might be considered to bear "contingent
interest" under the OID rules. The OID rules for the treatment of contingent
interest do not by their terms apply to Certificates. However, if final
regulations dealing with contingent interest on Certificates apply the same
principles as the OID rules, the regulations may lead to different timing of
income inclusion than would be the case under the OID rules. Furthermore,
application of such principles could lead to the characterization of gain on the
sale of contingent interest Certificates as ordinary income.
Market discount
A purchaser of a Certificate may also be subject to the "market discount" rules
of sections 1276 through 1278. Under these sections and the principles applied
by the OID rules for OID, market discount is the amount by which the purchaser's
original basis in the Certificate is exceeded (1) by the then-current principal
amount of the Certificate, or (2) for a Certificate having OID, by the adjusted
issue price of the Certificate at the time of purchase.
The purchaser will generally have to recognize ordinary income to the extent
of accrued market discount on the Certificate as distributions includible in the
stated redemption price at maturity are received, in an amount not exceeding the
distribution. Market discount would accrue in a manner to be provided in
Treasury regulations and should take into account the prepayment rate assumed in
structuring the Series. The Conference Committee Report provides that until
regulations are issued, market discount would accrue either (1) on the basis of
a constant interest rate or (2) in the ratio of stated interest allocable to the
relevant period to the sum of the interest for the period plus the remaining
interest as of the end of the period, or in the case of a Certificate issued
with OID, in the ratio of OID accrued for the relevant period to the sum of the
OID accrued for the period plus the remaining OID as of the end of the period.
The purchaser will also generally be required to treat a portion of any gain
on a sale or exchange of the Certificate as ordinary income to the extent of the
market discount accrued to the date of disposition under one of the preceding
methods, less any accrued market discount previously reported as ordinary income
as partial distributions in reduction of the stated redemption price at maturity
were received.
The purchaser also will be required to defer deduction of a portion of the
interest expense attributable to any indebtedness incurred or continued to
purchase or carry the Certificate. The deferred portion of the interest expense
would not exceed the accrued market discount on the Certificate for the taxable
year. Such deferred interest expense is, in general, allowed as a deduction not
later than the year in which the related market discount income is recognized or
the Certificate is disposed of.
As an alternative to the inclusion of market discount in income on the
preceding basis, a holder may elect to include market discount in income
currently as it accrues on all market discount instruments acquired by the
holder in that taxable year or later, in which case the interest deferral rule
will not apply. See "- Election to treat interest under the constant yield
method" below regarding an alternative manner in which the election may be made.
By analogy to the OID rules, market discount for a Certificate will be
considered to be zero if the market discount is less than 0.25% of the remaining
stated redemption price at maturity of the Certificate multiplied by the
weighted average maturity of the Certificate (determined as described above
under "- Original issue discount") remaining after the date of purchase. It
appears that de minimis market discount would be reported in a manner similar to
de minimis OID. See "- De minimis OID" above. Treasury regulations implementing
the market discount rules have not yet been issued. Investors should consult
Revenue Procedure 92-67 concerning the elections to include market discount in
income currently and to accrue market discount on the basis of the constant
yield method.
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Premium
A Certificate purchased at a cost greater than its remaining stated redemption
price at maturity generally is considered to be purchased at a premium. If a
holder holds such Certificate as a "capital asset" within the meaning of section
1221, the holder may elect under section 171 to amortize the premium under the
constant yield method. Such election will apply to all debt obligations acquired
at a premium by the holder of a Certificate held in that taxable year or
thereafter, unless revoked with the permission of the IRS. Final Treasury
regulations issued under section 171 do not by their terms apply to prepayable
debt instruments such as the Certificates. However, the Conference Committee
Report indicates a Congressional intent to apply the rules for the accrual of
market discount on installment obligations in amortizing bond premium under
section 171 on installment obligations such as the Certificates. (It is unclear,
however, whether the alternatives to the constant yield method described above
under "--Market discount" are available.) Amortizable bond premium will be
treated as an offset to interest income on a Certificate, rather than a separate
deduction item. See "--Election to treat interest under the constant yield
method" below regarding an alternative manner in which the section 171 election
may be deemed to be made.
Losses
Certificate holders must report income on the Certificates on the accrual method
of accounting, without giving effect to delays or reductions in distributions
attributable to defaults or delinquencies on the mortgage loans, except to the
extent it can be established that the losses are uncollectible. Accordingly, the
holder of a Certificate, particularly a subordinated Certificate, may have
income or may incur a diminution in cash flow as a result of a default or
delinquency, but may not be able to take a deduction (subject to the discussion
below) for the corresponding loss until a subsequent taxable year. In this
regard, investors are cautioned that while they may generally cease to accrue
interest income if it reasonably appears that the interest will be
uncollectible, the IRS may take the position that OID must continue to accrue in
spite of its uncollectibility until the debt instrument is disposed of in a
taxable transaction or becomes worthless in accordance with the rules of section
166.
Under section 166, it appears that
o a Certificate holder that is a corporation or that holds the Certificate in
connection with a trade or business should generally be allowed to deduct as
an ordinary loss, and
o other Certificate holders should generally be allowed to deduct as a short
term capital loss any loss of principal sustained during the taxable year on
account of the Certificate's becoming wholly or partially worthless.
Although the matter is not free from doubt, such non-corporate holders should
be allowed a bad debt deduction at the time a loss is allocated to the
Certificate to reflect losses resulting from any liquidated mortgage loans. The
IRS, however, could take the position that non-corporate holders will be allowed
a bad debt deduction to reflect such losses only after all the mortgage loans
remaining in the Trust have been liquidated or the Certificate has been retired.
The IRS could also assert that losses on the Certificates are deductible on some
other method that may defer such deductions for all holders, such as reducing
future cash flow for purposes of computing OID. This may create "negative" OID,
which would be deductible only against future positive OID or otherwise upon
termination of the Certificate.
While losses attributable to interest previously reported as income should be
deductible as ordinary losses by both corporate and non-corporate holders, the
IRS may take the position that losses attributable to accrued OID may only be
deducted as short-term capital losses by non-corporate holders not engaged in a
trade or business. Special loss rules are applicable to banks and thrift
institutions, including rules regarding reserves for bad debts.
Election to treat interest under the constant yield method
A Certificate holder may elect to treat all interest that accrues on the
instrument using the "constant yield method," with none of the interest being
treated as qualified stated interest. In applying the constant yield method, (1)
"interest" includes stated interest, OID, de minimis OID, market discount and de
minimis market discount, as adjusted by any amortizable bond premium or
acquisition premium and (2) the debt instrument is treated as if the instrument
were issued on the holder's acquisition date in the amount of the holder's
adjusted basis
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immediately after acquisition. It is unclear whether, for this purpose, the
prepayment rate assumed in structuring the Series would continue to apply or if
a new prepayment assumption as of the date of the holder's acquisition would
apply.
A holder generally may make such an election on an instrument by instrument
basis or for a class or group of debt instruments. However, if the holder makes
such an election with respect to a debt instrument with amortizable bond premium
or with market discount, the holder is deemed to have made elections to amortize
bond premium or to report market discount income currently as it accrues under
the constant yield method, respectively, for all premium bonds held or market
discount bonds acquired by the holder in the same taxable year or thereafter.
The election is made on the holder's federal income tax return for the year in
which the debt instrument is acquired and is irrevocable except with the
approval of the IRS.
Sale or exchange of Certificates
If a holder sells or exchanges a Certificate, the holder will recognize gain or
loss equal to any difference between the amount received and the holder's
adjusted basis in the Certificate. The adjusted basis of a Certificate will
generally equal the cost of the Certificate to the seller, increased by any OID
or market discount previously included in the seller's gross income for the
Certificate, and reduced by principal distributions on the Certificate
previously received by the seller, by any amortized premium and by any
deductible losses.
Except as described in "- Market discount," above, and except as provided in
the following paragraph, gain or loss on the sale or exchange of a Certificate
realized by an investor who holds the Certificate as a capital asset (within the
meaning of section 1221) will be capital gain or loss and will be long-term or
short-term depending on whether the Certificate has been held for more than one
year.
Gain on the sale or exchange of a Certificate will be treated as ordinary
income
o if the Certificate is held as part of a "conversion transaction" as defined
in section 1258(c), up to the amount of interest that would have accrued on the
holder's net investment in the conversion transaction at 120% of the appropriate
applicable federal rate under section 1274(d) in effect at the time the holder
entered into the transaction, minus any amount previously treated as ordinary
income with respect to any prior disposition of property that was held as a part
of such transaction,
o for a non-corporate taxpayer, to the extent the taxpayer has made an election
under section 163(d)(4) to have net capital gains taxed as investment income at
ordinary income rates, or
o to the extent that the gain does not exceed the excess, if any, of (1) the
amount that would have been includible in the gross income of the holder if its
yield on the Certificate were 110% of the applicable federal rate as of the date
of purchase, over (2) the amount of income actually includible in the gross
income of the holder for the Certificate. In addition, gain or loss recognized
on the sale of a Certificate by certain banks or thrift institutions will be
treated as ordinary income or loss pursuant to section 582(c).
Special types of holders
CMSI anticipates that Certificates held by
o a domestic building and loan association will be a "regular interest in a
REMIC" under section 7701(a)(19)(C)(xi) in the same proportion that the assets
of the REMIC would be treated as "loans . . . secured by an interest in real
property which is . . . residential real property" under section
7701(a)(19)(C)(v) or as other assets described in section 7701(a)(19)(C),
o a real estate investment trust will be "real estate assets" under section
856(c)(4)(A), and interest on the Certificates will be "interest on obligations
secured by mortgages on real property or on interests in real property" under
section 856(c)(3)(B),
in their entirety. Treasury regulations require that information be furnished
annually to beneficial owners of Certificates, and filed annually with the IRS,
concerning the percentage of the REMIC's assets meeting the qualified asset
tests that justify such characterization of these Certificates. This information
is furnished in the same manner as described below under "Reporting
requirements."
If the assets of the REMIC include buydown mortgage loans, the percentage of
those assets constituting "loans . . . secured by an interest in real property"
under section 7701(a)(19)(C)(v) might be reduced by the amount of any related
buydown subsidy accounts.
Certificates held by
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o a regulated investment company will not be "Government securities" under
section 851(b)(3)(A)(i), and
o certain financial institutions will be "evidence of indebtedness" under
section 582(c)(1).
Foreign investors
A non-U.S. person is a person that is not
o a citizen or resident of the United States,
o a corporation, partnership (with exceptions in Treasury regulations) or other
entity created or organized in or under the laws of the United States or a
political subdivision,
o an estate subject to United States federal income tax regardless of the
source of its income, or
o a trust, if a court within the United States is able to exercise primary
supervision over the administration of the trust, and one or more U.S. persons
have the authority to control all substantial decisions of the trust.
Interest, including OID, distributable to Certificate holders who are
non-U.S. persons will be considered "portfolio interest" and, therefore,
generally will not be subject to 30% United States withholding tax if the
non-U.S. person
o is not a "10% shareholder" under section 871(h)(3)(B) or a "controlled
foreign corporation" under section 881(c)(3)(C) and
o provides the Trustee, or the person who would otherwise be required to
withhold tax from distributions under section 1441 or 1442, with an appropriate
certification, signed under penalties of perjury, identifying the beneficial
owner and stating, among other things, that the beneficial owner of the
Certificate is a non-U.S.
person.
If such certification, or any other required certification, is not provided,
30% withholding will apply unless reduced or eliminated pursuant to an
applicable tax treaty or unless the interest is effectively connected with the
conduct of a trade or business within the United States by the non-U.S. person.
In the latter case, the non-U.S. person will be subject to United States federal
income tax at regular rates.
The IRS recently issued final regulations (the "New Regulations") which would
provide alternative methods of satisfying the certification requirement
described above. The New Regulations are effective January 1, 2000, although
valid withholding certificates that are held on December 31, 1999, remain valid
until the earlier of December 31, 2000 or the due date of expiration of the
certificate under the rules as currently in effect. The New Regulations will
require, for Certificates held by a foreign partnership, that (1) the
certification described above be provided by the partners rather than by the
foreign partnership and (2) the partnership provide certain information,
including a United States taxpayer identification number. A look-through rule
would apply in the case of tiered partnerships.
Backup withholding
Distributions made on the Certificates and proceeds from the sale of the
Certificates to or through certain brokers may be subject to a "backup"
withholding tax under section 3406 of 31% of "reportable payments" (including
interest distributions, OID, and, in some circumstances, principal
distributions) unless, in general, the Certificate holder complies with
reporting and/or certification procedures, including the provision of its
taxpayer identification number to the Trustee, its agent or the broker who
effected the sale of the Certificate, or the Certificate holder is otherwise an
exempt recipient under the Internal Revenue Code. Amounts withheld from
distributions on the Certificates would be refunded by the IRS or allowed as a
credit against the holder's federal income tax liability. The New Regulations
change some of the presumptions for information reporting and backup
withholding.
Reporting requirements
Reports of accrued interest, OID and information necessary to compute the
accrual of market discount will be made annually to the IRS and to individuals,
estates, non-exempt and non-charitable trusts, and partnerships who are either
holders of record of Certificates or beneficial owners who own Certificates
through a broker or middleman as nominee. All brokers, nominees and all other
non-tax-exempt holders of record of Certificates (including corporations,
non-calendar year taxpayers, securities or commodities dealers, real estate
investment trusts, investment companies, common trust funds, thrift institutions
and charitable trusts) may request such information for any calendar quarter by
telephone or in writing by contacting the person designated in IRS Publication
938 for a particular Series of Certificates. Holders through nominees must
request such information from the nominee.
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Taxation of the Trust
REMIC qualification
CMSI will elect to treat the Trust or one or more segregated pools of assets of
the Trust as one or more REMICs. References to the "Trust" or the "REMIC" in
this tax discussion will refer to the Trust or those asset pools. The supplement
states whether CMSI will make more than one REMIC election for the Trust's
assets.
Rona Daniels, vice president and tax counsel of Citibank, has advised CMSI
that in her opinion
o the Trust will qualify as one or more REMICs under current law if CMSI makes
the REMIC election(s), all parties comply with the pooling agreement, and the
Trust complies with any changes to the REMIC rules,
o and the Certificates qualify as regular interests in a REMIC.
For the Trust to remain qualified as one or more REMICs, it must continue to
comply with the REMIC rules. These include a requirement that all but a de
minimis portion of the assets of the Trust must be "qualified mortgages" or
"permitted investments," as defined in the REMIC rules.
If the Trust fails to comply with the REMIC rules during a taxable year, the
Trust may cease to be a REMIC and may become taxed as a corporation for that and
subsequent tax years. Certificates would then be treated as equity interests in
the Trust.
Taxes that may be imposed on the REMIC
Prohibited transactions. Income from "prohibited transactions" by the REMIC will
be taxed directly to the REMIC at a 100% rate. Prohibited transactions
generally include
o the disposition of mortgage loans other than for (1) substitution within two
years of the closing date for a defective (including a defaulted) mortgage loan
(or the repurchase in lieu of substitution of a defective (including a
defaulted) mortgage loan at any time), or for any mortgage loan within three
months of the closing date, (2) foreclosure, default, or reasonably foreseeable
default of a mortgage loan, (3) bankruptcy or insolvency of the REMIC, or (4) a
qualified (complete) liquidation,
o the receipt of income from assets that are not the type of mortgage loan or
investments that the REMIC is permitted to hold,
o the receipt of compensation for services, or
o the receipt of gain from disposition of cash flow investments other than
pursuant to a qualified liquidation.
It is not a prohibited transaction, however, to sell REMIC property to
prevent a default on a regular interest as a result of a default on mortgage
loans or to facilitate a clean-up call. The REMIC regulations indicate that a
substantial modification of a mortgage loan generally will not be treated as a
disposition if it is occasioned by a default or reasonably foreseeable default,
an assumption of the mortgage loan, the waiver of a due-on-sale clause or
due-on-encumbrance clause, or the conversion of an interest rate by a lender
pursuant to a convertible ARM.
Contributions to the REMIC after the closing date. In general, the REMIC will
be subject to tax at a 100% rate on the value of any property contributed to the
REMIC after the closing date. Exceptions are provided for cash contributions to
the REMIC
o during the three months following the closing date,
o made to a qualified reserve fund by a residual interest holder,
o in the nature of a guaranty, and made to facilitate a qualified liquidation
or clean-up call.
Net income from foreclosure property. A REMIC will be subject to federal
income tax at the highest corporate rate on "net income from foreclosure
property," determined by reference to the rules applicable to real estate
investment trusts. Generally, property acquired by deed in lieu of foreclosure
would be treated as "foreclosure property" for a period not exceeding the close
of the third calendar year beginning after the year of acquisition, with a
possible extension. Net income from foreclosure property generally means gain
from the sale of foreclosure property that is inventory property and gross
income from foreclosure property other than qualifying rents and other
qualifying income for a real estate investment trust.
Liquidation of the REMIC. If a REMIC adopts a plan of complete liquidation
under section 860F(a)(4)(A)(i), which may be accomplished by designating in the
REMIC's final tax return a date on which the adoption is deemed to occur, and
sells all of its assets (other than cash) within the 90-day period beginning on
that date, the remic will not be
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subject to the prohibited transaction rules on the sale of its assets, provided
that the REMIC credits or distributes in liquidation all of the sale proceeds
plus its cash (other than amounts retained to meet claims) to Certificate
holders within the 90-day period.
Legal aspects of mortgage loans
Mortgages and deeds of trust
The mortgage loans will be secured by either mortgages or deeds of trust,
depending on the prevailing practice in the state in which the mortgaged
property is located. A mortgage or a deed of trust creates a lien upon the
mortgaged property and represents the security for the repayment of an
obligation that is customarily evidenced by a promissory note or a bond. The
lien created by the mortgage or deed of trust is not prior to a lien for real
estate taxes and assessments and certain other liens. Priority over other
mortgages and deeds of trust depends on their terms and generally on the order
in which the mortgages or deeds of trust are recorded with a state, county or
municipal office.
There are two parties to a mortgage, the mortgagor, who is the
borrower/homeowner or the land trustee (as described below), and the mortgagee,
who is the lender. In keeping with the terminology used elsewhere in this
prospectus and the supplement, we shall generally refer to the mortgagor as the
"homeowner" or "borrower" and the mortgagee as the "lender." For a land trust,
title to the property is held by a land trustee under a land trust agreement,
while the borrower/homeowner is the beneficiary of the land trust; at
origination of a mortgage loan involving a land trust, the borrower signs a
separate undertaking to the land trustee to make payments on the mortgage note.
The security arrangements for a living trust (also known as a family trust or
inter vivos trust) are similar to those for a land trust, except that the
borrower signs the mortgage note.
Although a deed of trust is similar to a mortgage, a deed of trust formally
has three parties, the trustor (similar to a mortgagor), who is the homeowner
and may or may not be the borrower, the beneficiary (similar to a mortgagee),
who is the lender, and the trustee, a third-party grantee. Under a deed of
trust, the trustor grants the property, irrevocably until the debt is paid, in
trust, generally with a power of sale, to the trustee to secure payment of the
obligation.
The lender's authority under a mortgage and the trustee's authority under a
deed of trust are governed by law, the express provisions of the mortgage or
deed of trust, and, in some cases, the directions of the beneficiary.
Foreclosure
Foreclosure of a deed of trust is generally accomplished by a non-judicial
trustee's sale under a specific provision in the deed of trust that authorizes
the trustee to sell the property upon a default by the borrower under the terms
of the note or deed of trust. In some states, the trustee must record a notice
of default and send a copy to the borrower-trustor and to any person who has
recorded a request for a copy of a notice of default and notice of sale. In
addition, the trustee in some states must provide notice to any other individual
having an interest in the real property, including any junior lienholders. The
trustor, borrower or any person having a junior encumbrance on the real estate
may, during a reinstatement period, cure the default by paying the entire amount
in arrears plus the costs and expenses incurred in enforcing the obligation.
Generally, state law controls the amount of foreclosure expenses and costs,
including attorney's fees, which may be recovered by a lender. If the deed of
trust is not reinstated, a notice of sale must be posted in a public place and,
in most states, published for a specific period of time in one or more
newspapers. In addition, some state laws require that a copy of the notice of
sale be posted on the property or the courthouse door of the county in which the
property is located, recorded and sent to all parties having an interest in the
real property.
An action to foreclose a mortgage is an action to recover the mortgage debt
by enforcing the lender's rights under the mortgage. It is regulated by statutes
and rules and subject throughout to the court's equitable powers. For example,
in Texas it is necessary to give both notice of intent to accelerate as
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well as notice of acceleration of an installment note, and in New Jersey it is
also necessary to give a notice of intent to foreclose. Generally, a homeowner
is bound by the terms of the mortgage note and the mortgage as made and cannot
be relieved from his or her default. However, since a foreclosure action is
equitable in nature and is addressed to a court of equity, the court may relieve
a homeowner of a default and deny the lender foreclosure on proof that
o the homeowner's default was neither willful nor in bad faith and
o the lender's action established a waiver, or fraud, bad faith, oppressive or
unconscionable conduct that warrants a court of equity to refuse affirmative
relief to the lender. Under certain circumstances a court of equity may relieve
the homeowner from an entirely technical default if the default was not willful.
A foreclosure action is subject to most of the delays and expenses of other
lawsuits if defenses or counterclaims are interposed, sometimes requiring up to
several years to complete. Substantial delay and expense may be incurred if the
defaulting homeowner files a petition under the federal bankruptcy laws before
the initiation of a foreclosure action or during its pendency. Moreover, recent
judicial decisions suggest that a non-collusive, regularly conducted foreclosure
sale may be challenged as a fraudulent conveyance, regardless of the parties'
intent, if a court determines that the sale was for less than fair consideration
and such sale occurred while the homeowner was insolvent and within one year (or
within the statute of limitations if the trustee in bankruptcy elects to proceed
under state fraudulent conveyance law) of the filing of bankruptcy. Similarly, a
suit against the debtor on the mortgage note or bond may take several years.
In a foreclosure under either a mortgage or a deed of trust, the sale by the
referee or other designated officer or by the trustee is a public sale. However,
because of the difficulty potential third party purchasers at the sale have in
determining the exact status of title and because the physical condition of the
property may have deteriorated during the foreclosure proceedings, it often
happens that no third party purchases the property at the foreclosure sale.
Rather, it is more common for the lender to purchase the property from the
trustee or referee for an amount equal to the principal amount of the mortgage
or deed of trust plus accrued and unpaid interest and the expenses of
foreclosure. Thereafter, the lender will assume the burdens of ownership,
including obtaining casualty insurance, paying real estate taxes and any special
municipal assessments that have priority over the mortgage and making repairs at
its own expense to make the property suitable for sale. The lender will commonly
obtain the services of a real estate broker and pay the broker's commission in
connection with the sale of the property. Depending upon market conditions, the
ultimate proceeds of the sale of the property may not equal the lender's
investment in the property. A loss may be reduced by the receipt of any mortgage
insurance proceeds.
CMSI is not required to expend its own funds to foreclose on a defaulted
mortgage loan unless it determines that foreclosure would increase the net
proceeds of liquidation available for distribution to Certificate holders and
that its expenditures will be recoverable. There may be circumstances - for
example, the possibility of incurring liability for environmental damage or a
substantial decline in the value of the underlying property that would cause
CMSI to elect not to foreclose on a defaulted mortgage loan.
Foreclosure of a mortgage is accomplished in New York, New Jersey and Florida
in most cases, and in Illinois in all cases, by an action in foreclosure
culminating in a judicial sale (or, in Illinois, a judicially approved sale) of
the real property by a court-appointed referee, sales agent or other official
following a judgment of foreclosure. A foreclosure action may enable a lender to
realize upon its security and to bar the homeowner, persons with liens
subordinate to the foreclosing lender, and other persons with interests in the
real property from their statutory rights and "equity of redemption."
The doctrine of equity of redemption provides that, until the property
covered by a mortgage has been sold in accordance with a properly conducted
foreclosure and foreclosure sale, those having an equity of redemption may
redeem the property by paying the entire debt with interest and, if a
foreclosure action is pending, all or part of the costs of the action. Those
having a statutory right or equity of redemption must be made parties and duly
summoned to the foreclosure action in order for their statutory right or equity
of redemption to be barred.
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In Connecticut a court in its discretion may order either a foreclosure by
judicial sale or strict foreclosure. Generally, Connecticut courts grant strict
foreclosure unless the United States is a party or the court upon the motion of
a party or upon its own motion determines that the net value of the mortgaged
property is materially in excess of the debt being foreclosed. If a court orders
strict foreclosure, it will establish a "law day" for each defendant in the
foreclosure action. The time between the entry of the judgment of foreclosure
and the first law day will be set by the court as at least 20 days after the
date of the judgment. The first law day will be for the owner of the mortgaged
property, and then, in sequence, there will be a law day for each party having a
lien on, or other interest in, the mortgaged property that is junior to the
foreclosing lender's interest, in inverse order of their priority. Unless a
party assigned a prior law day redeems by paying the debt due the foreclosing
lender in full, each party will have the right on his law day to redeem the
mortgaged property by paying off the foreclosing lender; after redemption, the
redeeming party will own the mortgaged property subject to any other liens or
interests as to which a law day has not passed. If a party fails to redeem on
his law day, his rights in the mortgaged property will be extinguished. If no
party redeems, the foreclosing lender becomes the owner of the mortgaged
property, subject to other liens or interests that are prior to the mortgage
foreclosed or as to which the holders were not parties to the foreclosure
action. If the court orders foreclosure by sale rather than strict foreclosure,
a committee is appointed by the court to sell the mortgaged property at auction.
The proceeds of the sale are then distributed first to pay the costs of the sale
and then to satisfy the debts of the parties in the order of their priority to
the extent the proceeds permit.
Upon commencement of a foreclosure action on a Connecticut mortgage, a
homeowner who is unemployed or under-employed may, in certain circumstances, be
granted a stay of the foreclosure proceedings not to exceed six months, and a
restructuring of the mortgage debt to add unpaid interest and certain other
charges to the outstanding principal amount of the debt. The total amount of the
restructured debt may not exceed the larger of the original mortgage debt or 90%
of the fair market value at the time of restructuring and the restructured
payments must be made over the remaining portion of the original term of the
mortgage.
In California, foreclosure can be judicial or nonjudicial. The primary
distinction between a judicial and a nonjudicial foreclosure is that in a
judicial sale a deficiency judgment may be obtained, while in a non-judicial
foreclosure, no deficiency judgment is allowed. Since California borrowers are
protected by anti-deficiency legislation for most purchase-money deeds of trust,
the lender will, in almost all instances, pursue non-judicial foreclosure. A
second difference between judicial and non-judicial foreclosures is that in the
former, if the lender chooses to maintain its right to a deficiency judgment,
the homeowner may redeem the property by paying the amount bid at the sale plus
statutory fees, costs and interest for a period of three months (if the proceeds
of sale are sufficient to pay the lender in full) or one year (if the sale
proceeds are insufficient to pay the lender in full) after the sale. The
purchaser at the sale, whether it is the lender or a third party, may not demand
possession of the property until expiration of the redemption period, although,
the redeemer will be required to pay reasonable rental value upon redemption.
A lender may accept a deed in lieu of foreclosure instead of pursuing either
judicial or nonjudicial foreclosure. By accepting a deed in lieu of foreclosure,
the lender takes the property back subject to any junior liens, which would be
subordinated or released of record.(1)
In California, a borrower has until 5 days before a trustee sale to reinstate
the loan. California law can delay foreclosure and collection of late charges if
a lender participates in the sale of credit disability
- ----------------------
(1) Even a transfer at a nonjudicial foreclosure sale has been held by one
federal court of appeals to constitute a fraudulent conveyance. The United
States Court of Appeals for the Ninth Circuit (in which California is located),
however, has held to the contrary. Amendments to the federal bankruptcy laws
addressed this conflict, at least in the bankruptcy context (as opposed to a
state court fraudulent conveyance claim), but not with complete clarity. It is
probable that a court would interpret these amendments to permit challenging a
nonjudicial foreclosure sale as a fraudulent conveyance if the property is worth
significantly more than the amount paid at the sale.
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insurance in connection with one of its loans and the borrower suffers a
disability.(2)
In Illinois, a borrower in a mortgage foreclosure suit is granted the right
to reinstate a mortgage within 90 days after the date the court obtains
jurisdiction over all homeowners for the mortgaged property. If this right is
exercised, the delinquent borrower need only pay the actual delinquency costs
and reasonable attorney fees, but not any amount due as a result of an
acceleration provision in the mortgage note. As a result, the borrower may
unilaterally reinstate the mortgage loan and terminate the foreclosure
proceedings. In addition, when the lender bids less than the total debt at the
judicial sale, Illinois law provides the borrower with a special 30-day right of
redemption after the approval of the judicial sale in the foreclosure of a
single-family residence. Upon exercise of such right, the borrower need only
redeem by paying the amount of the sale price, plus interest and costs, and not
the deficiency. Many Illinois mortgages, however, give the homeowners greater
contractual rights to reinstate a mortgage than are granted under Illinois
statutes.
Cooperatives
All cooperative apartments relating to cooperative apartment loans are located
in New York, New Jersey, Illinois, Maryland and the District of Columbia. The
private, non-profit, cooperative apartment corporation owns all the real
property that comprises the project, including the land, separate dwelling units
and all common areas. The cooperative is responsible for project management and,
in most cases, payment of real estate taxes and hazard and liability insurance.
If there is a blanket mortgage on the cooperative apartment building and/or
underlying land, as is generally the case, the cooperative must meet the
mortgage obligations. A blanket mortgage is ordinarily incurred by the
cooperative in connection with the construction or purchase of the cooperative's
apartment building.
The cooperative is owned by tenant-stockholders who, through ownership of
stock, shares or membership certificates in the corporation, receive proprietary
leases or occupancy agreements (cooperative apartment leases) that confer
exclusive rights to occupy specific units. Generally, a tenant-stockholder of a
cooperative must make a monthly payment to the cooperative representing the
tenant-stockholder's share of the cooperative's payments for its blanket
mortgage, real property taxes, maintenance expenses and other capital or
ordinary expenses.
The interest of the occupant under a proprietary leases or occupancy
agreement is generally subordinate to the interest of the holder of the blanket
mortgage; that is, if the cooperative defaults under the blanket mortgage, the
lender holding the blanket mortgage could foreclose and terminate the
cooperative apartment lease.
A blanket mortgage on a cooperative may provide financing in the form of a
mortgage that does not fully amortize, with a significant portion of principal
being due in one lump sum at final maturity. If the cooperative can not
refinance this mortgage or make the final payment, the lender could foreclose.
A foreclosure by the holder of the blanket mortgage could eliminate or
significantly diminish the value of the collateral securing a cooperative
apartment loan.
A cooperative apartment loan is evidenced by a promissory note and secured by
a security interest in the cooperative apartment lease and the related
cooperative shares. The lender takes possession of the share certificate and a
counterpart of the cooperative apartment and, if allowed under state law, a
financing statement covering the cooperative apartment lease and the cooperative
shares is filed in the appropriate state and local offices to perfect the
lender's interest in its collateral. Subject to the limitations discussed below,
upon the tenant-stockholder's default, the lender may sue for judgment on the
promissory note, dispose of the collateral at a public or private sale or
otherwise proceed against the collateral or tenant-stockholder as an individual
as provided in the security agreement covering the assignment of the cooperative
apartment lease and the pledge of cooperative shares.
The cooperative shares owned by the tenant-stockholder and pledged to the
lender are, in almost all cases, subject to restrictions on transfer, and may be
cancelled by the cooperative if the tenant-
- -------------------
(2) Citibank Service Corporation, a subsidiary of Citi FSB doing business as
Citibank Insurance Agency, sells such insurance in connection with mortgage
loans originated by Citi FSB.
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stockholder fails to pay rent or other charges owed by the tenant-stockholder,
including mechanics' liens against the cooperative apartment building incurred
by the tenant-stockholder. The cooperative can usually terminate the cooperative
apartment lease if the tenant-stockholder fails to make payments or defaults in
the performance of obligations under the lease.
Typically, the lender and the cooperative enter into a recognition agreement
that establishes the rights and obligations of both parties in the event of a
default by the tenant-stockholder under the cooperative apartment lease. A
default by the tenant-stockholder under the lease will usually constitute a
default under the security agreement between the lender and the
tenant-stockholder.
The recognition agreement generally provides that if the tenant-stockholder
defaults under the cooperative apartment lease, the cooperative will take no
action to terminate the lease until the lender has had an opportunity to cure
the default. The recognition agreement typically provides that if the
cooperative apartment lease is terminated, the cooperative will recognize the
lender's lien against proceeds from a sale of the cooperative apartment,
subject, however, to the cooperative's right to sums due under the cooperative
apartment lease. The total amount owed to the cooperative by the
tenant-stockholder, which the lender generally cannot restrict and does not
monitor, could reduce the value of the collateral below the principal balance of
the cooperative apartment loan and accrued interest.
Recognition agreements also provide that if the cooperative loan is
foreclosed, the lender must obtain the cooperative's consent before transferring
the cooperative shares or assigning the cooperative apartment lease. Generally,
the lender is not limited in any rights it may have to dispossess the
tenant-stockholders.
In New York and New Jersey, foreclosure on the cooperative shares is
accomplished by a sale in accordance with the provisions of Article 9 of the
Uniform Commercial Code (the UCC) and the security agreement relating to those
shares. Article 9 of the UCC requires that a sale be conducted in a
"commercially reasonable" manner. Whether a foreclosure sale has been conducted
in a "commercially reasonable" manner will depend on the facts in each case. In
determining commercial reasonableness, a court will look to the notice given the
debtor and the method, manner, time, place and terms of the foreclosure.
Generally, a sale conducted according to the usual practice of banks selling
similar collateral will be considered reasonably conducted. Article 9 of the UCC
provides that the proceeds of the sale will be applied first to pay the costs
and expenses of the sale and then to satisfy the indebtedness secured by the
lender's security interest. The recognition agreement, however, generally
provides that the lender's right to reimbursement is subject to the right of the
cooperative to receive sums due under the proprietary lease or occupancy
agreement. If there are proceeds remaining, the lender must account to the
tenant-stockholder for the surplus. Conversely, if a portion of the indebtedness
remains unpaid, the tenant-stockholder is generally responsible for the
deficiency. See "Anti-deficiency laws and other limitations on lenders" below.
Rights of redemption
In some states, after sale pursuant to a deed of trust or foreclosure of a
mortgage, the trustor or homeowner and foreclosed junior lienors are given a
statutory period in which to redeem the property from the foreclosure sale. The
right of redemption should be distinguished from the equity of redemption, which
is a nonstatutory right that must be exercised prior to the foreclosure sale. In
some states, redemption may occur only upon payment of the entire principal
balance of the loan, accrued interest and expenses of foreclosure. In other
states, redemption may be authorized if the former borrower pays only a portion
of the sums due. The effect of a statutory right of redemption is to diminish
the ability of the lender to sell the foreclosed property. The right of
redemption would defeat the title of any purchaser from the lender subsequent to
foreclosure or sale under a deed of trust. Consequently, the practical effect of
a right of redemption is to force the lender to retain the property and pay the
expenses of ownership until the redemption period has run. In some states, there
is no right to redeem property after a trustee's sale under a deed of trust or
after a foreclosure action.
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Anti-deficiency laws and other limitations on lenders
In some states, statutes limit the right of a lender to obtain a deficiency
judgment against the borrower following foreclosure or sale under a deed of
trust. A deficiency judgment is a personal judgment against the former borrower
equal in most cases to the difference between the net amount realized upon the
public sale of the real property and the amount due to the lender. Other
statutes require the beneficiary or lender to exhaust the security afforded
under a deed of trust or mortgage by foreclosure in an attempt to satisfy the
full debt before bringing a personal action against the borrower. Finally, other
statutory provisions limit any deficiency judgment against the former borrower
following a judicial sale to the excess of the outstanding debt over the fair
market value of the property at the time of the public sale. The purpose of
these statutes is generally to prevent a beneficiary or a lender from obtaining
a large deficiency judgment against the former borrower as a result of low or no
bids at the judicial sale.
Although CMSI may elect to pursue deficiency judgments on a mortgage loan,
CMSI does not have to do so, even if permitted by applicable law.
New York. Section 1371 of the New York Real Property Actions and Proceedings
Law provides that no award of a deficiency judgment can be made unless the court
has personal jurisdiction over the defendant. Moreover, any motion for a
deficiency judgment must be made within 90 days of the consummation of the sale
by the delivery of the deed to the purchaser. Section 1301 of the same law
limits the lender's right to bring separate actions for the mortgage debt and
for foreclosure. While the foreclosure action is pending, or after final
judgment for the plaintiff in the action, no other action may be commenced or
maintained to recover any part of the mortgage debt without leave of the court
in which the foreclosure action was brought. A deficiency judgment is limited to
the judgment amount in the foreclosure action, minus the higher of (1) the fair
and reasonable market value of the mortgaged property at the date of the
foreclosure sale or the nearest earlier date as of which the court determines a
market value or (2) the sale price of the property at the foreclosure sale.
Section 254-b of the New York Real Property Law also limits lenders' ability
to collect late payment charges. If the mortgage permits the lender to collect a
late payment charge on an installment that has become due and remains unpaid,
the charge cannot be more than 2% of the delinquent installment and cannot be
imposed on any installment paid within 15 days of the due date. In addition,
late payment charges cannot be deducted from the regular installment payments;
they must be separately charged and collected by the lender. Section 254-b also
applies to a note evidencing a cooperative loan.
In New York a lender can foreclose a mortgage on a residential leasehold
property by maintaining a traditional equitable foreclosure action. Any rent or
taxes paid by the lender following default by the leaseholder may be added to
the unpaid balance of the mortgage debt upon foreclosure. A judgment of
foreclosure of a leasehold, however, results in a public auction only if the
mortgage expressly so provides, whereas judgment of foreclosure on a real
property mortgage would result in a public auction in all cases. In the absence
of an express provision, in a leasehold mortgage, the lender can only recover a
money judgment. In this event, the lender may follow traditional enforcement
procedures. In addition to enforcement of judgment remedies, the leasehold
interest may then be subject to a post-judgment sale pursuant to an execution.
New Jersey. Under New Jersey law, an action for deficiency judgment must be
commenced within three months from the date of the foreclosure sale of a
mortgaged premises. In a deficiency action, judgment will be rendered only for
the balance due on the debt and interest and costs of the action. The obligor
under the note may file an answer in the action for deficiency, disputing the
amount of the deficiency sued for. The court will determine the amount of the
deficiency by deducting from the debt the amount determined as the fair market
value of the premises.
In New Jersey, the commencement of a deficiency action reopens the
homeowner's right of redemption for a period of six months after the entry of
any deficiency judgment, which could have an adverse effect on the ability to
transfer good title to the mortgaged premises during this period.
Connecticut. If the lender took title to the mortgaged property under strict
foreclosure but the property's value was less than the debt, Connecticut
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law permits the lender to move for a deficiency judgment in the amount of the
difference within 30 days after the redemption period expires. If there was a
foreclosure sale and the sale proceeds were insufficient to discharge the
mortgage debt in full, the lender may obtain a deficiency judgment for the
difference. If, however, the sales price is less than the value of the mortgaged
property as found by the court, one half of the difference between such value
and the sales price must be credited against the deficiency claim of the person
who sought foreclosure by sale. To avoid this outcome, lenders do not generally
seek foreclosure sales.
California. Under California's "one-action rule," a lender must include all
claims in one action and must foreclose its security before seeking to impose
any personal liability. The anti-deficiency rules limit the recovery of personal
judgments. If a foreclosure is conducted by way of a nonjudicial foreclosure
sale, California law prohibits the recovery of a deficiency judgment. In
addition, a deficiency judgment is prohibited even if judicial foreclosure is
pursued when a lender finances the purchase price of residential real property
and the property has four or fewer units and is occupied by the purchaser.
Because most mortgage loans fall into this category, the Issuer intends to
pursue nonjudicial foreclosure. While it is possible to sue the borrower for any
fraud or damage to the mortgaged property, it generally is not practical to do
so.
Texas. In Texas most foreclosures are non-judicial. However, the lender must
give both notice of intent to accelerate as well as notice of acceleration of
the installment note unless proper waiver language is included in the note. If
the real property is the debtor's residence, the debtor must be given at least
20 days to cure the default before the entire debt is due and notice of sale is
given. A suit for a deficiency judgment must be brought within two years after
foreclosure. During the pendency of the suit, the debtor can request the court
to determine the fair market value of the property foreclosed upon. If the court
determines that the fair market value of the property is greater than the bid
price paid at foreclosure, the debtor is entitled to an offset against the
deficiency claim in the amount by which the fair market value exceeds the bid
price.
Illinois. In Illinois, if the price at the foreclosure sale is less than the
total amount held due in the judgment of foreclosure plus statutory interest,
certain advances and costs incurred at the time of judicial sale, the lender may
obtain a deficiency judgment against the homeowner provided that there is
personal jurisdiction over the homeowner.
Florida. Under Florida law, if the fair market value of the mortgaged
property at the time of the foreclosure sale is less than the debt of the final
judgment, the lender may seek a deficiency judgment, either as part of the
foreclosure action or in a separate action on the note. The decision whether to
grant a deficiency judgment sought as part of the foreclosure action lies within
the sound judicial discretion of the court but is subject to any equitable
defenses by the borrower. No award of a deficiency judgment can be made, either
as part of or separately from the foreclosure action, unless the court has
personal jurisdiction over the defendant. A request for a deficiency judgment is
subject to dismissal for lack of prosecution if the deficiency relief is not
sought within one year from the foreclosure sale date.
All mortgage loans. In addition to anti-deficiency and related legislation,
numerous other federal and state statutory provisions, including the United
States Bankruptcy Code (the Bankruptcy Code), and state laws affording relief to
debtors may interfere with or affect the ability of a secured mortgage lender to
obtain payment of a mortgage loan, to realize upon collateral and/or enforce a
deficiency judgment. For example, under the Bankruptcy Code, virtually all
actions (including foreclosure actions and deficiency judgment proceedings) are
automatically stayed upon the filing of a bankruptcy petition, and, usually, no
interest or principal payments are made during the course of the bankruptcy
case. Foreclosure of an interest in real property of a debtor in a case under
the Bankruptcy Code can typically occur only if the bankruptcy court vacates the
stay, an action the court may be reluctant to take, particularly if the debtor
has the prospect of restructuring his or her debts and the mortgage collateral
is not deteriorating in value. The delay and its consequences caused by the
automatic stay can be significant. Also, under the Bankruptcy Code, the filing
of a petition in bankruptcy by or on behalf of a junior lienor (a subordinate
lender secured by a mortgage on the property) may stay a senior lender from
taking action to foreclose.
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A homeowner may file for relief under any of three different chapters of the
Bankruptcy Code. Under Chapter 7, the assets of the debtor are liquidated and a
lender secured by a lien may "bid in" (ie, bid up to the amount of the debt) at
the sale of the asset. A homeowner may also file for relief under Chapter 11 of
the Bankruptcy Code and reorganize his or her debts through his or her
reorganization plan. Alternatively, a homeowner may file for relief under
Chapter 13 of the Bankruptcy Code and address his or her debts in a
rehabilitation plan. (Chapter 13 is often referred to as the "wage earner
chapter" or "consumer chapter" because most individuals seeking to restructure
their debts file for relief under Chapter 13 rather than Chapter 11).
The Bankruptcy Code permits a mortgage loan that is secured by property that
does not consist solely of the debtor's principal residence to be modified
without the consent of the lender provided certain substantive and procedural
safeguards are met. The lender's security interest may be reduced to the
then-current value of the property as determined by the court if the value is
less than the amount due on the loan, thereby leaving the lender as a general
unsecured creditor for the difference between the value of the collateral and
the outstanding balance of the mortgage loan. A borrower's unsecured
indebtedness will typically be discharged in full upon payment of a
substantially reduced amount. Other modifications to a mortgage loan may include
a reduction in the amount of each scheduled payment, which reduction may result
from a reduction in the rate of interest, an alteration of the repayment
schedule, an extension of the final maturity date, and/or a reduction in the
outstanding balance of the secured portion of the loan. In some circumstances,
subject to the court's approval, a debtor in a case under Chapter 11 of the
Bankruptcy Code may have the power to grant liens senior to the lien of a
mortgage.
A reorganization plan under Chapter 11 and a rehabilitation plan under
Chapter 13 of the Bankruptcy Code may each allow a debtor to cure a default with
respect to a mortgage loan on the debtor's residence by paying arrearages over
time and to deaccelerate and reinstate the original mortgage loan payment
schedule, even though the lender accelerated the loan and a final judgment of
foreclosure had been entered in state court (provided no sale of the property
had yet occurred) prior to the filing of the debtor's petition under the
Bankruptcy Code. Under a Chapter 13 plan, curing of defaults must be
accomplished within the five year maximum term permitted for repayment plans,
such term commencing when repayment plan becomes effective, while defaults may
be cured over a longer period under a Chapter 11 plan of reorganization.
Generally, a repayment plan in a case under Chapter 13 and a plan of
reorganization under Chapter 11 may not modify the claim of a mortgage lender if
the borrower elects to retain the property, the property is the borrower's
principal residence and the property is the lender's only collateral. Certain
courts have allowed modifications when the mortgage loan is secured both by the
debtor's principal residence and by collateral that is not "inextricably bound"
to the real property, such as appliances, machinery, or furniture.
The general protection for mortgages secured only by the debtor's principal
residence is not applicable in a case under Chapter 13 if the last payment on
the original payment schedule is due before the final date for payment under the
debtor's Chapter 13 plan (which date could be up to five years after the debtor
emerges from bankruptcy). Under several recently decided cases, the terms of
such a loan can be modified in the manner described above. While these decisions
are contrary to the holding in a prior case by a senior appellate court, it is
possible that the later decisions will become the accepted interpretation in
view of the language of the statute. If this interpretation is adopted by a
court considering the treatment in a Chapter 13 repayment plan of a mortgage
loan, it is possible that the mortgage loan could be modified.
State statutes and general principles of equity may also provide a homeowner
with means to halt a foreclosure proceeding or sale and to force a restructuring
of a mortgage loan on terms a lender would not otherwise accept.
If a court relieves a borrower's obligation to repay amounts otherwise due on
a mortgage loan, the servicer will not be required to advance those amounts, and
any loss will be borne by the Certificate holders.
In a bankruptcy or similar proceeding of a homeowner, action may be taken
seeking the recovery, as a preferential transfer or on other grounds, of any
payments made by the homeowner under the mortgage loan before the proceeding.
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Payments on long-term debt may be protected from recovery as preferences if they
are payments in the ordinary course of business made on debts incurred in the
ordinary course of business or if the value of the collateral exceeds the debt
at the time of payment. Whether any particular payment would be protected
depends upon the facts specific to a particular transaction.
A trustee in bankruptcy may sometimes be entitled to collect its costs and
expenses in preserving or selling the mortgaged property ahead of a payment to
the lender. Moreover, the laws of certain states also give priority to certain
tax and mechanics liens over the lien of a mortgage. Under the Bankruptcy Code,
if the court finds that actions of the lender have been unreasonable and
inequitable, the mortgage may be subordinated to the claims of unsecured
creditors.
Bankruptcy reform legislation passed by the Senate in September 1998 would
have amended the Bankruptcy Code to authorize bankruptcy court judges to
disallow claims based on secured debt if the creditor failed to comply with
certain provisions of the federal Truth in Lending Act. As proposed, the
provision would apply retroactively to secured debt incurred by a debtor prior
to the date of effectiveness of the legislation, including the mortgage loans.
The House bill and the conference report did not have a similar provision, and
Congress adjourned from its last session without acting on the proposed
legislation. However, such legislation may be introduced in the current session.
If the proposed amendment to the Bankruptcy Code were to become law, a violation
of the Truth in Lending Act in the origination of a mortgage loan could result
in a total loss on the loan in a bankruptcy proceeding. Such a violation would,
however, breach a representation and warranty of CMSI, which would require CMSI
to repurchase the mortgage loan.
Various proposals to amend the Bankruptcy Code in ways that could adversely
affect the value of the mortgage loans in a trust have been considered by
Congress, and more such proposed legislation may be considered in the future. No
assurance can be given that any particular proposal will or will not be enacted
into law or that any provision so enacted will not differ materially from the
proposal described above.
The Internal Revenue Code gives priority to some tax liens over the mortgage
or deed of trust. The laws of some states give priority to certain tax liens
over the lien of the mortgage or deed of trust. Numerous federal and some state
consumer protection laws impose substantive requirements upon mortgage lenders
in the origination, servicing, and enforcement of mortgage loans. These laws
include the federal Truth in Lending Act, Real Estate Settlement Procedures Act,
Equal Credit Opportunity Act, Fair Credit Billing Act, Fair Debt Collection
Practices Act, Fair Credit Reporting Act, and related statutes and regulations.
These federal laws and state laws impose specific statutory liabilities upon
lenders who originate or service mortgage loans and who fail to comply with the
provisions of the law. In some cases, this liability may affect assignees of the
mortgage loans.
Due-on-sale clauses
For Trusts containing only fixed rate mortgage loans, at least 90% of the
scheduled principal balance of the loans on the cut-off date will contain
due-on-sale clauses. Generally, ARMs in a Trust will contain due-on-sale clauses
permitting the lender to accelerate only in situations where its security may be
impaired. These clauses permit the lender to accelerate the maturity of the loan
if the borrower sells, transfers or conveys the property or, for a land trust,
the beneficial interest.
The Garn-St Germain Depository Institutions Act of 1982 (the Garn-St Germain
Act) preempts state law that prohibits the enforcement of due-on-sale clauses.
Exempted from this preemption are some mortgage loans that were originated
o before October 15, 1982,
o for mortgaged properties in Minnesota, Michigan, New Mexico and Utah,
o by a lender that was not a federal savings and loan associations or a federal
savings bank.
However, the Garn-St Germain Act also provides for nine specific instances in
which a mortgage lender can notexercise a due-on-sale clause on a transfer of
the property. If a lender can not enforce a due-on-sale clause where the
mortgage loan has an interest rate below the current market rate, the loan will
be assumed by a new home buyer rather than being paid off. This may affect the
average life of the mortgage loans underlying a Series and the
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number of mortgage loans that may be outstanding until maturity.
Other limitations on foreclosure
Upon foreclosure, courts have imposed general equitable principles. The
equitable principles are generally designed to relieve the borrower from the
legal effect of his defaults under the loan documents. For example, courts have
o required lenders to take affirmative and expensive actions to determine the
causes for the borrower's default and the likelihood that the borrower will be
able to reinstate the loan,
o required lenders to reinstate loans or recast payment schedules in order to
accommodate borrowers who are suffering from temporary financial disability,
and
o limited the lender's right to foreclose if the default is not monetary, such
as the borrower's failure to adequately maintain the property or the borrower's
execution of a second mortgage or deed of trust affecting the property.
Courts have also been faced with the question whether federal or state
constitutional provisions reflecting due process concerns for adequate notice
require that homeowners receive notices in addition to the statutorily
prescribed minimums. For the most part, these cases have upheld the notice
provisions as being reasonable or have found that the sale by a trustee under a
deed of trust, or under a mortgage having a power of sale, does not involve
sufficient state action to afford constitutional protections to the borrower.
Applicability of usury laws
Title V of the Depository Institutions Deregulation and Monetary Control Act of
1980 (Title V), provides that state usury limitations will not apply to certain
types of residential first mortgage loans originated by certain lenders after
March 31, 1980. A similar federal statute was in effect for mortgage loans made
during the first three months of 1980. Title V authorized the states to reimpose
interest rate limits by adopting, before April 1, 1983, a law or constitutional
provision that expressly rejects an application of the federal law. In addition,
even where Title V is not so rejected, a state can limit discount points or
other charges on mortgage loans covered by Title V. Some states have reimposed
interest rate limits and/or limited discount points or other charges.
CMSI will warrant to the Trustee on the closing date that each mortgage loan
was originated in compliance in all material respects with applicable state law,
including usury laws.
Environmental considerations
Mortgaged properties will be subject to federal, state, and local environmental
protection laws. These laws may regulate
o emissions of air pollutants,
o discharges of wastewater or storm water,
o generation, transport, storage or disposal of hazardous waste or hazardous
substances,
o operation, closure and removal of underground storage tanks,
o removal and disposal of asbestos-containing materials
o management of electrical or other equipment containing polychlorinated
biphenyls (popularly known as "PCBs").
Failure to comply with these laws can result in significant penalties, including
civil and criminal fines. Under the laws of certain states, environmental
contamination on a property may give rise to a lien on the
property to ensure the availability and/or reimbursement of cleanup costs.
Generally, all subsequent liens on the property are subordinated to such a lien
and, in some states, even prior recorded liens are subordinated to such liens
(superliens). The Trustee's security interest in a property subject to a
superlien could be adversely affected.
Under the federal Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), a secured party that takes a deed in lieu of
foreclosure, purchases a mortgaged property at a foreclosure sale, operates a
mortgaged property or undertakes certain types of activities that may constitute
"management" of the property may become liable in some circumstances for cleanup
costs if hazardous wastes or hazardous substances have been released or disposed
of on the property. Cleanup costs may be substantial and could exceed the value
of the property and the aggregate assets of the owner or operator. CERCLA
imposes strict, as well as joint and several, liability for environmental
remediation and/or damage costs on several classes of "potentially responsible
parties," including current "owners and/or operators" of property, regardless
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of whether those owners or operators caused or contributed to contamination on
the property. In addition, owners and operators of properties that generate
hazardous substances that are disposed of at other off-site locations may be
held strictly, jointly and severally liable for environmental remediation and/or
damages at the off-site locations. Many states also have laws that are similar
to CERCLA. Liability under CERCLA or under similar state law could exceed the
value of the property itself as well as the aggregate assets of the property
owner.
The law is unclear as to whether and under what precise circumstances cleanup
costs, or the obligation to take remedial actions, could be imposed on a secured
lender such as the Trust. Under the laws of some states and under CERCLA, a
lender may be liable as an owner or operator for costs of addressing releases or
threatened releases of hazardous substances on a mortgaged property if the
lender or its agents or employees have "participated in the management" of the
operations of the borrower, even though the environmental damage or threat was
caused by a prior owner or current owner or operator or other third party.
Excluded from CERCLA's definition of "owner or operator," is a person "who
without participating in the management of . . . [the] facility, holds indicia
of ownership primarily to protect his security interest" (the secured creditor
exemption). This exemption for holders of a security interest such as a secured
lender applies only to the extent that the lender seeks to protect its security
interest in the contaminated facility or property. Thus, if a lender's
activities begin to encroach on the actual management of the facility or
property, the lender faces potential liability as an "owner or operator" under
CERCLA. Similarly, when a lender forecloses and takes title to a contaminated
facility or property, the lender may incur potential CERCLA liability if, for
example, it holds the facility or property as an investment (including leasing
the facility or property to a third party), fails to market the property in a
timely fashion or fails to properly address environmental conditions at the
property or facility.
The Resource Conservation and Recovery Act (RCRA), contains a similar secured
creditor exemption for lenders who hold a security interest in petroleum
underground storage tanks (USTs) or in real estate containing a UST, or that
acquire title to a UST or facility or property on which such a UST is located.
As under CERCLA, a lender may lose its secured creditor exemption and be held
liable under RCRA as a UST owner or operator if such lender or its employees or
agents participate in the management of the UST. And, if the lender takes title
to or possession the UST or the real estate containing the UST, under certain
circumstances the secured creditor exemption may be unavailable.
Court decisions have taken varying views of the scope of the secured creditor
exemption, leading to administrative and legislative efforts to provide guidance
to lenders on the scope of activities that would trigger CERCLA and/or RCRA
liability. Until recently, these efforts have failed to provide substantial
guidance.
On September 30, 1996, however, the President signed into law legislation
intended to clarify the scope of the secured creditor exemption under both
CERCLA and RCRA. This legislation more explicitly defined the kinds of
"participation in management" that would trigger liability under CERCLA and
specified certain activities that would not constitute "participation in
management" or otherwise result in a loss of the secured creditor exemption
before foreclosure or during a workout period. The legislation also clarifies
the extent of protection against foreclosure liability under CERCLA. The
legislation also authorizes regulatory clarifications of the scope of the
secured creditor exemption for purposes of RCRA, similar to the statutory
protections under CERCLA. However, since the courts have not yet had the
opportunity to interpret the new statutory provisions, the scope of the
additional protections offered by the new law is not fully defined. It also is
important to note that the new legislation does not offer complete protection to
lenders and that risk of liability remains.
If a secured lender does become liable, it may be entitled to bring an action
for contribution against the owner or operator who created the environmental
contamination or against some other liable party, but that person or entity may
be bankrupt or otherwise judgment-proof. It is therefore possible that cleanup
or other environmental liability costs could become a liability of the Trust and
occasion a loss to the Trust and to Certificate holders in certain
circumstances. The new secured creditor amendments to CERCLA also affect the
potential for
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liability in actions by either a state or a private party under other federal or
state laws which may impose liability on "owners or operators" but do not
incorporate the secured creditor exemption.
Traditionally, residential mortgage lenders have not taken steps to evaluate
whether hazardous wastes or hazardous substances are present on a mortgaged
property prior to origination of the mortgage loan or prior to foreclosure or
accepting a deed in lieu of foreclosure. Neither CMSI nor any originator has
made such evaluations prior to the origination of the mortgage loans, and CMSI
does not require that originators who sell mortgage loans to it make such
evaluations. CMSI is not required to undertake any such evaluations prior to
foreclosure or accepting a deed in lieu of foreclosure. CMSI does not make any
representations or warranties or assume any liability with respect to: the
environmental condition of any mortgaged property; the absence or presence of
hazardous wastes or hazardous substances on a mortgaged property; any casualty
resulting from the presence or effect of hazardous wastes or hazardous
substances on, near or emanating from such property; or the impact of any
environmental condition or the presence of any substance on or near the property
on the performance of the mortgage loans or the compliance of a mortgaged
property with any environmental laws, nor is any agent, person or entity
otherwise affiliated with CMSI authorized or able to make any such
representation, warranty or assumption of liability relating to a mortgaged
property.
Use of proceeds
CMSI intends to use net proceeds from the sale of the Certificates to originate
or purchase new residential mortgage loans and for other general corporate
purposes. These other purposes may include repayment of indebtedness to
Citicorp, its affiliates or unaffiliated parties.
Certificates will be sold in Series from time to time. The timing and amount
of the sales will depend upon many factors, including the volume of mortgage
loans CMSI acquires, prevailing interest rates, availability of funds and
general market conditions.
Plan of Distribution
CMSI may offer and sell the Certificates either through agents or through
underwriters. CMSI normally sells Certificates through underwriters. An
underwriter or agent that offers the Certificates may be an affiliate of CMSI,
and offers and sales of Certificates may include secondary market transactions
by CMSI affiliates. Affiliates may act as principal or agent in these
transactions. Sales will be at prices related to prevailing market prices at the
time of sale.
The supplement sets forth the terms of the offering, including the names of
any underwriters or agents, the managing underwriters of any underwriting
syndicate, the net proceeds to CMSI from the sale, and any securities exchange
on which the Certificates will be listed. CMSI does not normally list
Certificates on any securities exchange. Dealer trading may take place in the
Certificates, including Certificates not listed on a securities exchange.
If an underwriter is used in the sale of the Certificates, each underwriter
will acquire Certificates for its own account, and its Certificates may be
resold from time to time in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices determined
at the time of sale.
The underwriters will be obligated to buy all Certificates if any are bought.
CMSI and Citicorp may agree to indemnify underwriters, agents and their
controlling persons against certain civil liabilities, including liabilities
under the Securities Act of 1933, in connection with their participation in the
distribution of Certificates.
CMSI anticipates that Certificates will be sold primarily to institutional
investors. A purchaser of Certificates, including a dealer, may be deemed to be
an "underwriter" of those securities under the Securities Act of 1933 in making
re-offers and sales by it of Certificates. Certificate holders should con-
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sult their legal advisers as to the consequences of being deemed an
"underwriter."
Underwriters and agents participating in the distribution of the
Certificates, and their affiliates, may engage in transactions with and perform
services for Citicorp or its affiliates in the ordinary course of business.
Additional information
SEC filings
The following documents are incorporated by reference into this prospectus
and supplement:
o All documents subsequently filed by CMSI on behalf of the Trust with the
Securities and Exchange Commission (the SEC) pursuant to section 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 before the termination of the
offering of theCertificates.
o If Citicorp issues a guaranty as part of the credit enhancement for the
Series offered by this prospectus and the attached supplement, Citicorp's most
recent Annual Report on Form 10-K and any subsequent reports on Form 8-K or Form
10-Q filed with the SEC by Citicorp, and all reports filed by Citicorp pursuant
to sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act before the
termination of the offering of the Certificates.
CMSI will provide without charge to any person, including a beneficial owner
of Certificates, to whom a copy of this prospectus and the attached supplement
is delivered, a copy of any document incorporated by reference in this
prospectus and supplement (without exhibits, except for exhibits incorporated by
reference in the document).
Written or telephone requests for documents should be made
o for documents filed by CMSI, to Citicorp Mortgage Securities, Inc., 909 Third
Avenue, New York, New York 10043, telephone (212) 559-6727, and
o for documents filed by Citicorp, to Citicorp, 399 Park Avenue, New York, NY
10043, Attention: Investor Relations Department, telephone (212) 559-2718.
You may read and copy any materials CMSI or Citicorp file with the SEC at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549.
You may obtain information on the operation of the public reference room by
calling the sec at 1-800-SEC-0330.
The SEC also maintains an Internet site at http://www.sec.gov that contains,
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC, including CMSI and Citicorp.
Our delivery of this prospectus and supplement or any document incorporated
by reference at any time does not imply that information in those documents is
correct at any time after their dates.
Mortgage loan information
You may subscribe for detailed mortgage loan information in machine readable
format updated monthly for each outstanding Series of Certificates. This
information reflects payments made on the individual mortgage loans, including
full and partial prepayments and liquidation proceeds, and identifies various
characteristics of the mortgage loans. Contact Citicorp Mortgage, Inc., 15851
Clayton Road West, Ballwin, Missouri 63011, telephone (314) 256-6406, for
subscription information.
Experts
The consolidated financial statements of Citicorp and subsidiaries included in
Citicorp's Annual Report on Form 10-K for 1998 have been incorporated by
reference in reliance upon the report in such Form 10-K of KPMG LLP, independent
certified public accountants, and upon the authority of that firm as experts in
accounting and auditing.
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Index of defined terms
accrual classes, 6
affiliated mortgage loans, 6
affiliated originators, 14
agency certificates, 7
ARMs, 14
available for distribution, 10
balloon mortgage loan, 17
Bankruptcy Code, 49
beneficial owner, 30
book-entry securities, 30
CERCLA, 52
Certificates, 6
Citi FSB, 14
classes, 6
clean-up call, 13
CMSI, 6
Conference Committee Report, 34
cooperative apartment leases, 46
cooperative apartment loans, 16
cut-off date, 8
debt burden, 23
determination day, 9
distribution day, 9
DTC, 30
due-on-sale clause, 12
ERISA, 8, 31
ERISA plans, 31
events of default, 26
FDIC, 21
Freddie Mac, 7
fully amortizing mortgage loan, 17
Garn-St Germain Act, 51
Ginnie Mae, 7
graduated-payment mortgage loan, 17
homeowner, 8
interest-only, 6
IO, 6
IRA, 31
IRS, 34
loan-to-value ratio, 17
losses, 13
master servicer, 24
mortgage loans, 6
mortgaged properties, 6
mortgagee, 43
mortgagor, 43
non-U.S. person, 41
OID, 34
OID rules, 34
order of seniority, 13
order of subordination, 13
original issue discount, 34
outstanding, 13
PO, 6
pool insurance, 20
pooling agreement, 28
prepayment charge, 11
prepayment interest shortfall, 12
principal balance, 8
principal-only, 6
PTE 83-1, 31
RCRA, 53
registered holder, 30
regular classes, 9
REMIC, 6
residual class, 9
retail class Certificate, 36
scheduled payment, 8
SEC, 55
secured creditor exemption, 53
securities intermediaries, 30
securitized, 15
senior classes, 6, 13
Series, 6
servicer, 24
SMMEA, 33
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special hazard insurance, 20
subordinated classes, 6, 13
superliens, 52
third-party mortgage loans, 6
Title V, 52
Trust, 6
Trustee, 6
UCC, 47
UST, 53
variable rate Certificates, 37
voluntary advance, 10
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APPENDIX
ARMS, BUYDOWN LOANS AND AGENCY CERTIFICATES
ARMs
Adjustable rate mortgage loans (ARMs) bear interest at a rate that is adjusted
at regular intervals to equal a fixed number of basis points over a variable
index interest rate. (A basis point is 0.01%.) The adjusted rate is generally
rounded to the nearest eighth of a percent. There are often limits on the size
of any one upward or downward adjustment or on the total upward or downward
adjustment during a specified period (such as a year), and there is usually a
limit on the maximum interest rate (and, less commonly, on the minimum interest
rate) that can ever be charged on the mortgage loan.
When the interest rate on an ARM is adjusted, some ARMs may adjust the
scheduled monthly payment of principal and interest in order to amortize fully
the mortgage loan by its stated maturity; other ARMs may keep the scheduled
mortgage payment constant but extend or shorten the maturity to take account of
the increase or decrease in the principal portion of the payment.
The initial scheduled monthly payment by the homeowner is the amount that
will fully amortize the initial principal balance of the ARM in equal
installments over its remaining term and pay interest at the initial interest
rate. On the first day of the month following the month in which an interest
rate adjusts, the homeowner must begin making scheduled monthly payments that
will fully amortize the principal balance of the ARM in equal installments over
its remaining term and pay interest at the adjusted interest rate (except for
ARMs that defer a portion of interest, as described in the preceding paragraph).
The homeowner under an ARM may have been qualified at an interest rate that
is lower than the current interest rate at origination. Accordingly, the
repayment of the ARM will depend on the homeowner's ability to make larger
monthly payments after the initial interest rate adjustment date.
ARMs included in the Trust will generally not be convertible at the
homeowner's option into fixed-rate fully amortizing loans.
Negative amortization
If an ARM limits the amount by which monthly payments may be increased, or if
changes to the interest rate of the ARM are made more frequently than changes in
the scheduled payments, an increase in the interest rate may not be fully
covered by the adjusted scheduled monthly payment. In that case, the uncollected
portion of interest will be deferred and added to the principal balance of the
ARM. Interest will accrue on the additional principal at the then applicable
interest rate from the date of the addition
Such a deferral is referred to as negative amortization. Negative
amortization tends to lengthen the weighted average life of a mortgage loan and
may cause payments near the maturity of the mortgage loan to be larger than the
previously scheduled monthly payments unless the mortgage loan permits its
maturity to be extended.
Yield considerations
When the scheduled monthly payment on an ARM is adjusted, the first distribution
to certificate holders that reflects the adjustment will be made on the
distribution day in the month following the month in which the interest rate on
the ARM is adjusted. Furthermore, adjustments in the interest rates are based on
the relevant index most recently available 45 days before the date of the
interest rate adjustment. Moreover, there may be a delay between the time the
index is set and its public availability. Accordingly, the yield to Certificate
holders will be adjusted on a delayed basis relative to movements in the index.
Adjustments to the interest rate on an ARM may also be limited by a maximum
periodic adjustment or a maximum or minimum interest rate. The following table
illustrates the timing of the adjustments and receipt by Certificate holders of
related distributions for a hypothetical ARM pool containing ARMs having a July
1 adjustment date. All dates are assumed to be business days.
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May 1 Index published
May 15 Index fixed, based on May 1
publication.
July 1 Interest rates adjusted based on May
15 index.
August 1 Homeowners make first adjusted monthly payments at adjusted
interest rates.
August 18 Determination day.
August 25 First payment to Certificate holders that reflects adjusted
scheduled monthly payments on underlying ARMs.
On the cut-off date for a Trust containing ARMs, some ARMs may be newly
originated while others may have had one or more adjustments. ARMs that have not
had their first interest rate adjustment will generally bear interest at rates
that are lower than the rate that would otherwise be produced by the sum of the
index and the number of basis points over the index used to compute the interest
rate for the mortgage loan.
State law restrictions
Adjustable interest rate mortgage loans originated by non-federally chartered
lenders have historically been subject to a variety of restrictions. Such
restrictions differed from state to state, resulting in difficulties in
determining whether a particular alternative mortgage instrument originated by a
state-chartered lender complied with applicable law. These difficulties were
alleviated substantially by Title VIII of the Garn-St Germain Act (Title VIII).
Title VIII provides that, notwithstanding any state law to the contrary,
o state-chartered banks may originate "alternative mortgage instruments"
(including adjustable rate mortgage loans) in accordance with regulations of the
Comptroller of the Currency for origination of alternative mortgage instruments
by national banks,
o state-chartered credit unions may originate alternative mortgage instruments
in accordance with regulations of the National Credit Union Administration for
origination of alternative mortgage instruments by federal credit unions and all
other non-federally chartered housing creditors, including state-chartered
savings and loan associations, and
o state-chartered savings banks and mortgage banking companies may originate
alternative mortgage instruments in accordance with the regulations of the
Federal Home Loan Bank Board (now the Office of Thrift Supervision) for
origination of alternative mortgage instruments by federal savings and loan
associations.
Title VIII allowed states to reject Title VIII by adopting, before October
15, 1985, a law or constitutional provision expressly rejecting its
applicability. Some states have taken that action.
CMSI has been advised by its counsel that, in their opinion, a court would
hold that adjustable interest rate mortgage loans originated by state-chartered
lenders before enactment of a state law or constitutional provision rejecting
applicability of Title VIII would not be subject to state laws imposing
restrictions or prohibitions on the ability of state-chartered lenders to
originate alternative mortgage instruments.
Any ARMs in the Trust
o originated by a state-chartered lender after enactment of a state law or
constitutional provision rejecting the applicability of Title VIII complied with
applicable state law, and
o originated by federally chartered lenders, or by state-chartered lenders
before enactment of a state law or constitutional provision rejecting the
applicability of Title VIII, were originated in compliance with all applicable
federal regulations.
Buydown loans
Some mortgage loans in the Trust may be subject to temporary buydown plans
(buydown mortgage loans). In a buydown mortgage loan, monthly payments by the
homeowner during the early years of the loan (the buydown period) are less than
the scheduled monthly payments, the difference being
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made up from buydown funds contributed by the homeowner, the homeowner's
employer, the seller or builder of the mortgaged property or another source. The
buydown funds may be contributed at the origination of the buydown mortgage loan
or in some cases when buydown funds are contributed by an employer, on an annual
basis.
Buydown funds contributed on an annual basis by the homeowner's employer will
generally have a buydown period of three years but may have a buydown period of
up to five years. The employer may or may not be required to guarantee the
payment of buydown funds even if the homeowner is no longer employed by the
employer.
Buydown funds contributed at origination are placed on the closing date in a
depository account maintained by CMSI or the originator (or for third party
mortgage loans, the subservicer), and amounts are withdrawn monthly from the
account promptly following receipt of the homeowner's monthly payment and
deposited with the Trust.
Buydown funds for different Series may be held in the same deposit account.
Each affiliated originator originates buydown mortgage loans. Each buydown
mortgage loan will
o provide for payments by the homeowner during the buydown period based on a
hypothetical reduced interest rate (the buydown mortgage rate) that will not be
more than 5% below the mortgage rate at origination,
o have an annual increase in the buydown mortgage rate during the buydown
period that will not exceed 1%.
o have a buydown period not exceeding three years for mortgage loans originated
by Citibank or originated by the Florida branches of Citi FSB, five years for
mortgage loans originated or acquired by CMI, and six years for other mortgage
loans originated or acquired by Citi FSB.
For mortgage loans originated before October 1, 1991, the maximum buydown
funds that the seller or builder of the related mortgaged property can
contribute is 9% of the value at origination of the mortgaged property; for
mortgage loans originated on or after October 1, 1991, the maximum buydown funds
that the seller or builder of the related mortgaged property can contribute is
6% of the value at origination of the mortgaged property. These limits do not
apply to contributions from the homeowner, the homeowner's immediate relatives
or the homeowner's employer.
The homeowner under a buydown mortgage loan will have been qualified at an
interest rate that is not more than 5% per annum below the current mortgage rate
at origination. Accordingly, repayment of a buydown mortgage loan depends on the
homeowner's ability to make larger monthly payments after the buydown funds are
depleted and, for some buydown mortgage loans, while the funds are being
depleted during the buydown period.
Agency certificates
Ginnie Mae
The Government National Mortgage Association (Ginnie Mae) is a wholly-owned
corporate instrumentality of the United States within the Department of Housing
and Urban Development. Ginnie Mae is authorized to guarantee the timely payment
of principal and interest on certificates (Ginnie Mae certificates) that are
backed by, and represent an interest in, pools of mortgage loans insured by the
Federal Housing Administration (FHA loans) or partially guaranteed by the
Veterans Administration (VA loans) or by pools of other eligible mortgage loans.
The full faith and credit of the United States is pledged to the payment of
all amounts that Ginnie Mae guarantees on Ginnie Mae certificates. Ginnie Mae
can borrow from the United States Treasury in any amount required to enable
Ginnie Mae to perform its obligations under its guaranties.
Ginnie Mae certificates
All of the Ginnie Mae certificates are "fully modified pass-through"
certificates. They are issued and serv-
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iced by issuers approved by Ginnie Mae or by Fannie Mae as a seller-servicer of
FHA Loans or VA Loans. The mortgage loans underlying Ginnie Mae certificates may
be
o FHA Loans secured by mortgages on one- to four-family residential properties
or multifamily residential properties,
o VA loans, and
o other mortgage loans eligible for inclusion in mortgage pools underlying
Ginnie Mae certificates, which may be level payment mortgage loans (including
buydown mortgage loans) or graduated payment mortgage loans each secured by a
first lien on a one- to four-family residential property.
All payments on Ginnie Mae certificates are made by or on behalf of the
issuer of the Ginnie Mae certificate to the registered holder of the
certificate. Except for Ginnie Mae certificates backed by graduated payment
mortgage loans, each Ginnie Mae certificate provides for monthly payments of the
registered holder's proportionate share of
o the aggregate monthly scheduled principal and interest payments on the
underlying mortgage loans (less servicing and guaranty fees),
o any principal prepayments on the mortgage loans and,
o any net proceeds of foreclosure or other disposition of mortgage loans.
Ginnie Mae certificates may be issued under either the Ginnie Mae I program
(Ginnie Mae I certificates) or the Ginnie Mae II program (Ginnie Mae II
certificates). A principal difference between the two programs is that under the
Ginnie Mae I program payments are made directly by the issuer of the Ginnie Mae
I Certificate to the registered holder, while under the Ginnie Mae II program
payments are made to the registered holder through Chemical Bank as paying
agent. A further difference between the two programs is that under the Ginnie
Mae I program single issuer approach, an individual Ginnie Mae issuer assembles
a pool of mortgages against which it issues and markets Ginnie Mae I
Certificates, while under the Ginnie Mae II program multiple issuer pools may be
formed by aggregating loan packages of several Ginnie Mae issuers. However,
single issuer pools may be formed under the Ginnie Mae II program as well.
[If specified in the related prospectus supplement, Ginnie Mae certificates
in the Trust may be held on deposit at the Participants Trust Company (PTC), a
limited trust company organized under the banking laws of the State of New York.
PTC operates a private sector, industry owned depository and settlement facility
for book-entry transfer of interests in Ginnie Mae certificates. Distribution of
principal of and interest on such Ginnie Mae certificate held through PTC will
be credited by PTC to the PTC participant to whose account the Ginnie Mae
certificate is credited.]
All mortgage loans underlying a particular Ginnie Mae I Certificate must have
the same annual interest rate (except for pools of mortgages secured by mobile
homes). The annual interest rate on each Ginnie Mae I Certificate is 50 basis
points less than the annual interest rate on the mortgage loans included in the
pool of mortgages backing such Ginnie Mae I Certificate.
Mortgages underlying a particular Ginnie Mae II Certificate may have annual
interest rates that vary from each other by up to 100 basis points. The annual
interest rate on each Ginnie Mae II Certificate will be between 50 basis points
and 150 basis points per annum less than the highest annual interest rate on the
mortgage loans included in the pool of mortgages backing such Ginnie Mae II
Certificate.
All of the Ginnie Mae certificates included in the Trust have original
maturities of not more than 30 years (but may have original maturities of
substantially less than 30 years). In general, Ginnie Mae requires that at least
90% of the original principal amount of the mortgage pool underlying a Ginnie
Mae certificate must be mortgage loans with maturities of 20 years or more.
However, in some circumstances Ginnie Mae certificates may be backed by pools of
mortgage loans at least 90% of the original principal amount of which have
original maturities of at least 15 years.
Each mortgage loan underlying a Ginnie Mae certificate, at the time Ginnie
Mae issues its guarantee commitment, must be originated no more than 12 months
prior to the commitment date.
The Ginnie Mae certificates are not a liability of, or evidence any recourse
against, the issuer of the
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Ginnie Mae certificates or any of its affiliates. The only recourse of a
registered holder of Ginnie Mae certificates, such as the Trustee, is to enforce
Ginnie Mae's guaranty.
Ginnie Mae approves the issuance of each Ginnie Mae certificate in accordance
with a guaranty agreement between Ginnie Mae and the servicer of the mortgage
loans underlying the Ginnie Mae certificate, which is the issuer of the Ginnie
Mae certificates. The agreement requires the issuer to advance its own funds to
make timely payments of all amounts due on the Ginnie Mae certificate, even if
the payments received by the issuer on the mortgage loans backing the Ginnie Mae
certificate are less than the amounts due on the Ginnie Mae certificate. If the
issuer is unable to make payments on a Ginnie Mae certificate as it becomes due,
it must promptly notify Ginnie Mae and request Ginnie Mae to make the payment.
Upon the notification and request, Ginnie Mae will make the payments directly to
the registered holder of the Ginnie Mae certificate. If no payment is made by
the issuer and the issuer fails to notify and request Ginnie Mae to make the
payment, the registered holder of the Ginnie Mae certificate has recourse only
against Ginnie Mae to obtain the payment. The Trustee or its nominee, as
registered holder of the Ginnie Mae certificates in the Trust can proceed
directly against Ginnie Mae for any amounts that are not paid when due under a
Ginnie Mae certificate.
Freddie Mac
The Federal Home Loan Mortgage Corporation (Freddie Mac) is a corporate
instrumentality of the United States. Freddie Mac's common stock is owned by the
Federal Home Loan Banks. Freddie Mac was established primarily to increase the
availability of mortgage credit for the financing of urgently needed housing. It
seeks to provide an enhanced degree of liquidity for residential mortgage
investments primarily by assisting in the development of secondary markets for
conventional mortgages. The principal activity of Freddie Mac currently consists
of the purchase of first lien conventional residential mortgage loans or
participation interests in such mortgage loans and the resale of the mortgage
loans in the form of mortgage securities. Freddie Mac is confined to purchasing,
so far as practicable, conventional mortgage loans and participation interests
therein that it deems to be of a quality, type and class that generally meet the
purchase standards imposed by private institutional mortgage investors.
Freddie Mac certificates
Each Freddie Mac certificate represents an undivided interest in a group of
mortgage loans. The mortgage loans underlying any Freddie Mac certificates in
the Trust are fixed rate mortgage loans with original terms to maturity of
between 10 and 30 years. The mortgage loans may include whole loans,
participation interests in whole loans and undivided interests in whole loans
and/or participations underlying other Freddie Mac certificates.
For some Freddie Mac certificates (Original PCs), the period between the
first day of the month in which the certificate is issued and the initial
payment date for the certificate is approximately 75 days. For other Freddie Mac
certificates (Gold PCs), the period between the first day of the month in which
the certificate is issued and the initial payment date for the certificate is
approximately 45 days. Also, the record date for payments of principal and
interest on a Gold PC is the last day of the month immediately preceding the
month in which the related payment date occurs, whereas the record date for
payments of principal and interest on an Original PC is the last day of the
second month preceding the month in which the payment date occurs.
Freddie Mac guarantees timely payment of interest at the rate provided for
each Freddie Mac certificate. Freddie Mac also guarantees the ultimate
collection by the registered holder of a Freddie Mac certificate of its pro rata
share of all principal on the underlying mortgage loans, without any offset or
deduction. However, only Gold PCs guarantee the timely payment of scheduled
principal. Pursuant to its guaranties, Freddie Mac indemnifies certificate
holders against any diminution in principal for property repairs, maintenance
and foreclosure.
Freddie Mac may pay any amount due on its guaranty of collection of principal
at any time after de-
A-5
<PAGE>
fault on an underlying mortgage loan, but not later than 30 days following the
later of
o foreclosure sale,
o payment of the claim by a mortgage insurer, or
o expiration of any right of redemption,
but in no event later than one year after demand has been made upon the
homeowner for accelerated payment of principal. In collecting principal after
default on a mortgage loan, including timing a demand for acceleration, Freddie
Mac may exercise its servicing judgment in the same manner as for mortgages that
it has purchased but not sold.
Freddie Mac certificates are not guaranteed by the United States or by any
Federal Home Loan Bank and do not constitute debts or obligations of the United
States or any Federal Home Loan Bank. Accordingly, Freddie Mac's guaranty is not
backed by the full faith and credit of the United States.
Registered holders of Freddie Mac certificates receive their monthly pro rata
share of all principal payments on the underlying mortgage loans received by
Freddie Mac, including any scheduled principal payments, full and partial
payments of principal, and principal received by Freddie Mac by virtue of
condemnation, insurance or foreclosure, and repurchases of the mortgages by
Freddie Mac or the sellers of the mortgages. Freddie Mac is required to remit to
each registered Freddie Mac certificate holder its pro rata share of principal
payments on the underlying mortgage loans, interest at the Freddie Mac
certificate rate and any other sums (such as prepayment fees), within 60 days of
the date the payments are deemed received by Freddie Mac.
Under Freddie Mac's Cash Program, before June 1987 there was no limit on the
amount by which interest rates on the mortgage loans underlying a Freddie Mac
certificate could exceed the interest rate on the Freddie Mac certificate. Under
the Cash Program, Freddie Mac purchases groups of whole mortgage loans from
sellers at percentages up to 100% of their unpaid principal amount, adjusted for
accrued or prepaid interest, that results in the yield required by Freddie Mac.
The required yield, which includes a minimum servicing fee retained by the
servicer, is calculated using the outstanding principal balance of the mortgage
loans, an assumed term and a prepayment period determined by Freddie Mac. The
range of interest rates on the mortgage loans underlying a Freddie Mac
certificate under the Cash Program formed before June 1987 will vary since
mortgage loans are purchased and assigned to a Freddie Mac certificate based
upon their yield to Freddie Mac rather than on the interest rate on the mortgage
loans.
Since June 1987, the range of interest rates on the mortgage loans and
participations underlying a Freddie Mac certificate comprised of 15-and 30-year
fixed rate single family mortgage loans bought by Freddie Mac under the Cash
Program is limited to 1%. Moreover, the lowest coupon on any mortgage loan
underlying a Freddie Mac certificate can not be less than the annual
pass-through rate on the certificate, and the highest mortgage interest rate can
not be more than 2% above the pass-through rate.
Under Freddie Mac's Guarantor Program, the annual pass-through rate on a
Freddie Mac certificate is established based upon the lowest interest rate on
the underlying mortgage loans, minus a minimum servicing fee and the amount of
Freddie Mac's management and guaranty income as agreed between the seller and
Freddie Mac. Before December 1987, the range between the lowest and highest
annual interest rates on the mortgage loans underlying a Freddie Mac certificate
formed under the Guarantor Program could not exceed 2%. Beginning in December
1987, the range was limited to 1%.
Freddie Mac certificates duly presented for registration of transfer on or
before the last business day of a month are registered effective as of the first
day of that month. The first remittance check to a registered holder of a
Freddie Mac certificate is mailed to be received normally by the 15th day of the
second month following the month in which the purchaser became a registered
holder of the Freddie Mac certificate. Thereafter checks will be mailed monthly
to the registered holder to be received normally by the 15th day of each month.
The Federal Reserve Bank of New York maintains book-entry accounts for Freddie
Mac certificates sold by Freddie Mac on or after January 2, 1985, and makes
payments of interest and principal each month to the registered holders in
accordance with the holders' instructions.
A-6
<PAGE>
Fannie Mae
Fannie Mae was established in 1938 as a United States government agency to
provide supplemental liquidity to the mortgage market. It was transformed into a
stockholder-owned and privately managed corporation by legislation enacted in
1968.
Fannie Mae provides funds to the mortgage market primarily by purchasing home
mortgage loans from lenders, thereby replenishing their funds for additional
lending. Fannie Mae acquires funds to purchase loans from many capital market
investors that may not ordinarily invest in mortgage loans, thereby expanding
the total amount of funds available for housing. By operating nationwide, Fannie
Mae helps to redistribute mortgage funds from capital-surplus to capital-short
areas. In addition, Fannie Mae issues mortgage-backed securities primarily in
exchange for pools of mortgage loans from lenders.
Fannie Mae certificates
A Fannie Mae certificate represents a fractional undivided interest in a pool of
mortgage loans formed by Fannie Mae. Each mortgage loan must meet the applicable
standards of the Fannie Mae purchase program. Mortgage loans comprising a pool
are either provided by Fannie Mae from its own portfolio or purchased under
Fannie Mae's purchase program.
Mortgage loans underlying Fannie Mae certificates in the Trust consist of
conventional mortgage loans, FHA Loans or VA Loans. The original maturities of
substantially all of the conventional, level payment mortgage loans underlying a
Fannie Mae certificate are expected to be between either 8 and 15 years or 20
and 30 years. The original maturities of substantially all of the level payment
FHA Loans or VA Loans are expected to be 30 years.
Mortgage loans underlying a Fannie Mae certificate may have annual interest
rates that vary by as much as 2% from each other. The rate of interest payable
on a Fannie Mae certificate is the lowest interest rate of any mortgage loan in
the related pool, less a specified minimum annual percentage representing
servicing compensation and Fannie Mae's guaranty fee. Under a regular servicing
option (pursuant to which the mortgagee or other servicer assumes the entire
risk of foreclosure losses), the annual interest rates on the mortgage loan
underlying a Fannie Mae certificate will be between 50 basis points and 250
basis points greater than the annual interest rate for the Fannie Mae
certificates. Under a special servicing option (pursuant to which Fannie Mae
assumes the entire risk for foreclosure losses), the annual interest rates on
the mortgage loans underlying a Fannie Mae certificate will generally be between
55 basis points and 255 basis points greater than the annual Fannie Mae
certificate interest rate.
Fannie Mae guarantees scheduled principal and interest (at the rate provided
for by the Fannie Mae certificate) on the mortgage loans in the pool represented
by a Fannie Mae certificate, whether or not received, and the full principal
amount of any foreclosed or other finally liquidated mortgage loan, regardless
of the portion of the principal amount actually recovered. Fannie Mae's
obligations under its guaranties are obligations solely of Fannie Mae and are
not backed by the full faith and credit of the United States. Although the
Secretary of the Treasury of the United States has discretionary authority to
lend Fannie Mae up to $2.25 billion outstanding at any time, neither the United
States nor any of its agencies is obligated to finance Fannie Mae's operations
or to assist Fannie Mae in any other way. If Fannie Mae is unable to satisfy its
obligations, distributions on Fannie Mae certificates would consist solely of
payments and other recoveries on the underlying mortgage loans and, accordingly,
monthly distributions on Fannie Mae certificates would be affected by delinquent
payments and defaults on those mortgage loans.
Fannie Mae certificates evidencing interests in pools of mortgage loans
formed on or after May 1, 1985 are available in book-entry form only and will
not be convertible to definitive form. Distributions of principal and interest
on each Fannie Mae certificate will be made by Fannie Mae on the 25th day of
each month to the persons in whose name the Fannie Mae certificate is entered on
the books of the Federal Reserve Bank (or registered in the Fannie Mae
certificate register in the case of fully registered Fannie Mae certificates) as
of the close of business on the last day of the preceding month. For Fannie Mae
certificates issued in book-entry form, distributions will be made
A-7
<PAGE>
by wire, and for fully registered Fannie Mae certificates, distributions will be
made by check.
A-8
<PAGE>
TABLE OF CONTENTS
Prospectus Supplement
Page
Summary.................................................
Series Risk Factors.....................................
Ratio Stripping.........................................
Subordination...........................................
Distributions of Interest...............................
Distributions of Principal..............................
Losses..................................................
Sensitivity of Certificates to Prepayment ..............
Voting Rights...........................................
Additional ERISA Considerations.........................
Legal Investment........................................
Federal Income Tax Consequences.........................
Plan of Distribution....................................
Legal Matters .........................................
Incorporation of Documents by Reference.................
Prospectus
Summary.................................................
General Risk Factors....................................
Distributions on the Certificates.......................
Delinquency, Foreclosure and Loss Experience............
The Mortgage Loans......................................
Defective Mortgage Loans................................
Insurance and other Credit Support......................
Mortgage Documents......................................
CMSI and its Affiliates.................................
Mortgage Loan Underwriting Policies.....................
Servicing...............................................
Default by CMSI.........................................
The Trustee.............................................
The Pooling Agreement...................................
Book-Entry and Physical Certificates....................
ERISA Considerations....................................
Legal Investment Considerations.........................
Taxation of Certificateholders..........................
Taxation of the Trust...................................
Legal Aspects of Mortgage Loans.........................
Use of Proceeds.........................................
Plan of Distribution....................................
Incorporation by Reference; Additional
Experts Information.....................................
Appendix: ARMs, Buydown Loans and Agency Certificates...
Index of Defined Terms..................................
$[ ]
(Approximate)
Citicorp Mortgage
Securities, Inc.
(Packager and Servicer)
REMIC Pass-Through Certificates
Series [ ]
[ ]
Dated [ ]
<PAGE>
[Alternate Page]
EXPERTS
Consolidated financial statements of Citicorp and subsidiaries included
in Citicorp's Annual Report on Form 10-K for 1998 have been incorporated in this
Prospectus by reference in reliance upon the report set forth therein of KPMG
LLP, independent certified public accountants, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated balance sheets of MBIA Insurance Corporation and
subsidiaries as of December 31, 1998 and 1997 and the related consolidated
statements of income, changes in shareholder's equity and cash flows for each of
the three years in the period ended December 31, 1998, incorporated by
reference in this Prospectus, have been incorporated herein in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of that firm as experts in accounting and auditing.
<PAGE>
[Alternate Page]
EXPERTS
Consolidated financial statements of Citicorp and subsidiaries included
in Citicorp's Annual Report on Form 10-K for 1998 have been incorporated in this
Prospectus by reference in reliance upon the report set forth therein of KPMG
LLP, independent certified public accountants, and upon the authority of said
firm as experts in accounting and auditing.
The consolidated balance sheets of Financial Security Assurance
Inc. and subsidiaries as of December 31, 1998 and 1997 and the related
consolidated statements of income, changes in shareholder's equity and cash
flows for each of the three years in the period ended December 31, 1998,
incorporated by reference in this Prospectus, have been incorporated herein in
reliance on the report of PricewaterhouseCoopers LLP, independent accountants,
given on the authority of that firm as experts in accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemized list of the estimated expenses to be
incurred in connection with the offering of the Certificates other than
underwriting discounts and commissions.
SEC filing fee.................................................. $2,780,000
Printing and engraving expenses................................. 1,000,000*
Accounting fees and expenses.................................... 1,500,000*
Legal fees and expenses......................................... 850,000*
Trustee fees and expenses....................................... 850,000*
Rating agency fees.............................................. 2,500,000*
Miscellaneous................................................... 520,000*
Total..................................................... $10,000,000
- ----
* Estimated.
Item 15. Indemnification of Directors and Officers.
a. Citicorp Indemnification. Subsection (a) of Section 145 of the General
Corporation Law of Delaware empowers a corporation to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification may be made
in respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the
<PAGE>
court in which such action or suit was brought shall determine that, despite the
adjudication of liability, such person is fairly and reasonably entitled to
indemnity for such expenses which the court shall deem proper.
Section 145 further provides that to the extent a director, officer,
employee or agent of a corporation has been successful in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) or in the
defense of any claim, issue or matter therein, he shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection therewith; that expenses of the indemnified party may be paid by the
corporation in advance of a final disposition; that indemnification provided for
by Section 145 shall not be deemed exclusive of any other rights to which the
indemnified party may be entitled; and empowers the corporation to purchase and
maintain insurance on behalf of a director, officer, employee or agent of the
corporation against any liability asserted against him or incurred by him in any
such capacity or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liabilities under
Section 145.
The Certificate of Incorporation of Citicorp provides, in effect, that
to the extent and under the circumstances permitted by subsections (a) and (b)
of Section 145 of the General Corporation Law of the State of Delaware, Citicorp
(i) shall indemnify any person who was or is a party or is threatened to be made
a party to any action, suit or proceeding described in subsections (a) and (b)
by reason of the fact that he or she is or was a director or officer of Citicorp
against expenses, judgments, fines and amounts paid in settlement, and (ii) may
indemnify any person who was or is a party or is threatened to be made a party
to any such action, suit or proceeding if such person was an employee or agent
of Citicorp, or is or was serving at the request of Citicorp as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise.
b. Issuer Indemnification. The Issuer's Certificate of Incorporation provides
that the Issuer shall (or, in the case of an employee or agent of the Issuer, or
a person who was serving at the request of the Issuer as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, may) indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Issuer) by reason of the fact
that he is or was a director, officer, employee or agent of the Issuer, or was
serving at the request of the Issuer as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Issuer,
and, with respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful. The Issuer's Certificate of Incorporation
also provides that the termination of any such action, suit or proceeding by
judgment, order, settlement, conviction, or upon a plea of nolo contendere or
its equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the Issuer, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his conduct
was unlawful.
<PAGE>
The Issuer's Certificate of Incorporation further provides that the
Issuer shall (or, in the case of an employee or agent of the Issuer, or a person
who was serving at the request of the Issuer as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise, may) indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Issuer to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee or agent of the Issuer, or was
serving at the request of the Issuer as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Issuer and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Issuer unless and only to the
extent that the Court of Chancery of the State of Delaware or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery of the State of Delaware or such other court shall
deem proper.
<PAGE>
The Issuer's Certificate of Incorporation provides that any
indemnification thereunder (unless ordered by a court) shall be made by the
Issuer only as authorized in the specific case upon a determination that
indemnification of the director or officer is proper in the circumstances
because he has met the applicable standard of conduct set forth therein. Such
determination shall be made (a) by the Board of Directors by a majority vote of
a quorum (as defined in the by-laws of the Issuer) consisting of directors who
were not parties to such action, suit or proceeding, or (b) if such quorum is
not obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (c) by the
stockholders.
The Issuer's Certificate of Incorporation provides that expenses of the
indemnified party may be paid by the Issuer in advance of a final disposition
and that the indemnification and advancement of expenses provided for therein
shall not be deemed exclusive of any other rights to which the indemnified party
may be entitled. The Issuer's Certificate of Incorporation empowers the Issuer
to purchase and maintain insurance, in such amounts as the Board of Directors
deems appropriate, on behalf of any person who is or was a director, officer,
employee or agent of the Issuer, or of any corporation a majority of the voting
stock of which is owned by the Issuer, or is serving at the request of the
Issuer as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against any liability
asserted against him and incurred by him in any such capacity, or arising out of
his status as such, whether or not the Issuer would have the power or would be
required to indemnify him against such liability under the provisions of the
Issuer's Certificate of Incorporation or of the General Corporation Law of the
State of Delaware.
The Issuer's Certificate of Incorporation provides that a director of
the Issuer shall not be personally liable to the Issuer or its stockholders for
monetary damages for breach of fiduciary duty as a director, except to the
extent such exemption from liability or limitations thereof is not permitted
under the Delaware General Corporation Law as the same existed at the time of
the Issuer's incorporation or may thereafter be amended; and that any repeal or
modification of the foregoing provision by the stockholders of the Issuer shall
not adversely affect any right or protection of a director of the Issuer
existing at the time of such repeal or modification.
c. Insurance. Pursuant to Section 145 of the General Corporation Law of
Delaware, liability insurance is maintained covering directors and principal
officers of Citicorp and the Issuer.
<PAGE>
Item 16. Exhibits.
1.1 - Form of Underwriting Agreement.*
4.1 - Form of Pooling and Servicing Agreement with respect to REMIC
Certificates representing interests in fixed-rate mortgage loans
backed by Guaranty, between Citicorp Mortgage Securities, Inc., as
packager and servicer, and the Trustee, including forms of
Certificates, Subservicing Agreement, Custodial Agreement and Guaranty
(incorporated by reference to Exhibit 4.1 of the Registration
Statement on Forms S-11 and S-3 filed by the Issuer and others (File
No. 33-33448)).
4.2 - Standard Terms of Pooling and Servicing Agreements with respect to
REMIC Certificates representing interests in fixed-rate mortgage loans
backed by Guaranty (incorporated by reference to Exhibit 4.2 of the
Registration Statement on Forms S-11 and S-3 filed by the Issuer and
others (File No. 33-33448)).
4.3 - Form of Pooling and Servicing Agreement with respect to REMIC
Certificates representing interests in adjustable-rate mortgage loans
backed by Guaranty between Citicorp Mortgage Securities, Inc., as
packager and servicer, and the Trustee, including forms of
Certificates, Custodial Agreement, Subservicing Agreement and Guaranty
(incorporated by reference to Exhibit 4.3 of the Registration
Statement on Forms S-11 and S-3 filed by the Issuer and others (File
No. 33-33448)).
4.4 - Standard Terms of Pooling and Servicing Agreements with respect to
REMIC Certificates representing interests in adjustable-rate mortgage
loans backed by Guaranty (incorporated by reference to Exhibit 4.4 of
the Registration Statement on Forms S-11 and S-3 filed by the Issuer
and others (File No. 33-33448)).
4.5 - Form of Pooling and Servicing Agreement with respect to REMIC
Certificates representing interests in adjustable-rate convertible
mortgage loans backed by Guaranty, between Citicorp Mortgage
Securities Inc., as packager and servicer, and the Trustee, including
forms of CitiCertificates, Limited Guaranty, Custodial Agreement,
Subservicing Agreement and Power of Attorney (incorporated by
reference to Exhibit 4.13 of the Registration Statement on Forms S-11
and S-3 filed by the Issuer and others (File No. 33-37536)).
4.6 - Form of Pooling and Servicing Agreement with respect to REMIC
Certificates having three Senior/Subordinated classes representing
interests in mortgage loans between Citicorp Mortgage Securities,
Inc., as packager and servicer, and the Trustee, including forms of
Certificates, Subservicing Agreement, Deposit Agreement, Mortgage Note
Custodial Agreement, Guaranty and Mortgage Document Custodial
Agreement (incorporated by reference to Exhibit 4.22 of the
Registration Statement on Forms S-11 and S-3 filed by the Issuer and
others (File No. 33-37536)).
4.7 - Standard Terms of Pooling and Servicing Agreements with respect to
REMIC Certificates having three Senior/Subordinated classes
representing interests in mortgage loans (incorporated by reference to
Exhibit 4.23 of the Registration Statement on Forms S-11 and S-3 filed
by the Issuer and others (File No. 33-37536)).
4.8 - Form of Pooling and Servicing Agreement with respect to REMIC
Certificates representing interests in mortgage loans backed by other
forms of credit support between Citicorp Mortgage Securities, Inc., as
packager and servicer and the Trustee, including forms of
Certificates, Custodial Agreement, Subservicing Agreement, Deposit
Agreement and Letter of Credit (incorporated by reference to Exhibit
4.24 of the Registration Statement on Forms S-11 and S-3 filed by the
Issuer and others (File No. 33-37536)).
4.9 - Standard Terms of Pooling and Servicing Agreements with respect to
REMIC Certificates backed by other forms of credit support
representing interests in mortgage loans (incorporated by reference to
Exhibit 4.25 of the Registration Statement on Forms S-11 and S-3 filed
by the Issuer and others (File No. 33-37536)).
4.10 - Form of Pooling and Servicing Agreement with respect to REMIC
Certificates representing interests in mortgage loans backed by a
mortgage pool insurance policy, between Citicorp Mortgage Securities,
Inc., as packager and servicer, and the Trustee, including forms of
Certificates, Subservicing Agreement, Custodial Agreement and Mortgage
Pool Insurance Policy (incorporated by reference to Exhibit 4.10 of
the Registration Statement on Forms S-11 and S-3 filed by the Issuer
and others (File No. 33-66222)).
4.11 - Standard Terms of Pooling and Servicing Agreements with respect to
REMIC Certificates representing interests in mortgage loans backed by
a mortgage pool insurance policy (incorporated by reference to Exhibit
4.11 of the Registration Statement on Forms S-11 and S-3 filed by the
Issuer and others (File No. 33-66222)).
<PAGE>
4.12 - Form of Pooling and Servicing Agreement with respect to shifting
interest REMIC Certificates representing interests in mortgage loans
between Citicorp Mortgage Securities, Inc., as packager and servicer,
and the Trustee, including forms of Certificates, Subservicing
Agreement and Custodial Agreement.*
4.13 - Standard Terms of Pooling and Servicing Agreements with respect to
shifting interest REMIC Certificates representing interests in
mortgage loans.*
4.14 - Form of financial guaranty insurance policy issued by MBIA Insurance
Corporation (incorporated by reference to Exhibit 4.26 of the
Registration Statement on Forms S-11 and S-3 filed by the Issuer and
others (File No. 33-37536)).
4.15 - Form of financial guaranty insurance policy issued by Financial
Security Assurance Inc. (incorporated by reference to Exhibit 4.15 of
the Registration Statement on Forms S-11 and S-3 filed by the Issuer
and others (File No. 33-66222)).
5.1 - Opinion of Marla A. Berman, Esq. with respect to the Certificates and
Guaranties being registered.*
8.1 - Opinion of Rona Daniels, Esq. with respect to certain tax matters.*
23.1 - Consent of KPMG LLP**
23.2 - Consents of Marla A. Berman, Esq., and Rona Daniels, Esq. are
contained in their opinions filed herewith as Exhibits 5.1 and 8.1,
respectively.
23.3 - Consent of PricewaterhouseCoopers LLP regarding MBIA Insurance
Corporation.**
23.4 - Consent of PricewaterhouseCoopers LLP regarding Financial Security
Assurance Inc.**
24.1 - Powers of Attorney of Messrs. Reed, Collins, Lipp, Menezes, Rhodes
and Ruding and Ms. Miller as Directors and/or officers of Citicorp.*
----------
* Filed herewith
** To be filed by amendment
Item 17. Undertakings.
(a) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in this registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of Citicorp's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in this registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the registrants pursuant to the foregoing provisions or otherwise,
the registrants have been informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrants of expenses incurred or paid by a director, officer
or controlling person of the registrants in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrants will,
unless in the opinion of their counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Citicorp
Mortgage Securities, Inc. certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of New York, State of New York, on
February 16, 1999.
CITICORP MORTGAGE SECURITIES, INC.
By: /s/ Andrew E. La Barbera
------------------------
Andrew E. La Barbera
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on February 16, 1999 by the following
persons in the capacities indicated.
Each person whose signature appears below hereby constitutes and
appoints each of Andrew E. La Barbera and John H. Outland, jointly and
severally, his or her true and lawful attorney-in-fact and agent, each with full
power of substitution and resubstitution, to sign any and all amendments to this
registration statement and to file the same with all exhibits thereto and other
documents in connection therewith with the Securities and Exchange Commission,
which amendments may make such changes in the registration statement as such
attorney-in-fact and agent deems appropriate, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to so
and perform each and every act and thing requisite and necessary to be done, as
fully to all intents and purposes as he or she might or could do in person.
Each person whose signature appears below hereby ratifies and confirms all that
each of said attorneys-in-fact and agents or their substitutes may lawfully do
or cause to be done by virtue hereof.
Signature Capacity
--------- --------
/s/ Andrew E. La Barbera President and a Director
------------------------ (Principal Executive Officer)
(Andrew E. La Barbera)
/s/ John H. Outland Senior Vice President and
------------------- Chief Financial Officer
(John H. Outland) (Principal Financial Officer and
Principal Accounting Officer)
<PAGE>
/s/ James Levites Director
-----------------
(James Levites)
/s/ David W. Young Director
------------------
(David W. Young)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Citicorp
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of New York, State of New York, on February 16, 1999.
CITICORP
By:/s/ Gregory C. Ehlke
--------------------
Gregory C. Ehlke
Vice President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on February 16, 1999 by the following
persons in the capacities indicated.
Each person whose signature appears below hereby constitutes and
appoints each of Gregory C. Ehlke, Peter M. Gallant, Heidi G. Miller, John F.
Rice and Martin A. Waters, his or her true and lawful attorney-in-fact and
agent, each with full power of substitution and resubstitution, to sign any and
all amendments to this registration statement and to file the same with all
exhibits thereto and other documents in connection therewith with the Securities
and Exchange Commission, which amendments may make such changes in the
registration statement as such attorney-in-fact and agent deems appropriate,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to so and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as he or she might or
could do in person. Each person whose signature appears below hereby ratifies
and confirms all that each of said attorneys-in-fact and agents or their
substitutes may lawfully do or cause to be done by virtue hereof.
Signature Capacity
--------- --------
* Chairman and Director
(John S. Reed) (Principal Executive Officer)
* Corporate Executive Vice President and Director
(Victor J. Menezes)
* Director
(Paul J. Collins)
* Vice Chairman and Director
(William R. Rhodes)
* Vice Chairman and Director
(H. Onno Ruding)
* Director
(Robert I. Lipp)
* Chief Financial Officer
(Heidi G. Miller)
/s/ Roger W. Trupin Controller
-------------------
Roger W. Trupin (Principal Accounting Officer)
<PAGE>
- -------------
* GREGORY C. EHLKE, by signing his name hereto, does sign this document on
behalf of the person indicated above pursuant to a power of attorney duly
executed by such person and filed with the Securities and Exchange Commission.
/s/ Gregory C. Ehlke
--------------------
Gregory C. Ehlke
Attorney-in-Fact
Citicorp Mortgage Securities, Inc.
REMIC Pass-Through Certificates, Series 1999-__
Underwriting Agreement
________, 1999
To: ____________, as Underwriter
[address]
Ladies and Gentlemen:
Citicorp Mortgage Securities, Inc., a Delaware corporation ("CMSI"),
proposes to sell to you, as underwriter (the "Underwriter"), REMIC Pass-Through
Certificates (the "Offered CitiCertificates"), comprised of the classes of
CitiCertificates set forth in Schedule I hereto evidencing ownership interests
in a trust (the "Trust") consisting of the mortgage loans described in Schedule
I (the "Mortgage Loans") originated or acquired by the affiliates of CMSI
identified in Schedule I (the "Originators") and having, as of the close of
business on the date specified in Schedule I as the cut-off date (the "Cut-Off
Date"), the aggregate principal balance set forth in such Schedule I and related
property. An election will be made to treat the Trust, or one or more segregated
pools of assets within the Trust, as one or more real estate mortgage investment
conduits (each a "REMIC") for purposes of federal income taxation. The Offered
CitiCertificates will represent regular interests in a REMIC and the Residual
Certificates will represent the residual interests in a REMIC. The Mortgage
Loans are to be conveyed to CMSI pursuant to a mortgage loan purchase agreement,
to be dated as of the Cut-Off Date (the "Mortgage Loan Purchase Agreement"),
between CMSI, as buyer, and the Originators, as sellers. The Offered
CitiCertificates are to be issued under a pooling and servicing agreement (the
"Pooling Agreement"), dated as of the Cut-Off Date, between CMSI, as packager
and servicer, and State Street Bank and Trust Company ("State Street"), in its
individual capacity and as trustee (in such capacity, the "Trustee"). The
Offered CitiCertificates will be issued in the denominations specified in
Schedule I.
1. Representations and Warranties. CMSI represents and warrants
to the Underwriter that:
(a) A registration statement (File No. 333-43167) on Form S-3 has been
filed with the Securities and Exchange Commission (the "Commission") and has
become effective under the Securities Act of 1933, as amended (the "Act"); such
registration statement includes a prospectus which, as supplemented, shall be,
and may include a preliminary prospectus supplement which, as completed, is
proposed to be, used in connection with the sale of the Offered
CitiCertificates. The registration statement, as amended to the date of this
Agreement, is hereinafter referred to as the "Registration Statement"; such
prospectus (which shall be in the form in which it has most recently been filed,
as the same is proposed to be added to or changed), as first supplemented by a
prospectus supplement relating to the Offered CitiCertificates, filed, or
transmitted for filing, with the Commission pursuant to Rule 424 under the Act
and used in connection with the sale of the Offered CitiCertificates, is
hereinafter referred to as the "Prospectus" and such prospectus supplement is
hereinafter referred to as the "Prospectus Supplement". Any reference herein to
the Registration Statement or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item 12 of
Form S-3
1
<PAGE>
which were filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the date hereof; and any reference herein to the
terms "amend", "amendment" or "supplement" with respect to the Registration
Statement or the Prospectus shall be deemed to refer to and include the filing
of any document under the Exchange Act deemed to be incorporated by reference
therein after the date hereof;
(b) The Registration Statement and the Prospectus, as of the date of
the Prospectus Supplement, and any revisions or amendments thereof or
supplements thereto filed prior to the termination of the offering of the
Offered CitiCertificates, as of their respective effective or issue dates,
conformed or will conform in all material respects to the requirements of the
Act and the rules and regulations of the Commission thereunder applicable to
such documents as of such respective dates, and the Registration Statement and
the Prospectus as revised, amended or supplemented as of the Closing Date (as
defined herein), will conform in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder applicable to
such documents to be used as of the Closing Date; and no such document, as of
such respective dates and, in the case of the Prospectus and any revisions or
amendments thereof or supplements thereto filed prior to the Closing Date, as of
the Closing Date, included or will include any untrue statement of a material
fact or omitted or will omit to state a material fact necessary to make the
statements therein in the light of the circumstances under which they were made,
not misleading; provided, however, that CMSI makes no representations,
warranties or agreements as to (i) the information contained in or omitted from
the Prospectus or any revision or amendment thereof or supplement thereto in
reliance upon and in conformity with information furnished in writing to CMSI by
or on behalf of the Underwriter specifically for use in connection with the
preparation of the Prospectus or any revision or amendment thereof or supplement
thereto, consisting solely of such Underwriter's statements as are included in
Schedule I hereto or (ii) any information in any Computational Materials or ABS
Term Sheets (each as defined in Section 7(b)) provided by the Underwriter;
(c) Each of the offered Class A and Class M CitiCertificates will, when
issued, be a "mortgage related security" as such term is defined in Section
3(a)(41) of the Exchange Act, and each of the Offered CitiCertificates, when
validly authenticated, issued and delivered in accordance with the Pooling
Agreement, will be duly and validly issued and outstanding and entitled to the
benefits of the Pooling Agreement;
(d) As of the Closing Date, each of this Agreement and the Pooling
Agreement will have been duly authorized, executed and delivered by CMSI and,
assuming the valid execution of the Pooling Agreement by State Street, in its
individual capacity and as Trustee, each such agreement will constitute a valid
and binding agreement of CMSI enforceable in accordance with its terms, except
as the same may be limited by bankruptcy, insolvency, reorganization or other
laws relating to or affecting the enforcement of creditors' rights and by
general equity principles; and
(e) CMSI has been duly organized and is validly existing in good
standing under the laws of the State of Delaware, with corporate power and
authority to own its properties and conduct its business as described in the
Prospectus.
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, CMSI agrees
to sell to the Underwriter, and the Underwriter agrees to purchase from CMSI,
all of the Offered CitiCertificates at the purchase price set forth in Schedule
I hereto.
3. Delivery and Payment. Delivery of and payment for the Offered
CitiCertificates shall be made at the office, on the date and at the time
specified in Schedule I hereto, which place, date and time may be changed by
agreement among the Underwriter and CMSI (such date and time of delivery of
2
<PAGE>
and payment for the Offered CitiCertificates being hereinafter referred to as
the "Closing Date"). Unless otherwise specified in Schedule I, delivery of one
certificate representing each class of Offered CitiCertificates or, if there are
Subclasses of Offered CitiCertificates, one certificate representing each
Subclass of such class of Offered CitiCertificates shall be made to the account
of the Underwriter against payment by the Underwriter of the purchase price
therefor to or upon the order of CMSI in the manner provided in Schedule I
hereto. Unless otherwise specified in Schedule I, the certificates to be so
delivered shall be registered in the name of Cede & Co., as nominee for The
Depository Trust Company ("DTC"), and the interests of beneficial owners of such
Offered CitiCertificates will be represented by book entries on the records of
DTC and participating members thereof. Unless otherwise specified in Schedule I,
definitive certificates representing the Offered CitiCertificates will be
available only under limited circumstances.
CMSI agrees to have the Offered CitiCertificates available for
inspection, checking and packaging by the Underwriter in New York, New York, one
business day prior to the Closing Date.
4. Agreements by Underwriter. (a) It is understood that the Underwriter
proposes to offer the Offered CitiCertificates for sale as set forth in the
Prospectus.
(b) The Underwriter represents and warrants to and agrees with CMSI, as
of the date hereof and as of the Closing Date, as applicable, that:
(i) if the Underwriter has provided any Collateral Term Sheets
(as defined in the PSA No-Action Letter referred to in Section 7(b)) to
potential investors in the Offered CitiCertificates prior to the date
hereof and if the filing of such materials with the Commission is a
condition of the relief granted in the PSA No-Action Letter, then in
each such case the Underwriter has heretofore delivered two copies of
such materials to CMSI, and the Underwriter will deliver to CMSI two
copies of all Computational Materials or ABS Term Sheets delivered to
such potential investors, except for any Computational Materials and
ABS Term Sheets which are not required to be filed with the Commission
in accordance with the Kidder No-Action Letter and the PSA No-Action
Letter (collectively, the "No-Action Letters"), not later than noon on
the fifth business day preceding the Closing Date;
(ii) the Computational Materials (either in original,
aggregated or consolidated form) and ABS Term Sheets furnished to CMSI
as contemplated in Section 4(b)(i) will constitute all such materials
relating to the Offered CitiCertificates required to be filed with the
Commission furnished by the Underwriter (whether in written, electronic
or other format) to prospective investors in the Offered
CitiCertificates prior to the Closing Date, and all Computational
Materials and ABS Term Sheets provided or to be provided by the
Underwriter to potential investors in the Offered CitiCertificates
comply with the requirements of the No-Action Letters;
(iii) the Underwriter will not provide to any potential
investor in the Offered CitiCertificates any Collateral Term Sheets on
or after the date hereof;
(iv) on the dates any such Computational Materials and/or ABS
Term Sheets with respect to the Offered CitiCertificates referred to in
Section 4(b) (i) are filed pursuant to Section 5(f), such Computational
Materials and/or ABS Term Sheets will not include any untrue statement
of a material fact or, when read in conjunction with the Prospectus,
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading (other than any
untrue statement or omission resulting directly from a Collateral
Error);
3
<PAGE>
(v) at the time any Computational Materials or ABS Term Sheets
with respect to the Offered CitiCertificates are furnished to a
prospective investor, the Underwriter possessed, and on the date of
delivery of such materials to CMSI pursuant to or as contemplated by
this Section 4 and on the Closing Date, the Underwriter will possess,
the capability, knowledge, expertise, resources and systems of internal
control necessary to ensure that such Computational Materials and/or
ABS Term Sheets conform to the representations and warranties of the
Underwriter contained in subparagraphs (ii) and (iv) above of this
paragraph;
(vi) all Computational Materials and ABS Term Sheets with
respect to the Offered CitiCertificates furnished by the Underwriter to
potential investors after the date hereof will contain a legend,
prominently displayed on the first page thereof, to the effect that
Citicorp, CMSI and the Originators have not prepared, reviewed or
participated in the preparation of such Computational Materials or ABS
Term Sheets, are not responsible for the accuracy thereof and have not
authorized the dissemination thereof;
(vii) all Collateral Term Sheets with respect to the Offered
CitiCertificates furnished by the Underwriter to potential investors
contained a legend, prominently displayed on the first page thereof,
indicating that the information contained therein will be superseded by
the description of the Mortgage Loans 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; and
(viii) on and after the date on which the Prospectus has been
filed with the Commission as provided in Section 5(a), the Underwriter
shall not deliver or authorize the delivery of any Computational
Materials, ABS Term Sheets or other materials relating to the Offered
CitiCertificates (whether in written, electronic or other format) to
any potential investor unless such potential investor has received a
Prospectus and Prospectus Supplement prior to or at the same time as
the delivery of such Computational Materials, ABS Term Sheets or other
materials.
(c) the Underwriter acknowledges and agrees that CMSI and the
Originators have not authorized and will not authorize the distribution of any
Computational Materials or ABS Term Sheets with respect to the Offered
CitiCertificates to any prospective investor and agrees that any such
Computational Materials and/or ABS Term Sheets furnished to prospective
investors shall include a disclaimer in the form set forth in paragraph (b)(vi)
above. The Underwriter agrees that it will not represent to potential investors
that any Computational Materials and/or ABS Term Sheets with respect to the
Offered CitiCertificates were prepared or disseminated on behalf of Citicorp,
CMSI or the Originators.
5. Agreements by CMSI. CMSI agrees with the Underwriter that:
(a) CMSI will cause the Prospectus to be filed, or transmitted for
filing, with the Commission pursuant to Rule 424 under the Act and will promptly
advise the Underwriter when the Prospectus has been so filed, or transmitted for
filing, and, prior to the termination of the offering of the Offered
CitiCertificates, will also promptly advise the Underwriter (i) when any
amendment to the Registration Statement relating to the Offered CitiCertificates
has become effective or any revision of or supplement to the Prospectus has been
so filed or transmitted for filing (unless such amendment, revision or
supplement does not relate to the Offered CitiCertificates), (ii) of any request
by the Commission for any amendment of the Registration Statement or the
Prospectus or for any additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding for that purpose
and (iv) of the receipt by CMSI of any notification with respect to the
suspension of the qualification of the Offered CitiCertificates
4
<PAGE>
for sale in any jurisdiction or the initiation or threatening of any proceeding
for such purpose. CMSI will use its best efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible the withdrawal
thereof. Neither CMSI nor Citicorp will file or transmit for filing prior to the
termination of such offering any amendment to the Registration Statement or any
revision of or supplement to the Prospectus (other than any such amendment,
revision or supplement which does not relate to the Offered CitiCertificates)
unless a copy has been furnished to the Underwriter for its review prior to such
filing or transmission for filing.
(b) If, at any time when a prospectus relating to the Offered
CitiCertificates is required to be delivered under the Act, (i) any event occurs
as a result of which the Prospectus, as then amended or supplemented, would
include any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein in the light of the circumstances under
which they were made not misleading, or (ii) it shall be necessary to revise,
amend or supplement the Prospectus to comply with the Act or the rules and
regulations of the Commission thereunder, CMSI and Citicorp promptly will
prepare and file with the Commission, subject to paragraph (a) of this Section
5, a revision, amendment or supplement which will correct such statement or
omission or effect such compliance.
(c) CMSI will furnish to the Underwriter and counsel for the
Underwriter, without charge, signed copies of the Registration Statement
(including exhibits thereto) and, so long as delivery of a prospectus relating
to the Offered CitiCertificates is required under the Act, as many copies of the
Prospectus and any revisions or amendments thereof or supplements thereto as may
be reasonably requested.
(d) CMSI will pay all expenses incidental to the performance of its
obligations under this Agreement, including without limitation (i) expenses of
preparing, printing and reproducing the Registration Statement, the Prospectus,
this Agreement, the Pooling Agreement, the Mortgage Loan Purchase Agreement and
the Offered CitiCertificates, (ii) all expenses of KPMG Peat Marwick LLP (other
than their expenses relating to the preparation of the letter referred to in
Section 7(c) below which shall be paid by the Underwriter) and (iii) the cost of
delivering the Offered CitiCertificates to the office of DTC (or other costs of
delivery, if so specified in Schedule I); provided, however, that except as
provided in this paragraph (d) and in Section 8 hereof, the Underwriter will pay
(i) all of its own expenses, including the fees of Cadwalader, Wickersham & Taft
and any other counsel to the Underwriter, (ii) any transfer taxes on resale of
any of the Offered CitiCertificates by it and (iii) advertising expenses
connected with any offers that the Underwriter may make.
(e) CMSI will use its best efforts to arrange for the qualification of
the Offered CitiCertificates for sale under the laws of such jurisdictions as
the Underwriter may designate, to maintain such qualifications in effect so long
as required for the distribution of the Offered CitiCertificates and to arrange
for the determination of the legality of the Offered CitiCertificates for
purchase by institutional investors; provided, however, that neither CMSI nor
Citicorp shall 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.
(f) CMSI will file with the Commission in a Current Report on Form 8-K
all ABS Term Sheets and Computational Materials furnished by the Underwriter and
identified by it as such, not later than the earlier of (i) the date the
Prospectus has been made available to the Underwriter and (ii) the date of the
filing of the Prospectus pursuant to Rule 424 (or such earlier date as required
under the No-Action Letters). Notwithstanding the preceding sentence, CMSI shall
have no obligation to file materials provided by the Underwriter pursuant to or
as contemplated by Section 4 which, in the reasonable determination of CMSI and
the Underwriter, are not required to be filed pursuant to the No-Action Letters,
or which contain erroneous information or contain any untrue statement of a
material fact or which, when read in conjunction with the Prospectus, omit to
state a material fact or which, when read in
5
<PAGE>
conjunction with the Prospectus, omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading; it
being understood, however, that CMSI shall have no obligation to review or pass
upon the accuracy or adequacy of, or to correct, any Computational Materials or
ABS Term Sheets provided by the Underwriter to CMSI pursuant to or as
contemplated by Section 4 hereof.
6. Conditions to the Obligation of the Underwriter. The obligation of
the Underwriter to purchase the Offered CitiCertificates shall be subject to the
accuracy in all material respects of the representations and warranties on the
part of CMSI contained herein as of the date hereof and as of the Closing Date,
to the accuracy of the statements of CMSI made in any officer's certificate
pursuant to the provisions hereof, to the performance by CMSI of its obligations
hereunder and to the following additional conditions:
(a) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been instituted and be pending or shall have been threatened.
(b) CMSI shall have furnished to the Underwriter a certificate, dated
the Closing Date, of such corporation, signed by the President or any Vice
President of CMSI, to the effect that the signer of such certificate has
examined the Registration Statement, the Prospectus and this Agreement and that:
(i) The representations and warranties of such corporation
herein are true and correct in all material respects on and as of the
Closing Date with the same effect as if made on the Closing Date, and
CMSI has complied with all agreements and satisfied all the conditions
on its part to be performed or satisfied at or prior to the Closing
Date; and
(ii) No stop order suspending the effectiveness of the
Registration Statement has been issued, and no proceedings for that
purpose have been instituted and are pending or, to such officer's
knowledge, have been threatened as of the Closing Date.
(c) CMSI shall have furnished to the Underwriter:
(i) an opinion, dated the Closing Date, of an Associate
General Counsel of Citibank, N.A., to the effect that:
(A) CMSI is validly existing as a corporation in good
standing under the laws of the State of Delaware, with corporate power
and authority under such laws to own its properties and conduct its
business as described in the Prospectus;
(B) Each Originator is a Delaware corporation or a
national banking association, as the case may be, validly existing
under applicable law, with full power and authority under such law to
own its properties and conduct its business as described in the
Prospectus;
(C) The Offered CitiCertificates have been duly
authorized, executed, issued and delivered and, assuming authentication
in the manner contemplated in the Pooling Agreement, are validly issued
and outstanding and entitled to the benefits provided by the Pooling
Agreement;
(D) Assuming that the Class A and Class M
CitiCertificates are rated at the time of issuance in one of the two
highest rating categories by a nationally recognized statistical
6
<PAGE>
rating organization, each such CitiCertificate at such time will be a
"mortgage related security" as such term is defined in Section 3(a)
(41) of the Exchange Act;
(E) The Pooling Agreement has been duly authorized,
executed and delivered by CMSI and, assuming valid execution thereof by
State Street, in its individual capacity and as Trustee, constitutes a
valid and legally binding agreement of CMSI enforceable in accordance
with its terms, except as the same may be limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting the
enforcement of creditors' rights and by general equity principles;
(F) The Pooling Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and the
Trust Fund (as defined in the Pooling Agreement) is not required to be
registered under the Investment Company Act of 1940, as amended;
(G) The Mortgage Loan Purchase Agreement has been
duly authorized, executed and delivered by CMSI and each Originator and
constitutes the valid and legally binding obligation of CMSI and each
such Originator, enforceable in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency, reorganization or
other laws relating to or affecting the enforcement of creditors'
rights and by general equity principles;
(H) The Registration Statement has become effective
under the Act, and, to the best of the knowledge of such counsel, (x)
no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or have been threatened under the Act, (y)
the Registration Statement and the Prospectus, as of the date of the
Prospectus Supplement, and each revision or amendment thereof or
supplement thereto relating to the Offered CitiCertificates, as of its
effective or issue date, appeared on their respective faces to be
appropriately responsive in all material respects to the requirements
of the Act and the rules and regulations of the Commission thereunder
applicable to such documents as of such respective dates and (z) the
Prospectus, as revised, amended or supplemented as of the Closing Date,
will conform in all material respects to the requirements of the Act
and the rules and regulations of the Commission thereunder applicable
to such documents as to be used as of the Closing Date; in the course
of such counsel's review of the Registration Statement and the
Prospectus and discussion of the same with certain officers of CMSI,
Citicorp and the Originators and their auditors, no facts came to the
attention of such counsel that caused such counsel to believe that the
Registration Statement or the Prospectus, as of the date of the
Prospectus Supplement, or any revision or amendment thereof or
supplement thereto, as of its effective or issue date, contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or that the Prospectus, or any revision or amendment thereof
or supplement thereto filed prior to the date of such opinion, as of
the date of such opinion, contained any untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; the descriptions in the Registration Statement
and the Prospectus, as of the date of such opinion, of the Offered
CitiCertificates and the Pooling Agreement and such description, as of
the date of the Prospectus Supplement, of the aspects of certain
statutes as set forth in the Prospectus under the heading "ERISA
Considerations" were, to the extent that they constitute statements of
matters of law or legal conclusions with respect thereto, accurate in
all material respects; and such counsel does not know of any contracts
or documents relating to CMSI of a character required to be described
in or to be filed as exhibits to the Registration Statement, as of the
date of the Prospectus Supplement, which were not described or filed as
required; it being understood that such counsel need express no opinion
as to
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the financial statements or other financial data and statistical data
contained or incorporated by reference in or omitted from the
Registration Statement or the Prospectus;
(I) This Agreement has been duly authorized, executed
and delivered by each of CMSI and Citicorp; and
(J) Such other opinions with regard to secured
transactions, bankruptcy, insolvency and related matters which the
Underwriter may reasonably request.
Such opinion may express its reliance (a) as to factual matters on the
representations and warranties made by, and on certificates or other documents
furnished by officers of, the parties to this Agreement and the Pooling
Agreement, (b) as to legal matters relating to the Employee Retirement Income
Security Act of 1974, as amended, on an opinion, dated the Closing Date, of
counsel acceptable to the Underwriter, and (c) as to legal matters relating to
secured transactions, bankruptcy, insolvency and related matters, on an opinion,
dated the Closing Date, of Cadwalader, Wickersham & Taft, special bankruptcy
counsel to CMSI. Such opinion may assume the due authorization, execution and
delivery of the instruments and documents referred to therein by the parties
thereto other than CMSI, Citicorp and the Originators. Such opinion may be
qualified as an opinion only on the General Corporation Law of the State of
Delaware, the laws of each state in which the writer of the opinion is admitted
to practice law and the federal law of the United States.
(ii) An opinion, dated the Closing Date, of a Tax Counsel for
Asset Securitization of Citibank, N.A., to the effect that:
(A) The description in the Registration Statement and
the Prospectus, as of the date of the Prospectus Supplement, to the
extent it constitutes statements of matters of law or legal conclusions
with respect thereto, of the aspects of certain statutes as set forth
in the Prospectus and Prospectus Supplement under the heading "Certain
Federal Income Tax Consequences" is accurate in all material respects;
and
(B) The Trust described in the Prospectus Supplement
and the Pooling Agreement will qualify as one or more REMICs within the
meaning of Section 860D of the Internal Revenue Code of 1986, as
amended (the "Code"), the CitiCertificates described in the Prospectus
Supplement and the Pooling Agreement will be treated as "regular
interests" in a REMIC for purposes of Code Section 860G(a)(1) and the
Residual Certificates described in the Pooling Agreement will be
treated as "residual interests" in a REMIC for purposes of Code Section
860G(a)(2), assuming: (i) an election is made to treat the Trust, or
one or more segregated pools of assets within the Trust, as one or more
REMICs, (ii) compliance with the Pooling Agreement and (iii) compliance
with changes in the law, including any amendments to the Code or
applicable Treasury regulations thereunder.
(d) The Underwriter shall have received from Cadwalader, Wickersham &
Taft, counsel for the Underwriter, such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Offered CitiCertificates, the
Registration Statement and the Prospectus, and such other related matters as the
Underwriter may reasonably request.
(e) KPMG Peat Marwick LLP shall have furnished to the Underwriter a
letter, dated the Closing Date, in form and substance satisfactory to the
Underwriter, stating in effect that they have performed certain specified
procedures as a result of which they have determined that:
the information of an accounting, financial or statistical
nature with respect to the serviced portfolio of Citicorp Mortgage,
Inc. ("CMI") and the securitized portfolio of the
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<PAGE>
originators named in the Prospectus (and certain other affiliates of
CMI) of one- to four-family mortgage loans (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Originators) set forth in the
Prospectus under the caption "Delinquency, Foreclosure and Loss
Experience" agrees with the accounting records of the Originators,
excluding any questions of legal interpretation.
(f) KPMG Peat Marwick LLP shall have furnished to the Underwriter a
letter, dated the Closing Date, in form and substance satisfactory to the
Underwriter, stating in effect that:
(i) They have performed certain specified procedures as a
result of which they have determined that the information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Originators and which is obtained
from an analysis of a sample of the Mortgage Loans) set forth in the
Prospectus Supplement under the caption "Description of the Pool and
the Mortgaged Properties" and in the detailed description relating to
such Prospectus Supplement and the Mortgage Loans agrees with the
accounting records of the Originators, excluding any questions of legal
interpretation; and
(ii) They have compared the data contained in a data sheet or
computer tape prepared by CMI for the Mortgage Loans to information
contained in the Mortgage Loan files furnished by the Originators and
in such other sources as shall be specified by them, based on an
appropriate sampling thereof, and found such data and information to be
in agreement, unless otherwise noted in such letter.
(g) If there is more than one Class or Subclass of Offered
CitiCertificates, KPMG Peat Marwick LLP shall have furnished to the Underwriter
a letter, dated the date of the Prospectus Supplement, and a letter, dated the
Closing Date, and each in form and substance satisfactory to the Underwriter,
stating in effect that:
(i) using the assumptions and methodology used by CMSI (which
include and do not conflict with any assumptions and methodology set
forth in the Prospectus Supplement), all of which shall be described by
reference in such letter, they have recalculated the percentages and
weighted average lives set forth in the Prospectus Supplement in the
table relating to the Percent of Initial Principal Amount Outstanding
For Each Subclass or Class of Offered CitiCertificates at certain
Percentages of the Prepayment Model to be set forth in the Prospectus
Supplement, compared the results of their calculations to the
corresponding items in the respective table and found each such
percentage and weighted average life set forth in each such table to be
in agreement with the respective results of such calculations;
(ii) using the methodology and assumptions prescribed in the
Prospectus Supplement, they have recalculated, for each Distribution
Date (as defined in the Prospectus Supplement), the aggregate of the
amount of cash to be on deposit in the Certificate Account on the
Determination Date immediately preceding such Distribution Date and
found that such aggregate amount equals or exceeds the aggregate amount
of interest and distributions in reduction of Principal Amount that is
distributable on the Offered CitiCertificates on the following
Distribution Date, as recalculated by them;
(iii) using the methodology and assumptions prescribed in the
Pooling Agreement and the Prospectus Supplement, they have recomputed
the Last Scheduled Distribution Dates for each Subclass or Class of
Offered CitiCertificates and found such dates to be in agreement with
those set forth in the Prospectus Supplement;
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<PAGE>
(iv) if one or more Classes or Subclasses of Offered
CitiCertificates will be entitled to receive distributions in respect
of interest at other than a fixed rate or distributions in reduction of
Principal Amount according to a schedule of planned or targeted
amounts, or have other characteristics which give rise to the use of
tables in the Prospectus Supplement reflecting yield or cash flow, such
letters shall also set forth such other statements as are customarily
set forth by KPMG Peat Marwick LLP in such letters with respect to such
Classes or Subclasses; and
(v) using the assumptions and methodology used by CMSI set
forth in the Prospectus Supplement, all of which shall be described by
reference in such letter, they have recalculated the percentages set
forth in the Prospectus Supplement in the table entitled "Pre-Tax Yield
of the Offered Class B CitiCertificates..." compared the results of
their calculations to the corresponding items in such table and found
each such percentage set forth in such table to be in agreement with
the results of such calculations.
(h) Subsequent to the date hereof, there shall not have occurred any
change, or any development involving a prospective change, in or affecting the
business or properties of CMSI which the Underwriter concludes, after
consultation with CMSI, in the judgment of the Underwriter, materially impairs
the investment quality of the Offered CitiCertificates so as to make it
impractical or inadvisable to proceed with the public offering or the delivery
of the Offered CitiCertificates as contemplated by the Prospectus.
(i) The Offered CitiCertificates shall have been rated at least the
rating or ratings specified in Schedule I by the rating agency specified in
Schedule I and such ratings shall not have been rescinded or placed under
review.
(j) CMSI shall have furnished to the Underwriter such further
information, certificates and documents as the Underwriter may reasonably have
requested not less than three full business days prior to the Closing Date.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Underwriter and its counsel, this Agreement and all
obligations of the Underwriter hereunder may be canceled at, or at any time
prior to, the Closing Date by the Underwriter. Notice of such cancellation shall
be given to CMSI in writing, or by telephone or telegraph confirmed in writing.
7. Conditions to the Obligation of CMSI. The obligation of CMSI to
issue and sell the Offered CitiCertificates shall be subject to the satisfaction
of the conditions that on the Closing Date,
(a) the Unoffered CitiCertificates (as defined in the Prospectus
Supplement) shall have been issued and sold under the Purchase Agreement dated
the date of this Agreement among CMSI, Citicorp and the purchaser thereof.
(b) the Underwriter shall have delivered to CMSI a certificate stating
that attached thereto are all of the information, tables, charts and other items
prepared by the Underwriter that constitute "Computational Materials" (as
defined in the letter dated May 4, 1994, from Brown & Wood to Linda C. Quinn,
Director of the Division of Corporation Finance of the Commission (together with
the Commission's response thereto dated May 20, 1994, the "Kidder No-Action
Letter")) or "ABS Term Sheets" (as defined in the letter dated February 13, 1995
from Cleary, Gottlieb, Steen & Hamilton to Abigail Arms, Associate Director
(Legal) of the Division of Corporation Finance of the Commission (together with
the Commission's response thereto dated February 17, 1995, the "PSA No-Action
Letter"))
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which are required to be filed with the Commission pursuant to the terms of the
Kidder No-Action Letter or the PSA No-Action Letter and stating that the
Underwriter has otherwise complied with the terms of the Kidder No-Action Letter
and the PSA No-Action Letter.
(c) KPMG Peat Marwick LLP shall have furnished to the Issuer and the
Underwriter a letter or letters, each in form and substance satisfactory to the
Issuer, relating to the ABS Term Sheets and Computational Materials of the
Underwriter filed in accordance with Section 5(f) and dated the date of the
related Current Report on Form 8-K and stating in effect that:
(i) using the assumptions and methodology used by the
Underwriter, all of which shall be described by reference in the
letter, they have recalculated the numerical data and dates set forth
in the ABS Term Sheets and Computational Materials (or portions
thereof) attached to such letter, compared the results of their
calculations to the corresponding items in such ABS Term Sheets and
Computational Materials (or portions thereof) and found such items to
be in agreement with the respective results of such calculations;
(ii) if such ABS Term Sheets and Computational Materials
include data reflecting the distribution of interest at other than a
fixed rate or the distribution in reduction of Principal Amount
according to a schedule of planned or targeted amounts, or reflecting
other characteristics which give rise to the use of tables in such ABS
Term Sheets and Computational Materials, such letter shall also set
forth such other statements as are customarily set forth by KPMG Peat
Marwick LLP in such letter with respect to such data; and
(iii) they have performed certain specified procedures as a
result of which they have determined that the information of an
accounting, financial or statistical nature set forth in such
Computational Materials and ABS Term Sheets agrees with the data sheet
or computer tape prepared by CMSI, unless otherwise indicated in such
letter.
8. Indemnification and Contribution. (a) CMSI agrees to indemnify and
hold harmless the Underwriter and each person who controls the Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which it or any of
them may become subject under the Act, the Exchange Act, or other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact (except any fact relating to Citicorp or any affiliates of
Citicorp other than CMSI) contained in the Registration Statement or in the
Prospectus, or in any revision or amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact (except any fact relating to Citicorp or any affiliates of
Citicorp other than CMSI) required to be stated therein or necessary to make the
statements therein in light of the circumstances under which they were made, not
misleading, and agrees to reimburse as incurred each such indemnified party for
any legal or other expenses reasonably incurred by them or him in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that CMSI 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 (i) any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to CMSI by or on behalf of the Underwriter specifically
for use in connection with the preparation thereof, consisting solely of such
Underwriter's statements as are included in Schedule I hereto, or (ii) any such
untrue statement made in ABS Term Sheets or Computational Materials incorporated
therein as a result of any filing pursuant to Section 5(f) (except to the extent
any such untrue statement or alleged untrue statement results directly from
inaccurate information or a failure to furnish information specifically
requested by the Underwriter (each, a "Collateral Error") provided to the
Underwriter by or on behalf of CMSI or Citicorp relating to the Mortgage Loans)
or (iii) any omission or alleged omission to state in Computational Materials or
ABS Term Sheets of the Underwriter incorporated by reference into the
Registration Statement or Prospectus as a result of any filing pursuant to
Section 5(f) a material fact that, when read in conjunction with the Prospectus,
is required to be stated therein or necessary to make the statements therein not
misleading (except to the extent any such omission or alleged omission results
directly from a Collateral Error), or (iv) any inaccuracy or untruth of the
statements or representations set forth in Section 7(b); and provided further
that such indemnity with respect to any Collateral Error shall not inure to be
benefit of the Underwriter (or any person controlling the Underwriter) from whom
the person asserting any loss, claim, damage or liability received any
Computational Materials or ABS
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Term Sheets that were prepared on the basis of such Collateral Error, if, prior
to the time of confirmation of the sale of Offered CitiCertificates to such
person, CMSI notified the Underwriter in writing of the Collateral Error or
provided in written or electronic form information superseding or correcting
such Collateral Error (in any such case, a "Corrected Collateral Error"), and
the Underwriter failed to notify such person thereof or to deliver such person
corrected Computational Materials and/or ABS Term Sheets, as applicable. This
indemnity agreement will be in addition to any liability which CMSI may
otherwise have.
(b) Citicorp agrees to indemnify and hold harmless the Underwriter and
each person who controls the Underwriter within the meaning of either the Act or
the Exchange Act against any and all losses, claims, damages or liabilities,
joint or several, to which they or any of them may become subject under the Act,
the Exchange Act, or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact relating to Citicorp or
any affiliates of Citicorp (other than CMSI) contained in the Registration
Statement or in the Prospectus, or in any revision or amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact relating to Citicorp, or any
affiliates of Citicorp (other than CMSI) required to be stated therein or
necessary to make the statements therein in light of the circumstances under
which they were made, not misleading, and agrees to reimburse as incurred each
such indemnified party for any legal or other expenses reasonably incurred by
them or him in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that Citicorp 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 (i) any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to Citicorp by or on behalf of the
Underwriter specifically for use in connection with the preparation thereof,
consisting solely of such Underwriter's statements as are included in Schedule I
hereto, or (ii) any such untrue statement made in ABS Term Sheets or
Computational Materials incorporated therein as a result of any filing pursuant
to Section 5(f) (except to the extent any such untrue statement or alleged
untrue statement results directly from a Collateral Error) or (iii) any omission
or alleged omission to state in Computational Materials or ABSTerm Sheets of the
Underwriter incorporated by reference into the Registration
Statement or Prospectus as a result of any filing pursuant to Section 5(f) a
material fact that, when read in conjunction with the Prospectus, is required to
be stated therein or necessary to make the statements therein not misleading
(except to the extent any such omission or alleged omission results directly
from a Collateral Error), or (iv) any inaccuracy or untruth of the statements or
representations set forth in Section 7(b); and provided further that such
indemnity with respect to any Collateral Error shall not inure to the benefit of
the Underwriter (or any person controlling the Underwriter) in the case of a
Corrected Collateral Error, if the Underwriter failed to notify such person
thereof or to deliver to such person corrected Computational Materials and/or
ABS Term Sheets, as applicable. This indemnity agreement will be in addition to
any liability which Citicorp may otherwise have.
(c) The Underwriter agrees to indemnify and hold harmless CMSI and
Citicorp, each of their respective directors, each of their respective officers
who signed the Registration Statement or any amendment thereof, and each person
who controls CMSI or Citicorp within the meaning of either the Act or the
Exchange Act, to the same extent as the foregoing indemnities from CMSI and
Citicorp to the
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Underwriter, but only with reference to (i) written information furnished to
CMSI or Citicorp by or on behalf of the Underwriter specifically for use in
connection with the preparation of the Prospectus or any revision or amendment
thereof or supplement thereto, consisting solely of such Underwriter's
statements as are included in Schedule I hereto, (ii) any untrue statement made
in ABS Term Sheets or Computational Materials incorporated by reference into the
Registration Statement or Prospectus as a result of any filing pursuant to
Section 5(f) (except to the extent any such untrue statement or alleged untrue
statement results directly from a Collateral Error that is not subsequently a
Corrected Collateral Error) and (iii) any inaccuracy or untruth of the
statements or representations set forth in Section 7(b). This indemnity
agreement will be in addition to any liability which the Underwriter may
otherwise have. Each of CMSI and Citicorp acknowledges that the statements set
forth in Schedule I under the heading "Underwriter's Statements to be Included
in the Prospectus Supplement" constitute the only information furnished in
writing by or on behalf of the Underwriter for inclusion in the Prospectus or
any revision or amendment thereof or supplement thereto, and the Underwriter
confirms that such statements are correct.
(d) 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 in writing of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which 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 to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof, with counsel satisfactory to such indemnified
party; provided that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. 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 counsel, the indemnifying party
will not be liable to such indemnified party in connection with the defense
thereof unless (i) the indemnified party shall have employed separate 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 the indemnified party or parties, representing the
indemnified party or parties 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; and except 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).
(e) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 8 is due
in accordance with its terms but is for any reason held by a court to be
unavailable on grounds of policy or otherwise, CMSI or Citicorp, as the case may
be, and the Underwriter shall contribute to the aggregate losses, claims,
damages and liabilities (including legal and other expenses reasonably incurred
in connection with investigating or defending same) to which CMSI or Citicorp,
as the case may be, and the Underwriter may be subject in such proportion so
that the Underwriter is responsible for 0.5% thereof and CMSI or Citicorp, as
the case may be, is responsible for the balance; provided that 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 and provided further that, to the extent such
circumstances relate to
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any untrue statement made in ABS Term Sheets or Computational Materials
incorporated by reference into the Registration Statement or Prospectus as a
result of any filing pursuant to Section 5(f) (except to the extent any such
untrue statement resulted directly from a Collateral Error that was not
subsequently a Corrected Collateral Error) or any inaccuracy or untruth of the
statements or representations set forth in Section 7(b), then such contribution
shall be determined based on the relative fault of CMSI or Citicorp, as the case
may be, on the one hand, and the Underwriter on the other in connection with the
statements made in such ABS Term Sheets or Computational Materials or the
inaccuracy or untruth of such statements or representations which resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, or such inaccurate or untrue
statement or representation, relates to information supplied by CMSI, Citicorp
or the Underwriter, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such statement,
omission or representation. For purposes of this Section 8, each person who
controls the Underwriter within the meaning of either the Act or the Exchange
Act shall have the same rights to contribution as the Underwriter, and each
person who controls CMSI or Citicorp, as the case may be, within the meaning of
either the Act or the Exchange Act, each officer of CMSI or Citicorp, as the
case may be, who shall have signed the Registration Statement or any amendment
thereof and each director of CMSI or Citicorp, as the case may be, shall have
the same rights to contribution as CMSI or Citicorp, as the case may be. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this paragraph (e), notify such party or parties from whom contribution
may be sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under this paragraph
(e).
9. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Underwriter, by notice given to CMSI and Citicorp
prior to delivery of and payment for the Offered CitiCertificates, if prior to
such time (i) trading in securities generally on the New York Stock Exchange
shall have been suspended or materially limited, (ii) a general moratorium on
commercial banking activities in New York shall have been declared by either
federal or New York State authorities, or (iii) there shall have occurred any
material outbreak or escalation of hostilities or other calamity or crisis the
effect of which on the financial markets of the United States is such as to make
it, in the reasonable judgment of the Underwriter after consultation with CMSI,
impracticable to market the Offered CitiCertificates.
10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
CMSI and Citicorp and its respective officers and of the Underwriter set forth
in or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of the Underwriter, CMSI or
Citicorp or any of the officers, directors or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Offered
CitiCertificates. The provisions of Section 8 hereof shall survive the
termination or cancellation of this Agreement.
11. Obligation of Citicorp. Citicorp agrees, in consideration of and as
an inducement to the Underwriter's purchase of the Offered CitiCertificates from
CMSI, to indemnify and hold harmless the Underwriter, and each person who
controls the Underwriter against any failure by CMSI to perform any of its
obligations under this Agreement, including, without limitation, any obligation
of CMSI to the Underwriter pursuant to Sections 5 and 8 hereof, after receipt
from the Underwriter of written notice of any such failure.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors and controlling persons referred to in
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Section 8 hereof and their respective successors and assigns, and no other
person will have any right or obligation hereunder.
13. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
14. Miscellaneous. This Agreement supersedes all prior or
contemporaneous agreements and understandings relating to the subject matter
hereof. Neither this Agreement nor any term hereof 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. This
Agreement may be signed in any number of counterparts, each of which shall be
deemed an original, which taken together shall constitute one and the same
instrument.
15. Notices. All communications hereunder will be in writing and
effective only upon receipt and, if sent to the Underwriter, will be delivered
to the Underwriter at the address specified in Schedule I, or if sent to CMSI,
will be delivered to Citicorp Mortgage Securities, Inc., 909 Third Avenue, 30th
Floor, New York, New York 10043, Attn: A. La Barbera, President; or if sent to
Citicorp, will be delivered to Citicorp, Citicorp Center, 153 East 53rd Street,
6th Floor, New York, New York 10043, Attn: Gregory C. Ehlke, Vice President.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to each of the undersigned a counterpart
hereof, whereupon this letter and your acceptance shall represent a binding
agreement among CMSI, Citicorp and the Underwriter.
Very truly yours,
CITICORP MORTGAGE SECURITIES, INC.
By:_______________________________
Senior Vice President
CITICORP
By:_______________________________
Vice President
The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.
[Underwriter]
By:________________________________
Name:
Authorized Signatory
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I-3
SCHEDULE I
Underwriting Agreement dated ________, 1999
REMIC Pass-Through Certificates, Series 1999-__
Offered CitiCertificates: Senior Class A CitiCertificates, Senior
Subordinated Class M CitiCertificates, and
Subordinated Class B-1 CitiCertificates and
Class B-2 CitiCertificates (the "Offered
Class B CitiCertificates")(each in such
proportion of the Mortgage Loans as specified
in Attachment A hereto and within the
respective tolerances as are set forth
therein).
The Senior Class A CitiCertificates may
include one or more Subclasses of Class A
CitiCertificates with the prior consent of an
authorized officer of CMSI, which consent
shall not unreasonably be withheld.
Subclasses of Senior Class A CitiCertificates
which are not eligible to be held by DTC, the
Senior Subordinated Class M CitiCertificates
and the Offered Class B CitiCertificates
shall be issued in definitive, fully
registered form rather than in book-entry
form held by DTC. The certificates
representing such Subclasses of Senior Class
A CitiCertificates, the Senior Subordinated
Class M CitiCertificates and the Offered
Class B CitiCertificates shall be registered
in such names and in such denominations as
the Underwriter shall request in writing not
less than two business days prior to the
Closing Date or, if the Underwriter shall
fail to give such notice, one certificate
representing each of such Subclasses of
Senior Class A CitiCertificates, the Senior
Subordinated Class M CitiCertificates and the
Offered Class B CitiCertificates shall be
registered in the name of the Underwriter.
Purchase Price: __________% of the Initial Principal Amount
of the Senior Class A CitiCertificates other
than the Subclass of Senior Class A
CitiCertificates which is a ratio-stripped
principal-only Subclass (the "Class A-PO
CitiCertificates"), ________% of the Initial
Principal Amount of the Class A-PO
CitiCertificates, ________% of the Initial
Principal Amount of the Class M
CitiCertificates, ________% of the Initial
Principal Amount of the Class B-1
CitiCertificates and ________% of the Initial
Principal Amount of the Class B-2
CitiCertificates plus, in each case (other
than in the case of principal only Subclasses
of CitiCertificates), accrued interest from
(and including) the Cut-Off Date to (but
excluding) the Closing Date at the rate of
____% per annum, plus $_____ (if the Offered
CitiCertificates are sold to investors in
subclasses).
I-1
<PAGE>
Originator and Address: Citicorp Mortgage, Inc.(1)
12855 North Outer Forty Drive
St. Louis, Missouri 63141
Underwriter and Address [Name}
for Notices: [address]
Description of Mortgage Loans: 15- to 30-year fixed-rate conventional one-
to four-family mortgage loans having an
aggregate principal balance as of the Cut-Off
Date of approximately $___,000,000 (subject
to an upward or downward variance of up to
5%). The weighted average Note Rate of the
Mortgage Loans as of the Cut-Off Date is
expected to be at least _____% but no more
than_____%. The weighted average remaining
term to stated maturity of the Mortgage Loans
as of the Cut-Off Date is expected to be at
least ___ months but no more than 360 months.
The Mortgage Loans, subject to certain
changes by CMSI (which changes shall not be
material), are further described in
Attachment A hereto.
Cut-Off Date: ________ 1, 1999.
Ratings of
Offered CitiCertificates: The Senior Class A CitiCertificates (other
than the principal only Subclasses of
CitiCertificates) shall be rated "AAA" by
Standard & Poor's Ratings Group ("S&P") and
"AAA" by Fitch IBCA, Inc. ("Fitch"). The
principal only Subclasses of CitiCertificates
shall be rated "AAAr" by S&P and "AAA" by
Fitch. The Class M CitiCertificates shall be
rated at least "AA" by Fitch, the Class B-1
CitiCertificates shall be rated at least "A"
by Fitch, and the Class B-2 CitiCertificates
shall be rated at least "BBB" by Fitch.
Denominations: The denominations of the Offered
CitiCertificates will be an Initial Principal
Amount of $1,000 and any whole dollar amount
in excess thereof (except that one
CitiCertificate of each such other Senior
Class A Subclass and one Class M, Class B-1
and Class B-2 CitiCertificate
may be in a different denomination).
- -----------------------------
(1) Mortgage Loans of this Originator include Mortgage Loans originated or
acquired by Citibank, Federal Savings Bank and originated by Citibank, N.A.
I-2
<PAGE>
Underwriter's Statements to
be Included in the Prospectus
Supplement: The purchase price for the Offered
CitiCertificates will be set by the
Underwriter or negotiated between the
purchaser and the Underwriter at the time of
sale, which will occur from time to time.
The Offered CitiCertificates are offered
subject to receipt and acceptance by the
Underwriter, to prior sale and to the
Underwriter's right to reject any order in
whole or in part.
Although the Underwriter had indicated to the
Issuer that it intends to establish a
secondary market for the Offered
CitiCertificates, the Underwriter is under no
obligation to do so or to continue doing so
for any period of time.
IN CONNECTION WITH THIS OFFERING THE
UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE OFFERED CITICERTIFICATES
AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE
PREVAIL IN THE OPEN MARKET. SUCH STABILIZING,
IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.
Subject to the terms and conditions of the
Underwriting Agreement among Citicorp, the
Issuer and the Underwriter (the "Underwriting
Agreement"), the Offered CitiCertificates are
being purchased from the Issuer by the
Underwriter upon issuance. The Underwriter is
committed to purchase all of the Offered
CitiCertificates offered hereby if any
CitiCertificates are purchased. Distribution
of the Offered CitiCertificates is being made
by the Underwriter from time to time in
negotiated transactions or otherwise at
varying prices to be determined at the time
of sale. In connection with the purchase and
sale of such CitiCertificates, the
Underwriter may be deemed to have received
compensation from the Issuer in the form of
underwriting discounts.
Delivery and Payment: Same day funds by federal funds wire.
Closing Date and Location: 10:00 a.m. (New York City time)
on ______ __, 1999 at the offices of:
Citicorp
425 Park Avenue, 2nd Floor
New York, New York 10043
I-3
______________________________________________________________________
CITICORP MORTGAGE SECURITIES, INC.
Packager and Servicer
And
[TRUSTEE]
Trustee
______________________________________________________________________
POOLING AND SERVICING AGREEMENT
Dated as of ________ 1, 1999
______________________________________________________________________
REMIC PASS-THROUGH CERTIFICATES,
SERIES 1999-____
<PAGE>
ARTICLE I-XI
INCORPORATION BY REFERENCE
ARTICLE XII
TERMS FOR SERIES 1999-____ CERTIFICATES
Section 12.01. General Terms for Certificates..................................7
Section 12.02. Additional Terms and Definitions...............................15
Accretion Directed CitiCertificates................15
Accretion Distribution Amount......................15
Accretion Termination Date.........................15
Accrual CitiCertificates...........................16
Accrual Date.......................................16
Advance Account Trigger Applicability..............16
Assumed Reinvestment Rate..........................16
Authenticating Agent...............................16
Available PO Loss Funds............................16
Book-Entry Certificates............................16
Cash Deposited into Certificate Account............16
Certificate Registrar..............................16
Class A Non-PO Principal Amount....................17
Class A Optimal Principal Amount...................17
Class A Percentage.................................17
Class A PO Principal Amount........................17
Class A PO Subclass................................18
Class A Prepayment Percentage......................18
Class A Principal Amount...........................19
Class A Principal Distribution Amount..............19
Class A Subclass Stated Amount.....................19
Class A-IO Interest Amount.........................20
Class A-IO Notional Amount.........................20
Class A-_ Notional Amount..........................20
Class A-__ Loss Amount.............................20
Class A-__ and Class A-__ Percentage...............20
Class A-__ and Class A-__ Priority Amount..........20
Class A-__ and Class A-__ Shift Percentage.........20
Class A-__ and Class A-__ Prepayment Shift
Percentage.........................................20
Class A-__ Loss Allocation Amount..................21
Class A-__ Policy Payments Account.................27
Class A-__ Notional Amount.........................21
Class B Percentage.................................21
Class B Prepayment Percentage......................21
Class L Regular Interests..........................21
Clearing Agency....................................21
Constituent REMICs.................................18
Corporate Trust Office.............................21
1
<PAGE>
Current Class B-1 Subordination Level..............21
Current Class B-2 Subordination Level..............21
Current Class B-3 Subordination Level..............22
Current Class B-4 Subordination Level..............22
Current Class M Subordination Level................22
Cut-Off Date.......................................22
Deceased Holder....................................22
Deficiency Amount..................................22
Definitive Certificates............................22
Denominations......................................22
Deposit Date.......................................23
Depository.........................................23
Designated Interest Accrual Date...................23
Determination Date.................................23
Discount Mortgage Loan.............................23
Distributable Class A-IO Interest Amount............D
Distribution Date..................................23
ERISA Restricted CitiCertificates..................23
Extraordinary Losses...............................23
Individual Retail CitiCertificate..................23
Initial Bankruptcy Loss Amount.....................23
Initial Fraud Loss Amount..........................23
Initial Special Hazard Loss Amount.................23
Initial Special Hazard Percentage..................23
Initial Stated Amount..............................23
Insurance Agreement................................23
Insurance Policy...................................24
Insurance Premium..................................24
Insured Certificates...............................24
Insured Payment....................................24
Insurer............................................24
Interest Accrual Period............................24
Investment Account.................................24
Investor Rate......................................24
Issue Date.........................................24
Last Scheduled Distribution Date...................24
Lower-Tier Certificates............................24
Lower-Tier REMIC...................................24
Mortgage Document Custodian........................25
Mortgage Loans.....................................25
Mortgage Note Custodian............................25
Net Note Rate......................................25
Non-PO Percentage..................................25
Non-PO Pool Adjusted Balance.......................25
Notices............................................25
Original Class A Percentage........................25
2
<PAGE>
Original Class A Stated Amount.....................25
Original Class B-1 Percentage......................25
Original Class B-1 Stated Amount...................25
Original Class B-1 Subordination Level.............25
Original Class B-2 Percentage......................26
Original Class B-2 Stated Amount...................26
Original Class B-2 Subordination Level.............26
Original Class B-3 Percentage......................26
Original Class B-3 Stated Amount...................26
Original Class B-3 Subordination Level.............26
Original Class B-4 Percentage......................26
Original Class B-4 Stated Amount...................26
Original Class B-4 Subordination Level.............26
Original Class B-5 Percentage......................26
Original Class B-5 Stated Amount...................26
Original Class M Percentage........................26
Original Class M Stated Amount.....................26
Original Class M Subordination Level...............26
Original Subordinated Stated Amount................26
PAC Balance Amount.................................26
PAC Certificates...................................26
Participant........................................26
Paying Agent.......................................27
Planned Balance....................................27
PO Loss Amount.....................................27
PO Percentage......................................27
Preference Amount..................................27
Premium Mortgage Loan..............................27
Private Certificates...............................27
Rating Agencies....................................27
Record Date........................................27
Reserve Fund.......................................27
Reserve Withdrawl..................................27
Retail CitiCertificates............................28
Retail Reserve Fund................................28
Right to Repurchase................................28
Schedule I TAC Balance Amount......................28
Schedule II TAC Balance Amount.....................28
Schedule I Targeted Balance........................28
Schedule II Targeted Balance.......................28
Scheduled Principal Amount.........................28
Servicing Fee......................................28
Single Certificate.................................29
Startup Day........................................29
Stated Rate........................................29
TAC Balance Amount.................................29
3
<PAGE>
TAC Certificates...................................29
Targeted Balance...................................29
Trustee Advances...................................29
Unpaid PO Loss Amount..............................29
Unscheduled Principal Amount.......................29
Upper-Tier Certificates............................29
Upper-Tier REMIC...................................29
Voting Interest....................................30
Section 12.03. Wire Transfer Eligibility......................................30
Section 12.04. REMIC-Related Covenants........................................30
Section 12.05. Expenses and Liabilities of the Trust Fund.....................32
Section 12.06. Tax Matters Person.............................................32
Section 12.07. Distributions in Reduction of Stated Amount of the Retail
CitiCertificates...............................................32
Section 12.08. The Insurance Policy...........................................38
Section 12.06. Replacement of the Insurance Policy............................41
ARTICLE XIII
SUBORDINATION; PRIORITIES; ALLOCATION OF LOSSES
Section 13.01. Subordination; Priority of Distributions.......................42
Section 13.02. Allocation of Realized Losses; Recoveries......................46
Section 13.03. Class L Regular Interests Allocations and Distributions........48
Section 13.04. Distributions on the Residual Certificates.....................49
EXHIBITS
EXHIBIT A-1 Form of Class A-_, A-_, A-_, A-_and A-__
CitiCertificates [general form]......................A-1-1
EXHIBIT A-2 Form of Class A-_ CitiCertificates [interest-only
class]...............................................A-2-1
EXHIBIT A-3 Form of Class A-_ CitiCertificates [principal-only
class]...............................................A-3-1
EXHIBIT A-4 [intentionally omitted]..............................A-4-1
EXHIBIT A-5 Form of Class A-__ CitiCertificates [retail class]...A-5-1
EXHIBIT A-6 Form of Class A-IO CitiCertificates..................A-9-1
EXHIBIT A-7 Form of Class M CitiCertificates....................A-10-1
EXHIBIT A-8 Form of Class B-1 through B-2 CitiCertificates......A-11-1
EXHIBIT A-9 Form of Class B-3 through B-5 CitiCertificates......A-12-1
EXHIBIT A-10 Form of Residual Class LR Certificates..............A-13-1
EXHIBIT A-11 Form of Residual Class R Certificates...............A-14-1
EXHIBIT B Schedule of Mortgage Loans - Deemed Incorporated.......B-1
EXHIBIT C Form of Mortgage Document Custodial Agreement..........C-1
EXHIBIT D Form of Subservicing Agreement.........................D-1
EXHIBIT E Form of Purchaser Letter...............................E-1
EXHIBIT F Form of ERISA Letter...................................F-1
[EXHIBIT G Targeted Balances, Schedule I Targeted Balances,
Schedule II Targeted Balances].........................G-1
[EXHIBIT H Planned Balances]......................................H-1
[EXHIBIT I Insurance Policy]......................................I-1
4
<PAGE>
THIS POOLING AND SERVICING AGREEMENT ("this Pooling Agreement" or "this
Agreement"), dated as of ________ 1, 1999, between CITICORP MORTGAGE SECURITIES,
INC., a corporation organized and existing under the laws of the State of
Delaware ("CMSI"), and [TRUSTEE, a New York banking corporation,] [TRUSTEE, a
Massachusetts trust company,] in its individual capacity and as trustee (the
"Trustee").
WITNESSETH THAT:
In the regular course of their business, certain affiliates of CMSI
originate and acquire Mortgage Loans. CMSI and the Trustee wish to set forth the
terms and conditions pursuant to which the Trust Fund will acquire the Mortgage
Loans listed in Exhibit B hereto. Certificates will be issued to Holders
evidencing ownership interests in such Trust Fund and CMSI will manage and
service such Mortgage Loans. In consideration of the mutual agreements herein
contained, CMSI and the Trustee agree as follows:
ARTICLES I-XI
INCORPORATION BY REFERENCE
Those certain Standard Terms for Pooling and Servicing Agreements for
CitiCertificates dated as of ________ 1, 1999 (the "Standard Terms"), a copy of
which is attached hereto, as amended hereby, are incorporated by reference
herein as if set forth in full. Such Standard Terms, as so amended, are hereby
affirmed by, and shall constitute a part of this Agreement between, the parties
hereto. For purposes of this Pooling Agreement and the Certificates executed and
delivered hereunder, the terms "this Agreement," "herein," "hereof" and words of
similar import shall refer to this Pooling Agreement including the Standard
Terms as incorporated herein with such modifications or amendments with respect
to the related series of Certificates as may be set forth in this Pooling
Agreement.
ARTICLE XII
TERMS FOR SERIES 1999-____ CERTIFICATES
On ________, 1999 (the "Issue Date"), there shall be established
pursuant to the terms of, and authenticated under, this Pooling Agreement a
series of certificates known and designated as "Citicorp Mortgage Securities,
Inc., REMIC Pass-Through Certificates, Series 1999-____" (the "Certificates").
[An] Election[s] will be made pursuant to this Agreement to treat the Trust as
[a] [two separate] REMIC[s] for federal income tax purposes. The Certificates
shall consist of (i) one Class consisting of __________ Subclasses of
CitiCertificates (each a "Class A Subclass")
5
<PAGE>
designated as "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-1 CitiCertificates" (the "Class
A-1 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-__, Senior Class A-2 CitiCertificates" (the "Class A-2
CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-3 CitiCertificates" (the "Class
A-3 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-4 CitiCertificates" (the "Class
A-4 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-5 CitiCertificates" (the "Class
A-5 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-6 CitiCertificates" (the "Class
A-6 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-7 CitiCertificates" (the "Class
A-7 CitiCertificates") "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-8 CitiCertificates" (the "Class
A-8 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-9 CitiCertificates" (the "Class
A-9 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-10 CitiCertificates" (the "Class
A-10 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-11 CitiCertificates" (the "Class
A-11 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-12 CitiCertificates" (the "Class
A-12 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-13 CitiCertificates" (the "Class
A-13 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-14 CitiCertificates" (the "Class
A-14 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-15 CitiCertificates" (the "Class
A-15 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-16 CitiCertificates" (the "Class
A-16 CitiCertificates") "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-17 CitiCertificates" (the "Class
A-17 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-18 CitiCertificates" (the "Class
A-18 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-19 CitiCertificates" (the "Class
A-19 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-20 CitiCertificates" (the "Class
A-20 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-21 CitiCertificates" (the "Class
A-21 CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Senior Class A-22 CitiCertificates" (the "Class
A-22 CitiCertificates") and "Citicorp Mortgage Securities, Inc. REMIC
Pass-Through Certificates, Series 1999-____, Senior Class A-IO CitiCertificates"
(the "Class A-IO CitiCertificates"); (ii) one Class of CitiCertificates
designated as "Citicorp Mortgage Securities, Inc., REMIC Pass-Through
Certificates, Series 1999-____, Senior Subordinated Class M CitiCertificates"
(the "Class M CitiCertificates"); (iii) one Class consisting of five Subclasses
of CitiCertificates (each a "Class B Subclass") designated as "Citicorp Mortgage
Securities, Inc. REMIC Pass-Through Certificates, Series 1999-____, Subordinated
Class B-1 CitiCertificates" (the "Class B-1 CitiCertificates"), "Citicorp
Mortgage Securities, Inc. REMIC Pass-Through Certificates, Series 1999-____,
Subordinated Class B-2 CitiCertificates" (the "Class B-2 CitiCertificates"),
"Citicorp Mortgage Securities, Inc. REMIC Pass-Through Certificates,
6
<PAGE>
Series 1999-____, Subordinated Class B-3 CitiCertificates" (the "Class B-3
CitiCertificates"), "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Subordinated Class B-4 CitiCertificates" (the
"Class B-4 CitiCertificates") and "Citicorp Mortgage Securities, Inc. REMIC
Pass-Through Certificates, Series 1999-____, Subordinated Class B-5
CitiCertificates" (the "Class B-5 CitiCertificates") (collectively, the "Class B
CitiCertificates," and together with the Class A, Class A-IO and Class M
CitiCertificates, the "CitiCertificates"); [(iv) two classes of uncertificated
interests designated as "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Class L-1 Regular Interest" (the "Class L-1
Regular Interest") and "Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Class L-2 Regular Interest" (the "Class L-2
Regular Interest");] and (v) [one] [two] class[es] of residual interests
designated as ["Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-____, Class R Certificate" (the "Class R Certificate")
and] "Citicorp Mortgage Securities, Inc. REMIC Pass-Through Certificates, Series
1999-____, Class LR Certificate" (the "Class LR Certificate," [and together with
the Class R Certificate,] [or] the "Residual Certificate[s]").
The Class A-__, Class A-__, Class A-__, Class A-__, Class A-__, Class
A-__, Class A-__, Class A-__, Class A-__, Class A-__, Class A-__, Class A-__,
Class A-__, Class A-__, Class A-__, Class A-__, Class A-IO, Class M, Class B-1,
Class B-2, Class B-3, Class B-4 and Class B-5 CitiCertificates, [the Class L-1
Regular Interest and the Class L-2 Regular Interest] are hereby designated as
"regular interests" in the [Lower-Tier] REMIC [and the Class A-__, Class A-__,
Class A-__, Class A-__, Class A-__ and Class A-__ CitiCertificates are hereby
designated as "regular interests" in the Upper-Tier REMIC] within the meaning of
Code Section 860G(a)(1). The Class LR Certificate is hereby designated as the
"residual interest" in the [Lower-Tier] REMIC [and the Class R Certificate is
hereby designated as the "residual interest" in the Upper-Tier REMIC] within the
meaning of Code Section 860G(a)(2). The CitiCertificates, [the Class L-1 Regular
Interest, the Class L-2 Regular Interest] and the Residual Certificate[s] shall
have the terms provided for in this Pooling Agreement (including the Standard
Terms, as modified, amended and supplemented hereby).
[The Trustee acknowledges that it is holding the Class L Regular
Interests as assets of the Upper-Tier REMIC.]
Distributions on the Class M CitiCertificates are subordinated to
distributions on the Class A CitiCertificates, distributions on the Class B
CitiCertificates are subordinated to distributions on the Class A and Class M
CitiCertificates and distributions on each Subclass of the Class B
CitiCertificates are subordinated to distributions on each Subclass of the Class
B CitiCertificates having a lower numerical designation, in each case to the
extent provided in Article XIII.
Section 12.01.....General Terms for Certificates.
(a) The Class A CitiCertificates, the Class M CitiCertificates,
the Class B CitiCertificates, [the Class L-1 Regular Interest
and the Class L-2 Regular Interest] shall have the following
respective Initial Stated Amounts, initial Notional Amounts,
Stated Rates and Last Scheduled Distribution Dates:
7
<PAGE>
Initial Stated Stated Last Scheduled
Amount Rate Distribution Date (1)
------ ---- ---------------------
Class A-1 CitiCertificates $___________ ____% ______ 25, 2029
Class A-2 CitiCertificates $___________ ____% ______ 25, 2029
Class A-3 CitiCertificates $___________ ____% ______ 25, 2029
Class A-4 CitiCertificates (2) ____% ______ 25, 2029
Class A-5 CitiCertificates $___________ ____% ______ 25, 2029
Class A-6 CitiCertificates $___________ ____% ______ 25, 2029
Class A-7 CitiCertificates $___________ ____% ______ 25, 2029
Class A-8 CitiCertificates $___________ ____% ______ 25, 2029
Class A-9 CitiCertificates $___________ ____% ______ 25, 2029
Class A-10 CitiCertificates $___________ ____% ______ 25, 2029
Class A-11 CitiCertificates $___________ (3) ______ 25, 2029
Class A-12 CitiCertificates $___________ ____% ______ 25, 2029
Class A-13 CitiCertificates $___________ ____% ______ 25, 2029
Class A-14 CitiCertificates $___________ ____% ______ 25, 2029
Class A-15 CitiCertificates $___________ ____% ______ 25, 2029
Class A-16 CitiCertificates $___________ ____% ______ 25, 2029
Class A-17 CitiCertificates $___________ ____% ______ 25, 2029
Class A-18 CitiCertificates $___________ ____% ______ 25, 2029
Class A-19 CitiCertificates $___________ ____% ______ 25, 2029
Class A-20 CitiCertificates (4) 0.__% ______ 25, 2029
Class A-21 CitiCertificates $___________ ____% ______ 25, 2029
Class A-22 CitiCertificates $___________ (3) ______ 25, 2029
Class A-IO CitiCertificates (5) (6) ______ 25, 2029
Class M CitiCertificates $___________ ____% ______ 25, 2029
Class B-1 CitiCertificates $___________ ____% ______ 25, 2029
Class B-2 CitiCertificates $___________ ____% ______ 25, 2029
Class B-3 CitiCertificates $___________ ____% ______ 25, 2029
Class B-4 CitiCertificates $___________ ____% ______ 25, 2029
Class B-5 CitiCertificates $___________ ____% ______ 25, 2029
[Class L-1 Regular Interest $___________ ____% ______ 25, 2029]
[Class L-2 Regular Interest $___________ ____% ______ 25, 2029]
8
<PAGE>
(1) The last scheduled distribution date is the "latest possible maturity
date" of the related Subclass or Class for purposes of Section
860G(a)(1) of the Code and Treasury Regulations Section
1.860G-1(a)(4)(iii).
(2) The Class A-__ CitiCertificates have no Stated Amount. The Class A-__
Notional Amount on any Distribution Date will be equal to the sum of
(i) ____% of the Stated Amount of the Class A-__ CitiCertificates, (ii)
____% of the Stated Amount of the Class A-__ CitiCertificates and (iii)
____% of the Stated Amount of the Class A-__ CitiCertificates as of
such date. The Class A-__ Notional Amount will initially be $_____.
(3) The Class A-__ CitiCertificates and Class A-__ CitiCertificates are
principal-only regular interests and do not bear interest.
(4) The Class A-__ CitiCertificates have no Stated Amount. The Class A-__
Notional Amount on any Distribution Date will be equal to the Stated
Amount of the Class A-__ CitiCertificates as of such date.
(5) The Class A-IO CitiCertificates have no Stated Amount. The Class A-IO
Notional Amount on any Distribution Date will be equal to the aggregate
Adjusted Balance of the Premium Mortgage Loans, and will initially be
$_____.
(6) The Class A-IO CitiCertificates will accrue interest for each Interest
Accrual Period in an amount equal to the Class A-IO Interest Amount.
The Residual Certificates will not be issued with Initial Stated
Amounts or Stated Rates, but will be entitled to distributions to the extent set
forth herein.
Interest will accrue with respect to a Distribution Date on the Class A
(other than the Class A-__ and Class A-__ CitiCertificates), Class M, Class B
CitiCertificates and [the Class L Regular Interests] during the related Interest
Accrual Period.
The Class A-__ CitiCertificates and Class A-__ CitiCertificates are
Accrual CitiCertificates.
(b) Each of the Class A CitiCertificates (other than the Class A-__ and
Class A-__ CitiCertificates), Class M CitiCertificates and Class B
CitiCertificates and the Class L Regular Interests will bear interest on their
respective Stated Amounts (and, in the case of the Class A-__ CitiCertificates,
Class A-__ CitiCertificates and the Class A-IO CitiCertificates, on the Class
A-__ Notional Amount, Class A-__ Notional Amount and Class A-IO Notional Amount,
respectively) at the applicable Stated Rate for such Subclass, Class or [Class L
Regular Interest] set forth in Section 12.01(a). Interest accrued on the
CitiCertificates [and the Class L Regular Interests] during any Interest Accrual
Period will be calculated on the assumption that any distributions in reduction
of Stated Amount (or, with respect to the Class A-__ CitiCertificates, Class
A-__ CitiCertificates and Class A-IO CitiCertificates, any reduction in the
Class A-__ Notional Amount, Class A-__ Notional Amount and Class A-IO Notional
Amount, respectively) on all CitiCertificates [and the Class L Regular
Interests] were made, any accrued interest added to the Stated Amounts of the
Accrual
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<PAGE>
CitiCertificates on the Distribution Date occurring during such Interest Accrual
Period and any allocations of any losses were made, on the day immediately
following the last day of the preceding Interest Accrual Period, and not on the
following Distribution Date when actually made, added or allocated. Each Class A
Subclass Interest Amount (other than the amount for a Subclass of Accrual
CitiCertificates prior to the applicable Accretion Termination Date), each Class
B Subclass Interest Amount and the Class M Interest Amount relating to an
Interest Accrual Period shall be distributable on the following Distribution
Date or, if such day is not a Business Day, on the next succeeding Business Day.
Each Subclass and Class of CitiCertificates (other than the Class A-__ and Class
A-__ CitiCertificates) [and Class L Regular Interest] shall accrue interest from
the applicable Accrual Date for such Subclass and Class of CitiCertificates [and
Class L Regular Interest]. Until the applicable Accretion Termination Date, on
each Distribution Date an amount equal to the Accretion Distribution Amount for
the related Subclass of Accrual CitiCertificates shall be added to the Stated
Amount of such Accrual CitiCertificates and the Accretion Distribution Amount
for such Subclass shall be distributed in the manner and up to the amount
provided in Section 12.01(c).
Distributions of interest on the Accrual CitiCertificates will commence
on the applicable Accretion Termination Dates.
On each Distribution Date, each Class A Subclass Interest Amount and
each Class B Subclass Interest Amount for such Subclass with respect to such
Distribution Date shall be distributable to such Subclass of CitiCertificates
(or, in the case of the Accrual CitiCertificates prior to the applicable
Accretion Termination Date, added to the Stated Amounts thereof), and the Class
M Interest Amount with respect to such Distribution Date shall be distributable
to the Class M CitiCertificates. In the event that on a particular Distribution
Date, the Pool Distribution Amount is insufficient to pay any of the Class A
Subclass Interest Amounts, the Class M Interest Amount or any of the Class B
Subclass Interest Amounts, the aggregate amount of the shortfall will be carried
forward and added pro rata to the amount distributable to holders of the
applicable Subclass of Class A or Class B CitiCertificates or the Class M
CitiCertificates, as applicable, until distribution thereof is made as provided
herein.
[On each applicable Distribution Date, subject to the provisions of
Section 12.08, a payment in an amount equal to the portion of the Insured
Payment on such Distribution Date, if any, attributable to a payment with
respect to interest shortfalls or losses will be made by the Insurer as provided
in Section 12.08 to the Trustee for the benefit of the Holders of the Insured
Certificates. Any such payments will be applied as payments to the Holders of
the Insured Certificates in accordance with such Section 12.08 and shall not be
available for distribution to any other Class or Subclass. On each applicable
Distribution Date, subject to the provisions of Sections 12.07 and 12.08, a
payment in an amount equal to the Non-Supported Interest Shortfall allocated to
the Insured Certificates will be made from the Reserve Fund before any payment
is made therefor by the Insurer.]
[On each Distribution Date, interest on the Class L Regular Interests
shall be distributable as provided in Section 13.03.]
(c) On each Distribution Date prior to the latest Accretion Termination
Date for any of the Class A-__, Class A-__ or Class A-__ CitiCertificates, that
portion of the Class A Principal
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<PAGE>
Distribution Amount that represents the aggregate Accretion Distribution Amount
for the Class A-__, Class A-__ and Class A-__ CitiCertificates will be allocated
first concurrently, ____% to the Class A-__ CitiCertificates and ____%
sequentially to the Class A-__ CitiCertificates and the Class A-__
CitiCertificates, in each case until the Stated Amount thereof has been reduced
to its respective Schedule I Targeted Balance, second to the Class A-__
CitiCertificates up to the amount necessary to reduce the Stated Amount thereof
to zero, third concurrently, ____% to the Class A-__ CitiCertificates and ____%
sequentially to the Class A-__ CitiCertificates and the Class A-__
CitiCertificates, in each case until the Stated Amount thereof has been reduced
to its respective Schedule II Targeted Balance, fourth to the Class A-__
CitiCertificates up to the amount necessary to reduce the Stated Amount thereof
to zero, fifth concurrently, ____% to the Class A-__ CitiCertificates and ____%
sequentially to the Class A-__ CitiCertificates and the Class A-__
CitiCertificates, in each case up to the amount necessary to reduce the Stated
Amount thereof to zero and sixth to the Class A-__ CitiCertificates up to the
amount necessary to reduce the Stated Amount thereof to zero.
On each Distribution Date prior to the Accretion Termination Date for
the Class A-__ CitiCertificates, that portion of the Class A Principal
Distribution Amount that represents the Accretion Distribution Amount for the
Class A-__ CitiCertificates will be allocated first concurrently, until the
Stated Amount of the Class A-__ CitiCertificates has been reduced to its
Targeted Balance, ____% to the Class A-__ CitiCertificates and ____%
sequentially to the Class A-__ CitiCertificates and the Class A-__
CitiCertificates, in each case up to the amount necessary to reduce the Stated
Amount thereof to its respective Targeted Balance, second sequentially to the
Class A-__ CitiCertificates and Class A-__ CitiCertificates, in each case up to
the amount necessary to reduce the Stated Amount thereof to its respective
Targeted Balance and third to the Class A-__ CitiCertificates up to the amount
necessary to reduce the Stated Amount to zero.
(d) Except as provided below and subject to the provisions of Section
13.01, on each Distribution Date prior to the Subordination Depletion Date, the
Class A Principal Distribution Amount (other than the portion that represents
the Accretion Distribution Amounts, which will be distributed as provided in the
preceding paragraphs), will be allocated among and distributed in reduction of
the Stated Amount of the Subclasses of the Class A CitiCertificates in the
following order of priority after giving effect to any reduction of the Stated
Amount thereof pursuant to Section 13.02:
The Class A PO Principal Amount for such Distribution Date will be allocated to
the Class A-__ CitiCertificates up to the amount necessary to reduce the Stated
Amount thereof to zero;
I. The Class A Non-PO Principal Amount for such Distribution Date
will be allocated sequentially as follows:
A. to the Class A-__ and Class A-__ CitiCertificates,
pro rata the lesser of (i) the Class A-__ and Class
A-__ Priority Amount for such Distribution Date and
(ii) ____% of the Class A Non-PO Principal Amount for
such Distribution Date;
B. ____% of the Class A Non-PO Principal Amount
remaining after the Class
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<PAGE>
A Non-PO Principal Amount has been reduced according
to clause A above, sequentially as follows:
1. sequentially as follows:
first, concurrently, until the Stated Amount of the
Class A-__ CitiCertificates has been reduced
to its Planned Balance, (i) ____% to the
Class A-__ CitiCertificates up to the amount
necessary to reduce the Stated Amount
thereof to its Planned Balance and (ii)
____% to the Class A-__ CitiCertificates up
to the amount necessary to reduce the Stated
Amount thereof to its Planned Balance;
second, to the Class A-__ CitiCertificates up to the
amount necessary to reduce the Stated Amount
thereof to its Planned Balance; and
third, to the Class A-__ CitiCertificates up to the
amount necessary to reduce the Stated Amount
thereof to its Planned Balance;
2. the remaining Class A Non-PO Principal Amount
available under clause B, after the Class A Non-PO
Principal Amount has been reduced according to clause
B.1 above, concurrently as follows:
a. ____% as follows:
sequentially, (i) concurrently, ____% to the Class
A-__ CitiCertificates and ____% sequentially to the
Class A-__ CitiCertificates and the Class A-__
CitiCertificates, in each case up to the amount
necessary to reduce the Stated Amount thereof to its
Schedule I Targeted Balance, (ii) to the Class A-__
CitiCertificates up to the amount necessary to reduce
the Stated Amount thereof to zero, (iii)
concurrently, ____% to the Class A-__
CitiCertificates and ____% sequentially to the Class
A-__ CitiCertificates and the Class A-__
CitiCertificates, in each case up to the amount
necessary to reduce the Stated Amount thereof to its
Schedule II Targeted Balance, (iv) to the Class A-__
CitiCertificates up to the amount necessary to reduce
the Stated Amount thereof to zero, (v) concurrently,
____% to the Class A-__ CitiCertificates and ____%
sequentially to the Class A-__ CitiCertificates and
the Class A-__ CitiCertificates, in each case up to
the amount necessary to reduce the Stated Amount
thereof to zero and (vi) to the Class A-__
CitiCertificates up to the amount necessary to reduce
the Stated Amount thereof to zero; and
b. ____% to the Class A-__ CitiCertificates up to
the amount necessary to reduce the Stated Amount
thereof to zero;
3. the remaining Class A Non-PO Principal Amount
available under
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<PAGE>
clause B, after the Class A Non-PO Principal
Amount has been reduced according to clauses B.1
and B.2 above, sequentially as follows:
first, concurrently until the Stated Amount of the
Class A-__ CitiCertificates is reduced to
zero (i) ____% to the Class A-__
CitiCertificates up to the amount necessary
to reduce the Stated Amount thereof to zero
and (ii) ____% to the Class A-__
CitiCertificates up to the amount necessary
to reduce the Stated Amount thereof to zero;
second, to the Class A-__ CitiCertificates up to the
amount necessary to reduce the Stated Amount
thereof to zero; and
third, to the Class A-__ CitiCertificates up to the
amount necessary to reduce the Stated Amount
thereof to zero;
C. the remaining Class A Non-PO Principal Amount, after
the Class A Non-PO Principal Amount has been reduced
according to clause B above, as follows:
1. ____% sequentially as follows:
first, concurrently, until the Stated Amount of the
Class A-__ CitiCertificates is reduced to
its Targeted Balance, (i) ____% sequentially
to the Class A-__ CitiCertificates and the
Class A-__ CitiCertificates, in each case up
to the amount necessary to reduce the Stated
Amount thereof to its Targeted Balance and
(ii) ____% to the Class A-__
CitiCertificates up to the amount necessary
to reduce the Stated Amount thereof to its
Targeted Balance;
second, sequentially to the Class A-__
CitiCertificates and the Class A-__
CitiCertificates in each case up to the
amount necessary to reduce the Stated Amount
thereof to its Targeted Balance;
third, to the Class A-__ CitiCertificates up to the
amount necessary to reduce the Stated Amount
thereof to zero;
fourth, concurrently, until the Stated Amount of the
Class A-__ CitiCertificates is reduced to
zero, (i) ____% sequentially to the Class
A-__ CitiCertificates and the Class A-__
CitiCertificates, in each case up to the
amount necessary to reduce the Stated Amount
thereof to zero and (ii) ____% to the Class
A-__ CitiCertificates up to the amount
necessary to reduce the Stated Amount
thereof to zero; and
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<PAGE>
fifth, sequentially to the Class A-__
CitiCertificates and the Class A-__
CitiCertificates up to the amount necessary
to reduce the Stated Amounts thereof to
zero;
2. the remaining Class A Non-PO Principal
Amount, after the Class A Non-PO Principal
Amount has been reduced according to clause
C.1 above, sequentially as follows:
first, beginning in _________ 2001, $25,000 to the
Insured Certificates up to the amount
necessary to reduce the Stated Amount
thereof to zero;
second, to the Class A-__ CitiCertificates up to the
amount necessary to reduce the Stated Amount
thereof to zero;
third, to the Class A-__ CitiCertificates up to the
amount necessary to reduce the Stated Amount
thereof by $__________;
fourth, concurrently, 40% to the Class A-17
CitiCertificates and 60% to the Class A-__
CitiCertificates until the Stated Amount of
the Class A-__ CitiCertificates is reduced
to zero;
fifth, to the Insured Certificates up to the amount
necessary to reduce the Stated Amount
thereof to zero; and
sixth, to the Class A-__ and the Class A-__
CitiCertificates pro rata, in each case up
to the amount necessary to reduce the Stated
Amount thereof to zero.
[On each applicable Distribution Date, subject to the provisions of
Section 12.08, a payment in an amount equal to the portion of the Insured
Payment on such Distribution Date, if any, attributable to a payment with
respect to principal losses will be made by the Insurer as provided in Section
12.08 to the Trustee for the benefit of the holders of the Insured Certificates.
Any such payments will be applied as payments to the Holders of the Insured
Certificates together with the other payments under Section 13.01(b) and shall
not be available for distribution to any other Class or Subclass.]
(e) On each Distribution Date, Available PO Loss Funds will be
allocated to the Class A-__ CitiCertificates in respect of any Unpaid PO Loss
Amounts.
(f) On any Distribution Date on or after the Subordination Depletion
Date, notwithstanding the priorities set forth in Section 12.01(d), funds
available for distribution in reduction of Stated Amount of the Class A
CitiCertificates will be distributed to the Class A CitiCertificates (other than
the Class A-__ CitiCertificates), on the one hand, and the Class A-__
CitiCertificates, on the other, pro rata on the basis of (i) the Class A Non-PO
Principal Amount and (ii) the Class A PO Principal Amount, respectively. On each
Distribution Date on and after the
14
<PAGE>
Subordination Depletion Date, the amount allocated to the Class A
CitiCertificates (other than the Class A-__ CitiCertificates) will be allocated
pro rata, based on outstanding Stated Amounts, among the Class A
CitiCertificates (other than the Class A-__CitiCertificates) notwithstanding the
priorities set forth in Section 12.01(d)(II). On any Distribution Date prior to
the Subordination Depletion Date, distributions in reduction of the Stated
Amount (i) of each Class A Subclass (other than the Insured Certificates) will
be made pro rata among the holders of CitiCertificates of such Class A Subclass
and (ii) of the Insured Certificates will be made as provided in Section 12.07.
On each Distribution Date on and after the Subordination Depletion Date,
distributions in reduction of the Stated Amount made to each Class A Subclass
will be distributed pro rata among the holders of CitiCertificates of such Class
A Subclass.
[On each Distribution Date, subject to the provisions of Sections 13.01
and 13.03, a distribution in reduction of the Stated Amount of the Class L-1
Regular Interest will be made in an amount equal to the distribution in
reduction of the Stated Amounts of the Class A-__, Class A-__ and Class A-__
CitiCertificates and a distribution in reduction of the Stated Amount of the
Class L-2 Regular Interest will be made in an amount equal to the distribution
in reduction of Stated Amount of the Class A-__ CitiCertificates.]
On each Distribution Date, subject to the provisions of Section 13.01,
distributions in reduction of Stated Amount of the Class M CitiCertificates and
the Subclasses of Class B CitiCertificates will be made in an aggregate amount
equal to the Class M Principal Distribution Amount and the Class B Principal
Distribution Amount, respectively, in accordance with the priorities set forth
in Section 13.01(b).
On each Distribution Date, the Distributable Class A-IO Interest Amount
will be distributed to the Class A-IO CitiCertificates based on Percentage
Interests.
Any funds remaining in the Certificate Account on a Distribution Date
after distribution of funds pursuant to Section 3.03(b) shall be distributed on
such Distribution Date in accordance with Section 3.03(c).
Other distributions shall be made in respect of the CitiCertificates
[and in respect of the Class L Regular Interests] as provided in Sections 13.01
and 13.03.
Section 12.02. Additional Terms and Definitions. The CitiCertificates,
[the Class L Regular Interests] and the Residual Certificates shall have and be
subject to the following additional specific terms:
Accretion Directed CitiCertificates. The Class A-__, Class A-__, Class
A-__, Class A-__, Class A-__ and Class A-__ CitiCertificates.
Accretion Distribution Amount. With respect to any Distribution Date
and any Subclass of Accrual CitiCertificate prior to the applicable Accretion
Termination Date, an amount equal to the sum of (i) the amount allocated to such
Subclass of Accrual CitiCertificates pursuant to clause second of Section
13.01(b) and (ii) the amount allocated to such Subclass of Accrual
CitiCertificates
15
<PAGE>
pursuant to clause third of Section 13.01(b). As to any Distribution Date on and
after the Accretion Termination Date, zero.
Accretion Termination Date. For the Class A-__ CitiCertificates, the
earlier to occur of (a) the Distribution Date following the Distribution Date on
which the Stated Amounts of the Class A-__, Class A-__ and Class A-__
CitiCertificates have been reduced to zero and (b) the Subordination Depletion
Date. For the Class A-__ CitiCertificates, the earlier to occur of (a) the
Distribution Date following the Distribution Date on which the Stated Amounts of
the Class A-__, Class A-__, Class A-__ and Class A-__ CitiCertificates have been
reduced to zero and (b) the Subordination Depletion Date. For the Class A-__
CitiCertificates, the earlier to occur of (a) the Distribution Date following
the Distribution Date on which the Stated Amounts of the Class A-__, Class A-__,
Class A-__, Class A-__ and Class A-__CitiCertificates have been reduced to zero
and (b) the Subordination Depletion Date. For the Class A-__ CitiCertificates,
the earlier to occur of (a) the Distribution Date following the Distribution
Date on which the Stated Amounts of the Class A-__, Class A-__ and Class A-__
CitiCertificates have been reduced to zero and (b) the Subordination Depletion
Date.
Accrual CitiCertificates. The Class A-__, Class A-__, Class A-__ and
Class A-__ CitiCertificates.
Accrual Date. For each Class or Subclass of interest-bearing
CitiCertificates, the Cut-Off Date.
Advance Account Trigger Applicability. There is no Advance Account
Trigger Applicability for the CitiCertificates.
Assumed Reinvestment Rate. There is no Assumed Reinvestment Rate for
the Certificates.
Authenticating Agent. As of the date hereof, the Trustee has not
appointed an Authenticating Agent. However, the Trustee may at any time appoint
an Authenticating Agent for all of the Certificates pursuant to Section 8.12.
Any such Authenticating Agent may be removed, and any other Authenticating Agent
appointed, as permitted by Section 8.12.
Available PO Loss Funds. For any Distribution Date, Available PO Loss
Funds shall equal the Pool Distribution Amount for such Distribution Date minus
the sum of (a) [the Insurance Premium,] (b) the Class A Interest Amount and
Distributable Class A-IO Interest Amount, (c) any amounts in respect of Class A
Unpaid Interest Shortfalls and Class A-IO Unpaid Interest Shortfalls distributed
on such Distribution Date, (d) the Class A Principal Distribution Amount, (e)
the Class M Interest Amount, and (f) the sum of the Class B-1 Subclass Interest
Amount, the Class B-2 Subclass Interest Amount, the Class B-3 Subclass Interest
Amount, the Class B-4 Subclass Interest Amount and the Class B-5 Subclass
Interest Amount. For purposes of this Agreement, any Available PO Loss Funds
needed on a Distribution Date to pay any Unpaid PO Loss Amounts will reduce the
amounts otherwise distributable on the Class B Subclasses and the Class M
CitiCertificates in the following order:
First, amounts distributable to the Class B-5, Class B-4,
Class B-3, Class B-2 and Class B-1 CitiCertificates, in that order, in
reduction of Stated Amount; and
16
<PAGE>
Second, amounts distributable to the Class M CitiCertificates
in reduction of Stated Amount.
Book-Entry Certificates. All Subclasses of Class A CitiCertificates
(other than the Class A-__ and Class A-__ CitiCertificates) are Book-Entry
Certificates.
Cash Deposited into Certificate Account. No cash will be deposited into
the Certificate Account on the Issue Date.
Certificate Registrar. [TRUSTEE], having its principal offices located
at ___________, Attention: Corporate Trust Department, is hereby appointed as
the Certificate Registrar for all of the Certificates, pursuant to Section 6.05.
[TRUSTEE] hereby accepts its appointment as Certificate Registrar. The
Certificate Registrar may be removed and any other Certificate Registrar
appointed as permitted by Section 6.05.
Class A Non-PO Principal Amount. With respect to any Distribution
Date, an amount equal to the sum of
(a) the Class A Percentage of the applicable Non-PO Percentage of (A)
the principal portion of all Monthly Payments due on the Due Date occurring in
the month of such Distribution Date on each Outstanding Mortgage Loan, less (B)
if the Bankruptcy Coverage Termination Date has occurred, the principal portion
of Debt Service Reductions;
(b) the Class A Prepayment Percentage of the applicable Non-PO
Percentage of (a) all partial Principal Prepayments received by the Servicer
during the month preceding the month in which such Distribution Date occurs and
(b) the Adjusted Balance of each Mortgage Loan which was the subject of a
Principal Prepayment in full during the month preceding the month in which such
Distribution Date occurs;
(c) the Class A Prepayment Percentage of the applicable Non-PO
Percentage of the difference between (1) the aggregate Net Liquidation Proceeds
from each Mortgage Loan which becomes a Liquidated Loan during the month
preceding the month of such Distribution Date minus any unreimbursed Voluntary
Advances in respect of principal previously made by the Servicer or the Trustee
and (2) the portion of such aggregate Net Liquidation Proceeds allocable to
interest;
(d) the Class A Prepayment Percentage of the applicable Non-PO
Percentage of the Adjusted Balance of each Mortgage Loan which was repurchased
by CMSI during such preceding month pursuant to Section 2.03; and
(e) the amount of any Reimbursable Class A Non-PO Losses.
Class A Optimal Principal Amount. For any Distribution Date, the sum of
the Class A Non-PO Principal Amount and the Class A PO Principal Amount, each as
of such Distribution Date.
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<PAGE>
Class A Percentage. As to any Distribution Date, the percentage
calculated by dividing the aggregate Class A Subclass Stated Amounts (other than
the Class A-__ CitiCertificates) by the Non-PO Pool Adjusted Balance, both as of
the immediately preceding Distribution Date (after taking into account
distributions in reduction of Stated Amount and allocation of any losses on such
date).
Class A PO Principal Amount. With respect to any Distribution Date, an
amount equal to the sum of
(a) the applicable PO Percentage of (A) the principal portion of all
Monthly Payments due on the Due Date occurring in the month of such Distribution
Date on each Outstanding Mortgage Loan, less (B) if the Bankruptcy Coverage
Termination Date has occurred, the principal portion of Debt Service Reductions;
(b) the applicable PO Percentage of (a) all partial Principal
Prepayments received by the Servicer during the month preceding the month in
which such Distribution Date occurs and (b) the Adjusted Balance of each
Mortgage Loan which was the subject of a Principal Prepayment in full during the
month preceding the month in which such Distribution Date occurs;
(c) the applicable PO Percentage of the difference between (1) the
aggregate Net Liquidation Proceeds from each Mortgage Loan which becomes a
Liquidated Loan during the month preceding the month of such Distribution Date
minus any unreimbursed Voluntary Advances in respect of principal previously
made by the Servicer or the Trustee and (2) the portion of such aggregate Net
Liquidation Proceeds allocable to interest;
(d) the applicable PO Percentage of the Adjusted Balance of each
Mortgage Loan which was repurchased by CMSI during such preceding month pursuant
to Section 2.03; and
(e) the amount of Reimbursable Class A PO Losses.
Class A PO Subclass. The Class A-__ CitiCertificates.
Class A Prepayment Percentage. The Class A Prepayment Percentage shall
be determined as follows: As to any Distribution Date to and including the
Distribution Date in the month in which the fifth anniversary of the Issue Date
occurs, 100%. As to any Distribution Date subsequent to such fifth anniversary
to and including the Distribution Date in the month in which the sixth
anniversary of the Issue Date occurs, the Class A Percentage as of such
Distribution Date plus 70% of the Subordinated CitiCertificate Percentage as of
such Distribution Date. As to any Distribution Date subsequent to such sixth
anniversary to and including the Distribution Date in the month in which the
seventh anniversary of the Issue Date occurs, the Class A Percentage as of such
Distribution Date plus 60% of the Subordinated CitiCertificate Percentage as of
such Distribution Date. As to any Distribution Date subsequent to such seventh
anniversary to and including the Distribution Date in the month in which the
eighth anniversary of the Issue Date occurs, the Class A Percentage as of such
Distribution Date plus 40% of the Subordinated CitiCertificate Percentage as of
such Distribution Date. As to any Distribution Date subsequent to such eighth
anniversary to and including the Distribution Date in the month in which the
ninth anniversary of the Issue Date occurs, the Class A Percentage as of such
Distribution Date plus 20% of the Subordinated CitiCertificate
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<PAGE>
Percentage as of such Distribution Date. As to any Distribution Date subsequent
to such ninth anniversary, the Class A Percentage as of such Distribution Date.
Notwithstanding the foregoing, if the Class A Percentage on any Distribution
Date exceeds the initial Class A Percentage, the Class A Prepayment Percentage
for such Distribution Date will once again equal 100%.
No reduction to the Class A Prepayment Percentage described in the
first paragraph of this definition of Class A Prepayment Percentage shall occur
unless (a) the Servicer certifies to the Trustee, as of the first Distribution
Date as to which any such reduction applies, that (1) the Adjusted Balance of
the Mortgage Loans delinquent 60 days or more (including, for this purpose,
Mortgage Loans in foreclosure and real estate owned by the Trust as a result of
Mortgagor default) averaged over the last six months, as a percentage of the sum
of the Class M Stated Amount and the Class B Stated Amount averaged over the
last six months, is less than 50% or (y) the Adjusted Balance of such delinquent
Mortgage Loans averaged over such period, as a percentage of the Adjusted
Balance of all of the Mortgage Loans averaged over such period, is less than 2%
and (b) cumulative Realized Losses do not exceed (1) with respect to each
Distribution Date from _________ 2004 through ______ 2005, inclusive, 30% of the
Original Subordinated Stated Amount, (2) with respect to each Distribution Date
from _________ 2005 through ______ 2006, inclusive, 35% of the Original
Subordinated Stated Amount, (3) with respect to each Distribution Date from
_________ 2006 through ______ 2007, inclusive, 40% of the Original Subordinated
Stated Amount, (4) with respect to each Distribution Date from _________ 2007
through ______ 2008, inclusive, 45% of the Original Subordinated Stated Amount,
and (5) with respect to the Distribution Date in _________ 2008 and thereafter,
50% of the Original Subordinated Stated Amount.
Class A Principal Amount. For any Distribution Date, the lesser of (a)
the Class A Optimal Principal Amount and (b) the Pool Distribution Amount minus
the sum of [the Insurance Premium,] the Class A Interest Amount and any Class A
Unpaid Interest Shortfalls.
Class A Principal Distribution Amount. For any Distribution Date, the
sum of (a) the Class A Principal Amount, but in no event more than the Class A
Optimal Principal Amount, and (b) the Accretion Distribution Amount, if any.
Class A Principal-Only Subclass: Each of the Class A PO Subclass and
the Class A-__ and Class A-__ CitiCertificates.
Class A Subclass Stated Amount: As of the first Distribution Date and
as to any Class A Subclass, the Initial Stated Amount of such Class A Subclass
as set forth in Section 12.01(a). As of any subsequent Distribution Date prior
to the Subordination Depletion Date and as to any Class A Subclass (other than
the Class A PO Subclass), the Initial Stated Amount of such Class A Subclass
plus, in the case of any Class A Subclass of Accrual CitiCertificates, the
Accretion Distribution Amount previously added to the Stated Amount thereof,
less the sum of (a) all amounts previously distributed in respect of such Class
A Subclass on prior Distribution Dates (A) pursuant to Paragraph fourth of
Section 13.01(b) and (B) as a result of clause (a) of the definition of Class A
Principal Distribution Amount and (b) the Class A Subclass Loss Percentage of
such Class A Subclass of the principal portion of Excess Special Hazard Losses,
Excess Fraud Losses and Excess Bankruptcy Losses previously allocated to the
Class A CitiCertificates (other than the Class A PO Subclass) pursuant to
Section 13.02 [(except, in each case, for purposes of effecting the Insurer's
subrogation
19
<PAGE>
rights, the principal portion of Insured Payments)]. On each Distribution Date
on or after the Subordination Depletion Date, each Class A Subclass Stated
Amount (other than with respect to the Class A PO Subclass) will also be reduced
on each Distribution Date by an amount equal to the product of the Class A
Subclass Loss Percentage of such Class A Subclass and the difference if any
between (1) the Class A Stated Amount (after subtracting the Stated Amount of
the Class A PO Subclass) for such Distribution Date without regard to this
sentence and (2) the Non-PO Pool Adjusted Balance for the preceding Distribution
Date. In addition, on each Distribution Date on or after the Subordination
Depletion Date, the Class A Subclass Stated Amount of the Class A-__
CitiCertificates will be increased by the Class A-__ Loss Allocation Amount for
such Distribution Date and the Class A Subclass Stated Amount of the Class A-__
CitiCertificates will be decreased by the Class A-__ Loss Allocation Amount for
such Distribution Date. As of any Distribution Date the Class A Subclass Stated
Amount of the Class A PO Subclass will equal the difference between the Pool
Adjusted Balance and the Non-PO Pool Adjusted Balance as of such date.
Class A-IO Interest Amount. On each Distribution Date, an amount equal
to the excess of (a) interest accrued on the Premium Mortgage Loans over (b) the
sum of (x) the product of the Servicing Fee and the aggregate Adjusted Balance
of the Premium Mortgage Loans and (y) the product of one-twelfth of the
aggregate Adjusted Balance of the Premium Mortgage Loans and ____%.
Class A-IO Notional Amount. The Class A-IO Notional Amount for any date
shall be equal to the Adjusted Balance of the Premium Mortgage Loans on such
date. Such notional amount does not entitle the Class A-IO CitiCertificates to
any distributions of principal.
Class A-__ Notional Amount. The Class A-__ Notional Amount on any
Distribution Date will be equal to the sum of (i) ____% of the Stated Amount of
the Class A-__ CitiCertificates, (ii) ____% of the Stated Amount of the Class
A-__ CitiCertificates and (iii) ____% of the Stated Amount of the Class A-__
CitiCertificates as of such date. The Class A-__ Notional Amount will initially
be $______.
Class A-__ Loss Amount. With respect to any Distribution Date on or
after the Subordination Depletion Date, the amount, if any, by which the Class A
Subclass Stated Amount of the Class A-__ CitiCertificates is reduced on such
Distribution Date pursuant to the third sentence in the definition of "Class A
Subclass Stated Amount."
Class A-__ and Class A-__ Percentage. The lesser of (A) 100% and (B)
the sum of (a) the Stated Amount of the Class A-__ CitiCertificates, (b) the
Stated Amount of the A-__ CitiCertificates and (c) $______, divided by the
Non-PO Pool Adjusted Balance.
Class A-__ and Class A-__ Priority Amount. For any Distribution Date
means the lesser of (A) the sum of (1) the Stated Amount of the Class A-__
CitiCertificates and (2) the Stated Amount of the Class A-__ CitiCertificates or
(B) the sum of (1) the product of (a) the Class A-__ and Class A-__ Percentage,
(b) the Class A-__ and Class A-__ Shift Percentage and (c) the Scheduled
Principal Amount and (2) the product of (a) the Class A-__ and Class A-__
Percentage, (b) the Class A-__ and Class A-__ Prepayment Shift Percentage and
(c) the Unscheduled Principal Amount.
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Class A-__ and Class A-__ Shift Percentage. For any Distribution Date
will be the percentage indicated below:
Class A-__ and Class A-__
Distribution Date Occurring In Shift Percentage
- ------------------------------ -----------------
_________ 1999 through ______ 2004......... 0%
_________ 2004 and thereafter.............. 100%
Class A-__ and Class A-__ Prepayment Shift Percentage. For any
Distribution Date will be the percentage indicated below:
Class A-__ and Class A-__
Distribution Date Occurring In Prepayment Shift Percentage
- ------------------------------ ---------------------------
_________ 1999 through ______ 2004......... 0%
_________ 2004 through ______ 2005......... 30%
_________ 2005 through ______ 2006......... 40%
_________ 2006 through ______ 2007......... 60%
_________ 2007 through ______ 2008......... 80%
_________ 2008 and thereafter.............. 100%
Class A-__ Loss Allocation Amount. With respect to any Distribution
Date on or after the Subordination Depletion Date, the lesser of (a) the Stated
Amount of the Class A-__ CitiCertificates with respect to such Distribution Date
prior to any reduction for the Class A-__ Loss Allocation Amount and (b) the
Class A-__ Loss Amount.
Class A-__ Notional Amount. The Class A-__ Notional Amount for any date
shall be equal to the Stated Amount of the Class A-__ CitiCertificates as of
such date.
Class B Percentage. The Class B Percentage for any Distribution Date
shall be equal to (a) the Subordinated CitiCertificate Percentage minus (b) the
Class M Percentage.
Class B Prepayment Percentage. The Class B Prepayment Percentage for
any Distribution Date will be equal to (a) the Subordinated Prepayment
Percentage minus (b) the Class M Prepayment Percentage.
[Class L Regular Interests. The Class L-1 Regular Interest and Class
L-2 Regular Interest, as defined in the preliminary statement to this Article
XII.] [None]
Clearing Agency. The initial Clearing Agency will be The Depository
Trust Company.
Constituent REMICs. The Trust Fund will contain [one] [two] segregated
asset pool[s] [designated as the Lower-Tier REMIC and the Upper-Tier REMIC].
[The Lower-Tier REMIC shall be the "applicable Constituent REMIC" for purposes
of Section 3.21.]
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Corporate Trust Office. The Corporate Trust Office is located at
[Trustee, having its principal offices located at _________________________,
Attention: Corporate Trust Department,] or such other address as shall be
identified to CMSI and all Certificateholders by or on behalf of the Trustee in
writing.
Current Class B-1 Subordination Level. As of any Distribution Date, the
Current Class B-1 Subordination Level is the percentage obtained by dividing (a)
the sum of the Class B-2, Class B-3, Class B-4 and Class B-5 Subclass Stated
Amounts by (b) the Pool Adjusted Balance, each as of the immediately preceding
Distribution Date (after giving effect to any distributions in reduction of
Stated Amount and the allocation of any losses on such date).
Current Class B-2 Subordination Level. As of any Distribution Date, the
Current Class B-2 Subordination Level is the percentage obtained by dividing (a)
the sum of the Class B-3, Class B-4 and Class B-5 Subclass Stated Amounts by (b)
the Pool Adjusted Balance, each as of the immediately preceding Distribution
Date (after giving effect to any distributions in reduction of Stated Amount and
the allocation of any losses on such date).
Current Class B-3 Subordination Level. As of any Distribution Date, the
Current Class B-3 Subordination Level is the percentage obtained by dividing (a)
the sum of the Class B-4 and Class B-5 Subclass Stated Amounts by (b) the Pool
Adjusted Balance, each as of the immediately preceding Distribution Date (after
giving effect to any distributions in reduction of Stated Amount and the
allocation of any losses on such date).
Current Class B-4 Subordination Level. As of any Distribution Date, the
Current Class B-4 Subordination Level is the percentage obtained by dividing (a)
the Class B-5 Subclass Stated Amount by (b) the Pool Adjusted Balance, each as
of the immediately preceding Distribution Date (after giving effect to any
distributions in reduction of Stated Amount and the allocation of any losses on
such date).
Current Class M Subordination Level. As of any Distribution Date, the
Current Class M Subordination Level is the percentage obtained by dividing (a)
the Class B Stated Amount by (b) the Pool Adjusted Balance, each as of the
immediately preceding Distribution Date (after giving effect to any
distributions in reduction of Stated Amount and the allocation of any losses on
such date).
Cut-Off Date. The Cut-Off Date is ________ 1, 1999.
[Deceased Holder. A Deceased Holder is a Beneficial Owner of a Retail
CitiCertificate who was living at the time such interest was acquired and whose
authorized personal representative, surviving tenant by the entirety, surviving
joint tenant or surviving tenant in common or other person empowered to act on
behalf of a deceased Beneficial Owner causes to be furnished to the Clearing
Agency evidence of death satisfactory to the Trustee and any tax waivers
requested by the Trustee.]
[Deficiency Amount. For any Distribution Date, without duplication, (A)
the sum of (i) the Class A Subclass Interest Shortfall Amount for such
Distribution Date for the Insured Certificates, (ii) any Non-Supported Interest
Shortfall for such Distribution Date allocated to the Insured
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Certificates and not covered by the Reserve Fund and (iii) the amount of the
principal or interest portion of any Realized Losses for such Distribution Date
allocated to the Insured Certificates, including any Excess Special Hazard
Losses, Excess Fraud Losses and Excess Bankruptcy Losses (and excluding any
Extraordinary Losses) and (B) for the Last Scheduled Distribution Date, the
Stated Amount of the Insured Certificates to the extent unpaid on the Last
Scheduled Distribution Date.]
Definitive Certificates. The Class A-__, Class A-__, Class A-IO, Class
M and Class B CitiCertificates and the Residual Certificates will be issued in
fully registered certificated form.
Denominations. The denominations of each Subclass of the Class A
CitiCertificates (other than the Class A-__ and Class A-__ CitiCertificates),
Class M, Class B-1 and Class B-2 CitiCertificates are $1,000 Initial Stated
Amount and integral multiples of $1 in excess thereof and the Class B-3, Class
B-4 and Class B-5 CitiCertificates are $100,000 Initial Stated Amount and
integral multiples of $1,000 in excess thereof (except that one CitiCertificate
of each Class or Subclass may be issued in a different denomination). The
denominations of the Class A-__, Class A-__ and Class A-IO CitiCertificates will
be initial notional amounts of $1,000 and any whole dollar amount in excess
thereof. The denominations of the [Class R and Class LR] [Residual] Certificates
are 100% Percentage Interest.
Deposit Date. The Deposit Date with respect to the Certificates is
the Business Day prior to each Distribution Date.
Depository. The initial Depository is Citibank (New York State).
Designated Interest Accrual Date. The last day of the calendar month
preceding each Distribution Date.
Determination Date. The Determination Date with respect to each
Distribution Date is the close of business on the 18th day (or, if such day is
not a Business Day, the preceding Business Day) of the month in which the
related Distribution Date occurs.
Discount Mortgage Loan. Each Mortgage Loan having a Net Note Rate of
less than ____% per annum.
Distribution Date. Each Distribution Date shall be the 25th day of each
month (or if such day is not a Business Day, the next succeeding Business Day),
commencing in _________ 1999.
ERISA Restricted CitiCertificates. The Class A-__, Class A-IO, Class M
and Class B CitiCertificates.
Extraordinary Losses. Realized Losses resulting from Extraordinary
Events.
[Individual Retail CitiCertificate. A Class A-__ CitiCertificate which
evidences $1,000 original Stated Amount.]
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Initial Bankruptcy Loss Amount. The Initial Bankruptcy Loss Amount
is $______.
Initial Fraud Loss Amount. The Initial Fraud Loss Amount is $______.
Initial Special Hazard Loss Amount. The Initial Special Hazard Loss
Amount is $______.
Initial Special Hazard Percentage. The Initial Special Hazard
Percentage is ____%.
Initial Stated Amount. The Initial Stated Amount for each Subclass of
the Class A CitiCertificates (or, in the case of the Class A-__, Class A-__ and
Class A-IO CitiCertificates, their respective initial notional amounts), for the
Class M CitiCertificates, for each Subclass of the Class B CitiCertificates [and
for the Class L Regular Interests] are as set forth in Section 12.01(a).
[Insurance Agreement. The Insurance Agreement dated as of
________ 1, 1999 among the Insurer, CMSI and the Trustee, as amended from time
to time.]
[Insurance Policy. The certificate guaranty insurance policy issued
by the Insurer on the Issue Date for the benefit of the Holders of the Insured
Certificates, substantially in the form of Exhibit I.]
[Insurance Premium. The Insurance Premium is a monthly fee equal to
0.05% per annum of the Stated Amount of the Insured Certificates as of the close
of business on the first day of the month next preceding the month in which the
related Distribution Date occurs or, in the case of the first Distribution Date,
as of the close of business on the Startup Day, payable to the Insurer as
provided in this Agreement.]
[Insured Certificates. The Class A-__ CitiCertificates.]
[Insured Payment. An Insured Payment is (i) as of any Distribution
Date, any Deficiency Amount and (ii) any Preference Amount.]
[Insurer. The Insurer is ______ Insurance Corporation, a ______ stock
insurance company.]
[Insurer Deliverables. Each notice, report, opinion or other written
item delivered pursuant to the following provisions shall also be delivered to
each Insurer, if any, at the times and in the manner set forth therein:
(a) the penultimate paragraph of Section 2.03 and
(b) Section 3.05.]
Interest Accrual Period. The Interest Accrual Period in respect of any
Distribution Date is the first day of the month preceding the month of such
Distribution Date (or, in the case of the first Distribution Date, the Cut-Off
Date) through the last day of the month preceding the month of such Distribution
Date.
Investment Account. The Certificate Account will be an Investment
Account.
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Investor Rate. For the purposes of Section 9.01, the Investor Rate
for each Mortgage Loan will be applicable Net Note Rate therefor.
Issue Date. The Issue Date is _______, 1999.
Last Scheduled Distribution Date. The Last Scheduled Distribution Dates
for the CitiCertificates [and the Class L-1 Regular Interest] are as set forth
in Section 12.01(a).
[Lower-Tier Certificates. The Lower-Tier Certificates shall consist of
the Class A-__, Class A-__, Class A-__, Class A-__, Class A-__, Class A-__,
Class A-__, Class A-__, Class A-__, Class A-__, Class A-__, Class A-__, Class
A-__, Class A-__, Class A-__, Class A-__, Class M, Class B-1, Class B-2, Class
B-3, Class B-4 and Class B-5 CitiCertificates, the Class L-1 Regular Interest,
the Class L-2 Regular Interest and the Class LR Certificate.]
[Lower-Tier REMIC. The Lower-Tier REMIC is one of the two separate
REMICs comprising the Trust Fund, the assets of which consist of the Mortgage
Loans, such amounts as shall from time to time be held in the Retail Reserve
Fund, the Certificate Account, the insurance policies, if any, relating to a
Mortgage Loan, and property which secured a Mortgage Loan and which has been
acquired by foreclosure or deed in lieu of foreclosure and all proceeds thereof
and the rights of the Trustee under the Reserve Fund and the Insurance Policy.
Neither the Reserve Fund nor the Class A-__ Policy Payments Account shall be
assets of the Lower-Tier REMIC.]
Mortgage Document Custodian. The initial Mortgage Document Custodian
is Bank One Trust Company, N.A.
Mortgage Loans. The Mortgage Loans will consist primarily of 20- to
30-year fixed-rate conventional one- to four-family mortgage loans.
Mortgage Note Custodian. The Mortgage Document Custodian is also
designated by CMSI as the Mortgage Note Custodian. At any time that the Rating
Agencies respective rating of Citicorp's long-term senior debt is below the
respective rating assigned by each such Rating Agency to the CitiCertificates,
the Mortgage Note Custodian may not be an Affiliate of CMSI.
Net Note Rate. For a Mortgage Loan, the related Mortgage Note Rate
less the Servicing Fee.
Non-PO Percentage. For any Mortgage Loan, the difference between (a)
100% and (b) the applicable PO Percentage.
Non-PO Pool Adjusted Balance. As of any Distribution Date, the sum of
the products of the applicable Non-PO Percentage of each Mortgage Loan and the
Adjusted Balance of each Mortgage Loan for the preceding Distribution Date.
Notices. The address of the Trustee to which notices should be sent is
[Trustee, having its principal offices located at __________________, Attention:
Corporate Trust Department, CMSI 1999-____,] at or such other address of which
the Trustee shall notify CMSI in writing. The address of CMSI to which notices
should be sent is Citicorp Mortgage Securities, Inc., 909 Third Avenue,
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30th Floor, New York, NY 10043, Attention: Andrew E. LaBarbera, or such other
address of which CMSI shall notify the Trustee in writing. [The address of S&P
to which notices should be sent is 25 Broadway, New York, NY 10004. The address
of Fitch to which notices should be sent is Residential Mortgage Pass-Through
Monitoring, Fitch Investors Service, L.P., One State Street Plaza, 32nd Floor,
New York, New York 10004.]
Original Class A Percentage. The Original Class A Percentage
is ______%.
Original Class A Stated Amount. The Original Class A Stated Amount
is $______.
Original Class B-1 Percentage. The Original Class B-1 Percentage
is ______%.
Original Class B-1 Stated Amount. The Original Class B-1 Stated Amount
is $______.
Original Class B-1 Subordination Level. The Original Class B-1
Subordination Level is equal to ______%.
Original Class B-2 Percentage. The Original Class B-2 Percentage
is ______%.
Original Class B-2 Stated Amount. The Original Class B-2 Stated Amount
is $______.
Original Class B-2 Subordination Level. The Original Class B-2
Subordination Level is equal to ______%.
Original Class B-3 Percentage. The Original Class B-3 Percentage
is ______%.
Original Class B-3 Stated Amount. The Original Class B-3 Stated Amount
is $______.
Original Class B-3 Subordination Level. The Original Class B-3
Subordination Level is equal to ______%.
Original Class B-4 Percentage. The Original Class B-4 Percentage
is ______%.
Original Class B-4 Stated Amount. The Original Class B-4 Stated Amount
is $______.
Original Class B-4 Subordination Level. The Original Class B-4
Subordination Level is equal to ______%.
Original Class B-5 Percentage. The Original Class B-5 Percentage
is ______%.
Original Class B-5 Stated Amount. The Original Class B-5 Stated Amount
is $______.
Original Class M Percentage. The Original Class M Percentage
is ______%.
Original Class M Stated Amount. The Original Class M Stated Amount
is $______.
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<PAGE>
Original Class M Subordination Level. The Original Class M
Subordination Level is equal to ______%.
Original Subordinated Stated Amount. The Original Subordinated Stated
Amount is the sum of the Original Class M, Class B-1, Class B-2, Class B-3,
Class B-4 and Class B-5 Stated Amounts. The Original Subordinated Stated
Amount is equal to $______.
PAC Balance Amount. The PAC Balance Amount for either Class A Subclass
of the PAC Certificates for any Distribution Date is the amount, if any,
required to reduce the outstanding Stated Amount thereof (prior to giving effect
to distributions in reduction thereof to be made on such Distribution Date) to
their Planned Balance for such Distribution Date.
PAC Certificates. The Class A-__, Class A-__ and Class A-__
CitiCertificates are planned amortization class certificates.
Participant. A participating organization in the Clearing Agency.
Paying Agent. The Trustee shall act as the initial Paying Agent.
However, the Servicer may at any time appoint a Paying Agent reasonably
acceptable to the Trustee for all of the Certificates. Any such Paying Agent may
be removed, and any other Paying Agent reasonably acceptable to the Trustee
appointed, by the Servicer.
Planned Balance. The Planned Balance for the PAC Certificates for any
Distribution Date is set forth in the table attached hereto as Exhibit H.
PO Loss Amount. With respect to each Distribution Date, the sum of (i)
the difference, if any, between the Class A PO Principal Amount for such
Distribution Date and the amount distributed in reduction of the Stated Amount
of the Class A-__ CitiCertificates on such Distribution Date pursuant to
Paragraph fifth of Section 13.01(b) and (ii) the PO Percentage of each Realized
Loss (other than Excess Special Hazard Losses, Excess Fraud Losses and Excess
Bankruptcy Losses). On and after the Subordination Depletion Date, Available PO
Loss Funds will be zero and therefore will not be available for reimbursement of
PO Loss Amounts.
PO Percentage. A fraction, expressed as a percentage, (a) for each
Discount Mortgage Loan, the numerator of which is ____% minus the Net Note Rate
and the denominator of which is ____% and (b) for each Premium Mortgage Loan,
0.0%.
[Policy Payments Account. The account established pursuant to Section
12.08(c).]
[Preference Amount. Any amount previously distributed to an Owner on
the Insured Certificates that is recoverable and sought to be recovered as a
avoidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time in accordance with a
final nonappealable order of a court having competent jurisdiction.]
Premium Mortgage Loan. Each Mortgage Loan having a Net Note Rate of
____% per annum or greater.
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<PAGE>
Private Certificates. The Class A-IO, Class B-3, Class B-4 and
Class B-5 CitiCertificates and the Residual Certificates.
Rating Agencies. The Rating Agencies for the Class A CitiCertificates
are S&P and Fitch, and the Rating Agency for the Class M, Class B-1, Class B-2,
Class B-3 and Class B-4 CitiCertificates is Fitch.
Record Date. The Record Date for each Distribution Date will be the
close of business on the last day of the month preceding the month of the
applicable Distribution Date.
[Reserve Fund. The non-interest bearing account established with the
Trustee and maintained by the Trustee for the benefit of the Class A-__
CitiCertificateholders pursuant to Section 12.07(h). The Reserve Fund shall be
an Eligible Account.]
[Reserve Withdrawal. With respect to any Distribution Date, the
lesser of (a) the amount on deposit in the Reserve Fund and (b) the amount of
Non-Supported Interest Shortfalls allocated to the Insured Certificates.]
[Retail CitiCertificates. The Retail CitiCertificates are the Class
A-__ CitiCertificates.]
[Retail Reserve Fund. The special reserve fund established pursuant to
Section 12.07(e) hereof. The Retail Reserve Fund shall be a non-interest
bearing account.]
Right to Repurchase. The right of CMSI to repurchase all of the
Mortgage Loans pursuant to Section 9.01 hereof shall be conditioned upon, among
other things, the aggregate Adjusted Balance of such Mortgage Loans being less
than $______ at the time of any such repurchase, and, unless otherwise agreed by
the Insurer, the purchase price paid by CMSI in connection therewith must equal
or exceed the aggregate Stated Amount of all CitiCertificates then outstanding
plus accrued interest thereon, any unreimbursed advances and all reimbursement
amounts then owed to the Insurer.
Schedule I TAC Balance Amount . The Schedule I TAC Balance Amount for
the Class A-__, Class A-__ or Class A-__ CitiCertificates for any Distribution
Date will be equal to the amount, if any, required to reduce the outstanding
Stated Amount thereof (prior to giving effect to the distributions in reduction
of the Stated Amount on such Distribution Date) to the Schedule I Targeted
Balance.
Schedule II TAC Balance Amount. The Schedule II TAC Balance Amount for
the Class A-__, Class A-__ or Class A-__ CitiCertificates for any Distribution
Date will be equal to the amount, if any, required to reduce the outstanding
Stated Amount thereof (prior to giving effect to the distributions in reduction
of the Stated Amount on such Distribution Date) to the Schedule II Targeted
Balance.
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Schedule I Targeted Balance. The Schedule I Targeted Balance for the
Class A-__, Class A-__ and Class A-__ CitiCertificates for any Distribution Date
is set forth in the table attached hereto as Exhibit G.
Schedule II Targeted Balance. The Schedule II Targeted Balance for the
Class A-__, Class A-__ and Class A-__ CitiCertificates for any Distribution Date
is set forth in the table attached hereto as Exhibit G.
Scheduled Principal Amount. The sum for each outstanding Mortgage Loan
(including each defaulted Mortgage Loan, other than a Liquidated Loan, with
respect to which the related Mortgaged Property has been acquired by the Trust)
of the product of (A) the Non-PO Percentage for such Mortgage Loan and (B) the
amount described in clause (a) of the definition of "Class A Non-PO Principal
Amount", but without that amount being multiplied by the Class A Percentage.
Servicing Fee. The Servicing Fee is a monthly fee equal to 0.__% per
annum of the aggregate Adjusted Balance of each Mortgage Loan as of the close of
business on the first day of the month next preceding the month in which the
related Distribution Date occurs, payable to the Servicer out of each payment
received by it on account of interest on such Mortgage Loan during the related
Due Period, to the extent that the amount of such payment of interest exceeds
the amount of interest with respect to such Mortgage Loan to be deposited in the
Certificate Account.
Single Certificate. A Single Certificate evidences, in the case of a
Class A-__, Class A-__, Class A-__, Class A-__, Class A-__, Class A-__, Class
A-__, Class A-__, Class A-__, Class A-__, Class A-__, Class A-__, Class A-__,
Class A-__, Class A-__, Class A-__, Class A-__, Class A-__, Class A-__, Class
A-__, Class M, Class B-1 or Class B-2 CitiCertificate, $1.00 Initial Stated
Amount, in the case of a Class A-__, Class A-__ and Class A-IO CitiCertificate,
$1.00 initial notional amount, in the case of a Class B-3, Class B-4 or Class
B-5 CitiCertificate, $1,000 Initial Stated Amount and, in the case of a Residual
Certificate, 1% Percentage Interest.
Startup Day. The Startup Day will be ______, 1999.
Stated Rate. The Stated Rates for the CitiCertificates [and the Class
L Regular Interests] are as set forth in Section 12.01(a).
TAC Balance Amount. For the Class A-__, Class A-__ or Class A-__
CitiCertificates, the TAC Balance Amount for any Distribution Date will be equal
to the amount, if any, required to reduce the outstanding Stated Amount thereof
(prior to giving effect to distributions in reduction of the Stated Amount
thereof to be made on such Distribution Date) to the Targeted Balance set forth
in the table attached hereto as Exhibit G.
TAC Certificates. The Class A-__, Class A-__, Class A-__, Class A-__,
Class A-__and Class A-__ CitiCertificates are targeted amortization class
certificates.
Targeted Balance. The Targeted Balance for the Class A-__, Class
A-__and Class A-__ CitiCertificates for any Distribution Date is set forth in
the table attached hereto as Exhibit G.
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Trustee Advances. The Trustee (in its individual capacity) hereby
undertakes to make Trustee Advances in accordance with Section 8.13.
Underwriters.
Unpaid PO Loss Amount. For any Distribution Date, the difference
between (a) the sum of the PO Loss Amount for that and prior Distribution Dates
and (b) amounts distributed pursuant to Paragraph fifth of Section 13.01(b).
Unscheduled Principal Amount. The sum for each outstanding Mortgage
Loan (including each defaulted Mortgage Loan, other than a Liquidated Loan, with
respect to which the related Mortgaged Property has been acquired by the Trust)
of the product of (A) the Non-PO Percentage for such Mortgaged Loan and (B) the
sum of the amounts described in clause (b), (c), (d) and (e) of the definition
of "Class A Non-PO Principal Amount," but without that amount being multiplied
by the Class A Prepayment Percentage.
[Upper-Tier Certificates. The Upper-Tier Certificates shall consist
of the Class A-__, Class A-__, Class A-__, Class A-__, Class A-__ and
Class A-__ CitiCertificates and the Class R Certificate.]
[Upper-Tier REMIC. The Upper-Tier REMIC is one of the two separate
REMICs comprising the Trust Fund, the assets of which consist of the Class L
Regular Interests and such amounts as shall from time to time be held in the
Upper-Tier REMIC Account. Neither the Reserve Fund, the Retail Reserve Fund nor
the Class A-__ Policy Payments Account shall be assets of the Upper-Tier REMIC.]
Voting Interest. As of any date, the Voting Interest of the Class A
CitiCertificates shall equal the sum of (i) (100% minus the sum of the Voting
Interests of the Class A-__, Class A-__ and Class A-IO CitiCertificates)
multiplied by a fraction the numerator of which is the Class A Stated Amount and
the denominator of which is the sum of the Class A Stated Amount, the Class M
Stated Amount and the Class B Stated Amount and (ii) the Voting Interest of the
Class A-__, Class A-__ and Class A-IO CitiCertificates. As of any date the
Voting Interest of the Class M CitiCertificates will equal (a) 100% minus the
Class A Voting Interest multiplied by (b) a fraction the numerator of which is
the Class M Stated Amount and the denominator of which is the sum of the Class M
Stated Amount and the Class B Stated Amount. As of any date the Voting Interest
of the Class B CitiCertificates will equal 100% less the sum of the Voting
Interest of the Class A and Class M CitiCertificates. The Voting Interest of the
Class A CitiCertificates (other than the Class A-__ and Class A-__
CitiCertificates) and the Class B CitiCertificates will be allocated among the
Subclasses of the Class A or Class B CitiCertificates, as the case may be, pro
rata based on each such Subclass' Stated Amount. The Voting Interest of the
Class A-__ and Class A-__ CitiCertificates shall be 1% for each such Class A
Subclass. The Voting Interest of the Class A-IO CitiCertificates shall be 2%.
Section 12.03. Wire Transfer Eligibility.
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The minimum number of Single Certificates eligible for wire transfer on
each Distribution Date, in the case of CitiCertificates, is 1,000,000
(representing a $1,000,000 Initial Stated Amount or initial notional amount)
and, in the case of the Residual Certificates, a 100% Percentage Interest.
Section 12.04. REMIC-Related Provisions.
[(a) Elections shall be made to treat the Trust Fund formed hereunder
as, and the affairs of the Trust Fund shall be conducted so as to qualify it as,
two separate REMICs (the "Lower-Tier REMIC" and the "Upper-Tier REMIC",
respectively), for federal income tax purposes. CMSI and the Trustee agree to
assure continuing treatment of the Trust Fund as segregated asset pools, and the
treatment of each such segregated asset pool as a REMIC and to avoid the
imposition of a tax on the Trust Fund, the Upper-Tier REMIC or the Lower-Tier
REMIC, and to carry out the covenants set forth in this Article XII and the
elections and reporting required in Section 3.07 on behalf of each of the
Lower-Tier REMIC and Upper-Tier REMIC, including making the appropriate
elections to treat the Trust Fund as two separate REMICs and maintaining two
segregated accounts (the "Certificate Account" and the "Upper-Tier REMIC
Account", respectively).
(b) CMSI, on behalf of the Trustee, shall deposit daily in the
Certificate Account in accordance with Section 3.02 all Remittances received by
it, any amounts required to be deposited in the Certificate Account pursuant to
Section 3.01, all other deposits required to be made to the Certificate Account
other than those amounts specifically designated to be deposited in the
Upper-Tier REMIC Account in Section 3.28 and all investments made with moneys on
deposit in the Certificate Account, including all income or gain from such
investments, if any. Funds on deposit in the Certificate Account shall be held
and invested in accordance with the applicable provisions of Section 3.02.
Distributions from the Certificate Account shall be made in accordance with the
provisions of Sections 3.04, 3.16 and Articles XII and XIII to make payments in
respect of the Lower-Tier Certificates and to pay the Servicing Fee in
accordance with Section 3.03(c) and to pay the Insurer in accordance with
Article XIII.
Notwithstanding anything herein to the contrary, Upper-Tier
Certificates shall not receive distributions directly from the Certificate
Account. On each Distribution Date, CMSI, on behalf of the Trustee, shall
withdraw from the Certificate Account and deposit in the Upper-Tier REMIC
Account all distributions to be made on such Distribution Date in respect of
interest on and in reduction of Stated Amounts of the Class L Regular Interests.
The Trustee shall cause to be distributed from the Upper-Tier REMIC Account, to
the extent funds are on deposit therefor, all amounts required to be distributed
with respect to the Upper-Tier Certificates as specified in Articles XII and
XIII.
To the extent that any part of the Upper-Tier REMIC Account is
designated in Article XII as an Investment Account, the provisions in Section
3.02 hereof applicable to the investment of funds shall apply to the Upper-Tier
REMIC Account. In addition, the provisions of Section 3.02(b) shall apply to the
Upper-Tier REMIC Account.]
[(a)][(c)]CMSI shall maintain books with respect to [each Constituent]
[the] REMIC on a calendar year taxable year and on the accrual method of
accounting.
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[(b)][(d)]The Trustee shall not create, or permit the creation of, any
"interests" in [either Constituent] [the] REMIC within the meaning of Code
Section 860D(a)(2) other than the interests represented by the Certificates[,
and (with respect to the Lower-Tier REMIC) the Class L Regular Interests.]
[(c)][(e)]Except as otherwise provided in the Code, CMSI shall not
grant, and the Trustee shall not accept, property unless (i) substantially all
of the property held by [each Constituent] [such] REMIC constitutes either
"qualified mortgages" or "permitted investments" as defined in Code Sections
860G(a)(3) and (5), respectively, and (ii) no property shall be granted to
[either Constituent] [the] REMIC after the Startup Day, unless such grant would
not subject the REMIC to the 100% tax on contributions to a REMIC after the
Startup Day imposed by Code Section 860G(d).
[(d)][(f)]The Trustee shall not accept on behalf of the Trust Fund or
any Constituent REMIC any fee or other compensation for services and shall not
accept on behalf of the Trust Fund any income from assets other than those
permitted to be held by a REMIC.
[(e)][(g)]The Trustee shall not sell or permit the sale of all or any
portion of the Mortgage Loans, or of an Eligible Investment held in the
Certificate Account [or Upper-Tier REMIC Account] (other than in accordance with
Sections 2.02, 2.03, 2.04 and 3.02(d)) unless such sale is pursuant to a
"qualified liquidation" as defined in Code Section 860F(a)(4)(A) and is in
accordance with Section 9.01.
Section 12.05. Expenses and Liabilities of the Trust Fund.
CMSI, as Servicer, shall be liable for all expenses, liabilities and
obligations of the Trust Fund (other than the obligation to make distributions
in reduction of Stated Amount of the CitiCertificates [and the Class L Regular
Interests] and the obligation to make distributions of interest on the
CitiCertificates) including those set forth in Section 8.05 hereof. To the
extent such expenses, liabilities or obligations consist of federal income
taxes, including, without limitation, prohibited transaction taxes, taxes on net
income from foreclosure property and taxes on certain contributions to a REMIC
after the Startup Day, nothing shall prevent the Servicer from contesting any
such tax, if permitted by law, pending the outcome of such proceedings. If the
Trustee determines that on any Distribution Date the amount in the Certificate
Account due CMSI as its Servicing Fee, after the distribution of all amounts
required to be distributed to the Holders of the Certificates has been made, is
insufficient to pay expenses or meet any obligation of the Trust Fund, the
Trustee shall give notice of any shortfall to CMSI setting forth the basis for
such expenses. Within ten Business Days of such notice, CMSI shall deliver to
the Trustee immediately available funds in the amount of such expenses.
Section 12.06. Tax Matters Person.
If in any taxable year there shall be more than one Holder of the Class
LR [or Class R] Certificate, a tax matters person may be designated with respect
to the [related] REMIC, who shall have the same duties with respect to the
[Lower-Tier] REMIC [or Upper-Tier REMIC, respectively,] as those of a "tax
matters partner" under Subchapter C of Chapter 63 of Subtitle F of the Code, and
who shall be, in order of priority, (i) the Servicer or an Affiliate of the
Servicer, if the Servicer or
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such Affiliate is the Holder of a Class LR [or Class R] Certificate at any time
during the taxable year or at the time such designation is made, (ii) if the
Servicer is not a Holder of a Class LR [or Class R] Certificate at the relevant
time, the Servicer as agent for the Holder[s] of the Class LR [or Class R]
Certificate, if such designation is permitted to be made under the Code or (iii)
such Holder of a Class LR [or Class R] Certificate or person who may be
designated a tax matters person in the same manner in which a tax matters
partner may be designated under applicable Treasury Regulations, including
Treasury Regulations ss. 1.860F-4(d) and temporary Treasury Regulations ss.
301.6231(a)(7)-1T.
[ [Section 12.07. Distributions in Reduction of Stated Amount of the
Retail CitiCertificates.
Distributions in reduction of Stated Amount of the Retail
CitiCertificates will be made, prior to the earlier to occur of (i) the
Subordination Depletion Date or (ii) the failure by the Insurer to make
an Insured Payment, in integral multiples of $1,000 Stated Amount at
the request of Beneficial Owners thereof or by mandatory distributions
by random lot, pursuant to clauses (a) and (d) below, and thereafter on
a pro rata basis pursuant to clause (f) below.
(a) Subject to clause (f) below, on each Distribution Date on
which distributions in reduction of Stated Amount are made on
the Retail CitiCertificates, such distributions will be made
in the following order of priority:
(1) with respect to a Deceased Holder, any request by the
personal representatives or by a surviving tenant by
the entirety, by a surviving joint tenant or by a
surviving tenant in common, but not exceeding an
aggregate distributions in reduction of Stated Amount
of $100,000 per request; and
(2) with respect to a Beneficial Owner other than a
Deceased Holder, any request not exceeding an
aggregate distributions in reduction of Stated Amount
of $10,000.
Requests for distributions in reduction of Stated Amount of
the Retail CitiCertificates presented on behalf of Deceased
Holders in accordance with the provisions of clause (1) above
will be accepted in the order of their receipt by DTC and the
Trustee. Requests for distributions in reduction of Stated
Amount of the Retail CitiCertificates presented in accordance
with the provisions of clause (2) above will be accepted in
the order of their receipt by DTC after all requests presented
in accordance with clause (1) above have been honored.
Thereafter, requests for distribution on reduction of Stated
Amount will be honored with respect to a Deceased Holder as
provided in clause (1) above up to a second $100,000, and
requests for such distributions will be honored with respect
to a Beneficial Owner other than a Deceased Holder as provided
for in clause (2) above up to a second $10,000. This sequence
of priorities will be repeated until all requests for
distributions in reduction of Stated Amount have been honored.
All requests for distributions in reduction of Stated Amount
of the Retail CitiCertificates submitted on behalf of Deceased
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Holders and/or with respect to Retail CitiCertificates
beneficially owned by any joint ownership arrangement will be
accepted in accordance with the provisions set forth in
Section 12.07(b). All requests for distributions in reduction
of Stated Amount of the Retail CitiCertificates must comply
with the requirements set forth in Section 12.07(c) below.
Requests for distributions in reduction of Stated Amount of
the Retail CitiCertificates with respect to any Distribution
Date must be transmitted to DTC and the Trustee, via the APUT
System, no later than the close of business on the related
Record Date. Requests for distributions which are received by
DTC and the Trustee after the related Record Date and
requests, in either case, for distributions not accepted with
respect to any Distribution Date, will be treated as requests
for distributions in reduction of Stated Amount on the next
succeeding Distribution Date, and each succeeding Distribution
Date thereafter, until each such request is accepted or is
withdrawn as provided in Section 12.07(c). Such requests as
are not so withdrawn shall retain their order of priority
without the need for any further action on the part of the
Beneficial Owner of the related Retail CitiCertificate, all in
accordance with the procedures of DTC and the Trustee. A
request for distributions in reduction of Stated Amount
submitted on behalf of a Beneficial Owner who thereafter
becomes a Deceased Holder shall become entitled to the
priority afforded Deceased Holders pursuant to Section
12.07(a), provided, that, as to any Distribution Date, the
Trustee shall have received appropriate written evidence of
death and any required tax waivers on or before the related
Record Date. Upon the transfer of beneficial ownership of any
Retail CitiCertificate, any distribution request previously
submitted with respect to such CitiCertificate must be
withdrawn via the APUT System and approved by the Trustee as
described herein.
Distributions in reduction of Stated Amount will be applied,
in the aggregate, to the Retail CitiCertificates in an amount
equal to the Class A Principal Distribution Amount allocable
to such Subclass, plus an amount equal to the Insured Payments
allocable to such Subclass pursuant to Section 12.01(d), plus
any amounts available for distribution from the Retail Reserve
Fund established as provided in Section 12.07(e), provided
that the aggregate distribution in reduction of Stated Amount
of the Retail CitiCertificates on any Distribution Date is
made in an integral multiple of $1,000.
To the extent that the portion of the Class A Principal
Distribution Amount allocable to distributions in reduction to
Stated Amount of the Retail CitiCertificates on any
Distribution Date, plus an amount equal to the Insured
Payments allocable to the Class A-__ CitiCertificates pursuant
to Section 12.01(d) exceeds the Stated Amount of the Retail
CitiCertificates with respect to which distribution requests,
as set forth above, have been received (plus, any amounts
required to be distributed pursuant to the Retail Reserve
Fund), distributions in reduction of Stated Amount of the
Retail CitiCertificates will be made by mandatory distribution
pursuant to Section 12.07(d).
(b) A Retail CitiCertificate shall be deemed to be held by a
Deceased Holder for
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purposes of this Section 12.07 if the death of the Beneficial
Owner thereof is deemed to have occurred. Retail
CitiCertificates beneficially owned by tenants by the
entirety, joint tenants or tenants in common will be
considered to be beneficially owned by a single owner. The
death of a tenant by the entirety, joint tenant or tenant in
common will be deemed to be the death of the Beneficial Owner,
and the Retail CitiCertificates so beneficially owned will be
eligible for priority with respect to distributions in
reduction of Stated Amount, subject to the limitations stated
above. Retail CitiCertificates beneficially owned by a trust
will be considered to be beneficially owned by each
beneficiary of the trust to the extent of such beneficiary's
beneficial interest therein, but in no event will a trust's
beneficiaries collectively be deemed to be Beneficial Owners
of a number of Individual Retail CitiCertificates greater than
the number of Individual Retail CitiCertificates of which such
trust is the owner. The death of a Beneficiary of a trust will
be deemed to be the death of a Beneficial Owner of the Retail
CitiCertificates beneficially owned by the trust to the extent
of such beneficiary's beneficial interest in such trust. The
death of an individual who was a tenant by the entirely, joint
tenant or tenant in common in a tenancy which is the
beneficiary of a trust will be deemed to be the death of the
beneficiary of the trust. The death of a person who, during
his or her lifetime, was entitled at least 75% of the
beneficial ownership interests in Retail CitiCertificates will
be deemed to be the death of the Beneficial Owner of such
Retail CitiCertificates regardless of the registration of
ownership, if such beneficial ownership interest can be
established to the satisfaction of the Trustee. Such
beneficial interest will be deemed to exist in typical cases
of street name or nominee ownership, ownership by a trustee,
ownership under the Uniform Gifts to Minors Act and community
property or other joint ownership arrangements between a
husband and wife. Beneficial interests shall include the power
to sell, transfer or otherwise dispose of a Retail
CitiCertificate and the right to receive the proceeds
therefrom, as well as interest and distributions in reduction
of Stated Amount payable with respect thereto. The Trustee
shall not be under any duty to determine independently the
occurrence of the death of any deceased Beneficial Owner. The
Trustee may rely conclusively upon documentation delivered to
it pursuant to Section 12.07(a) in establishing the
eligibility of any Beneficial Owner to receive the priority
accorded Deceased Holders in Section 12.07(a).
(c) Requests for distributions in reduction of Stated Amount
of a Retail CitiCertificate must be made by the Beneficial
Owner of such CitiCertificates or by the personal
representative, surviving tenant by the entirety, surviving
joint tenant or surviving tenant in common of a Deceased
Holder by request therefor by delivering a written request
therefor, together with appropriate evidence of death any
necessary tax waivers in the case of a request by a Deceased
Holder, to the Participant or Indirect Participant that
maintains the account evidencing such Beneficial Owner's
interest in Retail CitiCertificates. The Indirect Participant
should in turn notify the related Participant of the
Beneficial Holder's request. The Participant should transmit
the request to DTC via the APUT system. The Participant will
receive a confirmation from DTC of receipt of the request.
Neither the Servicer nor the Trustee shall be liable for any
delay in receipt of or confirmation of receipt of request by
DTC via the
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APUT system.
The Trustee shall rely on the list, maintained on the APUT
system, of Participants representing Beneficial Owners of
Retail CitiCertificates that have transmitted requests for
distributions in reduction of Stated Amount of the Retail
CitiCertificates, which list shall contain the order of
receipt of transmitted request and the amount of each such
request. The Trustee will honor requests for distributions in
order of their receipt (subject to the priorities described in
Section 12.07(a) above). The Trustee shall transmit
confirmation to DTC and the appropriate Participants as to
which requests should be honored on each Distribution Date.
Requests shall be honored by the Trustee and DTC in accordance
with the procedures, and subject to the priorities and
limitations, described in Section 12.07. The exact procedures
to be followed by the Trustee and DTC for purposes of
determining such priorities and limitations will be those
established from time to time by the Trustee or DTC, as the
case may be. The decisions of the Trustee and DTC concerning
such matters will be final and binding on all affected
persons.
With respect to Retail CitiCertificates as to which Beneficial
Owners have requested distributions on a particular
Distribution Date on which distributions in reduction of
Stated Amount of the Retail CitiCertificates are being made,
DTC and its Participants will be notified prior to such
Distribution Date whether, and to the extent to which, such
Retail CitiCertificates have been accepted for distributions.
Participants and Indirect Participants holding Retail
CitiCertificates are required to forward such notices to the
Beneficial Owners of such CitiCertificates. It is expected
that Beneficial Owners will receive such notice no later than
three days prior to the applicable Distribution Date.
Individual Retail CitiCertificates which have been accepted
for a distribution shall be due and payable on the applicable
Distribution Date and shall cease to bear interest after the
last day of the month preceding the month in which such
Distribution Date occurs.
Any Beneficial Owner of a Retail CitiCertificate which has
requested a distribution may withdraw its request at any time
by so notifying in writing the Participant or Indirect
Participant that maintains such Beneficial Owner's account. In
the event that such account is maintained by an Indirect
Participant, such Indirect Participant must notify the related
participant which in turn must transmit the withdrawal of such
request to DTC and the Trustee. Any withdrawal of a request
for distribution must be approved by the Trustee, which
approval will be transmitted via the APUT system. Participants
will receive confirmation of withdrawal, upon approval from
the Trustee, via the APUT system. Any withdrawal of a request
for distribution that has not been transmitted by the
Participant and received by DTC and the Trustee on or prior to
the Record Date for the next Distribution Date, will not be
approved for withdrawal by the Trustee and the previously made
request for distribution will be irrevocable with respect to
the making of distributions in reduction of Stated Amount of
Retail CitiCertificates on such Distribution Date.
In the event that any request for distribution in reduction of
Stated Amount of the
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Retail CitiCertificates is rejected by DTC or any withdrawal
of any request for distribution is rejected by the Trustee for
failure to comply with the requirements of this Section 12.07,
DTC or the Trustee shall transmit to the Participant the
reasons for such rejection.
(d) To the extent, if any, that distributions in reduction of
Stated Amount of the Retail CitiCertificates on a Distribution
Date exceed the Stated Amount of Retail CitiCertificates with
respect to which distribution requests have been received by
the related Record Date, as provided in Section 12.07(a)
above, distributions in reduction of the Stated Amount of the
Retail CitiCertificates will be made by mandatory
distributions in reduction thereof. Such mandatory
distributions of Individual Retail CitiCertificates will be
made by random lot in accordance with the then applicable
random lot procedures of DTC, the Participants and the
Indirect Participants representing the Beneficial Owners;
provided however, that, if after the distribution in reduction
of Stated Amount of the Retail CitiCertificates on the next
succeeding Distribution Date on which mandatory distributions
are to be made, the Stated Amount of the Retail
CitiCertificates would not be reduced to zero, the Individual
Retail CitiCertificates to which such distributions will be
applied shall be selected by DTC from those Retail
CitiCertificates not otherwise receiving distributions in
reduction of Stated Amount on such Distribution Date. The
Trustee shall notify DTC of the aggregate amount of the
mandatory distribution in reduction of Stated Amount of the
Retail CitiCertificates to be made on the next Distribution
Date. DTC shall then allocate such aggregate amount among its
Participants on a random lot basis. Each Participant and, in
turn, each Indirect Participant will then select, in
accordance with its own random lot procedures, Individual
Retail CitiCertificates from among those held in its accounts
to receive mandatory distributions in reduction of Stated
Amount, such that the total amount so selected is equal to the
aggregate amount of such mandatory distribution allocated to
such Participant by DTC and to such Indirect Participant by
its related Participant, as the case may be. Participants and
Indirect Participant which hold Retail CitiCertificates
selected for mandatory distributions in reduction of Stated
Amount are required to provide notice of such mandatory
distribution to the affected Beneficial Owners. The Servicer
agrees to notify the Trustee of the amount of distributions in
reduction of Stated Amount of the Retail CitiCertificates to
be made on each Distribution Date in a timely manner such that
the Trustee may fulfill its obligations pursuant to paragraph
10 of the Letter of Representations dated ______, 1999 among
CMSI, the Trustee and DTC.
(e) On the Startup Day, the Issuer shall establish a non-interest
bearing account special reserve fund for the Retail
CitiCertificates with the Trustee (the "Retail Reserve Fund")
and shall deliver to the Trustee the sum of $999.99 as an
initial deposit therein. On each Distribution Date on which a
distribution is made in reduction of Stated Amount of the
Retail CitiCertificates, funds on deposit in the Retail
Reserve Fund shall be available to be applied to round upward
to an integral multiple of $1,000 the aggregate distribution
in reduction of Stated Amount to be made on the Retail
CitiCertificates. Rounding of such distribution on the Retail
CitiCertificates shall be accomplished, on the first such
Distribution Date, by withdrawing from the
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Retail Reserve Fund the amount of funds, if any, needed to
round the amount otherwise available for such distribution in
reduction of Stated Amount upward to the next integral
multiple of $1,000. On each succeeding Distribution Date on
which distributions in reduction of Stated Amount on the
Retail CitiCertificates are to be made, the aggregate amount
of such distribution allocable to the Retail CitiCertificates
shall be applied first to repay any funds withdrawn from the
Retail Reserve Fund on the prior Distribution Date, and then
the remainder of such allocable amount, if any, shall be
similarly rounded upward and applied as distributions in
reduction of Stated Amount of the Retail CitiCertificates;
this process shall continue on succeeding Distribution Dates
until the Stated Amount of the Retail CitiCertificates has
been reduced to zero.
Notwithstanding anything herein to the contrary, on the
Distribution Date on which distributions in reduction of
Stated Amount on the Retail CitiCertificates have reduced the
Stated Amount thereof to zero or in the event that
distributions in reduction of Stated Amount of the Retail
CitiCertificates are made in accordance with the provision set
forth in Section 12.07(f), an amount equal to the difference
between $999.99 and the sum then held in the Retail Reserve
Fund shall be paid from the Pool Distribution Amount to the
Retail Reserve Fund. Any funds then on deposit in the Retail
Reserve Fund shall be distributed to the Holder of the Class
LR Certificate.
(f) Notwithstanding any provisions herein to the contrary, on and
after the earlier to occur of (i) the Subordination Depletion
Date or (ii) any Distribution Date with respect to which the
Insurer fails to make an Insured Payment, distributions in
reduction of Stated Amount of the Retail CitiCertificates will
be made on a pro rata basis among the holders of the Retail
CitiCertificates and shall no longer be made in integral
multiples of $1,000 and shall no longer be made at the request
of the Beneficial Owners thereof or by mandatory distributions
by random lot. In the event that pro rata distributions cannot
be made through the facilities of DTC in accordance with this
provision, the Retail CitiCertificates will be withdrawn from
the facilities of DTC and Definitive Certificates will be
issued to replace such withdrawn Book-Entry CitiCertificates.
(g) In the event that Definitive Certificates representing the
Retail CitiCertificates are issued pursuant to Section 5.06 or
Section 12.07(f), an amendment to this Agreement, which may be
approved without the consent of any Certificateholders, shall
establish procedures relating to the manner in which
distributions in reduction of Stated Amount of the Retail
CitiCertificates are to be made; provided that such procedures
shall be consistent, to the extent practicable and customary
for certificates similar to the Retail CitiCertificates, with
the provisions of this Section 12.07; provided, however, that,
without its consent, no such amendment shall materially and
adversely affect the Insurer.
(h) The Reserve Fund shall be established on the Startup Day and
maintained by the Trustee in accordance with this Section
12.07(h). At the time the Reserve Fund is
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established, the Issuer shall cause to be deposited into the
Reserve Fund the amount of $14,000. All funds in the Reserve
Fund shall be held in trust for the benefit of the Holders of
the Class A-__ CitiCertificates until withdrawn in accordance
with this Section 12.07(h) and Section 13.01.
With respect to each Distribution Date, the Reserve Withdrawal
shall be withdrawn by the Trustee from the amount on deposit
in the Reserve Fund and distributed on such Distribution Date
to the Holders of the Class A-__ CitiCertificates, pro rata,
based on Percentage Interest.
Notwithstanding anything herein to the contrary, on the
Distribution Date on which the Stated Amount of the Class A-__
CitiCertificates has been reduced to zero, any funds then on
deposit in the Reserve Fund shall be distributed to ________.
at the address provided by it to the Trustee.
The Reserve Fund will be an "outside reserve fund" under the
REMIC Provisions that is beneficially owned for federal income
tax purposes by Lehman Brothers Inc. which shall report all
income, gain, deduction or loss with respect thereto, and will
not be an asset of the Upper-Tier REMIC, the Lower-Tier REMIC
or the Trust.] ]
[Section 12.08. The Insurance Policy.
(a) If, on the third Business Day before any Distribution Date,
the Trustee determines that the amount on deposit in the
Certificate Account distributable to Holders of the Insured
Certificates pursuant to Section 13.01(b), together with any
amounts that may be distributable to the Holders of the
Insured Certificates on such Distribution Date, the Trustee
shall determine the amount of any such deficiency and shall
give Notice to the Insurer and the appropriate Fiscal Agent
(as defined in the Insurance Policy), if any, by telephone or
telecopy of the amount of such deficiency, confirmed in
writing to the Insurer, such Notice to be substantially in the
form of Exhibit A attached to the Insurance Policy and
delivered by 12:00 noon, New York City time on such third
Business Day.
(b) In the event the Trustee receives a certified copy of an order
of the appropriate court that any scheduled payment of
principal or interest on a Insured Certificate has been voided
in whole or in part as a preference payment under applicable
bankruptcy law, the Trustee shall (i) promptly notify the
Insurer, as appropriate, and the Fiscal Agent, if any, and
(ii) comply with the provisions of the Insurance Policy to
obtain payment by the Insurer of such voided scheduled
payment. In addition, the Trustee shall mail notice to all
Holders of the Insured Certificates so affected that, in the
event that any such Holder's scheduled payment is so
recovered, such Holder will be entitled to payment pursuant to
the terms of the Insurance Policy, a copy of which shall be
made available to such Holders by the Trustee. The Trustee
shall furnish to the Insurer and the appropriate Fiscal Agent,
if any, its records listing the payments on the affected
Insured Certificates, if any, that have been made by the
Trustee and
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subsequently recovered from the affected Holder, and the dates
on which such payments were made by the Trustee.
(c) At the time of the execution hereof, and for the purposes
hereof, the Trustee shall establish an Eligible Account in the
name of the Trustee for the benefit of Holders of the Insured
Certificates (the "Policy Payments Account") over which the
Trustee shall have exclusive control and sole right of
withdrawal. The Trustee shall deposit any amount paid under
the Insurance Policy into the Insured Certificates Policy
Payments Account and distribute such amount only for the
purposes of making payments to Holders of the Insured
Certificates in respect of the Insured Payments by the Insurer
pursuant to the Insurance Policy for which the related claim
was made under the Policy. Such amounts shall be allocated by
the Trustee to Holders of Insured Certificates affected by
such shortfalls in the same manner as principal and interest
distributions are to be allocated with respect to such
CitiCertificates pursuant to Section 13.01. It shall not be
necessary for such payments to be made by checks or wire
transfers separate from the checks or wire transfers used to
make regular payments hereunder with funds withdrawn from the
Certificate Account. However, any payments made on the Insured
Certificates from funds in the Policy Payments Account shall
be noted as provided in subsection (e) below. Funds held in
the Policy Payments Account shall not be invested by the
Trustee.
(d) Any funds received from the Insurer for deposit into the
Policy Payments Account pursuant to the Insurance Policy in
respect of a Distribution Date or otherwise as a result of any
claim under such Insurance Policy shall be applied by the
Trustee directly to the payment in full (i) of the Deficiency
Amount due on such Distribution Date on the Insured
Certificates, or (ii) of the Preference Amount to which
payments under the Insurance Policy are to be applied. Funds
received by the Trustee as a result of any claim under the
Insurance Policy shall be used solely for payment of the
Holders of the Insured Certificates, respectively, and may not
be applied for any other purpose, including, without
limitation, satisfaction of any costs, expenses or liabilities
of the Trustee or the Trust Fund. Any funds remaining in the
Policy Payments Account on the first Business Day after each
Distribution Date shall be remitted promptly to the Insurer
pursuant to the written instruction of the Insurer.
(e) The Trustee shall keep complete and accurate records in
respect of (i) all funds remitted to it by the Insurer and
deposited into the Policy Payments Account and (ii) the
allocation of such funds to (A) payments of interest on and
principal in respect of any Insured Certificates, (B) Realized
Losses allocated to the Insured Certificates and (C)
Non-Supported Interest Shortfalls allocated to the Insured
Certificates. The Insurer shall have the right to inspect such
records at reasonable times during normal business hours upon
three Business Days' prior notice to the Trustee.
(f) The Trustee acknowledges, and each Holder of an Insured
Certificate by its acceptance of such Insured Certificate
agrees, that, without the need for any further action on the
part of the Insurer or the Trustee, to the extent the Insurer
makes payments, directly or indirectly, on account of
principal of or interest on any Insured
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Certificate, the Insurer will be fully subrogated to the
rights of the Holders of such Insured Certificates to receive
such principal and interest from the Trust Fund. The Holders
of the Insured Certificates, by acceptance of the Insured
Certificates, assign their rights as Holders of the Insured
Certificates to the extent of the Insurer's interest with
respect to amounts paid under the Insurance Policy. Anything
herein to the contrary notwithstanding solely for purposes of
determining the Insurer's rights as subrogee for payments
distributable pursuant to Sections 12.01 and 13.01, any
payment with respect to distributions to the Insured
Certificates that is made with funds received pursuant to the
terms of the Insurance Policy shall not be considered a
payment of the Insured Certificates from the Trust Fund and
shall not result in the distribution or the provision for the
distribution in reduction of the Stated Amount of the Insured
Certificates within the meaning of Section 12.07.
(g) Upon its becoming aware of the occurrence of an Event of
Default, the Trustee shall promptly notify the Insurer of such
Event of Default.
(h) The Trustee shall promptly notify the Insurer of either of the
following as to which it has actual knowledge: (A) the
commencement of any proceeding by or against the Issuer
commenced under the United States bankruptcy code or any other
applicable bankruptcy, insolvency, receivership,
rehabilitation or similar law (an "Insolvency Proceeding") and
(B) the making of any claim in connection with any Insolvency
Proceeding seeking the avoidance as a preferential transfer (a
"Preference Claim") of the distribution made with respect to
the Insured Certificates. Each Holder of an Insured
Certificate, by its purchase of an Insured Certificate, and
the Trustee hereby agree that the Insurer (so long as no
default in payment by the Insurer under the Insurance Policy
exists) may at any time during the continuation of any
proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim, including, without
limitation, (i) the direction of any appeal of any order
relating to any Preference Claim and (ii) the posting of any
surety, supersedeas or performance bond pending any such
appeal. In addition and without limitation of the foregoing,
Insurer shall be subrogated to the rights of the Trustee and
each Holder of an Insured Certificates in the conduct of any
Preference Claim, including, without limitation, all rights of
any party to an adversary proceeding action with respect to
any court order issued in connection with any such Preference
Claim.
(i) The Trustee shall surrender the Insurance Policy to the
Insurer for cancellation upon reduction of the Stated Amount
of the Insured Certificates to zero or replacement of the
Insurer pursuant to Section 12.09.
(j) With respect to this Section 12.08,
(i) the terms "Receipt" and "Received" shall mean
actual delivery to the Insurer and the
Insurer's Fiscal Agent, if any, prior to
12:00 noon, New York City time, on a
Business Day; delivery either on a day that
is not a Business Day or after 12:00 noon,
New York City time, shall be deemed to be
Receipt on the next succeeding Business Day.
If any
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<PAGE>
notice or certificate given under the
Insurance Policy by the Trustee is not in
proper form or is not properly completed,
executed or delivered, in any material
manner, it shall be deemed not to have been
Received. The Insurer or its Fiscal Agent, if
any, shall promptly so advise the Trustee and
the Trustee may submit an amended notice, and
"Business Day" means any day other than (A)
a Saturday or Sunday or (B) a day on which
the Insurer is closed or banking
institutions in the City of New York, New
York 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.]
[Section 12.09. Replacement of the Insurance Policy.
Notwithstanding any other provision of this Agreement to the
contrary, in the event that the Insured Certificates are
downgraded by a Rating Agency solely as a result of the
downgrade of the Insurer by both Moody's, to less than "Aa",
and S&P, to less than "AA", CMSI shall have the right, but not
the obligation, to replace the Insurance Policy in its
entirety, at its own expense to the extent that the cost of
such replacement exceeds the Insurance Premium, with another
form of credit enhancement and to amend this Agreement as
necessary or appropriate in order to implement such
replacement of the Insurance Policy without the consent of the
Certificateholders or the Trustee; provided that: (a) the
rating of the Insured Certificates subsequent to any such
replacement shall be at least the ratings initially assigned
to such Class of CitiCertificates by the Rating Agencies and
the Trustee and CMSI shall have received notice confirming
such ratings from the Rating Agencies; (b) the Trustee and
CMSI shall have received an Opinion of Counsel to the credit
enhancement provider to the effect (i) that (A) the credit
enhancement is a valid and legally binding obligation of the
credit enhancement provider enforceable in accordance with its
terms and (B) the credit enhancement is not a separate
security or, if a separate security, is exempt from
registration or has been duly registered under the Act, (ii)
that the credit enhancement meets the condition set forth in
Section II(i) of U.S. Department of Labor Prohibited
Transaction Class Exemption 83-1, provided however, that such
opinion with respect to this clause (ii) only may be waived by
CMSI upon advise of outside counsel, and (iii) such opinion
shall also cover such other matters as the Trustee or CMSI
shall reasonably require; (c) the Insurance Policy has been
delivered to the Insurer for cancellation and (d) written
notice shall be given to the Insured Certificateholders of
such replacement within ten (10) Business Days following such
replacement.]
ARTICLE XIII
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SUBORDINATION; PRIORITIES; ALLOCATION OF LOSSES
Section 13.01. Subordination; Priority of Distributions
(a) The rights of the holders of the Class M CitiCertificates to
receive distributions in respect thereof on any Distribution Date shall be
subordinated to the rights of the Class A CitiCertificateholders to receive
distributions [(and to distributions to the Class L-1 Regular Interest)] to
the extent, and only to the extent, described herein. The rights of the
holders of any Class B Subclass to receive distributions in respect of such
Class B Subclass on any Distribution Date shall be subordinated to the rights
of the Class A and Class M CitiCertificateholders and the holders of each
Class B Subclass having a lower numerical designation to receive
distributions [(and to distributions to the Class L Regular Interests)] to
the extent, and only to the extent, described herein. The right of CMSI to
receive its Servicing Fee shall not be subordinated to the rights of the
CitiCertificateholders.
(b) On each Distribution Date, the Pool Distribution Amount will be
applied in the following amounts, to the extent the Pool Distribution Amount
is sufficient therefor, in the manner and in the order of priority as follows
[(and the Insured Payments and Reserve Withdrawal will be applied to make
payments to the Insured Certificates as provided in Section 12.08 and
12.07(h), respectively)]:
first, [to the Insurer, to pay the Insurance Premium]
[intentionally omitted];
second, to the Subclasses of Class A CitiCertificates, pro
rata, based upon their respective Class A Subclass Interest Amounts, in
an aggregate amount up to the Class A Interest Amount; provided,
however that prior to the applicable Accretion Termination Date, the
amount allocable to any Subclass of Accrual CitiCertificates pursuant
to this clause second shall not be distributed to such Accrual
CitiCertificates but will instead be distributed in reduction of the
Stated Amounts of the Accretion Directed CitiCertificates and the
Accrual CitiCertificates, in each case in the manner and in the amount
set forth in Section 12.01(c);
third, to the Subclasses of Class A CitiCertificates, pro
rata, based upon their respective unpaid Class A Subclass Interest
Shortfall Amounts, in an aggregate amount up to the unpaid Class A
Unpaid Interest Shortfall; provided, however that prior to the
applicable Accretion Termination Date, the amount allocable to any
Subclass of Accrual CitiCertificates pursuant to this clause third
shall not be distributed to such Accrual CitiCertificates but will
instead be distributed in reduction of the Stated Amounts of the
Accretion Directed CitiCertificates and the Accrual CitiCertificates,
in each case in the manner and in the amount set forth in Section
12.01(c);
fourth, to the Subclasses of Class A CitiCertificates, in an
aggregate amount up to the Class A Principal Distribution Amount (other
than the portion that represents the Accretion
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Distribution Amount, if any), such distribution to be allocated among
such Subclasses in accordance with Section 12.01(d) or Section
13.01(c), as applicable;
fifth, to the Class A-__ CitiCertificates, in an aggregate
amount equal to the lesser of (a) Available PO Loss Funds and (b) any
Unpaid PO Loss Amounts;
sixth, to the Class M CitiCertificates in an amount up to the
Class M Interest Amount;
seventh, to the Class M CitiCertificates in an amount up
to the Class M Unpaid Interest Shortfall Amount;
eighth, to the Class M CitiCertificates in an amount up to the
Class M Optimal Principal Amount less any amount applied to payment of
any Unpaid PO Loss Amount;
ninth, to the Class B-1 CitiCertificates in an amount up to
their Class B Subclass Interest Amount;
tenth, to the Class B-1 CitiCertificates in an amount up to
the Class B-1 Unpaid Interest Shortfall Amount;
eleventh, to the Class B-1 CitiCertificates in an amount up to
the Class B-1 Optimal Principal Amount less any amount applied to
payment of any Unpaid PO Loss Amount;
twelfth, to the Class B-2 CitiCertificates in an amount up to
their Class B Subclass Interest Amount;
thirteenth, to the Class B-2 CitiCertificates in an amount up
to the Class B-2 Unpaid Interest Shortfall;
fourteenth, to the Class B-2 CitiCertificates in an amount up
to the Class B-2 Optimal Principal Amount less any amount applied to
payment of any Unpaid PO Loss Amount;
fifteenth, to the Class B-3 CitiCertificates in an amount up
to their Class B Subclass Interest Amount;
sixteenth, to the Class B-3 CitiCertificates in an amount up
to the Class B-3 Unpaid Interest Shortfall;
seventeenth, to the Class B-3 CitiCertificates in an amount up
to the Class B-3 Optimal Principal Amount less any amount applied to
payment of any Unpaid PO Loss Amount;
eighteenth, to the Class B-4 CitiCertificates in an amount
up to their Class B Subclass Interest Amount;
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<PAGE>
nineteenth, to the Class B-4 CitiCertificates in an amount up
to the Class B-4 Unpaid Interest Shortfall;
twentieth, to the Class B-4 CitiCertificates in an amount up
to the Class B-4 Optimal Principal Amount less any amount applied to
payment of any Unpaid PO Loss Amount;
twenty-first, to the Class B-5 CitiCertificates in an amount
up to their Class B Subclass Interest Amount;
twenty-second, to the Class B-5 CitiCertificates in an amount
up to the Class B-5 Unpaid Interest Shortfalls;
twenty-third, to the Class B-5 CitiCertificates in an amount
up to the Class B-5 Optimal Principal Amount less any amount applied to
payment of any Unpaid PO Loss Amount;
[twenty-fourth, to the Insured Certificates, any Non-Supported
Interest Shortfalls allocated to the Insured Certificates, the
principal portion and the interest portion of Realized Losses allocated
to the Insured Certificates and, with respect to the Last Scheduled
Distribution Date, the Stated Amount of the Insured Certificates to the
extent unpaid on the Last Scheduled Distribution Date] [intentionally
omitted];
[twenty-fifth, to the Insurer in reimbursement of amounts
previously paid by the Insurer under the Insurance Policy and accrued
interest thereon, if any, at the Late Payment Rate (as defined in the
Insurance Agreement)] [intentionally omitted];and
twenty-sixth, to the Holder of the Class LR Certificate.
[Notwithstanding the foregoing, no payment owing pursuant to the
foregoing clause twenty-fifth shall be paid to the Insurer until the cumulative
amount owing thereunder and not previously paid to the Insurer is equal to at
least $___.00; provided, however, that upon the Last Scheduled Distribution Date
or earlier termination pursuant to Section 9.01 or replacement pursuant to
Section 12.09, any cumulative amount owing thereunder and not previously paid to
the Insurer shall be paid to the Insurer.]
[In addition, the holders of the Insured Certificates will be entitled to
receive funds with respect to the Insurance Policy representing Deficiency
Amounts. The Insured Certificates shall be entitled to receive funds from the
Reserve Fund, so long as funds remain available therein, for any Non-Supported
Interest Shortfall allocated to the Insured Certificates on such Distribution
Date. Prior to any draw on the Insurance Policy with respect to any
Non-Supported Interest Shortfall allocated to the Insured Certificates only, the
Trustee shall withdraw from the Reserve Fund the Reserve Withdrawal and shall
distribute such amount to the Insured Certificates pursuant to Section 12.07(h)
or Section 13.01.]
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<PAGE>
(c) On each Distribution Date occurring on or subsequent to the
Subordination Depletion Date, the Class A Principal Distribution Amount shall be
distributed among the Subclasses of Class A CitiCertificates as set forth in
Section 12.01(f) and the Class A Interest Amount shall be distributed among the
Class A Subclasses pro rata in accordance with their respective Class A Subclass
Interest Amounts.
(d) (i) if on any Distribution Date the Current Class M Subordination
Level is less than the Original Class M Subordination Level, then the Class B-1,
Class B-2, Class B-3, Class B-4 and Class B-5 CitiCertificates shall not be
eligible to receive any distributions in reduction of Stated Amount and the
Class B-1 Percentage, Class B-2 Percentage, the Class B-3 Percentage, the Class
B-4 Percentage, the Class B-5 Percentage, the Class B-1 Prepayment Percentage,
the Class B-2 Prepayment Percentage, the Class B-3 Prepayment Percentage, the
Class B-4 Prepayment Percentage and the Class B-5 Prepayment Percentage shall
each be equal to zero with respect to such Distribution Date;
(ii) if on any Distribution Date the Current Class B-1
Subordination Level is less than the Original Class B-1 Subordination Level,
then the Class B-2, Class B-3, Class B-4 and Class B-5 CitiCertificates shall
not be eligible to receive distributions in reduction of Stated Amount and the
Class B-2 Percentage, the Class B-3 Percentage, the Class B-4 Percentage, the
Class B-5 Percentage, the Class B-2 Prepayment Percentage, the Class B-3
Prepayment Percentage, the Class B-4 Prepayment Percentage and the Class B-5
Prepayment Percentage shall each be equal to zero with respect to such
Distribution Date;
(iii) if on any Distribution Date the Current Class B-2
Subordination Level is less than the Original Class B-2 Subordination Level,
then the Class B-3, Class B-4 and Class B-5 CitiCertificates shall not be
eligible to receive distributions in reduction of Stated Amount and the Class
B-3 Percentage, the Class B-4 Percentage, the Class B-5 Percentage, the Class
B-3 Prepayment Percentage, the Class B-4 Prepayment Percentage and the Class B-5
Prepayment Percentage shall each be equal to zero with respect to such
Distribution Date;
(iv) if on any Distribution Date the Current Class B-3
Subordination Level is less than the Original Class B-3 Subordination Level,
then the Class B-4 and Class B-5 CitiCertificates shall not be eligible to
receive distributions in reduction of Stated Amount and the Class B-4
Percentage, the Class B-5 Percentage, the Class B-4 Prepayment Percentage and
the Class B-5 Prepayment Percentage shall each be equal to zero with respect to
such Distribution Date; and
(v) if on any Distribution Date the Current Class B-4
Subordination Level is less than the Original Class B-4 Subordination Level,
then the Class B-5 CitiCertificates shall not be eligible to receive
distributions in reduction of Stated Amount and the Class B-5 Percentage and the
Class B-5 Prepayment Percentage shall each be equal to zero with respect to such
Distribution Date.
(vi) if on any Distribution Date, any of the Subordinated
CitiCertificates are not entitled to distributions in reduction of Stated Amount
based on clause (ii) through (v) above and on such Distribution Date the Class M
CitiCertificates or the Subclasses of Class B CitiCertificates with lower
numerical designations are reduced to zero, the amount set forth in clauses (ii)
through
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(v) will be determined based on the Stated Amounts of the Subordinated
CitiCertificates still outstanding.
(e) No Class A Subclass Interest Shortfall Amount, Class A Unpaid
Interest Shortfall, Unpaid PO Loss Amount, Class M Interest Shortfall, Class M
Unpaid Interest Shortfall, Class B-1, Class B-2, Class B-3, Class B-4 or Class
B-5 Interest Shortfall or Class B-1, Class B-2, Class B-3, Class B-4 or Class
B-5 Unpaid Interest Shortfall will itself bear interest.
Section 13.02. Allocation of Realized Losses; Recoveries.
(a) With respect to any Distribution Date prior to the Subordination
Depletion Date, the applicable Non-PO Percentage of the principal portion of
Realized Losses (other than Debt Service Reductions, Excess Special Hazard
Losses, Excess Fraud Losses and Excess Bankruptcy Losses) will be allocated as
follows:
first, to the Class B-5 CitiCertificates until their Class B
Subclass Stated Amount has been reduced to zero;
second, to the Class B-4 CitiCertificates until their Class B
Subclass Stated Amount has been reduced to zero;
third, to the Class B-3 CitiCertificates until their Class B
Subclass Stated Amount has been reduced to zero;
fourth, to the Class B-2 CitiCertificates until their Class B
Subclass Stated Amount has been reduced to zero;
fifth, to the Class B-1 CitiCertificates until their Class B
Subclass Stated Amount has been reduced to zero; and
sixth, to the Class M CitiCertificates until their Stated
Amount has been reduced to zero.
With respect to any Distribution Date, the applicable PO Percentage of
such losses will be allocated to the Stated Amount of the Class A-__
CitiCertificates.
With respect to any Distribution Date on or after the Subordination
Depletion Date, the applicable Non-PO Percentage of such losses will be
allocated to the Class A CitiCertificates (other than the Class A-__
CitiCertificates), based on their Class A Subclass Loss Percentage.
Notwithstanding the foregoing, on each Distribution Date so long as the Class
A-__ CitiCertificates are outstanding, the Class A-__ Loss Amount shall be
applied to reduce the Stated Amount of the Class A-__ CitiCertificates to the
extent of the Class A-__ Loss Allocation Amount.
This allocation of Realized Losses will be effected through the
reduction of the applicable Class or Subclass Stated Amount, as the case maybe.
[Subject to the terms of the Insurance Policy, any Realized Losses, including
Excess Special Hazard Losses, Excess Fraud Losses and Excess
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Bankruptcy Losses (and excluding any Extraordinary Losses), allocated to the
Insured Certificates will be covered by an Insured Payment from the Insurer in
accordance with Section 12.08. If the Insurer fails to make an Insured Payment
then any losses allocated to the Insured Certificates will be allocated pro rata
among the Insured Certificates.]
Losses and delinquencies resulting from Extraordinary Events will be
allocated in the same manner as Excess Special Hazard Losses, Excess Fraud
Losses and Excess Bankruptcy Losses as set forth in Section 13.02(b).
(b) The principal portion of Excess Special Hazard Losses, Excess Fraud
Losses and Excess Bankruptcy Losses shall be allocated as follows: The
applicable PO Percentage of such Realized Losses shall be allocated to the Class
A-__ CitiCertificates and the applicable Non-PO Percentage of such Realized
Losses shall be allocated on a pro rata basis among the Class A Subclasses
(other than the Class A-__ CitiCertificates), Class M CitiCertificates and Class
B Subclasses based on the Stated Amount of each such Subclass or Class prior to
giving effect to distributions in reduction of Stated Amount on the relevant
Distribution Date (or, in the case of the Accrual CitiCertificates, their
initial Class A Subclass Stated Amount, if lower). [Realized Losses (excluding
any Extraordinary Losses) allocated to the Insured Certificates will be covered
by the Insurance Policy.]
(c) Any Realized Losses allocated to a Subclass of Class A or Class B
CitiCertificates or the Class M CitiCertificates pursuant to Section 13.02(a) or
Section 13.02(b) shall be allocated among the CitiCertificates of such Subclass
or Class based on their respective Stated Amounts.
(d) In the event that there is a recovery of an amount in respect of
principal which had previously been allocated as a Realized Loss to any one or
more Subclasses of Class A CitiCertificates, the Class M CitiCertificates or any
one or more Subclasses of Class B CitiCertificates, the amount of such recovery
shall be distributed to Holders of the Class A CitiCertificates in the same
manner as such loss was allocated to such Class A Subclass, but only if and to
the extent the Class A CitiCertificates had theretofore been allocated any
Realized Losses in respect of principal. The amount of such recovery allocated
to the Class A CitiCertificates (other than the Class A-__ CitiCertificates) is
referred to as the "Reimbursable Class A Non-PO Losses." The amount of such
recovery allocated to the Class A-__ CitiCertificates (exclusive of amounts in
respect of such a Realized Loss previously distributed in respect of the Class
A-__ CitiCertificates as reimbursement of Unpaid PO Loss Amounts) is referred to
as the "Reimbursable Class A PO Losses". Any remaining amount of any such
recovery shall be distributed to the Class M CitiCertificates but only if and to
the extent that the Class M CitiCertificates had theretofore been allocated any
Realized Losses ("Reimbursable Class M Losses"), then to the Class B-1
CitiCertificates but only if and to the extent that the Class B-1
CitiCertificates had theretofore been allocated any Realized Losses and then to
the Class B-2, Class B-3, Class B-4 and Class B-5 CitiCertificates in like
manner (collectively, the "Reimbursable Class B Losses"). A Subclass or Class of
CitiCertificates that is no longer outstanding shall not be entitled to any
share of any such recovery.
(e) The interest portion of Excess Special Hazard Losses, Excess Fraud
Losses and Excess Bankruptcy Losses shall be allocated pro rata among the
Classes of CitiCertificates based
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on the amount of interest accrued on each such Class and among the Class A
Subclasses (other than the Class A-__ and Class A-__ CitiCertificates), the
Class M CitiCertificates and the Class B Subclasses, respectively, pro rata
based on the Class A Interest Amount, the Class M Interest Amount and the Class
B Interest Amount. Any such loss allocated to the Class A CitiCertificates shall
be allocated among the outstanding Subclasses of Class A CitiCertificates (other
than the Class A-__ and Class A-__ CitiCertificates) based on their Class A
Subclass Interest Percentages. Any such loss allocated to the Class B
CitiCertificates will be allocated among the outstanding Subclasses of Class B
CitiCertificates based on their Class B Subclass Interest Percentages. After the
Subordination Depletion Date, the interest portion of Realized Losses will be
allocated among the outstanding Subclasses of Class A CitiCertificates as
described above. [Subject to the terms of the Insurance Policy, all losses of
interest allocated to the Insured Certificates, including Excess Special Hazard
Losses, Excess Fraud Losses and Excess Bankruptcy Losses (and excluding
Extraordinary Losses), will be covered by an Insured Payment from the Insurer in
accordance with Section 12.08.]
(f) Realized Losses allocated in accordance with this Section 13.02
will be allocated on the Distribution Date in the month following the month in
which such loss was incurred and, in the case of the principal portion thereof,
(x) in the case of Excess Special Hazard Losses, Excess Fraud Losses and Excess
Bankruptcy Losses, prior to giving effect to distributions made under Section
13.01 on such Distribution Date and (y) in the case of all other Realized
Losses, giving effect to distributions made under Section 13.01 on such
Distribution Date.
(g) On each Distribution Date occurring subsequent to the Subordination
Depletion Date, the interest portion of Realized Losses and the interest portion
of Remittance Delinquencies not covered by Voluntary Advances, Trustee Advances,
Advance Account Advances or Certificate Account Advances with respect to such
Distribution Date will be allocated pro rata between the CitiCertificates (other
than the Class A-__ and A-__ CitiCertificates).
Section 13.03. [intentionally omitted] [Class L Regular Interests
Allocations and Distributions.]
[(a) On each Distribution Date, the Class L-1 Regular Interest
shall receive a distribution in respect of principal equal to the amount
distributed in reduction of the Stated Amounts of the Class A-__, Class A-__ and
Class A-__ CitiCertificates and the Class L-2 Regular Interest shall receive a
distribution in respect of principal equal to the amount distributed in
reduction of the Stated Amount of the Class A-__ CitiCertificates. As of any
date, the Stated Amount of the Class L-1 Regular Interest will equal the sum of
the Stated Amounts of the Class A-__, Class A-__ and Class A-__ CitiCertificates
and the Stated Amount of the Class L-2 Regular Interest will equal the Stated
Amount of the Class A-__ CitiCertificates.
On each Distribution Date, the Class L-1 Regular Interest shall receive
a distribution in respect of interest equal to the sum of the amounts
distributed in respect of interest to the Class A-__, Class A-__, Class A-__ and
Class A-__ CitiCertificates and the Class L-2 Regular Interest shall receive a
distribution in respect of interest equal to the sum of the amounts distributed
in respect of interest to the Class A-__ and Class A-__ CitiCertificates.
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(b) With respect to any Distribution Date, the principal portion of
Realized Losses and recoveries attributable to previously allocated Realized
Losses will be allocated to the Class L-1 Regular Interest in the same manner as
losses and recoveries are allocated to the Class A-__, Class A-__ and Class A-__
CitiCertificates and will be allocated to the Class L-2 Regular Interest in the
same manner as losses and recoveries are allocated to the Class A-__
CitiCertificates.
With respect to any Distribution Date, the interest portion of Realized
Losses will be allocated to the Class L-1 Regular Interest in the same manner as
interest is allocated to the Class L-1 Regular Interest and to the Class L-2
Regular Interest in the same manner as interest is allocated to the Class L-2
Regular Interest.
(c) No interest shortfall amount or unpaid interest shortfall on any
Class L Regular Interest will bear interest.
(d) The Distribution Date Statement prepared by the Servicer pursuant
to Section 3.03(f) shall include the following additional information:
(i) the distributions of principal in reduction of the Stated
Amount of each Class L Regular Interest and the Stated Amount of each
Class L Regular Interest to the extent that it will remain outstanding
after giving effect to such distribution;
(ii) the amount of interest that has accrued on each Class L
Regular Interest and any Non-Supported Interest Shortfall allocated
thereto;
(iii) the amount of interest to be distributed on each Class L
Regular Interest;
(iv) the amount of the principal portion of Excess Special
Hazard Losses, Excess Fraud Losses and Excess Bankruptcy Losses
allocable to each Class L Regular Interest; and
(v) the interest portion of Excess Special Hazard Losses,
excess Fraud Losses and Excess Bankruptcy Losses allocable to each
Class L Regular Interest.]
Section 13.04. Distributions on the Residual Certificates. Upon a
termination of the Trust in accordance with Section 9.01, the Class LR
Certificate shall receive all amounts remaining in the Certificate Account [and
the Retail Reserve Fund,] [and the Class R Certificate shall receive any amounts
remaining in the Upper-Tier REMIC Account] after all required distributions on
the CitiCertificates [and the Class L Regular Interests] [and to the Insurer]
have been made.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers and their respective seals to be
hereunto affixed, all as of the day and year first above written.
CITICORP MORTGAGE SECURITIES, INC.
[SEAL]
By:_______________________________
[Senior] Vice President
[TRUSTEE], in its individual capacity and as
Trustee
[SEAL]
By:__________________________________
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State of New York )
) ss.:
County of New York )
On the __th day of ____ 1999 before me, a notary public in and
for the State of New York, personally appeared ________ known to me who, being
by me duly sworn, did depose and say that he resides at New York, New York; that
he is a [Senior] Vice President of Citicorp Mortgage Securities, Inc., one of
the parties that executed the foregoing instrument; that he knows the seal of
said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation; and that he signed his name thereto by like authority.
_______________________
Notary Public
[Notarial Seal]
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<PAGE>
State of New York )
) ss.:
County of New York )
On the __th day of ____ 1999 before me, a notary public in and
for the State of New York, personally appeared ______ known to me who, being by
me duly sworn, did depose and say that she resides at New York, New York; that
she is an Assistant Treasurer of [Trustee], a _____ banking corporation, one of
the parties that executed the foregoing instrument; that she knows the seal of
said banking corporation; that the seal affixed to said instrument is such seal;
that it was so affixed by authority of the Board of Directors of said banking
corporation; and that she signed her name thereto by like authority.
______________________
Notary Public
[Notarial Seal]
53
<PAGE>
EXHIBIT A-1
[GENERAL FORM OF CLASS A CERTIFICATES]
THE PRINCIPAL AMOUNT OF THIS CLASS A CERTIFICATE IS DISTRIBUTABLE IN
INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT OF THIS CLASS A CERTIFICATE AT ANY TIME MAY BE LESS
THAN THE INITIAL PRINCIPAL AMOUNT REPRESENTED HEREBY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
REMIC PASS-THROUGH CERTIFICATES, SERIES 1999-__
SENIOR CLASS A-__ CERTIFICATE, ____% CERTIFICATE RATE
representing an ownership interest in a trust fund consisting
primarily of mortgage loans acquired by
CITICORP MORTGAGE SECURITIES, INC.
Certificate No. 1 Initial Principal Amount: $____________
________ Single Certificates
Last Scheduled
Distribution Date: ______ 25, 2029 CUSIP 172953
THIS CERTIFIES THAT, for value received Cede & Co. is the
registered Holder of the number of Single Certificates (each representing $1.00
Initial Principal Amount) set forth above, each representing an undivided
beneficial ownership interest in the trust fund (the "Trust Fund") created
pursuant to the Pooling and Servicing Agreement dated as of ______ 1, 1999 (the
"Agreement") between Citicorp Mortgage Securities, Inc. ("CMSI") and [Trustee],
in its individual capacity and as trustee (the "Trustee", which term includes
any successor trustee), the assets of which consist of (i) a pool of 20- to
30-year fixed-rate, conventional one- to four-family mortgage loans (the
"Mortgage Loans") originated or acquired by Citicorp Mortgage, Inc. ("CMI"),
(ii) funds in the Certificate Account and the Upper-Tier Remic Account
(including any investment of funds contained therein) and (iii) certain related
property. This Class A Certificate represents a "regular
1
<PAGE>
interest" in a real estate mortgage investment conduit ("REMIC") within the
meaning of Section 860G(a)(1) of the Internal Revenue Code of 1986, as amended.
The registered Holder of this Class A Certificate is entitled
to receive from the Trustee distributions in reduction of Principal Amount on
the 25th day of each month commencing on the date determined as provided herein
or, if such day is not a Business Day, the Business Day next following such day
(each, a "Distribution Date"). Interest (computed on the basis of a 360-day year
consisting of twelve 30-day months) on the Principal Amount of this Class A
Certificate outstanding from time to time will be distributable for the period
from ______ 1, 1999, or such later time to which interest has been distributed,
until the Principal Amount has been reduced to zero, at the rate of
______________ percent (____%) per annum (net of any Non-Supported Interest
Shortfall and the interest portion of any Excess Special Hazard Losses, Excess
Fraud Losses and Excess Bankruptcy Losses allocable to this Certificate).
Interest distributable on this Class A Certificate on a Distribution Date will
be equal to the amount of interest that has accrued from the first through the
last day of the month preceding the month of each Distribution Date (the related
"Interest Accrual Period"), to the extent specified in the Agreement.
Distributions in reduction of Principal Amount on any Distribution Date will
stop accruing interest from the end of the related Interest Accrual Period. Each
such distribution in reduction of Principal Amount and of interest to Holders
will, as provided in the Agreement, be made to the Person in whose name this
Class A Certificate (or one or more Predecessor Certificates) is registered at
the close of business on the Record Date for such distribution, which shall be
the last Business Day of the month preceding the month in which the applicable
Distribution Date occurs. This Class A Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class A Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
NEITHER THIS CLASS A CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE INSURED OR GUARANTEED BY THE UNITED STATES GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY. THIS CLASS A CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR
OBLIGATION OF CMSI, CMI, CITIBANK, ANY AFFILIATES THEREOF, OR THEIR ULTIMATE
PARENT, CITIGROUP INC.
Reference is hereby made to the provisions of the Agreement,
and such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Class A Certificate is one of a duly authorized issue of
certificates designated as set forth herein above as REMIC Pass-Through
Certificates, Series 1999-__ (the "Certificates"), consisting of one senior
Class, the Class A Certificates, consisting of _____ Subclasses of Certificates
(the "Class A Certificates"), one senior subordinated Class of Certificates (the
"Class M Certificates"), one subordinated Class, the Class B Certificates,
consisting of five Subclasses of Certificates (the "Class B Certificates"), and
one Class of residual certificates (the "Residual Certificates"). This Class A
Certificate represents the number of Single Certificates set forth herein above.
The Certificates are issued pursuant to the Agreement, to which Agreement
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of CMSI, the Trustee and the Holders
of the Certificates, and of the terms upon which
2
<PAGE>
the Certificates are, and are to be, authenticated and delivered. Each
Certificate represents an ownership interest in the Trust Fund.
The aggregate amount distributable in reduction of Principal
Amount to Holders of the Class A Certificates on each Distribution Date shall be
equal to the Class A Principal Distribution Amount for such Distribution Date.
Distributions in reduction of Principal Amount of the Class A
Subclasses will be made as set forth in the Agreement.
The Class A Certificates are limited in right of payment to
payments and recoveries respecting the Mortgage Loans, all as more specifically
set forth herein and in the Agreement.
Distributions on this Class A Certificate will be made by
check mailed to the Person entitled thereto, as specified by such Person in
accordance with the terms of the Agreement or, if eligible for wire transfer in
accordance with the Agreement, by wire transfer; or by such other means as the
Person entitled thereto, the Paying Agent, the Trustee and CMSI shall agree.
Except as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Class A Certificate will be made after due notice to
the Holder hereof of the pendency of such distribution and only upon
presentation and surrender of this Class A Certificate at the office or agency
specified in the notice of such distribution maintained for that purpose.
In the event that the 25th day of any month in which
distributions are required to be made on the Class A Certificates shall not be a
Business Day, then distributions need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
such date or such other date on which distributions are required to be made, and
no additional interest shall accrue for any period as a result of distributions
being made on such next succeeding Business Day.
The Agreement generally permits the amendment thereof at any
time by CMSI and the Trustee with the consent of the Holders of Certificates
evidencing interests aggregating not less than 66 2/3% of the Voting Interests
of the Certificates materially and adversely affected by such amendment and, if
a Class of the Residual Certificates is materially and adversely affected by
such amendment, 66 2/3% of the Percentage Interest of each affected Class of the
Residual Certificates; however, amendments reducing the amount or delaying the
timing of distributions on the Certificates and certain other matters require
the consent of all Holders. Any such consent by the Holder of this Class A
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Class A Certificate and of any Class A Certificate issued upon
the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Class A Certificate. The Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of any of the Holders of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Class A Certificate is
registrable in the Certificate Register upon surrender of this Class A
Certificate for registration of transfer, accompanied by a written instrument of
transfer in form satisfactory to CMSI, the Trustee and the Certificate
Registrar, duly executed by the Holder
3
<PAGE>
hereof or such Holder's attorney duly authorized in writing, and thereupon one
or more new Class A Certificates of authorized denominations evidencing the same
aggregate number of Single Certificates will be issued to the designated
transferee or transferees.
The Class A Certificates are issuable only as registered
Certificates without coupons. The denominations of this Subclass of the Class A
Certificates will be an Initial Principal Amount of $1,000 or any whole dollar
amount in excess thereof. As provided in the Agreement and subject to certain
limitations therein set forth, Class A Certificates are exchangeable for new
Class A Certificates of authorized denominations evidencing the same aggregate
number of Single Certificates, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
CMSI, the Trustee and the Certificate Registrar and any agent
of CMSI, the Trustee or the Certificate Registrar may treat the Person in whose
name this Class A Certificate is registered as the owner hereof for all
purposes, and neither CMSI, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
As of the Cut-Off Date, the latest scheduled maturity of any
Mortgage Loan in the Trust Fund was not later than ______ 1, 2029. The
obligations and responsibilities created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the repurchase by
CMSI of all Mortgage Loans then outstanding and all property acquired in respect
of any other Mortgage Loan remaining in the Trust Fund at a price equal to the
sum of (i) 100% of the Adjusted Balance of each Mortgage Loan outstanding on the
first day of the month of repurchase (after giving effect to payments of
principal due on such first day) plus accrued and unpaid interest thereon at the
Net Note Rate per annum on the Mortgage Loans to but not including the Due Date
in the month in which the related distribution is made to Certificateholders,
after the deduction of related unreimbursed Trustee Advances made prior to the
month of repurchase (other than such payments and advances in respect of
interest in excess of the Net Note Rate per annum on the Mortgage Loans) and
(ii) the appraised value of any acquired property (less the good faith estimate
of CMSI of liquidation expenses to be incurred in connection with its disposal
thereof), such appraisal to be conducted by an appraiser mutually agreed upon by
CMSI and the Trustee, or (b) the later of (i) the maturity or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all property acquired upon foreclosure or by
Transfer Instrument in lieu of foreclosure of any such Mortgage Loan and (ii)
the payment to the Certificateholders of all amounts in the Certificate Account
and the Upper-Tier REMIC Account required to be paid to them pursuant to the
Agreement. The exercise of the right of CMSI to repurchase the Mortgage Loans
and property in respect of the Mortgage Loans will result in early retirement of
the Certificates, such right of CMSI to repurchase being subject to (i) the
aggregate Adjusted Balance of the Mortgage Loans at the time of repurchase being
less than 5% of the aggregate Adjusted Balance of the Mortgage Loans as of the
Cut-Off Date and (ii) receipt by the Trustee of an Opinion of Counsel or other
evidence satisfactory to it that such repurchase will be part of a "qualified
liquidation" within the meaning of Code Section 860F(a)(4)(A), will not
otherwise
4
<PAGE>
adversely affect the status of the Upper-Tier REMIC or the Lower-Tier REMIC as a
REMIC and will not otherwise subject the Upper-Tier REMIC or the Lower-Tier
REMIC to any tax.
This Class A Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used without definition in this Class A Certificate
which are defined in the Agreement have the meanings assigned to them in the
Agreement.
Unless the certificate of authentication hereon has been
executed by the Trustee or a duly authorized Authenticating Agent by manual
signature, this Class A Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose.
5
<PAGE>
IN WITNESS WHEREOF, Citicorp Mortgage Securities, Inc. has
caused this Class A Certificate to be duly executed under its official seal.
CITICORP MORTGAGE SECURITIES, INC.
By:_______________________________
Senior Vice President
[SEAL]
Attest:
_____________________________
Assistant Secretary
6
<PAGE>
This is one of the Class A Certificates referred to in the within
mentioned Agreement.
[TRUSTEE],
as Trustee
By:____________________________
Authorized Signature
Date: __________, 1999
7
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this Class A Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - _______________ Custodian ____________________
(Cust) (Minor)
Under Uniform Gifts to Minors Act ___________________________________
(State)
Additional abbreviations may also be used though not in
the above list.
________________________________________________________________________________
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, including zip code, of assignee)
__________________________________________________
the within Class A Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
__________________________________________________
attorney to transfer said Class A Certificate on the books of the Certificate
Registrar with full power of substitution in the premises.
Dated: ________________ __________________________
Signature Guaranteed by:_________________________________________
NOTICE: the signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
member of a Signature Guarantee Medallion Program.
8
<PAGE>
EXHIBIT A-2
[FORM OF INTEREST-ONLY CLASS A CERTIFICATES]
THE NOTIONAL AMOUNT OF THIS CLASS A CERTIFICATE IS SUBJECT TO
REDUCTION AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
ACCORDINGLY, THE OUTSTANDING NOTIONAL AMOUNT OF THIS CLASS A
CERTIFICATE AT ANY TIME MAY BE LESS THAN THE INITIAL NOTIONAL AMOUNT
REPRESENTED HEREBY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
REMIC PASS-THROUGH CERTIFICATES, SERIES 1999-__
SENIOR CLASS A-_ CERTIFICATE
____% CERTIFICATE RATE
representing an ownership interest in a trust fund consisting
primarily of mortgage loans acquired by
CITICORP MORTGAGE SECURITIES, INC.
Certificate No. 1 Initial Notional Amount: $________
________ Single Certificates
Last Scheduled
Distribution Date: ______ 25, 2029 CUSIP 172953
THIS CERTIFIES THAT, for value received Cede & Co.is the
registered Holder of the number of Single Certificates (each representing $1.00
initial notional amount) set forth above, each representing an undivided
beneficial ownership interest in the trust fund (the "Trust Fund") created
pursuant to the Pooling and Servicing Agreement dated as of ______ 1, 1999 (the
"Agreement") between Citicorp Mortgage Securities, Inc. ("CMSI") and [TRUSTEE],
in its individual capacity and as trustee (the "Trustee", which term includes
any successor trustee), the assets of which consist of (i) a pool of 20- to
30-year fixed-rate, conventional one- to four-family mortgage loans (the
"Mortgage Loans") originated or acquired by Citicorp Mortgage, Inc. ("CMI"),
(ii) funds in the Certificate Account and the Upper-Tier Remic Account
(including any investment of funds contained therein) and (iii) certain related
property. This Class A Certificate represents a
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<PAGE>
"regular interest" in a real estate mortgage investment conduit ("REMIC") within
the meaning of Section 860G(a)(1) of the Internal Revenue Code of 1986, as
amended.
The registered Holder of this Class A Certificate is entitled to
receive from the Trustee distributions of interest on the 25th day of each
month, commencing on the date determined as provided herein or, if such day is
not a Business Day, the Business Day next following such day (each, a
"Distribution Date"). This Class A-_ Certificate is an interest only certificate
and is not entitled to distributions in respect of principal. Interest (computed
on the basis of a 360-day year consisting of twelve 30-day months) on the Class
A-_ Notional Amount of this Class A Certificate outstanding from time to time
will be distributable for the period from ______ 1, 1999, or such later time to
which interest has been distributed, until the Class A-4 Notional Amount has
been reduced to zero, at the rate of ____% per annum (net of any Non-Supported
Interest Shortfall and the interest portion of any Excess Special Hazard Losses,
Excess Fraud Losses, and Excess Bankruptcy Losses allocable to this
Certificate). Interest distributable on this Class A Certificate on a
Distribution Date will be equal to the amount of interest that has accrued from
the first through the last day of the month preceding the month of each
Distribution (the related "Interest Accrual Period"), to the extent specified in
the Agreement. Each such distribution of interest to Holders will, as provided
in the Agreement, be made to the Person in whose name this Class A Certificate
(or one or more Predecessor Class A Certificates) is registered at the close of
business on the Record Date for such distribution, which shall be the last
Business Day of the month preceding the month in which the applicable
Distribution Date occurs. This Class A Certificate is issued and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Class A Certificate by virtue of the acceptance hereof assents
and by which such Holder is bound.
This Certificate is issued on ______ , 1999, at an issue price of
________% of the initial Class A-4 Notional Amount, including accrued interest,
and a stated redemption price at maturity equal to all interest distributions
hereon, and is issued with original issue discount ("OID") for federal income
tax purposes. Assuming that this Certificate pays in accordance with projected
cash flows reflecting the prepayment assumption of ___% of the Prepayment Model
(as defined in the Prospectus Supplement dated ______ , 1999 with respect to the
offering of the Class A, Class M, Class B-1 and Class B-2 Certificates) used to
price this Certificate: (i) the amount of OID as a percentage of the initial
Class A-4 Notional Amount of this Certificate is approximately ________%; (ii)
the annual yield to maturity of this Certificate, compounded monthly, is
approximately _____% and (iii) the amount of OID allocable to the short first
accrual period (________, 1999 to ______ 25, 1999) as a percentage of the
Initial Notional Amount of this Certificate, calculated using the exact method,
is approximately 0.______%.
NEITHER THIS CLASS A CERTIFICATE NOR THE UNDERLYING MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE UNITED STATES GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY. THIS
CLASS A CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF CMSI,
CMI, CITIBANK, ANY AFFILIATES THEREOF, OR THEIR ULTIMATE PARENT, CITIGROUP INC.
Reference is hereby made to the provisions of the Agreement, and such
further provisions shall for all purposes have the same effect as though fully
set forth at this place.
2
<PAGE>
This Class A Certificate is one of a duly authorized issue of
certificates designated as set forth herein above as REMIC Pass-Through
Certificates, Series 1999-__ (the "Certificates"), consisting of one senior
Class, the Class A Certificates, consisting of ______ Subclasses of Certificates
(the "Class A Certificates"), one senior subordinated Class of Certificates (the
"Class M Certificates"), one subordinated Class, the Class B Certificates,
consisting of five Subclasses of Certificates (the "Class B Certificates"), and
one Class of residual certificates (the "Residual Certificates"). This Class A
Certificate represents the number of Single Certificates set forth herein above.
The Certificates are issued pursuant to the Agreement, to which Agreement
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of CMSI, the Trustee and the Holders
of the Certificates, and of the terms upon which the Certificates are, and are
to be, authenticated and delivered. Each Certificate represents an ownership
interest in the Trust Fund.
The Class A Certificates are limited in right of payment to payments
and recoveries respecting the Mortgage Loans, all as more specifically set forth
herein and in the Agreement.
Distributions on this Class A Certificate will be made by check mailed
to the Person entitled thereto, as specified by such Person in accordance with
the terms of the Agreement or, if eligible for wire transfer in accordance with
the Agreement, by wire transfer; or by such other means as the Person entitled
thereto, the Paying Agent, the Trustee and CMSI shall agree. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Class A Certificate will be made after due notice to the Holder hereof
of the pendency of such distribution and only upon presentation and surrender of
this Class A Certificate at the office or agency specified in the notice of such
distribution maintained for that purpose.
In the event that the 25th day of any month in which distributions are
required to be made on the Class A Certificates, shall not be a Business Day,
then distributions need not be made on such date, but may be made on the next
succeeding Business Day with the same force and effect as if made on such date
or such other date on which distributions are required to be made, and no
additional interest shall accrue for any period as a result of distributions
being made on such next succeeding Business Day.
The Agreement generally permits the amendment thereof at any time by
CMSI and the Trustee with the consent of the Holders of Certificates evidencing
interests aggregating not less than 66 2/3% of the Voting Interests of the
Certificates materially and adversely affected by such amendment and, if a Class
of the Residual Certificates is materially and adversely affected by such
amendment, 66 2/3% of the Percentage Interest of each affected Class of the
Residual Certificates; however, amendments reducing the amount or delaying the
timing of distributions on the Certificates and certain other matters require
the consent of all Holders. Any such consent by the Holder of this Class A
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Class A Certificate and of any Class A Certificate issued upon
the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Class A Certificate. The Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of any of the Holders of the Certificates.
3
<PAGE>
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Class A Certificate is registrable in the
Certificate Register upon surrender of this Class A Certificate for registration
of transfer, accompanied by a written instrument of transfer in form
satisfactory to CMSI, the Trustee and the Certificate Registrar, duly executed
by the Holder hereof or such Holder's attorney duly authorized in writing, and
thereupon one or more new Class A Certificates of authorized denominations
evidencing the same aggregate number of Single Certificates will be issued to
the designated transferee or transferees.
The Class A Certificates are issuable only as registered Certificates
without coupons. The denominations of this Subclass of the Class A Certificates
will be an initial notional amount of $1,000 or any whole dollar amount in
excess thereof. As provided in the Agreement and subject to certain limitations
therein set forth, Class A Certificates are exchangeable for new Class A
Certificates of authorized denominations evidencing the same aggregate number of
Single Certificates, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Certificate Registrar may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
CMSI, the Trustee and the Certificate Registrar and any agent of CMSI,
the Trustee or the Certificate Registrar may treat the Person in whose name this
Class A Certificate is registered as the owner hereof for all purposes, and
neither CMSI, the Trustee, the Certificate Registrar nor any such agent shall be
affected by any notice to the contrary.
As of the Cut-Off Date, the latest scheduled maturity of any Mortgage
Loan in the Trust Fund was not later than ______ 1, 2029. The obligations and
responsibilities created by the Agreement and the Trust Fund created thereby
shall terminate upon payment to the Certificateholders, or provision therefor,
in accordance with the Agreement upon (a) the repurchase by CMSI of all Mortgage
Loans then outstanding and all property acquired in respect of any other
Mortgage Loan remaining in the Trust Fund at a price equal to the sum of (i)
100% of the Adjusted Balance of each Mortgage Loan outstanding on the first day
of the month of repurchase (after giving effect to payments of principal due on
such first day) plus accrued and unpaid interest thereon at the Net Note Rate
per annum on the Mortgage Loans to but not including the Due Date in the month
in which the related distribution is made to Certificateholders, after the
deduction of related unreimbursed Voluntary Advances and Affiliated Trustee
Advances made prior to the month of repurchase (other than such payments and
advances in respect of interest in excess of the Net Note Rate per annum on the
Mortgage Loans) and (ii) the appraised value of any acquired property (less the
good faith estimate of CMSI of liquidation expenses to be incurred in connection
with its disposal thereof), such appraisal to be conducted by an appraiser
mutually agreed upon by CMSI and the Trustee, or (b) the later of (i) the
maturity or other liquidation (or any advance with respect thereto) of the last
Mortgage Loan remaining in the Trust Fund and the disposition of all property
acquired upon foreclosure or by Transfer Instrument in lieu of foreclosure of
any such Mortgage Loan and (ii) the payment to the Certificateholders of all
amounts in the Certificate Account and the Upper-Tier REMIC Account required to
be paid to them pursuant to the Agreement. The exercise of the right of CMSI to
repurchase the Mortgage Loans and property in respect of the Mortgage Loans will
result in early retirement of the Certificates, such right of CMSI to repurchase
being
4
<PAGE>
subject to (i) the aggregate Adjusted Balance of the Mortgage Loans at the time
of repurchase being less than 5% of the aggregate Adjusted Balance of the
Mortgage Loans as of the Cut-Off Date and (ii) receipt by the Trustee of an
Opinion of Counsel or other evidence satisfactory to it that such repurchase
will be part of a "qualified liquidation" within the meaning of Code Section
860F(a)(4)(A), will not otherwise adversely affect the status of the Upper-Tier
REMIC or the Lower-Tier REMIC as a REMIC and will not otherwise subject the
Upper-Tier REMIC or the Lower-Tier REMIC to any tax.
This Class A Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used without definition in this Class A Certificate which are
defined in the Agreement have the meanings assigned to them in the Agreement.
Unless the certificate of authentication hereon has been executed by
the Trustee or a duly authorized Authenticating Agent by manual signature, this
Class A Certificate shall not be entitled to any benefit under the Agreement or
be valid for any purpose.
5
<PAGE>
IN WITNESS WHEREOF, Citicorp Mortgage Securities, Inc. has caused this
Class A Certificate to be duly executed under its official seal.
CITICORP MORTGAGE SECURITIES, INC.
By:__________________________
Senior Vice President
[SEAL]
Attest:
_____________________________
Assistant Secretary
6
<PAGE>
This is one of the Class A Certificates referred to in the within
mentioned Agreement.
[TRUSTEE],
as Trustee
By:__________________________
Authorized Signature
Date: ______ __, 1999
7
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Class A Certificate, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - _______________ Custodian ____________________
(Cust) (Minor)
Under Uniform Gifts to MinorsAct ___________________________________
(State)
Additional abbreviations may also be used though not in
the above list.
________________________________________________________________________________
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, including zip code, of assignee)
_______________________________________________
the within Class A Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_______________________________________________
attorney to transfer said Class A Certificate on the books of the Certificate
Registrar with full power of substitution in the premises.
Dated: ________________ __________________________
Signature Guaranteed by:_________________________________________
NOTICE: the signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
member of a Signature Guarantee Medallion Program.
8
<PAGE>
EXHIBIT A-3
[FORM OF PRINCIPAL-ONLY CLASS A CERTIFICATES]
THE PRINCIPAL AMOUNT OF THIS CLASS A CERTIFICATE IS DISTRIBUTABLE IN
INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT OF THIS CLASS A CERTIFICATE AT ANY TIME MAY BE LESS
THAN THE INITIAL PRINCIPAL AMOUNT REPRESENTED HEREBY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
REMIC PASS-THROUGH CERTIFICATES, SERIES 1999-__
SENIOR CLASS A-__ CERTIFICATE
representing an ownership interest in a trust fund consisting
primarily of mortgage loans acquired by
CITICORP MORTGAGE SECURITIES, INC.
Certificate No. 1 Initial Principal Amount: $__________
__________ Single Certificates
Last Scheduled
Distribution Date: ______ 25, 2029 CUSIP 172953 ____
THIS CERTIFIES THAT, for value received Cede & Co. is the
registered Holder of the number of Single Certificates (each representing $1.00
Initial Principal Amount) set forth above, each representing an undivided
beneficial ownership interest in the trust fund (the "Trust Fund") created
pursuant to the Pooling and Servicing Agreement dated as of ______ 1, 1999 (the
"Agreement") between Citicorp Mortgage Securities, Inc. ("CMSI") and [TRUSTEE],
in its individual capacity and as trustee (the "Trustee", which term includes
any successor trustee), the assets of which consist of (i) a pool of 20- to
30-year fixed-rate, conventional one- to four-family mortgage loans (the
"Mortgage Loans") originated or acquired by Citicorp Mortgage, Inc. ("CMI"),
(ii) funds in the Certificate Account and the Upper-Tier Remic Account
(including any investment of funds contained therein) and (iii) certain related
property. This Class A Certificate represents a
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<PAGE>
"regular interest" in a real estate mortgage investment conduit ("REMIC") within
the meaning of Section 860G(a)(1) of the Internal Revenue Code of 1986, as
amended.
The registered Holder of this Class A Certificate is entitled
to receive from the Trustee distributions in reduction of Principal Amount on
the 25th day of each month commencing on the date determined as provided herein
or, if such day is not a Business Day, the Business Day next following such day
(each, a "Distribution Date"). This Class A-__ Certificate is a principal only
certificate and is not entitled to distributions in respect of interest. Each
such distribution in reduction of Principal Amount to Holders will, as provided
in the Agreement, be made to the Person in whose name this Class A Certificate
(or one or more Predecessor Certificates) is registered at the close of business
on the Record Date for such distribution, which shall be the last Business Day
of the month preceding the month in which the applicable Distribution Date
occurs. This Class A Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class A Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
This Certificate is issued on ______ __, 1999, at an issue
price of _________%, and a stated redemption price at maturity equal to its
Initial Principal Amount, and is issued with original issue discount ("OID") for
federal income tax purposes. Assuming that this Certificate pays in accordance
with projected cash flows reflecting the prepayment assumption of ___% of the
Prepayment Model (as defined in the Prospectus Supplement dated ______ __, 1999
with respect to the offering of the Class A, Class M, Class B-1 and Class B-2
Certificates) used to price this Certificate: (i) the amount of OID as a
percentage of the Initial Principal Amount of this Certificate is approximately
________%; (ii) the annual yield to maturity of this Certificate, compounded
monthly, is approximately ____%; and (iii) the amount of the OID allocable to
the short first accrual period (______ __, 1999 to ______ 25, 1999), as a
percentage of the Initial Principal Amount of this Certificate, computed using
the exact method, is approximately 0._______%.
NEITHER THIS CLASS A CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE INSURED OR GUARANTEED BY THE UNITED STATES GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY. THIS CLASS A CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR
OBLIGATION OF CMSI, CMI, CITIBANK, ANY AFFILIATES THEREOF, OR THEIR ULTIMATE
PARENT, CITIGROUP INC.
Reference is hereby made to the provisions of the Agreement,
and such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Class A Certificate is one of a duly authorized issue of
certificates designated as set forth herein above as REMIC Pass-Through
Certificates, Series 1999-__ (the "Certificates"), consisting of one senior
Class, the Class A Certificates, consisting of ______ Subclasses of Certificates
(the "Class A Certificates"), one senior subordinated Class of Certificates (the
"Class M Certificates"), one subordinated Class, the Class B Certificates,
consisting of five Subclasses of Certificates (the "Class B Certificates"), and
one Class of residual certificates (the "Residual Certificates"). This Class A
Certificate represents the number of Single Certificates set forth herein above.
The Certificates are issued pursuant to the Agreement, to which Agreement
reference is
2
<PAGE>
hereby made for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of CMSI, the Trustee and the Holders of the
Certificates, and of the terms upon which the Certificates are, and are to be,
authenticated and delivered. Each Certificate represents an ownership interest
in the Trust Fund.
The aggregate amount distributable in reduction of Principal
Amount to Holders of the Class A Certificates on each Distribution Date shall be
equal to the Class A Principal Distribution Amount for such Distribution Date.
Distributions in reduction of Principal Amount of the Class A
Subclasses will be made as set forth in the Agreement.
The Class A Certificates are limited in right of payment to
payments and recoveries respecting the Mortgage Loans, all as more specifically
set forth herein and in the Agreement.
Distributions on this Class A Certificate will be made by
check mailed to the Person entitled thereto, as specified by such Person in
accordance with the terms of the Agreement or, if eligible for wire transfer in
accordance with the Agreement, by wire transfer; or by such other means as the
Person entitled thereto, the Paying Agent, the Trustee and CMSI shall agree.
Except as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Class A Certificate will be made after due notice to
the Holder hereof of the pendency of such distribution and only upon
presentation and surrender of this Class A Certificate at the office or agency
specified in the notice of such distribution maintained for that purpose.
In the event that the 25th day of any month in which
distributions are required to be made on the Class A Certificates shall not be a
Business Day, then distributions need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
such date or such other date on which distributions are required to be made, and
no additional interest shall accrue for any period as a result of distributions
being made on such next succeeding Business Day.
The Agreement generally permits the amendment thereof at any
time by CMSI and the Trustee with the consent of the Holders of Certificates
evidencing interests aggregating not less than 66 2/3% of the Voting Interests
of the Certificates materially and adversely affected by such amendment and, if
a Class of the Residual Certificates is materially and adversely affected by
such amendment, 66 2/3% of the Percentage Interest of each affected Class of the
Residual Certificates; however, amendments reducing the amount or delaying the
timing of distributions on the Certificates and certain other matters require
the consent of all Holders. Any such consent by the Holder of this Class A
Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Class A Certificate and of any Class A Certificate issued upon
the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Class A Certificate. The Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of any of the Holders of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Class A Certificate is
registrable in the Certificate Register upon surrender of this
3
<PAGE>
Class A Certificate for registration of transfer, accompanied by a written
instrument of transfer in form satisfactory to CMSI, the Trustee and the
Certificate Registrar, duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Class A
Certificates of authorized denominations evidencing the same aggregate number of
Single Certificates will be issued to the designated transferee or transferees.
The Class A Certificates are issuable only as registered
Certificates without coupons. The denominations of this Subclass of the Class A
Certificates will be an Initial Principal Amount of $1,000 or any whole dollar
amount in excess thereof. As provided in the Agreement and subject to certain
limitations therein set forth, Class A Certificates are exchangeable for new
Class A Certificates of authorized denominations evidencing the same aggregate
number of Single Certificates, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
CMSI, the Trustee and the Certificate Registrar and any agent
of CMSI, the Trustee or the Certificate Registrar may treat the Person in whose
name this Class A Certificate is registered as the owner hereof for all
purposes, and neither CMSI, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
As of the Cut-Off Date, the latest scheduled maturity of any
Mortgage Loan in the Trust Fund was not later than ______ 1, 2029. The
obligations and responsibilities created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the repurchase by
CMSI of all Mortgage Loans then outstanding and all property acquired in respect
of any other Mortgage Loan remaining in the Trust Fund at a price equal to the
sum of (i) 100% of the Adjusted Balance of each Mortgage Loan outstanding on the
first day of the month of repurchase (after giving effect to payments of
principal due on such first day) plus accrued and unpaid interest thereon at the
Net Note Rate per annum on the Mortgage Loans to but not including the Due Date
in the month in which the related distribution is made to Certificateholders,
after the deduction of related unreimbursed Trustee Advances made prior to the
month of repurchase (other than such payments and advances in respect of
interest in excess of the Net Note Rate per annum on the Mortgage Loans) and
(ii) the appraised value of any acquired property (less the good faith estimate
of CMSI of liquidation expenses to be incurred in connection with its disposal
thereof), such appraisal to be conducted by an appraiser mutually agreed upon by
CMSI and the Trustee, or (b) the later of (i) the maturity or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all property acquired upon foreclosure or by
Transfer Instrument in lieu of foreclosure of any such Mortgage Loan and (ii)
the payment to the Certificateholders of all amounts in the Certificate Account
and the Upper-Tier REMIC Account required to be paid to them pursuant to the
Agreement. The exercise of the right of CMSI to repurchase the Mortgage Loans
and property in respect of the Mortgage Loans will result in early retirement of
the Certificates, such right of CMSI to repurchase being subject to (i) the
aggregate Adjusted Balance of the Mortgage Loans at the time of repurchase being
less than 5% of the aggregate Adjusted Balance of the Mortgage Loans as of the
Cut-Off Date and (ii) receipt by the
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<PAGE>
Trustee of an Opinion of Counsel or other evidence satisfactory to it that such
repurchase will be part of a "qualified liquidation" within the meaning of Code
Section 860F(a)(4)(A), will not otherwise adversely affect the status of the
Upper-Tier REMIC or the Lower-Tier REMIC as a REMIC and will not otherwise
subject the Upper-Tier REMIC or the Lower-Tier REMIC to any tax.
This Class A Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used without definition in this Class A Certificate
which are defined in the Agreement have the meanings assigned to them in the
Agreement.
Unless the certificate of authentication hereon has been
executed by the Trustee or a duly authorized Authenticating Agent by manual
signature, this Class A Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose.
5
<PAGE>
IN WITNESS WHEREOF, Citicorp Mortgage Securities, Inc. has
caused this Class A Certificate to be duly executed under its official seal.
CITICORP MORTGAGE SECURITIES, INC.
By:_______________________________
Senior Vice President
[SEAL]
Attest:
____________________________
Assistant Secretary
6
<PAGE>
This is one of the Class A Certificates referred to in the within
mentioned Agreement.
[TRUSTEE],
as Trustee
By:______________________
Authorized Signature
Date: ______ __, 1999
7
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this Class A Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - _______________ Custodian ____________________
(Cust) (Minor)
Under Uniform Gifts to MinorsAct ___________________________________
(State)
Additional abbreviations may also be used though not in the above list.
________________________________________________________________________________
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, including zip code, of assignee)
___________________________________________________________
the within Class A Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
___________________________________________________________
attorney to transfer said Class A Certificate on the books of the Certificate
Registrar with full power of substitution in the premises.
Dated: ________________ __________________________
Signature Guaranteed by:_________________________________________
NOTICE: the signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
member of a Signature Guarantee Medallion Program.
8
<PAGE>
EXHIBIT A-5
[FORM OF RETAIL CLASS A CERTIFICATES]
THE PRINCIPAL AMOUNT OF THIS CLASS A CERTIFICATE IS DISTRIBUTABLE IN
INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING
PRINCIPAL AMOUNT OF THIS CLASS A CERTIFICATE AT ANY TIME MAY BE LESS
THAN THE INITIAL PRINCIPAL AMOUNT REPRESENTED HEREBY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.
REMIC PASS-THROUGH CERTIFICATES, SERIES 1999-__
SENIOR CLASS A-__ CERTIFICATE, ____% CERTIFICATE RATE
representing an ownership interest in a trust fund consisting
primarily of mortgage loans acquired by
CITICORP MORTGAGE SECURITIES, INC.
Certificate No. 1 Initial Principal Amount: $__________
__________ Single Certificates
Last Scheduled
Distribution Date: ______ 25, 2029 CUSIP 172953
THIS CERTIFIES THAT, for value received Cede & Co. is the
registered Holder of the number of Single Certificates (each representing $1.00
Initial Principal Amount) set forth above, each representing an undivided
beneficial ownership interest in the trust fund (the "Trust Fund") created
pursuant to the Pooling and Servicing Agreement dated as of ______ 1, 1999 (the
"Agreement") between Citicorp Mortgage Securities, Inc. ("CMSI") and [TRUSTEE],
in its individual capacity and as trustee (the "Trustee", which term includes
any successor trustee), the assets of which consist of (i) a pool of 20- to
30-year fixed-rate, conventional one- to four-family mortgage loans (the
"Mortgage Loans") originated or acquired by Citicorp Mortgage, Inc. ("CMI"),
(ii) funds in the Certificate Account and the Upper-Tier Remic Account
(including any investment of funds contained therein) and (iii) certain related
property. This Class A Certificate represents a
1
<PAGE>
"regular interest" in a real estate mortgage investment conduit ("REMIC") within
the meaning of Section 860G(a)(1) of the Internal Revenue Code of 1986, as
amended.
The registered Holder of this Class A Certificate is entitled
to receive from the Trustee distributions in reduction of Principal Amount on
the 25th day of each month commencing on the date determined as provided herein
or, if such day is not a Business Day, the Business Day next following such day
(each, a "Distribution Date"). Interest (computed on the basis of a 360-day year
consisting of twelve 30-day months) on the Principal Amount of this Class A
Certificate outstanding from time to time will be distributable for the period
from ______ 1, 1999, or such later time to which interest has been distributed,
until the Principal Amount has been reduced to zero, at the rate of six and
thirty one-hundredths percent (6.30%) per annum (net of any Non-Supported
Interest Shortfall and the interest portion of any Excess Special Hazard Losses,
Excess Fraud Losses and Excess Bankruptcy Losses allocable to this Certificate).
Interest distributable on this Class A Certificate on a Distribution Date will
be equal to the amount of interest that has accrued from the first through the
last day of the month preceding the month of each Distribution Date (the related
"Interest Accrual Period"), to the extent specified in the Agreement.
Distributions in reduction of Principal Amount on any Distribution Date will
stop accruing interest from the end of the related Interest Accrual Period. Each
such distribution in reduction of Principal Amount and of interest to Holders
will, as provided in the Agreement, be made to the Person in whose name this
Class A Certificate (or one or more Predecessor Certificates) is registered at
the close of business on the Record Date for such distribution, which shall be
the last Business Day of the month preceding the month in which the applicable
Distribution Date occurs. This Class A Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Class A Certificate by virtue of the acceptance
hereof assents and by which such Holder is bound.
NEITHER THIS CLASS A CERTIFICATE NOR THE UNDERLYING MORTGAGE
LOANS ARE INSURED OR GUARANTEED BY THE UNITED STATES GOVERNMENT, THE FEDERAL
DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY. THIS CLASS A CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR
OBLIGATION OF CMSI, CMI, CITIBANK, ANY AFFILIATES THEREOF, OR THEIR ULTIMATE
PARENT, CITICORP.
Reference is hereby made to the provisions of the Agreement,
and such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Class A Certificate is one of a duly authorized issue of
certificates designated as set forth herein above as REMIC Pass-Through
Certificates, Series 1999-__ (the "Certificates"), consisting of one senior
Class, the Class A Certificates, consisting of twelve Subclasses of Certificates
(the "Class A Certificates"), one senior subordinated Class of Certificates (the
"Class M Certificates"), one subordinated Class, the Class B Certificates,
consisting of five Subclasses of Certificates (the "Class B Certificates"), and
one Class of residual certificates (the "Residual Certificates"). This Class A
Certificate represents the number of Single Certificates set forth herein above.
The Certificates are issued pursuant to the Agreement, to which Agreement
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of CMSI, the Trustee and the Holders
of the Certificates, and of the terms upon which
2
<PAGE>
the Certificates are, and are to be, authenticated and delivered. Each
Certificate represents an ownership interest in the Trust Fund.
The aggregate amount distributable in reduction of Principal
Amount to Holders of the Class A Certificates on each Distribution Date shall be
equal to the Class A Principal Distribution Amount for such Distribution Date.
Distributions in reduction of Principal Amount of the Class A
Subclasses will be made as set forth in the Agreement.
Prior to the earlier to occur of (i) the Subordination
Depletion Date and (ii) the failure of MBIA Insurance Corporation (the
"Insurer") to make an Insured Payment (as defined in the Agreement),
distributions in reduction of the Principal Amount of this Class A-__
Certificate will be made only in lots equal to $1,000 initial Principal Amount
and in accordance with the priorities and procedures set forth in Section 12.07
of the Agreement (i) at the request of Deceased Holders, (ii) at the request of
Beneficial Owners other than Deceased Holders and (iii) by random lot.
Any Non-Supported Interest Shortfall allocated to the Class
A-__ Certificates will be covered, to the extent available, by funds in the
Reserve Fund, to the extent described in the Agreement and then by the Policy
described below.
The Class A-__ Certificates will be entitled to the benefits
of a certificate guaranty insurance policy issued by the Insurer (the "Policy")
to the extent described in the Agreement.
The Class A Certificates are limited in right of payment to
payments and recoveries respecting the Mortgage Loans, all as more specifically
set forth herein and in the Agreement.
Distributions on this Class A Certificate will be made by
check mailed to the Person entitled thereto, as specified by such Person in
accordance with the terms of the Agreement or, if eligible for wire transfer in
accordance with the Agreement, by wire transfer; or by such other means as the
Person entitled thereto, the Paying Agent, the Trustee and CMSI shall agree.
Except as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Class A Certificate will be made after due notice to
the Holder hereof of the pendency of such distribution and only upon
presentation and surrender of this Class A Certificate at the office or agency
specified in the notice of such distribution maintained for that purpose.
In the event that the 25th day of any month in which
distributions are required to be made on the Class A Certificates shall not be a
Business Day, then distributions need not be made on such date, but may be made
on the next succeeding Business Day with the same force and effect as if made on
such date or such other date on which distributions are required to be made, and
no additional interest shall accrue for any period as a result of distributions
being made on such next succeeding Business Day.
The Agreement generally permits the amendment thereof at any
time by CMSI and the Trustee with the consent of the Holders of Certificates
evidencing interests aggregating not less than 66 2/3% of the Voting Interests
of the Certificates materially and adversely affected by such
3
<PAGE>
amendment and, if a Class of the Residual Certificates is materially and
adversely affected by such amendment, 66 2/3% of the Percentage Interest of each
affected Class of the Residual Certificates; however, amendments reducing the
amount or delaying the timing of distributions on the Certificates and certain
other matters require the consent of all Holders. Any such consent by the Holder
of this Class A Certificate shall be conclusive and binding on such Holder and
upon all future Holders of this Class A Certificate and of any Class A
Certificate issued upon the transfer hereof or in exchange herefor or in lieu
hereof whether or not notation of such consent is made upon this Class A
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of any of the Holders of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Class A Certificate is
registrable in the Certificate Register upon surrender of this Class A
Certificate for registration of transfer, accompanied by a written instrument of
transfer in form satisfactory to CMSI, the Trustee and the Certificate
Registrar, duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Class A Certificates of
authorized denominations evidencing the same aggregate number of Single
Certificates will be issued to the designated transferee or transferees.
The Class A Certificates are issuable only as registered
Certificates without coupons. The denominations of this Subclass of the Class A
Certificates will be an Initial Principal Amount of $1,000 or any whole dollar
amount in excess thereof. As provided in the Agreement and subject to certain
limitations therein set forth, Class A Certificates are exchangeable for new
Class A Certificates of authorized denominations evidencing the same aggregate
number of Single Certificates, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
CMSI, the Trustee and the Certificate Registrar and any agent
of CMSI, the Trustee or the Certificate Registrar may treat the Person in whose
name this Class A Certificate is registered as the owner hereof for all
purposes, and neither CMSI, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
As of the Cut-Off Date, the latest scheduled maturity of any
Mortgage Loan in the Trust Fund was not later than ______ 1, 2029. The
obligations and responsibilities created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the repurchase by
CMSI of all Mortgage Loans then outstanding and all property acquired in respect
of any other Mortgage Loan remaining in the Trust Fund at a price equal to the
sum of (i) 100% of the Adjusted Balance of each Mortgage Loan outstanding on the
first day of the month of repurchase (after giving effect to payments of
principal due on such first day) plus accrued and unpaid interest thereon at the
Net Note Rate per annum on the Mortgage Loans to but not including the Due Date
in the month in which the related distribution is made to Certificateholders,
after the deduction of related unreimbursed Trustee Advances made prior to the
month of repurchase (other than such payments and advances in respect of
interest in excess of the Net Note Rate per annum on the Mortgage Loans)
4
<PAGE>
and (ii) the appraised value of any acquired property (less the good faith
estimate of CMSI of liquidation expenses to be incurred in connection with its
disposal thereof), such appraisal to be conducted by an appraiser mutually
agreed upon by CMSI and the Trustee, or (b) the later of (i) the maturity or
other liquidation (or any advance with respect thereto) of the last Mortgage
Loan remaining in the Trust Fund and the disposition of all property acquired
upon foreclosure or by Transfer Instrument in lieu of foreclosure of any such
Mortgage Loan and (ii) the payment to the Certificateholders of all amounts in
the Certificate Account and the Upper-Tier REMIC Account required to be paid to
them pursuant to the Agreement. The exercise of the right of CMSI to repurchase
the Mortgage Loans and property in respect of the Mortgage Loans will result in
early retirement of the Certificates, such right of CMSI to repurchase being
subject to (i) the aggregate Adjusted Balance of the Mortgage Loans at the time
of repurchase being less than 5% of the aggregate Adjusted Balance of the
Mortgage Loans as of the Cut-Off Date and (ii) receipt by the Trustee of an
Opinion of Counsel or other evidence satisfactory to it that such repurchase
will be part of a "qualified liquidation" within the meaning of Code Section
860F(a)(4)(A), will not otherwise adversely affect the status of the Upper-Tier
REMIC or the Lower-Tier REMIC as a REMIC and will not otherwise subject the
Upper-Tier REMIC or the Lower-Tier REMIC to any tax.
This Class A Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used without definition in this Class A Certificate
which are defined in the Agreement have the meanings assigned to them in the
Agreement.
Unless the certificate of authentication hereon has been
executed by the Trustee or a duly authorized Authenticating Agent by manual
signature, this Class A Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose.
5
<PAGE>
IN WITNESS WHEREOF, Citicorp Mortgage Securities, Inc. has
caused this Class A Certificate to be duly executed under its official seal.
CITICORP MORTGAGE SECURITIES, INC.
By:________________________________
Senior Vice President
[SEAL]
Attest:
___________________________
Assistant Secretary
6
<PAGE>
This is one of the Class A Certificates referred to in the within
mentioned Agreement.
[TRUSTEE],
as Trustee
By:______________________________
Authorized Signature
Date: ______ __, 1999
7
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this Class A Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - _______________ Custodian ____________________
(Cust) (Minor)
Under Uniform Gifts to Minors Act ___________________________________
(State)
Additional abbreviations may also be used though not in
the above list.
________________________________________________________________________________
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, including zip code, of assignee)
___________________________________________
the within Class A Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
___________________________________________
attorney to transfer said Class A Certificate on the books of the Certificate
Registrar with full power of substitution in the premises.
Dated: ________________ __________________________
Signature Guaranteed by:_________________________________________
NOTICE: the signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
member of a Signature Guarantee Medallion Program.
8
<PAGE>
EXHIBIT A-6
[FORM OF CLASS A-IO CERTIFICATE]
THIS CLASS A-IO CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED
TO ANY PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA") OR SECTION 4925 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE") OR ANY GOVERNMENTAL PLAN, AS DEFINED IN
SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW
WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF
ERISA OR THE CODE (COLLECTIVELY, A "PLAN") OR ANY PERSON INVESTING THE
ASSETS OF A PLAN EXCEPT AS PROVIDED IN SECTION 5.02 OF THE AGREEMENT
DESCRIBED HEREIN.
THIS CLASS A-IO CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, OR OFFERED
FOR SALE, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH SALE,
TRANSFER OR OTHER DISPOSITION IS MADE PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE BLUE SKY
LAW OR UNLESS AN EXEMPTION UNDER SUCH ACT AND ANY APPLICABLE BLUE
SKY LAW IS AVAILABLE.
THE NOTIONAL AMOUNT OF THIS CLASS A-IO CERTIFICATE IS SUBJECT TO
REDUCTION FROM TIME TO TIME. ACCORDINGLY, THE OUTSTANDING
NOTIONAL AMOUNT OF THIS CLASS A-IO CERTIFICATE AT ANY TIME MAY BE
LESS THAN THE INITIAL NOTIONAL AMOUNT REPRESENTED HEREBY.
REMIC PASS-THROUGH CERTIFICATES, SERIES 1999-__
CLASS A-IO CERTIFICATE
representing an ownership interest in a trust fund consisting
primarily of mortgage loans acquired by
CITICORP MORTGAGE SECURITIES, INC.
Certificate No. 1 Initial Notional Amount: $_______________
_______________ Single Certificates
Last Scheduled
Distribution Date: ______ 25, 2029
1
<PAGE>
THIS CERTIFIES THAT, for value received, [Citicorp Mortgage,
Inc] is the registered Holder of the number of Single Certificates (each
representing $1.00 undivided interest in amounts distributable from time to time
hereon) set forth above, each representing an undivided beneficial ownership
interest in the trust fund (the "Trust Fund") created pursuant to the Pooling
and Servicing Agreement dated as of ______ 1, 1999 (the "Agreement") between
Citicorp Mortgage Securities, Inc. ("CMSI") and [TRUSTEE], in its individual
capacity and as trustee (the "Trustee", which term includes any successor
trustee), the assets of which consist of (i) a pool of 20- to 30-year
fixed-rate, conventional one- to four-family mortgage loans (the "Mortgage
Loans") originated or acquired by Citicorp Mortgage, Inc. ("CMI"), (ii) funds in
the Certificate Account (including any investment of funds contained therein)
and (iii) certain related property. This Class A-IO Certificate represents a
"regular interest" in a real estate mortgage investment conduit ("REMIC") within
the meaning of Section 860G(a)(1) of the Internal Revenue Code of 1986, as
amended.
The registered Holder of this Class A-IO Certificate is
entitled to receive from the Trustee distributions of interest, in an amount
equal to the Distributable Class A-IO Interest Amount, determined as provided in
the Agreement, on the 25th day of each month commencing on the date determined
as provided herein or, if such day is not a Business Day, the Business Day next
following such day (each, a "Distribution Date"). This Class A-IO Certificate is
an interest only certificate and is not entitled to distributions in respect of
principal. Each such distribution of interest to Holders will, as provided in
the Agreement, be made to the Person in whose name this Class A-IO Certificate
(or one or more Predecessor Certificates) is registered at the close of business
on the Record Date for such distribution, which shall be the last Business Day
of the month preceding the month in which the applicable Distribution Date
occurs. This Class A-IO Certificate is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Class A-IO Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound.
This Certificate is issued on ________, 1999, and at an issue
price of _______% of the initial Class A-IO Notional Amount, including accrued
interest, and a stated redemption price at maturity equal to all interest
distributions hereon, and is issued with original issue discount ("OID") for
federal income tax purposes. Assuming that (a) this Certificate pays in
accordance with projected cash flows reflecting the prepayment assumption of
____% of the Prepayment Model (as defined in the Prospectus Supplement dated
______, 1999 with respect to the offering of the Class A, Class M, Class B-1 and
Class B-2 Certificates) used to price this Certificate and (b) that the
pass-through rate hereon changes in accordance with such prepayment assumption:
(i) the amount of OID as a percentage of the initial Class A-IO Notional Amount
is approximately 0.________%; (ii) the annual yield to maturity of this
Certificate, compounded monthly, is approximately ____%; and (iii) the amount of
OID allocable to the short first accrual period (________, 1999 to ______ 25,
1999), as a percentage of the Initial Class A-IO Notional Amount, computed using
the exact method, is approximately 0.______%.
NEITHER THIS CLASS A-IO CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE INSURED OR GUARANTEED BY THE UNITED STATES GOVERNMENT, THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR
INSTRUMENTALITY. THIS CLASS A-IO CERTIFICATE
2
<PAGE>
DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF CMSI, CMI, CITIBANK, ANY
AFFILIATES THEREOF, OR THEIR ULTIMATE PARENT, CITIGROUP INC.
Reference is hereby made to the provisions of the Agreement,
and such further provisions shall for all purposes have the same effect as
though fully set forth at this place.
This Class A-IO Certificate is one of a duly authorized issue
of certificates designated as set forth herein above as REMIC Pass-Through
Certificates, Series 1999-__ (the "Certificates"). The Certificates are issued
pursuant to the Agreement, to which reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of CMSI, the Trustee and the Holders of the Certificates, and of the terms upon
which the Certificates are, and are to be, authenticated and delivered. This
Class A-IO Certificate represents the number of Single Certificates set forth
herein above. Each Certificate represents an ownership interest in the Trust
Fund.
The Class A-IO Certificates are limited in right of payment to
payments and recoveries respecting the Mortgage Loans, all as more specifically
set forth herein and in the Agreement.
Distributions on this Class A-IO Certificate will be made by
check mailed to the Person entitled thereto, as specified by such Person in
accordance with the terms of the Agreement or, if eligible for wire transfer in
accordance with the Agreement, by wire transfer; or by such other means as the
Person entitled thereto, the Paying Agent, the Trustee and CMSI shall agree.
Except as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Class A-IO Certificate will be made after due notice
to the Holder hereof of the pendency of such distribution and only upon
presentation and surrender of this Class A-IO Certificate at the office or
agency specified in the notice of such distribution maintained for that purpose.
In the event that the 25th day of any month in which
distributions are required to be made on the Class A-IO Certificates, shall not
be a Business Day, then distributions need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made on such date or such other date on which distributions are required to be
made, and no additional interest shall accrue for any period as a result of
distributions being made on such next succeeding Business Day.
The Agreement generally permits the amendment thereof at any
time by CMSI and the Trustee with the consent of the Holders of Certificates
evidencing interests aggregating not less than 66 2/3% of the Voting Interests
of the Certificates materially and adversely affected by such amendment and, if
a Class of the Residual Certificates is materially and adversely affected by
such amendment, 66 2/3% of the Percentage Interests of each affected Class of
the Residual Certificates; however, amendments reducing the amount or delaying
the timing of distributions on the Certificates and certain other matters
require the consent of all Holders. Any such consent by the Holder of this Class
A-IO Certificate shall be conclusive and binding on such Holder and upon all
future Holders of this Class A-IO Certificate and of any Class A-IO Certificate
issued upon the transfer hereof or in exchange herefor or in lieu hereof whether
or not notation of such consent is made upon this Class
3
<PAGE>
A-IO Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of any of the Holders of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Class A-IO Certificate is
registrable in the Certificate Register upon surrender of this Class A-IO
Certificate for registration of transfer, accompanied by a written instrument of
transfer in form satisfactory to CMSI, the Trustee and the Certificate
Registrar, duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Class A-IO Certificates of
authorized denominations evidencing the same aggregate number of Single
Certificates will be issued to the designated transferee or transferees.
The Class A-IO Certificates are issuable only as registered
Certificates without coupons. The denominations of this Subclass of the Class
A-IO Certificates will be $1,000 initial notional amount or any whole dollar
amounts in excess thereof, except that one Certificate of this Class may be in a
different denomination. As provided in the Agreement and subject to certain
limitations therein set forth, Class A-IO Certificates are exchangeable for new
Class A-IO Certificates of authorized denominations evidencing the same
aggregate number of Single Certificates, as requested by the Holder surrendering
the same.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
CMSI, the Trustee and the Certificate Registrar and any agent
of CMSI, the Trustee or the Certificate Registrar may treat the Person in whose
name this Class A-IO Certificate is registered as the owner hereof for all
purposes, and neither CMSI, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
As of the Cut-Off Date, the latest scheduled maturity of any
Mortgage Loan in the Trust Fund was not later than ______ 1, 2029. The
obligations and responsibilities created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the repurchase by
CMSI of all Mortgage Loans then outstanding and all property acquired in respect
of any other Mortgage Loan remaining in the Trust Fund at a price equal to the
sum of (i) 100% of the Adjusted Balance of each Mortgage Loan outstanding on the
first day of the month of repurchase (after giving effect to payments of
principal due on such first day) plus accrued and unpaid interest thereon at the
Net Note Rate per annum on the Mortgage Loans to but not including the Due Date
in the month in which the related distribution is made to Certificateholders,
after the deduction of related unreimbursed Trustee Advances made prior to the
month of repurchase (other than such payments and advances in respect of
interest in excess of the Net Note Rate per annum on the Mortgage Loans) and
(ii) the appraised value of any acquired property (less the good faith estimate
of CMSI of liquidation expenses to be incurred in connection with its disposal
thereof), such appraisal to be conducted by an appraiser mutually agreed upon by
CMSI and the Trustee, or (b) the later of (i) the maturity or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all property acquired upon foreclosure or by
Transfer Instrument in lieu of foreclosure of any such Mortgage Loan and (ii)
the payment to the
4
<PAGE>
Certificateholders of all amounts in the Certificate Account and the Upper-Tier
REMIC Account required to be paid to them pursuant to the Agreement. The
exercise of the right of CMSI to repurchase the Mortgage Loans and property in
respect of the Mortgage Loans will result in early retirement of the
Certificates, such right of CMSI to repurchase being subject to (i) the
aggregate Adjusted Balance of the Mortgage Loans at the time of repurchase being
less than 5% of the aggregate Adjusted Balance of the Mortgage Loans as of the
Cut-Off Date and (ii) receipt by the Trustee of an Opinion of Counsel or other
evidence satisfactory to it that such repurchase will be part of a "qualified
liquidation" within the meaning of Code Section 860F(a)(4)(A), will not
otherwise adversely affect the status of the Upper-Tier REMIC or the Lower-Tier
REMIC as a REMIC and will not otherwise subject the Upper-Tier REMIC or the
Lower-Tier REMIC to any tax.
This Class A-IO Certificate shall be governed by and construed
in accordance with the laws of the State of New York.
All terms used without definition in this Class A-IO
Certificate which are defined in the Agreement have the meanings assigned to
them in the Agreement.
Unless the certificate of authentication hereon has been
executed by the Trustee or a duly authorized Authenticating Agent by manual
signature, this Class A-IO Certificate shall not be entitled to any benefit
under the Agreement or be valid for any purpose.
5
<PAGE>
IN WITNESS WHEREOF, Citicorp Mortgage Securities, Inc. has
caused this Class A-IO Certificate to be duly executed under its official seal.
CITICORP MORTGAGE SECURITIES, INC.
By:_______________________________
Senior Vice President
[SEAL]
Attest:
____________________________
Assistant Secretary
6
<PAGE>
This is one of the Class A-IO Certificates referred to in the within
mentioned Agreement.
[TRUSTEE],
as Trustee
By:_______________________________
Authorized Signature
Date: ___________, 1999
7
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this Class A Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - _______________ Custodian ____________________
(Cust) (Minor)
Under Uniform Gifts to MinorsAct ___________________________________
(State)
Additional abbreviations may also be used though not in
the above list.
________________________________________________________________________________
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, including zip code, of assignee)
________________________________________
the within Class A Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________
attorney to transfer said Class A Certificate on the books of the Certificate
Registrar with full power of substitution in the premises.
Dated: ________________ __________________________
Signature Guaranteed by:_________________________________________
NOTICE: the signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
member of a Signature Guarantee Medallion Program.
8
<PAGE>
EXHIBIT A-7
[FORM OF CLASS M CERTIFICATE]
THIS CLASS M CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENTS TO THE
CLASS A CERTIFICATES AS DESCRIBED IN THE AGREEMENT REFERRED TO
HEREIN. THIS CLASS M CERTIFICATE MAY NOT BE PURCHASED BY OR
TRANSFERRED TO ANY PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN SUBJECT
TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986,
AS AMENDED (THE "CODE") OR ANY GOVERNMENTAL PLAN, AS DEFINED IN
SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW
WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF
ERISA OR THE CODE (COLLECTIVELY, A "PLAN") OR ANY PERSON INVESTING THE
ASSETS OF A PLAN EXCEPT AS PROVIDED IN SECTION 5.02 OF THE AGREEMENT
DESCRIBED HEREIN.
REMIC PASS-THROUGH CERTIFICATES, SERIES 1999-__
SENIOR SUBORDINATED CLASS M CERTIFICATE
____% CERTIFICATE RATE
representing an ownership interest in a trust fund
consisting primarily of mortgage loans
acquired by
CITICORP MORTGAGE SECURITIES, INC.
Certificate No. 1 Initial Principal Amount: $___________
_________ Single Certificates
Last Scheduled Distribution
Date: _______ 25, 2029 CUSIP 172953
THIS CERTIFIES THAT, for value received, _______________. is
the registered Holder of the number of Single Certificates (each representing
$1,000.00 Initial Principal Amount) set forth above, each representing an
undivided beneficial ownership interest in the trust fund (the "Trust Fund")
created pursuant to the Pooling and Servicing Agreement dated as of _______ 1,
1999 (the "Agreement") between Citicorp Mortgage Securities, Inc. ("CMSI") and
[TRUSTEE], in its individual capacity and as trustee (the "Trustee", which term
includes any successor trustee), the assets of which consist of (i) a pool of
fixed-rate, conventional one- to four-family mortgage loans (the "Mortgage
Loans") originated or acquired by Citicorp Mortgage, Inc. ("CMI"), with a final
maturity of greater than 15 but not more than 30 years, (ii) funds in the
Certificate Account (including any investment of funds contained therein) and
(iii) certain related property. This Class
1
<PAGE>
M Certificate represents a "regular interest" in a real estate mortgage
investment conduit ("REMIC") within the meaning of Section 860G(a)(1) of the
Internal Revenue Code of 1986, as amended.
The registered Holder of this Class M Certificate is entitled,
subject to the provisions herein, to receive from the Trustee on the 25th day of
each month or, if such day is not a Business Day, the Business Day next
following such day (each a "Distribution Date"), commencing in _______ 1999,
such distributions as are described herein subject to the limitations and
priorities set forth in the Agreement. Each such distribution to Holders will,
as provided in the Agreement, be made to the Person in whose name this Class M
Certificate (or one or more Predecessor Class M Certificates) is registered at
the close of business on the Record Date for such distribution, which shall be
the last Business Day of the month next preceding the month of such Distribution
Date. This Class M Certificate is issued under and is subject to the terms,
provisions and conditions of such Agreement, to which Agreement the Holder of
this Class M Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
This Class M Certificate is one of a duly authorized issue of
Certificates designated as set forth above (the "Certificates"), issued pursuant
to the Agreement, to which Agreement reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of CMSI, the Trustee and the Holders of the Certificates, and of the terms upon
which the Certificates are, and are to be, authenticated and delivered. The
Holder of this Class M Certificate shall have the right to receive on each
Distribution Date its pro rata share of the Class M Interest Amount and the
amount distributable to the Class M Certificates on such Distribution Date in
reduction of the Principal Amount thereof (in each case subject to the
priorities and to the extent provided in the Agreement).
Notwithstanding the above, the rights of Holders of Class M
Certificates to receive distributions in respect of interest and in reduction of
Principal Amount on any Distribution Date shall be subordinated to the rights of
the Holders of the Class A Certificates to the extent of the Class M Interest
Amount and the Principal Amount of the Class M Certificates with respect to such
Distribution Date.
The Class M Certificates are limited in right of payment to
payments and recoveries respecting the Mortgage Loans, all as more specifically
set forth herein and in the Agreement.
Distributions on this Class M Certificate will be made by
check mailed to the Person entitled thereto, as specified by such Person in
accordance with the terms of the Agreement or, if eligible for wire transfer in
accordance with the Agreement, by wire transfer or by such other means as the
Person entitled thereto, the Paying Agent, the Trustee and CMSI shall agree.
Except as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Class M Certificate will be made after due notice to
the Holder hereof of the pendency of such distribution and only upon
presentation and surrender of this Class M Certificate at the office or agency
specified in the notice of final payment maintained for that purpose.
The Agreement generally permits the amendment thereof at any
time by CMSI and the Trustee with the consent of the Holders of Certificates
evidencing interests aggregating not less than 66 2/3% of the Voting Interests
of the Certificates materially and adversely affected by such
2
<PAGE>
amendment and, if the Residual Certificates are materially and adversely
affected by such amendment, 66 2/3% of the Percentage Interests of the Residual
Certificates; however, amendments reducing the amount or delaying the timing of
distributions on the Certificates and certain other matters require the consent
of all Holders. Any such consent by the Holder of this Class M Certificate shall
be conclusive and binding on such Holder and upon all future Holders of this
Class M Certificate and of any Class M Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Class M Certificate. The Agreement also permits the
amendment thereof, in certain limited circumstances, without the consent of the
Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein and herein set forth, the transfer of this Class M
Certificate is registrable in the Certificate Register upon surrender of this
Class M Certificate for registration of transfer, accompanied by a written
instrument of transfer in form satisfactory to CMSI, the Trustee and the
Certificate Registrar, duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Class M
Certificates of authorized denominations evidencing the same aggregate number of
Single Certificates will be issued to the designated transferee or transferees.
The Class M Certificates are issuable only as registered
Certificates without coupons in authorized Denominations of $1,000 Initial
Principal Amount or any whole dollar amount in excess thereof. As provided in
the Agreement and subject to certain limitations therein set forth, Class M
Certificates are exchangeable for new Class M Certificates of authorized
interests evidencing the same aggregate number of Single Certificates, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
CMSI, the Trustee and the Certificate Registrar and any agent
of CMSI, the Trustee or the Certificate Registrar may treat the Person in whose
name this Class M Certificate is registered as the owner hereof for all
purposes, and neither CMSI, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
This Certificate is issued on _______ __, 1999, at an issue
price of ________%, including accrued interest, and a Principal redemption price
at maturity equal to its Initial Principal Amount, and is issued with original
issue discount ("OID") for federal income tax purposes. Assuming that this
Certificate pays in accordance with projected cash flows reflecting the
prepayment assumption of ___% of the Prepayment Model (as defined in the
Prospectus Supplement dated _______ __, 1999 with respect to the offering of the
Class A, Class M, Class B-1 and Class B-2 Certificates) used to price this
Certificate: (i) the amount of OID as a percentage of the Initial Principal
Amount of this Certificate is approximately_______%; and (ii) the annual yield
to maturity of this Certificate, compounded monthly, is approximately ____%.
There is no short first accrual period.
3
<PAGE>
NEITHER THIS CLASS M CERTIFICATE NOR THE MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE UNITED STATES GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY. THIS
CLASS M CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF CMSI,
CMI, CITIBANK, ANY AFFILIATE THEREOF, OR THEIR ULTIMATE PARENT, CITIGROUP INC.
As of the Cut-Off Date, the latest scheduled maturity of any
Mortgage Loan in the Trust Fund was not later than _______ 1, 2029. The
obligations and responsibilities created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the repurchase by
CMSI of all Mortgage Loans then outstanding and all property acquired in respect
of any other Mortgage Loan remaining in the Trust Fund at a price equal to the
sum of (i) 100% of the Adjusted Balance of each Mortgage Loan outstanding on the
first day of the month of repurchase (after giving effect to payments of
principal due on such first day) plus accrued and unpaid interest thereon at the
Net Note Rate per annum on the Mortgage Loans to but not including the Due Date
in the month in which the related distribution is made to Certificateholders,
after the deduction of related unreimbursed Trustee Advances made prior to the
month of repurchase (other than such payments and advances in respect of
interest in excess of the Net Note Rate per annum on the Mortgage Loans) and
(ii) the appraised value of any acquired property (less the good faith estimate
of CMSI of liquidation expenses to be incurred in connection with its disposal
thereof), such appraisal to be conducted by an appraiser mutually agreed upon by
CMSI and the Trustee, or (b) the later of (i) the maturity or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all property acquired upon foreclosure or by
Transfer Instrument in lieu of foreclosure of any such Mortgage Loan and (ii)
the payment to the Certificateholders of all amounts in the Certificate Account
required to be paid to them pursuant to the Agreement. The exercise of the right
of CMSI to repurchase the Mortgage Loans and property in respect of the Mortgage
Loans will result in early retirement of the Certificates, such right of CMSI to
repurchase being subject to (i) the aggregate Adjusted Balance of the Mortgage
Loans at the time of repurchase being less than 5% of the aggregate Adjusted
Balance of the Mortgage Loans as of the Cut-Off Date and (ii) receipt by the
Trustee of an Opinion of Counsel or other evidence satisfactory to it that such
repurchase will be part of a "qualified liquidation" within the meaning of Code
Section 860F(a)(4)(A), will not otherwise adversely affect the status of the
REMIC as a REMIC and will not otherwise subject the REMIC to any tax.
This Class M Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used without definition in this Class M Certificate
which are defined in the Agreement have the meanings assigned to them in the
Agreement.
Unless the certificate of authentication hereon has been
executed by the Trustee or a duly authorized Authenticating Agent by manual
signature, this Class M Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose.
4
<PAGE>
IN WITNESS WHEREOF, Citicorp Mortgage Securities, Inc. has
caused this Class M Certificate to be duly executed under its official seal.
CITICORP MORTGAGE SECURITIES, INC.
By:_____________________________
Senior Vice President
[SEAL]
Attest:
__________________________
Assistant Secretary
5
<PAGE>
This is one of the Class M Certificates referred to in the
within mentioned Agreement.
[TRUSTEE],
as Trustee
By:______________________________
Authorized Signature
Date: _______ __, 1999
6
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this Class M Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - _______________ Custodian ____________________
(Cust) (Minor)
Under Uniform Gifts to Minors Act ___________________________________
(State)
Additional abbreviations may also be used though not in
the above list.
________________________________________________________________________________
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, including zip code, of assignee)
________________________________________
the within Class M Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________
attorney to transfer said Class M Certificate on the books of the Certificate
Registrar with full power of substitution in the premises.
Dated: ________________ __________________________
Signature Guaranteed by:_________________________________________
NOTICE: the signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
member of a Signature Guarantee Medallion Program.
7
<PAGE>
EXHIBIT A-8
[FORM OF CLASS B-1 AND CLASS B-2 CERTIFICATES]
THIS CLASS B-[__] CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENTS TO
THE CLASS A, [AND] CLASS M [AND CLASS B-1]CERTIFICATES AS DESCRIBED IN
THE AGREEMENT REFERRED TO HEREIN. THIS CLASS B CERTIFICATE MAY NOT
BE PURCHASED BY OR TRANSFERRED TO ANY PERSON WHICH IS AN EMPLOYEE
BENEFIT PLAN SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") OR ANY
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO
ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT,
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE
(COLLECTIVELY, A "PLAN") OR ANY PERSON INVESTING THE ASSETS OF A PLAN
EXCEPT AS PROVIDED IN SECTION 5.02 OF THE AGREEMENT DESCRIBED HEREIN.
REMIC PASS-THROUGH CERTIFICATES, SERIES 1999-__
SUBORDINATED CLASS B-[__] CERTIFICATE
____% CERTIFICATE RATE
representing an ownership interest in a trust fund
consisting primarily of mortgage loans
acquired by
CITICORP MORTGAGE SECURITIES, INC.
Certificate No. 1 Initial Principal Amount: $[__________]
[________] Single Certificates
Last Scheduled Distribution
Date: ________ 25, 2029 CUSIP 172953 [___]
THIS CERTIFIES THAT, for value received, ________________ is
the registered Holder of the number of Single Certificates (each representing
$1,000.00 Initial Principal Amount) set forth above, each representing an
undivided beneficial ownership interest in the trust fund (the "Trust Fund")
created pursuant to the Pooling and Servicing Agreement dated as of ________ 1,
1999 (the "Agreement") between Citicorp Mortgage Securities, Inc. ("CMSI") and
[TRUSTEE], in its individual capacity and as trustee (the "Trustee", which term
includes any successor trustee), the assets of which consist of (i) a pool of
fixed-rate, conventional one- to four-family mortgage loans (the "Mortgage
Loans") originated or acquired by Citicorp Mortgage, Inc. ("CMI"), with a final
1
<PAGE>
maturity of greater than 15 but not more than 30 years, (ii) funds in the
Certificate Account (including any investment of funds contained therein) and
(iii) certain related property. This Class B Certificate represents a "regular
interest" in a real estate mortgage investment conduit ("REMIC") within the
meaning of Section 860G(a)(1) of the Internal Revenue Code of 1986, as amended.
The registered Holder of this Class B Certificate is entitled,
subject to the provisions herein, to receive from the Trustee on the 25th day of
each month or, if such day is not a Business Day, the Business Day next
following such day (each a "Distribution Date"), commencing in ________ 1999,
such distributions as are described herein subject to the limitations and
priorities set forth in the Agreement. Each such distribution to Holders will,
as provided in the Agreement, be made to the Person in whose name this Class B
Certificate (or one or more Predecessor Class B Certificates) is registered at
the close of business on the Record Date for such distribution, which shall be
the last Business Day of the month next preceding the month of such Distribution
Date. This Class B Certificate is issued under and is subject to the terms,
provisions and conditions of such Agreement, to which Agreement the Holder of
this Class B Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
This Class B Certificate is one of a duly authorized issue of
Certificates designated as set forth above (the "Certificates"), issued pursuant
to the Agreement, to which Agreement reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of CMSI, the Trustee and the Holders of the Certificates, and of the terms upon
which the Certificates are, and are to be, authenticated and delivered. The
Holder of this Class B Certificate shall have the right to receive on each
Distribution Date its pro rata share of the applicable Class B Subclass Interest
Amount and the amount distributable to the applicable Class B Subclass on such
Distribution Date in reduction of the Principal Amount thereof (in each case
subject to the priorities and to the extent provided in the Agreement).
Notwithstanding the above, the rights of Holders of Class
B-[__] Certificates to receive distributions in respect of interest and in
reduction of Principal Amount on any Distribution Date shall be subordinated to
the rights of the Holders of the Class A, [and] Class M [and Class B-1]
Certificates to the extent of the Class B Subclass Interest Amount and the
Principal Amount of the Class B-[__] Certificates with respect to such
Distribution Date.
The Class B Certificates are limited in right of payment to
payments and recoveries respecting the Mortgage Loans, all as more specifically
set forth herein and in the Agreement.
Distributions on this Class B Certificate will be made by
check mailed to the Person entitled thereto, as specified by such Person in
accordance with the terms of the Agreement or, if eligible for wire transfer in
accordance with the Agreement, by wire transfer or by such other means as the
Person entitled thereto, the Paying Agent, the Trustee and CMSI shall agree.
Except as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Class B Certificate will be made after due notice to
the Holder hereof of the pendency of such distribution and only upon
presentation and surrender of this Class B Certificate at the office or agency
specified in the notice of final payment maintained for that purpose.
2
<PAGE>
The Agreement generally permits the amendment thereof at any
time by CMSI and the Trustee with the consent of the Holders of Certificates
evidencing interests aggregating not less than 66 2/3% of the Voting Interests
of the Certificates materially and adversely affected by such amendment and, if
the Residual Certificates are materially and adversely affected by such
amendment, 66 2/3% of the Percentage Interests of the Residual Certificates;
however, amendments reducing the amount or delaying the timing of distributions
on the Certificates and certain other matters require the consent of all
Holders. Any such consent by the Holder of this Class B Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this Class
B Certificate and of any Class B Certificate issued upon the transfer hereof or
in exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Class B Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein and herein set forth, the transfer of this Class B
Certificate is registrable in the Certificate Register upon surrender of this
Class B Certificate for registration of transfer, accompanied by a written
instrument of transfer in form satisfactory to CMSI, the Trustee and the
Certificate Registrar, duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Class B
Certificates of authorized denominations evidencing the same aggregate number of
Single Certificates will be issued to the designated transferee or transferees.
The Class B-[__] Certificates are issuable only as registered
Certificates without coupons in authorized Denominations of $1,000 Initial
Principal Amount or any whole dollar amount in excess thereof. As provided in
the Agreement and subject to certain limitations therein set forth, Class B-[__]
Certificates are exchangeable for new Class B-[__] Certificates of authorized
denominations evidencing the same aggregate number of Single Certificates, as
requested by the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
CMSI, the Trustee and the Certificate Registrar and any agent
of CMSI, the Trustee or the Certificate Registrar may treat the Person in whose
name this Class B Certificate is registered as the owner hereof for all
purposes, and neither CMSI, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
This Certificate is issued on ________ __, 1999, and based on
its issue price of _________%, including accrued interest, and a stated
redemption price at maturity equal to its Initial Principal Amount (plus three
days of interest at the Certificate Rate hereon), is issued with original issue
discount ("OID") for federal income tax purposes. Assuming that this Certificate
pays in accordance with projected cash flows reflecting the prepayment
assumption of ___% of the Prepayment Model (as defined in the Private Placement
Memorandum dated ________ __, 1999 with respect to the offering of the Class
B-3, Class B-4 and Class B-5 Certificates) used to price this Certificate: (i)
the amount of OID as a percentage of the Initial Principal Amount of this
Certificate
3
<PAGE>
is approximately _________%; and (ii) the annual yield to maturity of this
Certificate, compounded monthly, is approximately _____%. [There is no short
first accrual period.]
NEITHER THIS CLASS B CERTIFICATE NOR THE MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE UNITED STATES GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY. THIS
CLASS B CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF CMSI,
CMI, CITIBANK ANY AFFILIATE THEREOF, OR THEIR ULTIMATE PARENT, CITIGROUP INC.
As of the Cut-Off Date, the latest scheduled maturity of any
Mortgage Loan in the Trust Fund was not later than ________ 1, 2029. The
obligations and responsibilities created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the repurchase by
CMSI of all Mortgage Loans then outstanding and all property acquired in respect
of any other Mortgage Loan remaining in the Trust Fund at a price equal to the
sum of (i) 100% of the Adjusted Balance of each Mortgage Loan outstanding on the
first day of the month of repurchase (after giving effect to payments of
principal due on such first day) plus accrued and unpaid interest thereon at the
Net Note Rate per annum on the Mortgage Loans to but not including the Due Date
in the month in which the related distribution is made to Certificateholders,
after the deduction of related unreimbursed Trustee Advances made prior to the
month of repurchase (other than such payments and advances in respect of
interest in excess of the Net Note Rate per annum on the Mortgage Loans) and
(ii) the appraised value of any acquired property (less the good faith estimate
of CMSI of liquidation expenses to be incurred in connection with its disposal
thereof), such appraisal to be conducted by an appraiser mutually agreed upon by
CMSI and the Trustee, or (b) the later of (i) the maturity or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all property acquired upon foreclosure or by
Transfer Instrument in lieu of foreclosure of any such Mortgage Loan and (ii)
the payment to the Certificateholders of all amounts in the Certificate Account
required to be paid to them pursuant to the Agreement. The exercise of the right
of CMSI to repurchase the Mortgage Loans and property in respect of the Mortgage
Loans will result in early retirement of the Certificates, such right of CMSI to
repurchase being subject to (i) the aggregate Adjusted Balance of the Mortgage
Loans at the time of repurchase being less than 5% of the aggregate Adjusted
Balance of the Mortgage Loans as of the Cut-Off Date and (ii) receipt by the
Trustee of an Opinion of Counsel or other evidence satisfactory to it that such
repurchase will be part of a "qualified liquidation" within the meaning of Code
Section 860F(a)(4)(A), will not otherwise adversely affect the status of the
REMIC as a REMIC and will not otherwise subject the REMIC to any tax.
This Class B Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used without definition in this Class B Certificate
which are defined in the Agreement have the meanings assigned to them in the
Agreement.
4
<PAGE>
Unless the certificate of authentication hereon has been
executed by the Trustee or a duly authorized Authenticating Agent by manual
signature, this Class B Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose.
5
<PAGE>
IN WITNESS WHEREOF, Citicorp Mortgage Securities, Inc. has
caused this Class B Certificate to be duly executed under its official seal.
CITICORP MORTGAGE SECURITIES, INC.
By:______________________________
Senior Vice President
[SEAL]
Attest:
___________________________
Assistant Secretary
6
<PAGE>
This is one of the Class B Certificates referred to in the
within mentioned Agreement.
[TRUSTEE],
as Trustee
By:______________________________
Authorized Signature
Date: ________ __, 1999
7
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this Class B Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - _______________ Custodian ____________________
(Cust) (Minor)
Under Uniform Gifts to Minors Act ___________________________________
(State)
Additional abbreviations may also be used though not in
the above list.
_______________________________________________________________________________
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, including zip code, of assignee)
________________________________________
the within Class B Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________
attorney to transfer said Class B Certificate on the books of the Certificate
Registrar with full power of substitution in the premises.
Dated: ________________ __________________________
Signature Guaranteed by:_________________________________________
NOTICE: the signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
member of a Signature Guarantee Medallion Program.
8
<PAGE>
EXHIBIT A-9
[FORM OF CLASS B-3, CLASS B-4 AND CLASS B-5 CERTIFICATES]
THIS CLASS B-[ ] CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENTS TO
THE CLASS A, CLASS M, CLASS B-1, CLASS B-2, [AND] [CLASS B-3] [AND CLASS B-
4] CERTIFICATES, AS DESCRIBED IN THE AGREEMENT REFERRED TO HEREIN.
THIS CLASS B[ ] CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED
TO ANY PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN SUBJECT TO TITLE I OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA") OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE") OR ANY GOVERNMENTAL PLAN, AS DEFINED IN
SECTION 3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL
LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF
ERISA OR THE CODE (COLLECTIVELY, A "PLAN") OR ANY PERSON INVESTING THE
ASSETS OF A PLAN EXCEPT AS PROVIDED IN SECTION 5.02 OF THE AGREEMENT
DESCRIBED HEREIN.
THIS CLASS B CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, OR OFFERED FOR SALE,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH SALE, TRANSFER OR
OTHER DISPOSITION IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND ANY APPLICABLE BLUE SKY LAW OR
UNLESS AN EXEMPTION UNDER SUCH ACT AND ANY APPLICABLE BLUE SKY
LAW IS AVAILABLE.
REMIC PASS-THROUGH CERTIFICATES, SERIES 1999-__
SUBORDINATED CLASS B-[ ] CERTIFICATE
____% CERTIFICATE RATE
representing an ownership interest in a trust fund
consisting primarily of mortgage loans
acquired by
CITICORP MORTGAGE SECURITIES, INC.
Certificate No. 1 Initial Principal Amount: $[____________]
[_________] Single Certificates
Last Scheduled Distribution
Date: ________ 25, 2029 CUSIP 172953 [___]
1
<PAGE>
THIS CERTIFIES THAT, for value received _____________. is the
registered Holder of the number of Single Certificates (each representing $1,000
Initial Principal Amount) set forth above, each representing an undivided
beneficial ownership interest in the trust fund (the "Trust Fund") created
pursuant to the Pooling and Servicing Agreement dated as of ________ 1, 1999
(the "Agreement") between Citicorp Mortgage Securities, Inc. ("CMSI") and
[TRUSTEE], in its individual capacity and as trustee (the "Trustee", which term
includes any successor trustee), the assets of which consist of (i) a pool of
fixed-rate, conventional one- to four-family mortgage loans (the "Mortgage
Loans") originated or acquired by Citicorp Mortgage, Inc. ("CMI"), with a final
maturity of greater than 15 but not more than 30 years, (ii) funds in the
Certificate Account (including any investment of funds contained therein) and
(iii) certain related property. This Class B Certificate represents a "regular
interest" in a real estate mortgage investment conduit ("REMIC") within the
meaning of Section 860G(a)(1) of the Internal Revenue Code of 1986, as amended.
The registered Holder of this Class B Certificate is entitled,
subject to the provisions herein, to receive from the Trustee on the 25th day of
each month or, if such day is not a Business Day, the Business Day next
following such day (each a "Distribution Date"), commencing in ________ 1999,
such distributions as are described herein subject to the limitations and
priorities set forth in the Agreement. Each such distribution to Holders will,
as provided in the Agreement, be made to the Person in whose name this Class B
Certificate (or one or more Predecessor Class B Certificates) is registered at
the close of business on the Record Date for such distribution, which shall be
the last Business Day of the month next preceding the month of such Distribution
Date. This Class B Certificate is issued under and is subject to the terms,
provisions and conditions of such Agreement, to which Agreement the Holder of
this Class B Certificate by virtue of the acceptance hereof assents and by which
such Holder is bound.
This Class B Certificate is one of a duly authorized issue of
Certificates designated as set forth above (the "Certificates"), issued pursuant
to the Agreement, to which Agreement reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of CMSI, the Trustee and the Holders of the Certificates, and of the terms upon
which the Certificates are, and are to be, authenticated and delivered. The
Holder of this Class B Certificate shall have the right to receive on each
Distribution Date its pro rata share of the applicable Class B Subclass Interest
Amount and the amount distributable to the applicable Class B Subclass on such
Distribution Date in reduction of the Principal Amount thereof (in each case
subject to the priorities and to the extent provided in the Agreement).
Notwithstanding the above, the rights of Holders of Class
B-[__] Certificates to receive distributions in respect of interest and in
reduction of Principal Amount on any Distribution Date shall be subordinated to
the rights of the Holders of the Class A, Class M, Class B-1 and Class B-2 [and]
[Class B-3] [and Class B-4] Certificates to the extent of the Class B Subclass
Interest Amount and the Principal Amount of the Class B-[__] Certificates with
respect to such Distribution Date.
The Class B Certificates are limited in right of payment to
payments and recoveries respecting the Mortgage Loans, all as more specifically
set forth herein and in the Agreement.
2
<PAGE>
Distributions on this Class B Certificate will be made by
check mailed to the Person entitled thereto, as specified by such Person in
accordance with the terms of the Agreement or, if eligible for wire transfer in
accordance with the Agreement, by wire transfer or by such other means as the
Person entitled thereto, the Paying Agent, the Trustee and CMSI shall agree.
Except as otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Class B Certificate will be made after due notice to
the Holder hereof of the pendency of such distribution and only upon
presentation and surrender of this Class B Certificate at the office or agency
specified in the notice of final payment maintained for that purpose.
The Agreement generally permits the amendment thereof at any
time by CMSI and the Trustee with the consent of the Holders of Certificates
evidencing interests aggregating not less than 66 2/3% of the Voting Interests
of the Certificates materially and adversely affected by such amendment and, if
the Residual Certificates are materially and adversely affected by such
amendment, 66 2/3% of the Percentage Interests of the Residual Certificates;
however, amendments reducing the amount or delaying the timing of distributions
on the Certificates and certain other matters require the consent of all
Holders. Any such consent by the Holder of this Class B Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this Class
B Certificate and of any Class B Certificate issued upon the transfer hereof or
in exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Class B Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein and herein set forth, the transfer of this Class B
Certificate is registrable in the Certificate Register upon surrender of this
Class B Certificate for registration of transfer, accompanied by a written
instrument of transfer in form satisfactory to CMSI, the Trustee and the
Certificate Registrar, duly executed by the Holder hereof or such Holder's
attorney duly authorized in writing, and thereupon one or more new Class B
Certificates of authorized denominations evidencing the same aggregate number of
Single Certificates will be issued to the designated transferee or transferees.
The Class B-[__] Certificates are issuable only as registered
Certificates without coupons in authorized Denominations of $100,000 Initial
Principal Amount and integral multiples of $1,000 in excess thereof (except that
one Class B-[__] Certificate may be issued in a different denomination). As
provided in the Agreement and subject to certain limitations therein set forth,
Class B-[__] Certificates are exchangeable for new Class B-[__] Certificates of
authorized denominations evidencing the same aggregate number of Single
Certificates, as requested by the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
CMSI, the Trustee and the Certificate Registrar and any agent
of CMSI, the Trustee or the Certificate Registrar may treat the Person in whose
name this Class B Certificate is registered as the owner hereof for all
purposes, and neither CMSI, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
3
<PAGE>
This Certificate is issued on ________ __, 1999, and based on
its issue price of [________]%, including accrued interest, and a stated
redemption price at maturity equal to its Initial Principal Amount (plus three
days of interest at the Certificate Rate hereon), is issued with original issue
discount ("OID") for federal income tax purposes. Assuming that this Certificate
pays in accordance with projected cash flows reflecting the prepayment
assumption of ___% of the Prepayment Model (as defined in the Private Placement
Memorandum dated ________ __, 1999 with respect to the offering of the Class
B-3, Class B-4 and Class B-5 Certificates) used to price this Certificate: (i)
the amount of OID as a percentage of the Initial Principal Amount of this
Certificate is approximately [_________]%; and (ii) the annual yield to maturity
of this Certificate, compounded monthly, is approximately [_____]%.
NEITHER THIS CLASS B CERTIFICATE NOR THE MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE UNITED STATES GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL AGENCY OR INSTRUMENTALITY. THIS
CLASS B CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF CMSI,
CMI, CITIBANK ANY AFFILIATE THEREOF, OR THEIR ULTIMATE PARENT, CITIGROUP INC.
As of the Cut-Off Date, the latest scheduled maturity of any
Mortgage Loan in the Trust Fund was not later than ________ 1, 2029. The
obligations and responsibilities created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the repurchase by
CMSI of all Mortgage Loans then outstanding and all property acquired in respect
of any other Mortgage Loan remaining in the Trust Fund at a price equal to the
sum of (i) 100% of the Adjusted Balance of each Mortgage Loan outstanding on the
first day of the month of repurchase (after giving effect to payments of
principal due on such first day) plus accrued and unpaid interest thereon at the
Net Note Rate per annum on the Mortgage Loans to but not including the Due Date
in the month in which the related distribution is made to Certificateholders,
after the deduction of related unreimbursed Trustee Advances made prior to the
month of repurchase (other than such payments and advances in respect of
interest in excess of the Net Note Rate per annum on the Mortgage Loans) and
(ii) the appraised value of any acquired property (less the good faith estimate
of CMSI of liquidation expenses to be incurred in connection with its disposal
thereof), such appraisal to be conducted by an appraiser mutually agreed upon by
CMSI and the Trustee, or (b) the later of (i) the maturity or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all property acquired upon foreclosure or by
Transfer Instrument in lieu of foreclosure of any such Mortgage Loan and (ii)
the payment to the Certificateholders of all amounts in the Certificate Account
required to be paid to them pursuant to the Agreement. The exercise of the right
of CMSI to repurchase the Mortgage Loans and property in respect of the Mortgage
Loans will result in early retirement of the Certificates, such right of CMSI to
repurchase being subject to (i) the aggregate Adjusted Balance of the Mortgage
Loans at the time of repurchase being less than 5% of the aggregate Adjusted
Balance of the Mortgage Loans as of the Cut-Off Date and (ii) receipt by the
Trustee of an Opinion of Counsel or other evidence satisfactory to it that such
repurchase will be part of a "qualified liquidation" within the meaning of Code
Section 860F(a)(4)(A), will not otherwise adversely affect the status of the
REMIC as a REMIC and will not otherwise subject the REMIC to any tax.
4
<PAGE>
This Class B Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used without definition in this Class B Certificate
which are defined in the Agreement have the meanings assigned to them in the
Agreement.
Unless the certificate of authentication hereon has been
executed by the Trustee or a duly authorized Authenticating Agent by manual
signature, this Class B Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose.
5
<PAGE>
IN WITNESS WHEREOF, Citicorp Mortgage Securities, Inc. has
caused this Class B Certificate to be duly executed under its official seal.
CITICORP MORTGAGE SECURITIES, INC.
By:______________________________
Senior Vice President
[SEAL]
Attest:
___________________________
Assistant Secretary
6
<PAGE>
This is one of the Class B Certificates referred to in the
within mentioned Agreement.
[TRUSTEE],
as Trustee
By:______________________________
Authorized Signature
Date: ________ __, 1999
7
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this Class B Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - _______________ Custodian ____________________
(Cust) (Minor)
Under Uniform Gifts to Minors Act ___________________________________
(State)
Additional abbreviations may also be used though not in
the above list.
________________________________________________________________________________
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, including zip code, of assignee)
________________________________________
the within Class B Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________
attorney to transfer said Class B Certificate on the books of the Certificate
Registrar with full power of substitution in the premises.
Dated: ________________ __________________________
Signature Guaranteed by:_________________________________________
NOTICE: the signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
member of a Signature Guarantee Medallion
8
<PAGE>
EXHIBIT A-10
[FORM OF RESIDUAL CLASS LR CERTIFICATE]
THIS CLASS LR CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, OR OFFERED
FOR SALE, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH SALE,
TRANSFER OR OTHER DISPOSITION IS MADE PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE BLUE SKY
LAW OR UNLESS AN EXEMPTION UNDER SUCH ACT AND ANY APPLICABLE BLUE
SKY LAW IS AVAILABLE.
TRANSFER OF THIS CLASS LR CERTIFICATE IS RESTRICTED AS SET FORTH IN
SECTION 5.02 OF THE AGREEMENT DESCRIBED HEREIN. AS A CONDITION OF
OWNERSHIP OF THIS CLASS LR CERTIFICATE, A TRANSFEREE HEREOF SHALL BE
REQUIRED TO FURNISH AN AFFIDAVIT TO THE TRANSFEROR AND THE TRUSTEE
TO THE EFFECT THAT (A) IT IS NOT A DISQUALIFIED ORGANIZATION, AS SUCH
TERM IS DEFINED IN SECTION 860E(e)(5) OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE"), (B) IT IS NOT ACQUIRING THIS CLASS LR
CERTIFICATE AS AN AGENT (INCLUDING A BROKER, NOMINEE OR OTHER
MIDDLEMAN) ON BEHALF OF A DISQUALIFIED ORGANIZATION, (C) IT
UNDERSTANDS THAT IT MAY INCUR TAX LIABILITIES IN EXCESS OF CASH FLOWS
GENERATED BY THE RESIDUAL INTEREST AND IT INTENDS TO PAY TAXES
ASSOCIATED WITH HOLDING THE RESIDUAL INTEREST AS THEY BECOME DUE,
(D) IT HISTORICALLY HAS PAID ITS DEBTS AS THEY HAVE COME DUE AND
INTENDS TO PAY ITS DEBTS AS THEY COME DUE IN THE FUTURE AND (E) IT IS
NOT A NON-PERMITTED FOREIGN HOLDER (AS SUCH TERM IS DEFINED IN
SECTION 5.02 OF THE STANDARD TERMS). A TRANSFEREE OF THIS CLASS LR
CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS
CLASS LR CERTIFICATE SUBJECT TO SUCH RESTRICTIONS ON TRANSFERABILITY,
AND TO HAVE CONSENTED TO SUCH AMENDMENTS TO THE AGREEMENT AS
MAY BE REQUIRED TO FURTHER ENSURE THAT THIS CLASS LR CERTIFICATE IS
NOT TRANSFERRED TO A DISQUALIFIED ORGANIZATION, AN AGENT THEREOF OR
A NON-PERMITTED FOREIGN HOLDER.
THIS CLASS LR CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO
ANY PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") OR ANY
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO
ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT,
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE
(COLLECTIVELY, A "PLAN") OR ANY PERSON INVESTING THE ASSETS OF A PLAN
EXCEPT AS PROVIDED IN SECTION 5.02 OF THE AGREEMENT DESCRIBED HEREIN.
1
<PAGE>
REMIC PASS-THROUGH CERTIFICATES, SERIES 1999-__
CLASS LR CERTIFICATE
representing an ownership interest in a trust fund
consisting primarily of mortgage loans
acquired by
CITICORP MORTGAGE SECURITIES, INC.
Certificate No. 1 100% Percentage Interest
THIS CERTIFIES THAT, for value received, [Citicorp Mortgage,
Inc.] is the registered Holder of the Percentage Interest set forth above,
representing an ownership interest in the trust fund (the "Trust Fund") created
pursuant to the Pooling and Servicing Agreement dated as of _______ 1, 1999 (the
"Agreement") between Citicorp Mortgage Securities, Inc. ("CMSI") and [TRUSTEE],
in its individual capacity and as trustee (the "Trustee", which term includes
any successor trustee), the assets of which consist of (i) a pool of fixed-rate,
conventional one- to four-family mortgage loans (the "Mortgage Loans")
originated or acquired by Citicorp Mortgage, Inc. ("CMI"), with a final maturity
of greater than 15 but not more than 30 years, (ii) funds in the Certificate
Account (including any investment of funds contained therein) and (iii) certain
related property.
An election will be made to the Trust Fund as a real estate
mortgage investment conduit (the "REMIC"). This Class LR Certificate represents
a "residual interest" in the REMIC within the meaning of Code Section
860G(a)(2). As a condition of ownership hereof, the Holder hereof agrees that it
will not take or cause to be taken any action that would adversely affect the
status of the Trust Fund as a REMIC. The Holder hereof further agrees to the
designation of the Servicer as its agent to act as "tax matters person" for
purposes of Subchapter C of Chapter 63 of Subtitle F of the Code or, if
requested by the Servicer, to act as tax matters person.
This Class LR Certificate is one of a duly authorized issue of
REMIC Pass-Through Certificates, Series 1999-__ (the "Certificates"), consisting
of three Classes of Certificates and one Class of Residual Certificates. The
registered Holder of this Class LR Certificate is entitled to receive
distributions from the Trustee on the 25th day of each month or, if such day is
not a Business Day, on the next succeeding Business Day, commencing in _______,
1999 (each a "Distribution Date"), to the extent funds are available, as
described in the Agreement. Each such distribution, if any, to Holders will, as
provided in the Agreement, be made to the Person in whose name this Class LR
Certificate (or one or more Predecessor Certificates) is registered at the close
of business on the Record Date for such distribution, which shall be the last
Business Day of the month preceding the month of such Distribution Date. This
Class LR Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Class LR
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.
2
<PAGE>
NEITHER THIS CLASS LR CERTIFICATE NOR THE MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE UNITED STATES GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY. THIS CLASS
LR CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF CMSI, CMI,
CITIBANK, ANY AFFILIATE THEREOF, OR THEIR ULTIMATE PARENT, CITIGROUP INC.
Distributions on this Class LR Certificate will be made by
check mailed to the Person entitled thereto, as specified by such Person in
accordance with the terms of the Agreement or, if eligible for wire transfer and
requested in writing in accordance with the Agreement, by wire transfer or by
such other means as the Person entitled thereto, the Paying Agent, the Trustee
and CMSI shall agree. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Class LR Certificate
will be made after due notice to such Holder of the pendency of such
distribution and only upon presentation and surrender of this Class LR
Certificate at the office or agency specified in the notice of final payment
maintained for that purpose.
The Agreement generally permits the amendment thereof at any
time by CMSI and the Trustee with the consent of the Holders of Certificates
evidencing interests aggregating not less than 66 2/3% of the Voting Interests
of the Certificates materially and adversely affected by such amendment and, if
the Residual Certificates are materially and adversely affected by such
amendment, 66 2/3% of the Percentage Interests of the Residual Certificates;
however, amendments reducing the amount or delaying the timing of distributions
on the Certificates and certain other matters require the consent of all
Holders. Any such consent by the Holder of this Class LR Certificate shall be
conclusive and binding on such Holder and upon all future Holders of this Class
LR Certificate and of any Class LR Certificate issued upon the transfer hereof
or in exchange herefor or in lieu hereof whether or not notation of such consent
is made upon this Class LR Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Class LR Certificate is
registrable in the Certificate Register upon surrender of this Class LR
Certificate for registration of transfer, accompanied by a written instrument of
transfer in form satisfactory to CMSI, the Trustee and the Certificate
Registrar, duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Class LR Certificates of
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Class LR Certificate is issuable only as a registered
Certificate in the minimum denominations set forth in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Class LR Certificate is exchangeable for new Class LR Certificates of authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
3
<PAGE>
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
CMSI, the Trustee and Certificate Registrar and any agent of
CMSI, the Trustee or the Certificate Registrar may treat the Person in whose
name this Class LR Certificate is registered as the owner hereof for all
purposes, and neither CMSI, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
As of the Cut-Off Date, the latest scheduled maturity of any
Mortgage Loan in the Trust Fund was not later than _______ 1, 2029. The
obligations and responsibilities created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the repurchase by
CMSI of all Mortgage Loans then outstanding and all property acquired in respect
of any other Mortgage Loan remaining in the Trust Fund at a price equal to the
sum of (i) 100% of the Adjusted Balance of each Mortgage Loan outstanding on the
first day of the month of repurchase (after giving effect to payments of
principal due on such first day) plus accrued and unpaid interest thereon at the
Net Note Rate per annum on the Mortgage Loans to but not including the Due Date
in the month in which the related distribution is made to Certificateholders,
after the deduction of related unreimbursed Trustee Advances made prior to the
month of repurchase (other than such payments and advances in respect of
interest in excess of the Net Note Rate per annum on the Mortgage Loans) and
(ii) the appraised value of any acquired property (less the good faith estimate
of CMSI of liquidation expenses to be incurred in connection with its disposal
thereof), such appraisal to be conducted by an appraiser mutually agreed upon by
CMSI and the Trustee, or (b) the later of (i) the maturity or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all property acquired upon foreclosure or by
Transfer Instrument in lieu of foreclosure of any such Mortgage Loan and (ii)
the payment to the Certificateholders of all amounts in the Certificate Account
required to be paid to them pursuant to the Agreement. The exercise of the right
of CMSI to repurchase the Mortgage Loans and property in respect of the Mortgage
Loans will result in early retirement of the Certificates, such right of CMSI to
repurchase being subject to (i) the aggregate Adjusted Balance of the Mortgage
Loans at the time of repurchase being less than 5% of the aggregate Adjusted
Balance of the Mortgage Loans as of the Cut-Off Date and (ii) receipt by the
Trustee of an Opinion of Counsel or other evidence satisfactory to it that such
repurchase will be part of a "qualified liquidation" within the meaning of Code
Section 860F(a)(4)(A), will not otherwise adversely affect the status of the
Trust Fund as a REMIC and will not otherwise subject the REMIC to any tax.
This Class LR Certificate shall be governed by and construed
in accordance with the laws of the State of New York.
All terms used without definition in this Class LR Certificate
which are defined in the Agreement have the meanings assigned to them in the
Agreement.
4
<PAGE>
Unless the certificate of authentication hereon has been
executed by the Trustee or a duly authorized Authenticating Agent by manual
signature, this Class LR Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose.
5
<PAGE>
IN WITNESS WHEREOF, Citicorp Mortgage Securities, Inc. has
caused this Class LR Certificate to be duly executed under its official seal.
CITICORP MORTGAGE SECURITIES, INC.
By_______________________________
Senior Vice President
[SEAL]
Attest:
_______________________________
Assistant Secretary
6
<PAGE>
This is one of the Class LR Certificates referred to in the
within mentioned Agreement.
[TRUSTEE],
as Trustee
By__________________________
Authorized Signature
Date: _______ __, 1999
7
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this Class LR Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT -_______________Custodian_______________
(Cust) (Minor)
Under Uniform Gifts to Minors Act_________________________
(State)
Additional abbreviations may also be used though not in the
above list.
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, including zip code, of assignee)
________________________________________
the within Class LR Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________
attorney to transfer said Class LR Certificate on the books of the Certificate
Registrar with full power of substitution in the premises.
Dated:_____________ ___________________
Signature Guaranteed by________________________________
NOTICE: the signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
member of a Signature Guarantee Medallion Program.
8
<PAGE>
EXHIBIT A-11
[FORM OF RESIDUAL CLASS R CERTIFICATE]
THIS CLASS R CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, OR OFFERED FOR SALE,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH SALE, TRANSFER OR
OTHER DISPOSITION IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER SUCH ACT AND ANY APPLICABLE BLUE SKY LAW OR
UNLESS AN EXEMPTION UNDER SUCH ACT AND ANY APPLICABLE BLUE SKY
LAW IS AVAILABLE.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN
SECTION 5.02 OF THE AGREEMENT DESCRIBED HEREIN. AS A CONDITION OF
OWNERSHIP OF THIS CLASS R CERTIFICATE, A TRANSFEREE HEREOF SHALL BE
REQUIRED TO FURNISH AN AFFIDAVIT TO THE TRANSFEROR, CITICORP
MORTGAGE SECURITIES, INC. AND THE TRUSTEE TO THE EFFECT THAT (A) IT IS
NOT A DISQUALIFIED ORGANIZATION, AS SUCH TERM IS DEFINED IN SECTION
860E(e)(5) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"),
(B) IT IS NOT ACQUIRING THIS CLASS R CERTIFICATE AS AN AGENT (INCLUDING
A BROKER, NOMINEE OR OTHER MIDDLEMAN) ON BEHALF OF A DISQUALIFIED
ORGANIZATION, (C) IT UNDERSTANDS THAT IT MAY INCUR TAX LIABILITIES IN
EXCESS OF CASH FLOWS GENERATED BY THE RESIDUAL INTEREST AND IT
INTENDS TO PAY TAXES ASSOCIATED WITH HOLDING THE RESIDUAL INTEREST
AS THEY BECOME DUE, (D) IT HISTORICALLY HAS PAID ITS DEBTS AS THEY HAVE
COME DUE AND INTENDS TO PAY ITS DEBTS AS THEY COME DUE IN THE FUTURE
AND (E) IT IS NOT A NON-PERMITTED FOREIGN HOLDER (AS SUCH TERM IS
DEFINED IN SECTION 5.02 OF THE STANDARD TERMS). A TRANSFEREE OF THIS
CLASS R CERTIFICATE, BY ACCEPTANCE HEREOF, IS DEEMED TO HAVE
ACCEPTED THIS CLASS R CERTIFICATE SUBJECT TO SUCH RESTRICTIONS ON
TRANSFERABILITY, AND TO HAVE CONSENTED TO SUCH AMENDMENTS TO THE
AGREEMENT AS MAY BE REQUIRED TO FURTHER ENSURE THAT THIS CLASS R
CERTIFICATE IS NOT TRANSFERRED TO A DISQUALIFIED ORGANIZATION, AN
AGENT THEREOF OR A NON-PERMITTED FOREIGN HOLDER.
THIS CLASS R CERTIFICATE MAY NOT BE PURCHASED BY OR TRANSFERRED TO
ANY PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") OR ANY
GOVERNMENTAL PLAN, AS DEFINED IN SECTION 3(32) OF ERISA, SUBJECT TO
ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT,
SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE
(COLLECTIVELY, A "PLAN") OR ANY PERSON INVESTING THE ASSETS OF A PLAN
EXCEPT AS PROVIDED IN SECTION 5.02 OF THE AGREEMENT DESCRIBED HEREIN.
1
<PAGE>
REMIC PASS-THROUGH CERTIFICATES, SERIES 1999-__
CLASS R CERTIFICATE
representing an ownership interest in a trust fund
consisting primarily of mortgage loans
acquired by
CITICORP MORTGAGE SECURITIES, INC.
Certificate No. 1 100% Percentage Interest
THIS CERTIFIES THAT, for value received, Citicorp Mortgage
Securities, Inc. is the registered Holder of the Percentage Interest set forth
above, representing an ownership interest in the trust fund (the "Trust Fund")
created pursuant to the Pooling and Servicing Agreement dated as of ________ 1,
1999 (the "Agreement") between Citicorp Mortgage Securities, Inc. ("CMSI") and
[TRUSTEE], in its individual capacity and as trustee (the "Trustee", which term
includes any successor trustee), the assets of which consist of (i) a pool of
20- to 30-year fixed-rate, conventional one- to four-family mortgage loans (the
"Mortgage Loans") originated or acquired by CMI, (ii) funds in the Certificate
Account (including any investment of funds contained therein) and (iii) certain
related property.
Elections will be made to treat two segregated asset pools
within the Trust Fund as real estate mortgage investment conduits (each, a
"REMIC," or in the alternative, the "Lower-Tier REMIC" and the "Upper-Tier
REMIC," respectively). This Class R Certificate represents a "residual interest"
in the Upper-Tier REMIC within the meaning of Code Section 860G(a)(2). As a
condition of ownership hereof, the Holder hereof agrees that it will not take or
cause to be taken any action that would adversely affect the status of either of
the two segregated asset pools comprising the Trust Fund as a REMIC. The Holder
hereof further agrees to the designation of the Servicer as its agent to act as
"tax matters person" for purposes of Subchapter C of Chapter 63 of Subtitle F of
the Code or, if requested by the Servicer, to act as tax matters person.
This Class R Certificate is one of a duly authorized issue of
REMIC Pass-Through Certificates, Series 1999-__ (the "Certificates") consisting
of three Classes of Certificates and two Classes of Residual Certificates. The
registered Holder of this Class R Certificate is entitled to receive
distributions from the Trustee on the 25th day of each month or, if such day is
not a Business Day, on the next succeeding Business Day, commencing in ________
1999 (each a "Distribution Date"), to the extent funds are available, as
described in the Agreement. Each such distribution, if any, to Holders will, as
provided in the Agreement, be made to the Person in whose name this Class R
Certificate (or one or more Predecessor Certificates) is registered at the close
of business on the Record Date for such distribution, which shall be the last
Business Day of the month preceding the month of such Distribution Date. This
Class R Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this Class R
Certificate by virtue of the acceptance hereof assents and by which such Holder
is bound.
2
<PAGE>
NEITHER THIS CLASS R CERTIFICATE NOR THE MORTGAGE LOANS ARE
INSURED OR GUARANTEED BY THE UNITED STATES GOVERNMENT, THE FEDERAL DEPOSIT
INSURANCE CORPORATION OR ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY. THIS CLASS
R CERTIFICATE DOES NOT REPRESENT AN INTEREST IN OR OBLIGATION OF CMSI, CMI,
CITIBANK, ANY AFFILIATE THEREOF, OR THEIR ULTIMATE PARENT, CITIGROUP INC.
Distributions on this Class R Certificate will be made by
check mailed to the Person entitled thereto, as specified by such Person in
accordance with the terms of the Agreement or, if eligible for wire transfer and
requested in writing in accordance with the Agreement, by wire transfer or by
such other means as the Person entitled thereto, the Paying Agent, the Trustee
and CMSI shall agree. Except as otherwise provided in the Agreement and
notwithstanding the above, the final distribution on this Class R Certificate
will be made after due notice to such Holder of the pendency of such
distribution and only upon presentation and surrender of this Class R
Certificate at the office or agency specified in the notice of final payment
maintained for that purpose.
The Agreement generally permits the amendment thereof at any
time by CMSI and the Trustee with the consent of the Holders of Certificates
evidencing interests aggregating not less than 66 2/3% of the Voting Interests
of the Certificates materially and adversely affected by such amendment and, if
a Class of the Residual Certificates is materially and adversely affected by
such amendment, 66 2/3% of the Percentage Interests of each affected Class of
the Residual Certificates; however, amendments reducing the amount or delaying
the timing of distributions on the Certificates and certain other matters
require the consent of all Holders. Any such consent by the Holder of this Class
R Certificate shall be conclusive and binding on such Holder and upon all future
Holders of this Class R Certificate and of any Class R Certificate issued upon
the transfer hereof or in exchange herefor or in lieu hereof whether or not
notation of such consent is made upon this Class R Certificate. The Agreement
also permits the amendment thereof, in certain limited circumstances, without
the consent of the Holders of any of the Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Class R Certificate is
registrable in the Certificate Register upon surrender of this Class R
Certificate for registration of transfer, accompanied by a written instrument of
transfer in form satisfactory to CMSI, the Trustee and the Certificate
Registrar, duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Class R Certificates of
authorized denominations evidencing the same aggregate Percentage Interest will
be issued to the designated transferee or transferees.
The Class R Certificate is issuable only as a registered
Certificate in the minimum denominations set forth in the Agreement. As provided
in the Agreement and subject to certain limitations therein set forth, this
Class R Certificate is exchangeable for new Class R Certificates of authorized
denominations evidencing the same aggregate Percentage Interest, as requested by
the Holder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
therewith.
3
<PAGE>
CMSI, the Trustee and Certificate Registrar and any agent of
CMSI, the Trustee or the Certificate Registrar may treat the Person in whose
name this Class R Certificate is registered as the owner hereof for all
purposes, and neither CMSI, the Trustee, the Certificate Registrar nor any such
agent shall be affected by any notice to the contrary.
As of the Cut-Off Date, the latest scheduled maturity of any
Mortgage Loan in the Trust Fund was not later than ________ 1, 2029. The
obligations and responsibilities created by the Agreement and the Trust Fund
created thereby shall terminate upon payment to the Certificateholders, or
provision therefor, in accordance with the Agreement upon (a) the repurchase by
CMSI of all Mortgage Loans then outstanding and all property acquired in respect
of any other Mortgage Loan remaining in the Trust Fund at a price equal to the
sum of (i) 100% of the Adjusted Balance of each Mortgage Loan outstanding on the
first day of the month of repurchase (after giving effect to payments of
principal due on such first day) plus accrued and unpaid interest thereon at the
Net Note Rate per annum on the Mortgage Loans to but not including the Due Date
in the month in which the related distribution is made to Certificateholders,
after the deduction of related unreimbursed Trustee Advances made prior to the
month of repurchase (other than such payments and advances in respect of
interest in excess of the Net Note Rate per annum on the Mortgage Loans) and
(ii) the appraised value of any acquired property (less the good faith estimate
of CMSI of liquidation expenses to be incurred in connection with its disposal
thereof), such appraisal to be conducted by an appraiser mutually agreed upon by
CMSI and the Trustee, or (b) the later of (i) the maturity or other liquidation
(or any advance with respect thereto) of the last Mortgage Loan remaining in the
Trust Fund and the disposition of all property acquired upon foreclosure or by
Transfer Instrument in lieu of foreclosure of any such Mortgage Loan and (ii)
the payment to the Certificateholders of all amounts in the Certificate Account
and the Upper-Tier REMIC Account required to be paid to them pursuant to the
Agreement. The exercise of the right of CMSI to repurchase the Mortgage Loans
and property in respect of the Mortgage Loans will result in early retirement of
the Certificates, such right of CMSI to repurchase being subject to (i) the
aggregate Adjusted Balance of the Mortgage Loans at the time of repurchase being
less than 5% of the aggregate Adjusted Balance of the Mortgage Loans as of the
Cut-Off Date and (ii) receipt by the Trustee of an Opinion of Counsel or other
evidence satisfactory to it that such repurchase will be part of a "qualified
liquidation" within the meaning of Code Section 860F(a)(4)(A), will not
otherwise adversely affect the status of the Upper-Tier REMIC or the Lower-Tier
REMIC as a REMIC and will not otherwise subject the Upper-Tier REMIC or the
Lower-Tier REMIC to any tax.
This Class R Certificate shall be governed by and construed in
accordance with the laws of the State of New York.
All terms used without definition in this Class R Certificate
which are defined in the Agreement have the meanings assigned to them in the
Agreement.
Unless the certificate of authentication hereon has been
executed by the Trustee or a duly authorized Authenticating Agent by manual
signature, this Class R Certificate shall not be entitled to any benefit under
the Agreement or be valid for any purpose.
4
<PAGE>
IN WITNESS WHEREOF, Citicorp Mortgage Securities, Inc. has
caused this Class R Certificate to be duly executed under its official seal.
CITICORP MORTGAGE SECURITIES, INC.
By:______________________________
Senior Vice President
[SEAL]
Attest:
_____________________________
Assistant Secretary
5
<PAGE>
This is one of the Class R Certificates referred to in the within mentioned
Agreement.
[TRUSTEE]
as Trustee
By:______________________________
Authorized Signature
Date: ________ __, 1999
6
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this Class R Certificate, shall be construed as though they were
written out in full according to applicable laws or regulations:
TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common
UNIF GIFT MIN ACT - _______________ Custodian __________________
(Cust) (Minor)
Under Uniform Gifts to Minors Act ___________________________________
(State)
Additional abbreviations may also be used though
not in the above list.
________________________________________________________________________________
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, including zip code, of assignee)
________________________________________
the within Class R Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________
attorney to transfer said Class R Certificate on the books of the Certificate
Registrar with full power of substitution in the premises.
Dated: ________________ __________________________
Signature Guaranteed by_________________________________________
NOTICE: the signature to this assignment must correspond with the name as
written upon the face of the within instrument in every particular, without
alteration or enlargement or any change whatever, and must be guaranteed by a
member of a Signature Guarantee Medallion Program.
7
<PAGE>
EXHIBIT B
MORTGAGE LOAN SCHEDULE
DEEMED INCORPORATED
B-1
<PAGE>
EXHIBIT C
[FORM OF MORTGAGE DOCUMENT CUSTODIAL AGREEMENT]
MORTGAGE DOCUMENT CUSTODIAL AGREEMENT
Dated as of ______ 1, 1999
[TRUSTEE], a ________ trust company, as trustee (the
"Trustee"), BANK ONE TRUST COMPANY, N.A., a national banking association ("Bank
One") and CITICORP MORTGAGE SECURITIES, INC., a Delaware corporation ("CMSI"),
agree as follows:
WHEREAS, concurrently herewith, the Trustee and CMSI are
entering into a Pooling and Servicing Agreement dated as of ______ 1, 1999
relating to REMIC Pass-Through Certificates, Series 1999-__ (the "Pooling
Agreement", the terms defined therein being used herein with the same meaning),
pursuant to which CMSI shall transfer, assign, set-over and otherwise convey to
the Trustee, without recourse, all of CMSI's right, title and interest in and to
the mortgage loans identified in Exhibit B to the Pooling Agreement (the
"Mortgage Loans"); and
WHEREAS, in connection with such transfer and assignment and
pursuant to the Pooling Agreement, Bank One has been designated by CMSI to act
as custodian of the Mortgage Files (including as both Mortgage Document
Custodian and Mortgage Note Custodian);
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements
herein contained, CMSI, Bank One and the Trustee agree as follows:
1. Appointment as Custodian; Acknowledgment of Receipt. (a)
Subject to the terms and conditions herein, Bank One is hereby appointed, and
Bank One hereby accepts such appointment, as the Mortgage Document Custodian to
maintain custody of the Mortgage Files, including the Mortgage Notes and the
Co-op Documents, for and on behalf of the Trustee in accordance herewith and the
terms of the Pooling Agreement. CMSI has delivered to Bank One, as Custodian,
the Mortgage Files, including the Mortgage Notes and Co-op Documents referred to
in Section 2.01 of the Pooling Agreement. Bank One hereby acknowledges receipt
of the Mortgage Files, including the Mortgage Documents referred to and required
to be delivered with respect to each Mortgage Loan pursuant to Section 2.01 of
the Pooling Agreement. From time to time, CMSI, as Servicer, shall forward to
Bank One additional documents evidencing an assumption or modification of a
Mortgage Loan and such documents shall be held by Bank One in the related
Mortgage File in accordance with the terms of the Agreement and the Pooling
Agreement.
(b) Bank One hereby certifies to the Trustee that Bank One is
qualified to serve as Mortgage Document Custodian and Mortgage
Note Custodian under the Pooling Agreement. CMSI hereby agrees
to pay the reasonable custodial fees and expenses of Bank One
or its successor, including the Trustee if the
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Trustee shall henceforth hold any of the Mortgage Files
directly as custodian. Upon receipt of notice from Bank One or
the Trustee to the effect that Bank One has failed to hold,
release and otherwise perform with respect to the Mortgage
Files as required by the terms of this Agreement, CMSI shall
take such steps as may be required to cause Bank One to be in
compliance with the terms hereof and the Pooling Agreement.
(c) Notwithstanding anything to the contrary in this Agreement,
the parties hereto acknowledge and agree that Bank One shall
act as Mortgage Document Custodian and as Mortgage Note
Custodian hereunder and under the Pooling Agreement solely for
the benefit of the Trustee and the Certificateholders.
2. Maintenance of Office. Bank One agrees to maintain the
Mortgage Files identified in Exhibit B to the Pooling Agreement, said Exhibit
being incorporated herein by reference, and each Mortgage File being identified
therein by loan number, address of mortgaged property and name of Mortgagor, at
the office of Bank One located at 1080 Oliver Road, Monroe, Louisiana 71201 or
at such other office of Bank One as it shall designate from time to time after
giving the Trustee 30 days' prior written notice. Bank One shall also send 30
days' prior notice to CMSI at 909 Third Avenue, 30th Floor, New York, New York
10043, Attention: A. LaBarbera, of such change.
3. Duties of Mortgage File Custodian. As Custodian, Bank One
shall have and perform all of the powers and responsibilities of the Mortgage
Document Custodian and Mortgage Note Custodian set forth in the Pooling
Agreement, including but not limited to the following powers and duties:
(a) Safekeeping. To segregate the Mortgage Files from all other
mortgages and mortgage notes and similar records in its
possession, to maintain the Mortgage Files in a secure and
fireproof facilities in accordance with customary standards
for such custody, to identify the Mortgage Files and the Co-op
Documents as being held and to hold the Mortgage Files for and
on behalf of the Trustee for the benefit of all present and
future Certificateholders, to maintain accurate records
pertaining to Mortgages in the Mortgage Files as will enable
the Trustee to comply with the terms and conditions of the
Pooling Agreement, to maintain at all times a current
inventory thereof and to conduct periodic physical inspections
of the Mortgage Files held by it under this Agreement in such
a manner as shall enable the Trustee and Bank One to verify
the accuracy of such record-keeping, inventory and physical
possession. Bank One will promptly report to the Trustee and
CMSI any failure on its part to hold the Mortgage Files as
herein provided and shall promptly take appropriate action to
remedy any such failure.
(b) Release of Documents. In general, from time to time and as
appropriate for the foreclosure or servicing of any of the
Mortgage Loans, Bank One is hereby authorized, upon receipt of
a direction to release documents pursuant to Section 3.22 of
the Pooling Agreement, to release to such party or its
designee, as directed, the related Mortgage File or the
documents set forth in such request. All documents so released
shall be held by the recipient in trust for the benefit of the
Trustee in
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accordance with the Pooling Agreement. Such Mortgage Files
shall be returned to Bank One when the need therefor in
connection with such foreclosure or servicing no longer
exists, unless the Mortgage Loan shall have been liquidated or
paid in full. In addition, to release any Mortgage or Mortgage
Note to CMSI after purchase by CMSI of the related Mortgage
Loan or the property securing such Mortgage Loan, all as
provided in, and subject to the provisions of, the Pooling
Agreement.
(c) Review of Mortgage Files; Administration; Reports. In general,
to attend to all non-discretionary details in connection with
maintaining custody of the Mortgage Files, including without
limitation to review each Mortgage File within 90 days after
issuance of the Certificates, to ascertain that all documents
required to be delivered pursuant to Section 2.01 of the
Pooling Agreement have been executed, received and recorded,
if applicable, and, in connection therewith, to deliver such
reports and certifications to the Trustee and CMSI as are
required by the Pooling Agreement. If in the course of such
review, or if at any time during the term of this Agreement,
Bank One determines that a document or documents constituting
part of a Mortgage File is defective or missing, it shall
promptly so notify the Trustee and CMSI in accordance with the
provisions of Section 2.02 of the Pooling Agreement and shall,
within 30 days thereafter, provide the Trustee with an updated
report certifying as to the completeness of the Mortgage File,
with any applicable exceptions noted thereon. Bank One shall
assist the Trustee generally in the preparation of reports to
Certificateholders or to regulatory bodies to the extent
necessitated by Bank One's custody of the Mortgage Files.
4. Access to Records. Bank One shall permit the Trustee, CMSI or
any Subservicer appointed by CMSI or their duly authorized representatives,
attorneys or auditors to inspect the Mortgage Files and the books and records
maintained by Bank One or temporarily remove one or more Mortgage or Mortgage
Notes for purposes of servicing the Mortgages pursuant hereto at such times as
the Trustee, CMSI or any Subservicer may reasonably request, subject only to
compliance by the Trustee, CMSI or any Subservicer with the security procedures
of Bank One applied by Bank One to its own employees having access to these and
similar records.
5. Instructions; Authority to Act. Bank One shall be deemed to
have received proper instructions with respect to the Mortgage Files upon its
receipt of written instructions signed by a Responsible Officer of the Trustee
or a Servicing Officer of the Servicer. A certified copy of a resolution of the
Board of Directors of the Trustee may be accepted by Bank One as conclusive
evidence of the authority of any such officer to act and may be considered as in
full force and effect until receipt of written notice to the contrary by Bank
One from the Trustee, CMSI or any Subservicer. Such instructions may be general
or specific in terms.
6. Indemnification. Bank One agrees to indemnify the Trustee for
any and all liabilities, obligations, losses, damages, payments, costs or
expenses of any kind whatsoever which may be imposed on, incurred or asserted
against the Trustee as the result of any act or omission in any way relating to
the maintenance and custody by Bank One of the Mortgage Files; provided,
however, that
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Bank One shall not be liable for any portion of any such amount resulting from
the gross negligence or willful misconduct of the Trustee.
7. Advice of Counsel. Bank One shall be entitled to rely and act
upon advice of counsel with respect to its performance hereunder as custodian
and shall be without liability for any action reasonably taken pursuant to such
advice, provided that such action is not in violation of applicable Federal or
State law.
8. Effective Period, Termination and Amendment, and Interpretive
and Additional Provisions. This Agreement shall become effective as of the date
hereof and shall continue in full force and effect until terminated as
hereinafter provided, and may be amended at any time by mutual agreement of the
parties hereto. This Agreement may be terminated (a) by the resignation by Bank
One as Custodian hereunder or (b) by either CMSI or the Trustee, but only by
reason of a material breach by Bank One of its responsibilities, duties or
obligations hereunder or under the Pooling Agreement. In each case, such
termination shall be effected in a writing delivered or mailed, postage prepaid,
to the other parties, such termination to take effect no sooner than sixty (60)
days after the date of such delivery or mailing. Upon notice of such
termination, CMSI shall use its reasonable best efforts to select a successor
custodian reasonably acceptable to the Trustee upon substantially the same terms
and conditions as set forth in this Agreement. In the event that no such
successor custodian has been selected by the 50th day after such notice, the
Trustee may, upon prior notice to CMSI, select a successor custodian. If no
successor custodian has been selected by CMSI or the Trustee by the effective
date of such termination, the Trustee shall act as Mortgage Document Custodian
and Mortgage Note Custodian on and after such effective date, unless thereafter
the Trustee and CMSI shall agree as to a successor custodian. Concurrently with,
or as soon as practicable after, the termination of this Agreement, Bank One
shall redeliver the Mortgage Files (x) if a successor custodian has been
selected as aforesaid, to such successor custodian at such place as it may
reasonably designate or (y) otherwise, to the Trustee or its designee at such
place as the Trustee may reasonably designate. In connection with the
administration of this Agreement, the parties hereto may agree from time to time
upon the interpretation of the provisions of this Agreement as may in their
opinion be consistent with the general tenor and purposes of this Agreement, any
such interpretation to be signed and annexed hereto.
9. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
10. Notices. Notices and other writings shall be delivered or
mailed, postage prepaid, to the Trustee at ______________________ Attention:
Mortgage Backed and Select Securities Group, CMSI 1999-__; or to Bank One at the
address set forth in Section 2, Attention: Deirdre J. Linkletter; or to CMSI at
the address set forth in Section 2; or to such other address as the Trustee,
CMSI or Bank One may hereafter specify in writing. Notices or other writings
shall be effective only upon actual receipt by the parties.
11. Binding Effect. This Agreement shall be binding upon and shall
inure to the benefit of the Trustee and Bank One and their respective successors
and assigns. Concurrently with the appointment of a successor trustee as
provided in Section 8.07 of the Pooling Agreement, the
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<PAGE>
Trustee, CMSI and Bank One shall amend this Agreement to make said successor
trustee the successor to the Trustee hereunder.
12. Counterparts. This Agreement may be signed in any number of
counterparts, each of which will be deemed an original, which taken together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed in its name and on its behalf by a duly authorized
officer as of the day and year first above written.
[TRUSTEE],
as Trustee under the Pooling and
Servicing Agreement referred to above
By:______________________________
BANK ONE TRUST COMPANY, N.A.,
as Custodian
By:______________________________
CITICORP MORTGAGE SECURITIES, INC.
By:______________________________
Senior Vice President
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<PAGE>
EXHIBIT D
FORM OF SUBSERVICING AGREEMENT
This SUBSERVICING AGREEMENT dated as of ________ 1, 1999 by and between
Citicorp Mortgage Securities, Inc. ("CMSI") and Citicorp Mortgage, Inc., a
Delaware corporation (the "Subservicer");
WHEREAS, CMSI intends to offer REMIC Pass-Through Certificates
designated Series 1999-__, Senior Class A CitiCertificates, Senior Subordinated
Class M CitiCertificates and Subordinated Class B CitiCertificates (the
"CitiCertificates");
WHEREAS, CMSI has entered into a Pooling and Servicing Agreement (the
"Agreement") dated as of ______ 1, 1999 with [Trustee], in its individual
capacity and as Trustee, in connection with the issuance of the
CitiCertificates; and
WHEREAS, Section 6.06 of the Agreement provides that CMSI may at any
time without notice or consent, delegate any duties thereunder to any
corporation, including a corporation more than 50% of the stock of which is
owned, directly or indirectly, by Citicorp;
NOW THEREFORE, in consideration of the foregoing, the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, CMSI and the Subservicer hereby
agree as follows:
1. Definitions. Capitalized terms used but not defined herein shall have
the meanings set forth in the Agreement. Unless otherwise indicated,
all citations to section numbers herein are references to sections in
the Agreement.
2. Appointment of Subservicer. CMSI hereby appoints the Subservicer as
subservicer of the mortgage loans listed in Exhibit B to the Agreement
(the "Mortgage Loans") under the Agreement and delegates all its
servicing and administrative duties with respect to the Mortgage Loans
or otherwise under the Agreement to the Subservicer, including its
position as fiduciary of the Trust Fund, and the Subservicer hereby
agrees to perform all such servicing duties of CMSI with respect to the
Mortgage Loans set forth in the Agreement. The Subservicer covenants
and agrees that it will service the Mortgage Loans in accordance with
and in the manner specified in the Agreement.
3. Subservicing Fees.
(a) Subject to the following proviso, CMSI is entitled as servicer
under the Agreement to receive a fee in an amount equal to
0.__% per annum of the aggregate Adjusted Balance of the
Mortgage Loans. In addition to such servicing fee, CMSI is
entitled to receive any prepayment charges, assumption fees,
late payment charges, and other similar charges and fees, all
to the extent collected from the Mortgagors with respect to
the Mortgage Loans; provided, however, that CMSI is obligated
to make certain payments into the Certificate Account pursuant
to Section 3.25 of the Agreement.
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<PAGE>
(b) As compensation for its services, CMSI agrees to pay the
Subservicer monthly a subservicing fee equal to the aggregate
amount received pursuant to clause (a). Notwithstanding
anything herein to the contrary, unless otherwise directed by
CMSI, the Subservicer shall collect all items referred to in
clause (a) and retain the same as compensation for the
performance of its duties as Subservicer; provided, however,
that on or before the Business Day next preceding the related
Determination Date, the Subservicer shall pay to CMSI an
amount equal to the amount that CMSI is required to deposit
into the Certificate Account with respect to the Mortgage
Loans pursuant to Section 3.21 of the Agreement.
4. Payment of Servicing Expenses. The Subservicer agrees to pay any fees
and expenses of the Trustee, Certificate Registrar, Paying Agent,
Authenticating Agent and Independent Accountants. In addition, all
other expenses incurred in connection with the servicing of the
Mortgage Loans in the Pool, including but not limited to payment of all
fees and expenses in connection with the realization upon defaulted
Mortgage Loans in the Pool, and payment of expenses incurred in
connection with distributions and reports to Certificateholders, shall
be paid by the Subservicer.
5. Indemnification. The Subservicer agrees to indemnify, defend and hold
harmless CMSI against any and all losses, damages, penalties, fines,
forfeitures, legal fees and related costs, and judgments resulting from
the Subservicer's failure to perform under this Subservicing Agreement
or under the terms and conditions of the Agreement.
6. Independent Contractor. Nothing contained herein shall be deemed or
construed to create a co-partnership or joint venture between CMSI and
the Subservicer, and the services of the Subservicer shall be rendered
as an independent contractor and not as an employee or agent of CMSI.
7. Choice of Law. This Subservicing Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of New
York.
8. Amendment. This Subservicing Agreement may not be amended or modified
orally, and no provision of this Subservicing Agreement may be waived
or amended except in a writing signed by CMSI and the Subservicer. No
amendment or modification of this Subservicing Agreement which has a
material adverse effect on holders of CitiCertificates shall be
effective unless consented to in writing by the Trustee. The Trustee
shall be protected in consenting to any such change to the same extent
provided in Article X of the Agreement.
9. Termination; Replacement. This Subservicing Agreement shall terminate
upon any termination of CMSI as Servicer under the Agreement. CMSI may
terminate this Subservicing Agreement if the Subservicer defaults in
the performance of any of its duties hereunder or under the Agreement.
CMSI may replace the Subservicer as subservicer hereunder on thirty
days' written notice, with any housing finance institution or
corporation, including a housing finance institution or corporation
which is an affiliate of CMSI with a net worth as of the end of its
latest fiscal year of not less than $5,000,000. Any such replacement
subservicer shall execute a subservicing agreement substantially in the
form of this Subservicing Agreement.
2
<PAGE>
10. Trustee Beneficiary. The representations and agreements made by the
Subservicer in this Subservicing Agreement are made for the benefit of,
and may be enforced by, the Trustee and the holders of CitiCertificates
to the same extent that the Trustee and the holders of
CitiCertificates, respectively, have rights against CMSI under the
Agreement in respect of representations and agreements made by CMSI
therein with respect to the Mortgage Loans.
11. Subservicer not to Resign; Right to Delegate. The Subservicer shall not
resign as subservicer hereunder except upon determination (evidenced by
the delivery of an opinion of counsel reasonably acceptable to the
Trustee) that the performance of its duties hereunder is no longer
permissible under applicable law. The Subservicer shall have the right
to delegate its duties hereunder to any corporation more than 50% of
the voting stock of which is owned, directly or indirectly, by
Citicorp. No such delegation shall relieve the Subservicer of its
obligations hereunder.
3
<PAGE>
IN WITNESS WHEREOF, CMSI and the Subservicer have executed this
Subservicing Agreement effective as of the date first written above.
CITICORP MORTGAGE SECURITIES, INC.
By:_______________________________
Senior Vice President
CITICORP MORTGAGE, INC.
By:________________________________
Vice President
4
<PAGE>
EXHIBIT E
[FORM OF PURCHASER LETTER]
[Purchaser]
[Date]
Citicorp Mortgage Securities, Inc.
909 Third Avenue, 30th Floor
New York, New York 10043
[TRUSTEE]
Attention: Corporate Trust Department
Ladies and Gentlemen:
In connection with the purchase by us of $ Initial Stated Amount of the
Citicorp Mortgage Securities, Inc. REMIC Pass-Through Certificates, Series
1999-__, Class B-[3][4][5] CitiCertificates, we confirm that:
1. We understand that the Class B-[3][4][5] CitiCertificates are not
being registered under the Securities Act of 1933, as amended (the "Securities
Act") or any state securities or "blue sky" laws and are being transferred to us
in a transaction that is exempt from the registration requirements of the
Securities Act and any such laws.
[2. We have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of investment in the
Class B-[3][4][5] CitiCertificates, we are able to bear the economic risk of
investment in the Class B-[3][4][5] CitiCertificates and we are an accredited
investor as defined in Regulation D under the Securities Act. We have such
knowledge and experience in financial and business matters, specifically in the
field of mortgage related securities, as to be able to evaluate the risk of
purchasing a certificate which is subordinate in right of payment, and we have
direct, personal and significant experience in making investments in mortgage
related securities. If we are non-institutional investors, our net worth
(exclusive of our primary residence) is at least $1,000,000.]
[2. We are "Qualified Institutional Buyers" within the meaning of Rule
144A promulgated under the Securities Act.]
3. We will acquire the Class B-[3][4][5] CitiCertificates for our own
account or for accounts as to which we exercise sole investment discretion and
not with a view to any distribution of the Class B-[3][4][5] CitiCertificates,
subject, nevertheless, to the understanding that disposition of our property
shall at all times be and remain within our control.
4. We agree that our Class B-[3][4][5] CitiCertificates must be held
indefinitely by us unless subsequently registered under the Securities Act and
any applicable state securities or "blue sky" laws or unless exemptions from the
registration requirements of the Securities Act and such laws are available.
5. We agree that in the event that at some future time we wish to sell,
dispose of or otherwise transfer any of our Class B-[3][4][5] CitiCertificates,
we will not transfer any of such Class B-[3][4][5] CitiCertificates unless:
(A) (1) the transfer is made to an Eligible Purchaser (as
defined below), (2) a letter to substantially the same effect as this letter is
executed promptly by such Eligible Purchaser or by an Eligible Dealer (as
defined
E-1
<PAGE>
below) on behalf of such Eligible Purchaser and (3) all offers or solicitations
in connection with the sale (if a sale), whether directly or through any agent
on our behalf, are limited only to Eligible Purchasers and are not made by means
of any form of general solicitation or general advertising whatsoever; or
(B) Such Class B-[3][4][5] CitiCertificates are otherwise sold
in a transaction that does not require registration under the Securities Act.
"Eligible Purchaser" means an Eligible Dealer or a corporation,
partnership or other entity which we have reasonable grounds to believe and do
believe can make representations with respect to itself to substantially the
same effect as the representations set forth herein; "Eligible Dealer" means any
corporation or other entity having as a principal business acting as a broker or
dealer in securities.
6. We understand that each of the Class B-[3][4][5] CitiCertificates
will bear a legend to substantially the following effect:
THIS CLASS B[-3][-4][-5] CITICERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENTS TO
THE CLASS A, CLASS A-IO, CLASS M, CLASS B-1 [AND][,] CLASS B-2 [AND CLASS B-3]
[, CLASS B-3 AND CLASS B-4] CITICERTIFICATES AS DESCRIBED IN THE AGREEMENT
REFERRED TO HEREIN. THIS CLASS B CITICERTIFICATE MAY NOT BE PURCHASED BY OR
TRANSFERRED TO ANY PERSON WHICH IS AN EMPLOYEE BENEFIT PLAN SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA") OR SECTION 4925 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED (THE "CODE") OR ANY GOVERNMENTAL PLAN, AS DEFINED IN SECTION
3(32) OF ERISA, SUBJECT TO ANY FEDERAL, STATE OR LOCAL LAW WHICH IS, TO A
MATERIAL EXTENT, SIMILAR TO THE FOREGOING PROVISIONS OF ERISA OR THE CODE
(COLLECTIVELY, A "PLAN") OR ANY PERSON INVESTING THE ASSETS OF A PLAN EXCEPT AS
PROVIDED IN SECTION 5.02 OF THE AGREEMENT DESCRIBED HEREIN.
THIS CLASS B[-3][-4][-5] CITICERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, OR OFFERED FOR SALE,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH SALE, TRANSFER OR OTHER
DISPOSITION IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND ANY APPLICABLE BLUE SKY LAW OR UNLESS AN EXEMPTION UNDER SUCH ACT AND
ANY APPLICABLE BLUE SKY LAW IS AVAILABLE.
Very truly yours,
[Name of Purchaser]
By:*_______________
Name:
Title:
___________________________
* This letter may be signed by Purchaser's attorney-in-fact if an executed power
of attorney to such attorney-in-fact is attached hereto; provided that, upon
written instruction from the Issuer to the Trustee, no such attachment shall be
required.
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<PAGE>
EXHIBIT F
[FORM OF ERISA LETTER]
[Purchaser]
[Date]
Citicorp Mortgage Securities, Inc.
909 Third Ave., 30th Floor
New York, NY 10043
[TRUSTEE]
Attention: Corporate Trust Department
Ladies and Gentlemen:
In connection with the purchase by us of $_______________ Initial
Stated Amount of the Citicorp Mortgage Securities, Inc. REMIC Pass-Through
Certificates, Series 1999-__, [Class M][Class B-[1][2][3][4][5]]
CitiCertificates we confirm that:
We (check one)
___ are not an employee benefit plan subject to the fiduciary responsibility
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") or Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code") or any governmental plan, as defined in Section 3(32) of ERISA, subject
to any federal, state or local law ("Similar Law") which is, to a material
extent, similar to the foregoing provisions of ERISA or the Code (collectively,
a "Plan"), an agent acting on behalf of a Plan, or a person utilizing the assets
of a Plan or
___ are an insurance company and the source of funds used to purchase the
Purchased CitiCertificates is an "insurance company general account" (as such
term is defined in Section V (e) of Prohibited Transaction Class Exemption 95-60
("PTE 95-60"), 60 Fed. Reg. 35925 July 12, 1995) and 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 PTE 95-60) or by the same employee organization, exceed 10% of the
total of all reserves and liabilities of such general account (as such amounts
are determined under Section I (a) of PTE 95-60) at the date of acquisition or
___ have provided a "Benefit Plan Opinion" satisfactory to Citicorp Mortgage
Securities, Inc. and the Trustee of the trust fund. A Benefit Plan Opinion is an
opinion of counsel to the effect that the proposed transfer will not (a) cause
the assets of the trust fund to be regarded as "plan assets" and subject to the
fiduciary responsibility provisions of ERISA or the prohibited transaction
provisions of the Code or Similar Law (b) give rise to a fiduciary duty under
ERISA, Section 4975 of the code or Similar Law on the part of Citicorp Mortgage
Securities, Inc., the Servicer or the Trustee with respect to any Plan or (c)
constitute a prohibited transaction under ERISA or Section 4975 of the Code of
Similar Law.
[The Certificates will be registered in the name of [Nominee Name] but
the undersigned will
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<PAGE>
be the beneficial owner thereof.]
Very truly yours,
[Name of Purchaser]
By:________________
Name:
Title:
______________________
* This letter may be signed by Purchaser's attorney-in-fact if an executed power
of attorney to such attorney-in-fact is attached hereto; provided that, upon
written instruction from the Issuer to the Trustee, no such attachment shall be
required.
F-2
_____________________________________________
STANDARD TERMS FOR POOLING AND
SERVICING AGREEMENTS
FOR CITICERTIFICATES
______________________________________________
Dated as of ________, 1999
REMIC Pass-Through Certificates, Series 1999-__
______________________________________________________________________
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01. Definitions..........................................1
Accountant........................................1
Accretion Distribution Amount.....................1
Accrual CitiCertificates..........................1
Act...............................................1
Adjusted Balance..................................1
Advance Account...................................1
Advance Account Advances..........................2
Advance Account Available Advance Amount..........2
Advance Account Depository Agreement..............2
Advance Account Depository........................2
Advance Account Funding Date......................2
Advance Account Reimbursement Amount..............2
Advance Account Trigger Applicability.............2
Advance Account Trigger Date......................2
Affiliate.........................................2
Affiliated Certificate Account Advance............2
Affiliated Mortgage Loans.........................2
Affiliated Trustee Advances.......................2
Affiliated Uncommitted Cash.......................3
Agent.............................................3
Aggregate Outstanding Advances....................3
Aggregate Pool Value Change.......................3
Appraisal.........................................3
Assumed Reinvestment Rate.........................3
Authenticating Agent..............................3
Authorized Officer................................3
Available PO Loss Funds...........................3
Bankruptcy Code...................................3
Bankruptcy Coverage Termination Date..............3
Bankruptcy Loss...................................3
Bankruptcy Loss Amount............................4
Beneficial Owner..................................4
Book-Entry Certificates...........................4
Business Day......................................4
Buydown Account...................................4
Buydown Funds.....................................4
Buydown Mortgage Loan.............................4
Buydown Subsidy Agreement.........................4
Calculated Class A Distribution Amount............5
Calculated Servicing Fee..........................5
Certificate.......................................5
Certificate Account...............................5
Certificate Account Deposit Date..................5
Certificate Rate..................................5
Certificate Register and Certificate Registrar....5
Certificateholder or Holder.......................5
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Citibank..........................................5
CitiCertificateholder.............................5
CitiCertificates..................................5
Class.............................................5
Class A Certificateholder.........................5
Class A CitiCertificate...........................5
Class A Interest Amount...........................5
Class A Optimal Principal Amount..................5
Class A Non-PO Principal Amount...................5
Class A Percentage................................5
Class A Prepayment Percentage.....................6
Class A Principal Distribution Amount.............6
Class A PO Principal Amount.......................6
Class A PO Subclass...............................6
Class A Principal Amount..........................6
Class A Subclass..................................6
Class A Subclass Interest Amount..................6
Class A Subclass Interest Percentage..............6
Class A Subclass Interest Shortfall Amount........6
Class A Subclass Loss Denominator.................6
Class A Subclass Loss Percentage..................6
Class A Subclass Principal Amount.................7
Class A Subclass Unpaid Interest Shortfall........7
Class A Unpaid Interest Shortfall.................7
Class B Certificateholder.........................7
Class B CitiCertificate...........................7
Class B Interest Amount...........................7
Class B Percentage................................7
Class B Prepayment Percentage.....................7
Class B Principal Distribution Amount.............7
Class B Principal Amount..........................7
Class B Subclasses................................7
Class B Subclass Interest Amount..................7
Class B Subclass Interest Percentage..............8
Class B Subclass Principal Amount.................8
Class B Unpaid Interest Shortfall.................8
Class B-1 Interest Shortfall Amount...............8
Class B-1 Optimal Principal Amount................8
Class B-1 Percentage..............................9
Class B-1 Prepayment Percentage...................9
Class B-1 Principal Distribution Amount...........9
Class B-1 Unpaid Interest Shortfall...............9
Class B-2 Interest Shortfall Amount...............9
Class B-2 Optimal Principal Amount................9
Class B-2 Percentage.............................10
Class B-2 Prepayment Percentage..................10
Class B-2 Principal Distribution Amount..........10
Class B-2 Unpaid Interest Shortfall..............10
Class B-3 Interest Shortfall Amount..............10
Class B-3 Optimal Principal Amount...............10
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Class B-3 Percentage.............................11
Class B-3 Prepayment Percentage..................11
Class B-3 Principal Distribution Amount..........11
Class B-3 Unpaid Interest Shortfall..............11
Class B-4 Interest Shortfall Amount..............11
Class B-4 Optimal Principal Amount...............11
Class B-4 Percentage.............................12
Class B-4 Prepayment Percentage..................12
Class B-4 Principal Distribution Amount..........12
Class B-4 Unpaid Interest Shortfall..............12
Class B-5 Interest Shortfall Amount..............13
Class B-5 Optimal Principal Amount...............13
Class B-5 Percentage.............................13
Class B-5 Prepayment Percentage..................13
Class B-5 Principal Distribution Amount..........14
Class B-5 Unpaid Interest Shortfall..............14
Class L Regular Interests........................14
Class LR Certificate.............................14
Class M CitiCertificateholder....................14
Class M Interest Amount..........................14
Class M Interest Shortfall Amount................14
Class M Optimal Principal Amount.................14
Class M Percentage...............................15
Class M Prepayment Percentage....................15
Class M Principal Distribution Amount............15
Class M Principal Amount.........................15
Class M Unpaid Interest Shortfall................15
Class R Certificate..............................15
Clearing Agency..................................15
Clearing Agency Participant......................16
CMSI.............................................16
CMSI Order.......................................16
Code.............................................16
Commission.......................................16
Compensating Cap.................................16
Constituent REMICs...............................18
Corporate Trust Office...........................16
Custodial Account for P&I........................16
Cut-Off Date.....................................16
Debt Service Reduction...........................16
Deficient Valuation..............................16
Definitive Securities............................16
Delinquent Amount................................16
Deposit Date.....................................17
Depository.......................................17
Determination Date...............................17
Disqualified Organization........................17
Distribution Date................................17
Distribution Date Statement......................17
Due Date.........................................17
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Due Period.......................................17
Eligible Account.................................17
Eligible Investments.............................17
Eligible Substitute Mortgage Loan................19
ERISA............................................20
ERISA Prohibited Holder..........................20
ERISA Restricted CitiCertificates................20
Escrow Account...................................20
Event of Default.................................20
Excess Bankruptcy Loss...........................20
Excess Fraud Loss................................20
Excess Special Hazard Loss.......................20
Exchange Act.....................................20
Expense Rate.....................................20
Expenses.........................................20
Extraordinary Event..............................20
FDIC.............................................21
Federal Reserve Bank.............................21
FHLMC............................................21
Fitch............................................21
FNMA.............................................21
Foreclosure Profits..............................21
Fraud Coverage Termination Date..................21
Fraud Loss Amount................................21
Fraud Loss.......................................21
GIC..............................................21
Guide............................................21
Holder...........................................21
Independent......................................21
Initial Bankruptcy Loss Amount...................21
Initial Fraud Loss Amount........................22
Initial Special Hazard Loss Amount...............22
Initial Special Hazard Percentage................22
Initial Principal Amount.........................22
Insurance Policy.................................22
Insurance Proceeds...............................22
Insured Certificates.............................22
Insurer..........................................22
Insurer Deliverables.............................24
Interest Accrual Period..........................22
Investment Account...............................22
Investment Statement.............................22
Investor Rate....................................22
Issue Date.......................................22
Issuer...........................................22
Last Scheduled Distribution Date.................22
LIBOR Accrual Period.............................22
LIBOR CitiCertificates...........................22
Liquidated Loan..................................22
Liquidated Loan Loss.............................23
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Liquidating Loan.................................23
Liquidation Expenses.............................23
Liquidation Proceeds.............................23
Lower-Tier Certificates..........................23
Lower Tier REMIC.................................23
Master Servicer..................................23
Master Servicing Fee.............................23
Master Servicer Fee Rate.........................23
Monthly Payment..................................24
Moody's..........................................24
Mortgage.........................................24
Mortgage Document Custodial Agreement............24
Mortgage Document Custodian......................24
Mortgage Documents...............................24
Mortgage File....................................24
Mortgage Loan....................................24
Mortgage Loan Schedule...........................24
Mortgage Note....................................24
Mortgage Note Rate...............................24
Mortgaged Property...............................24
Mortgagor........................................24
Net Liquidation Proceeds.........................25
Net Note Rate....................................25
Net REO Proceeds.................................25
Net Trustee Advances.............................25
Net Advances.....................................25
Non-PO Percentage................................25
Non-PO Pool Adjusted Balance.....................25
Nonrecoverable Advance...........................25
Non-Supported Interest Shortfall.................25
Officer's Certificate............................26
Opinion of Counsel...............................26
Original Class A Principal Amount................26
Original Class B-1 Percentage....................26
Original Class B-1 Principal Amount..............26
Original Class B-1 Subordination Level...........26
Original Class B-2 Percentage....................26
Original Class B-2 Principal Amount..............26
Original Class B-2 Subordination Level...........26
Original Class B-3 Percentage....................26
Original Class B-3 Principal Amount..............26
Original Class B-3 Subordination Level...........26
Original Class B-4 Percentage....................26
Original Class B-4 Principal Amount..............26
Original Class B-4 Subordination Level...........26
Original Class B-5 Percentage....................26
Original Class B-5 Principal Amount..............26
Original Class B Principal Amount................26
Original Class M Percentage......................26
Original Class M Principal Amount................26
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Original Class M Subordination Level.............26
Original Value...................................26
Originator.......................................27
Outstanding......................................27
Outstanding Mortgage Loan........................27
Pass-Through Rate................................27
Paying Agent.....................................28
Percentage Interest..............................28
Person...........................................28
Plan.............................................28
PO Loss Amount...................................28
PO Percentage....................................28
Pool Adjusted Balance............................28
Pool Distribution Amount.........................28
Pool Value.......................................29
Pooling Agreement................................29
Predecessor Certificates.........................29
Prepaid Installment..............................29
Prepayment Interest Shortfall....................29
Prepayment Principal.............................29
Primary Mortgage Insurance Certificate...........29
Principal Amount.................................29
Principal Prepayment.............................29
Private Certificates.............................30
Proceeding.......................................30
Property Protection Expenses.....................30
Qualified GIC....................................30
Qualified Nominee................................30
Rating Agencies..................................31
Realized Losses..................................31
Record Date......................................31
Reimbursable Class A Non-PO Losses...............31
Reimbursable Class A PO Losses...................31
Reimbursable Class B Losses......................31
Reimbursable Class M Losses......................31
REMIC............................................31
REMIC Provisions.................................31
Remittance Delinquencies.........................31
Remittances......................................32
REO Mortgage Loan................................32
REO Proceeds.....................................32
REO Property.....................................32
Report Date......................................32
Required Amount of Certificates..................32
Reserve Fund.....................................32
Residual Certificate.............................32
Responsible Officer..............................32
Retail Reserve Fund..............................32
S&P..............................................32
Servicer.........................................32
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Servicing Account................................32
Servicing Fee....................................32
Servicing Officer................................32
Similar Law......................................33
Single Certificate...............................33
Special Hazard Loss..............................33
Special Hazard Loss Amount.......................33
Special Hazard Percentage........................33
Special Hazard Termination Date..................33
Standard Accrual Period..........................33
Startup Day......................................33
Subclass.........................................34
Subordinated CitiCertificates....................34
Subordinated CitiCertificate Percentage..........34
Subordinated Prepayment Percentage...............34
Subordination Depletion Date.....................34
Subservicer......................................34
Subservicing Agreement...........................34
Substitution Adjustment Amount...................34
Substitution Day.................................34
Third Party Certificate Account Advance..........34
Third Party Master Servicer......................33
Third Party Mortgage Loans.......................34
Third Party Servicer.............................34
Third Party Servicing Agreement..................34
Third Party Servicing Fee........................34
Third Party Servicing Fee Rate...................34
Third Party Trustee Advances.....................35
Third Party Uncommitted Cash.....................35
Transfer Instrument..............................35
Trustee..........................................35
Trustee Advances.................................35
Trustee Failure..................................35
Trustee Failure Advance..........................35
Trust Fund.......................................35
Uncommitted Cash.................................35
Uncovered Remittance Delinquency.................35
Unpaid PO Loss Amount............................35
Underwriters.....................................35
Upper-Tier Certificates..........................35
Upper-Tier REMIC.................................35
Upper-Tier REMIC Account.........................36
U.S. Person......................................36
Voluntary Advance................................36
Voting Interest..................................36
Section 1.02. Calculations Respecting Mortgage Loans..............36
ARTICLE II
CONVEYANCE OF TRUST FUND; ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Trust Fund............................36
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Section 2.02. Acceptance by Trustee...............................39
Section 2.03. Representations and Warranties of CMSI..............40
Section 2.04. Substitution of Eligible Substitute Mortgage Loans
for Nonconforming Mortgage Loans....................42
Section 2.05. Authentication of Certificates......................43
ARTICLE III
CERTIFICATE ACCOUNT; PAYMENTS AND STATEMENTS TO CERTIFICATEHOLDERS;
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 3.01. Collection of Moneys................................44
Section 3.02. Certificate Account.................................44
Section 3.03. Third Party Mortgage Loans; Custodial Accounts for
P&I and Certificate Account Deposits................46
Section 3.04. Distributions.......................................48
Section 3.05. Reports to Certificateholders.......................53
Section 3.06. Application of Buydown Funds........................53
Section 3.07. Tax Returns and Reports to Certificateholders.......54
Section 3.08. Intentionally Omitted...............................55
Section 3.09. Reports by Independent Accountants..................55
Section 3.10. CMSI to Act as Servicer of Affiliated Mortgage
Loans...............................................55
Section 3.11. CMSI to Act as Master Servicer of Third Party
Mortgage Loans......................................56
Section 3.12. Servicing Agreements between Master Servicer and
Third Party Servicers; Enforcement of Third Party
Servicers...........................................56
Section 3.13. Liability of the Master Servicer....................57
Section 3.14. Collection of Certain Mortgage Loan Payments with
respect to an Affiliated Mortgage Loan; Certificate
Account.............................................57
Section 3.15. Collection of Taxes, Assessments and Other Items,
Servicing Account...................................58
Section 3.16. Permitted Withdrawals from the Certificate Account..59
Section 3.17. Maintenance of Primary Mortgage Insurance
Certificates........................................60
Section 3.18. Maintenance of Hazard Insurance, Property
Protection Expenses.................................60
Section 3.19. Assumption and Modification Agreements relating to
Mortgage Loans......................................61
Section 3.20. Intenionally Omitted...............................61
Section 3.21. Realization on Defaulted Mortgage Loans.............61
Section 3.22. Trustee to Cooperate; Release of Mortgage Files.....63
Section 3.23. Servicing Fee, Payment of Certain Expenses by CMSI..64
Section 3.24. Reports.............................................64
Section 3.25. Payments by CMSI....................................65
Section 3.26. Refinancings of Mortgage Loans......................65
ARTICLE IV
RESERVE FUND
[Reserved].........................................................66
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates....................................66
Section 5.02. Registration of Transfer and Exchange of
Certificates........................................67
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates...70
Section 5.04. Persons Deemed Owners...............................70
Section 5.05. Access to List of Certificateholders' Names and
Addresses...........................................70
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Section 5.06. Definitive Certificates.............................71
Section 5.07. Notices to Clearing Agency..........................71
ARTICLE VI
CMSI
Section 6.01. Liability of CMSI...................................71
Section 6.02. Merger or Consolidation of, or Assumption of the
Obligations of, CMSI................................71
Section 6.03. Limitation on Liability of CMSI and Others..........71
Section 6.04. CMSI Not to Resign..................................72
Section 6.05. Maintenance of Office or Agency.....................72
Section 6.06. Delegation of Duties................................72
Section 6.07. Insurance...........................................72
ARTICLE VII
DEFAULT
Section 7.01. Events of Default...................................73
Section 7.02. Trustee to Act; Appointment of Successor............74
Section 7.03. Notification to Certificateholders..................74
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties of the Trustee...............................74
Section 8.02. Certain Matters Affecting the Trustee...............76
Section 8.03. Trustee Not Liable for Certificates or Mortgage
Loans...............................................77
Section 8.04. Trustee May Own Certificates........................77
Section 8.05. Trustee's Fees and Expenses.........................77
Section 8.06. Eligibility Requirements for Trustee................78
Section 8.07. Resignation or Removal of Trustee...................78
Section 8.08. Successor Trustee...................................79
Section 8.09. Merger or Consolidation of Trustee..................79
Section 8.10. Appointment of Co-Trustee or Separate Trustee.......79
Section 8.11. Tax Returns.........................................80
Section 8.12. Appointment of Authenticating Agent.................80
Section 8.13. Delinquency Advances................................82
Section 8.14. Advance Account, Trustee Failure Advances...........82
ARTICLE IX
TERMINATION
Section 9.01. Termination upon Repurchase by CMSI or Liquidation
of all Mortgage Loans...............................84
ARTICLE X
GENERAL PROVISIONS
Section 10.01. Amendment..........................................86
Section 10.02. Recordation of Agreement...........................87
Section 10.03. Limitation on Rights of Certificateholders.........87
Section 10.04. Governing Law......................................87
Section 10.05. Intention of Parties...............................88
Section 10.06. Notices............................................88
Section 10.07. Severability of Provisions.........................88
Section 10.08. Assignment.........................................88
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Section 10.09. Certificates Nonassessable and Fully Paid..........88
Section 10.10. Counterparts.......................................88
ARTICLE XI
Section 11.01. Annual Statement as to Compliance..................88
Section 11.02. Depositories.......................................89
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THESE STANDARD TERMS FOR POOLING AND SERVICING AGREEMENTS FOR
CITICERTIFICATES, dated as of ________, 1999 (the "Standard Terms Document"),
declare the basic terms and conditions upon which one or more series of
pass-through certificates packaged and serviced by Citicorp Mortgage Securities,
Inc. are to be issued, authenticated and delivered from time to time pursuant
to, with respect to each such series, a Pooling and Servicing Agreement (a
"Pooling Agreement") between CMSI as packager, servicer and master servicer, and
the institution named therein as trustee establishing such series.
This Standard Terms Document as incorporated in a Pooling Agreement
shall apply to the series of pass-through certificates established thereby to
the extent provided therein. Hereinafter, references to the "Pooling Agreement"
and the pass-through certificates executed and delivered thereunder and to terms
such as "this Agreement", "herein", "hereof" and words of similar import shall
refer only to a particular Pooling Agreement, including as and to the extent
incorporated therein this Standard Terms Document, and the series of
pass-through certificates established thereby.
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless die context otherwise requires, shall have
the following meanings, and the definitions of such terms are applicable to the
singular as well as the plural form of such terms and to the masculine as well
as to the feminine and neuter genders of such terms. Whenever any reference is
made to an amount the determination or calculation of which is governed by
Section 1.02, the provisions of Section 1.02 shall be applicable to such
determination or calculation, whether or not reference is specifically made to
Section 1.02, unless some other method of calculation or determination is
expressly specified in the particular provision.
Accountant: A Person engaged in the practice of accounting who (except
when this Pooling Agreement provides that an Accountant must be independent) may
be employed by or affiliated with CMSI or an Affiliate of CMSI.
Accretion Distribution Amount: As defined in Article XII.
Accrual CitiCertificates: As defined in Article XII.
Act: The Securities Act of 1933, as amended.
Adjusted Balance: With respect to any Mortgage Loan as of any date, the
scheduled principal balance thereof as of the close of business on the first day
of the month in which such date falls (whether or not any scheduled principal
payments have been received), without regard to any adjustments thereof in
connection with Mortgagor bankruptcies (other than a Deficient Valuation), less
any Principal Prepayments thereon or in respect thereof received or posted prior
to the close of business on the business day preceding such first day (or, in
the case of the Cut-Off Date, any Principal Prepayments thereon or in respect
thereof received or posted prior to the close of business on the Cut-Off Date).
Advance Account: The account established and maintained pursuant to the
Advance Account Depository Agreement. Such account shall meet the requirements
stated in Section 11.02 hereto for the Certificate Account or shall be held in
the corporate trust department of a depository institution with trust powers.
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Advance Account Advances: The aggregate of the Trustee Failure Advances
made from the Advance Account pursuant to Section 8.14, and deposited into the
Certificate Account, the amount of any such Advance Account Advance with respect
to a Distribution Date being no more than the Advance Account Available Advance
Amount.
Advance Account Available Advance Amount: As defined in the Advance
Account Depository Agreement.
Advance Account Depository Agreement: The Advance Account Depository
Agreement to be executed by the Advance Account Depository, the Trustee, in its
individual capacity and as Trustee, and the Servicer, substantially in the form
attached hereto on or before an Advance Account Funding Date.
Advance Account Depository: The depository institution with which the
Advance Account will be maintained pursuant to the Advance Account Depository
Agreement.
Advance Account Funding Date: The tenth Business Day following the
Advance Account Trigger Date.
Advance Account Reimbursement Amount: As defined in Section 8.14.
Advance Account Trigger Applicability: As specified in Article XII.
Advance Account Trigger Date: The date upon which the senior long term
debt of Citicorp or the Trustee is downgraded by Moody's below Baa3 and Al,
respectively; provided, however, if Moody's has advised the Servicer that such
downgrade would not cause the Class A CitiCertificates, the Class M
CitiCertificates (if any) or the Class B CitiCertificates to be downgraded then
such date shall not be considered an Advance Account Trigger Date for purposes
of this Agreement. If Moody's advises the Servicer pursuant to the above
proviso, Moody's may also specify the new rating levels at which a downgrade
would result in an Advance Account Trigger Date and such rating levels shall
replace the rating levels specified in the preceding sentence.
Affiliate: With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Affiliated Certificate Account Advance: With respect to any
Distribution Date, the amount of any Affiliated Uncommitted Cash to be
distributed to Certificateholders to cover Remittance Delinquencies related to
any Affiliated Mortgage Loan on such Distribution Date.
Affiliated Mortgage Loans: The Mortgage Loans listed in Exhibit B-2
hereto.
Affiliated Trustee Advances: The aggregate of the advances with respect
to any Affiliated Mortgage Loans made by the Trustee pursuant to Section 8.13,
and deposited into the Certificate Account, the amount of any such Affiliated
Trustee Advance with respect to a Distribution Date being no more than (a) the
aggregate of Remittances on the Affiliated Mortgage Loans that were due on the
preceding Due Date and delinquent as of the related Determination Date less (b)
the sum of Voluntary Advances in respect of Affiliated Mortgage Loans and the
amount of Affiliated Uncommitted Cash.
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Affiliated Uncommitted Cash: Any Uncommitted Cash relating to an
Affiliated Mortgage Loan.
Agent: As defined in Section 5.02.
Aggregate Outstanding Advances: As of any Determination Date, the
aggregate of Net Voluntary Advances, Net Trustee Advances and Net Advance
Account Advances made for the period from the Cut-Off Date to such Determination
Date (plus any Voluntary Advances, Trustee Advances, Advance Account Advances,
Affiliated Certificate Account Advances and Third Party Certificate Account
Advances to be made on the next succeeding Distribution Date).
Aggregate Pool Value Change: With respect to any Determination Date,
an amount equal to
(a) the aggregate of the Pool Values of all Mortgage Loans, determined
as of the preceding Determination Date (or, in the case of the first
Determination Date, the aggregate of the Pool Values of all Mortgage Loans as of
the Cut-Off Date), less
(b) the aggregate of the Pool Values of all such Mortgage Loans
determined as of such Determination Date.
Appraisal: With respect to a Mortgage Loan, the appraisal conducted in
connection with the origination of such Mortgage Loan, whether originated upon
the purchase of the related Mortgaged Property or in connection with a
refinancing.
Assumed Reinvestment Rate: The respective percentage or percentages per
annum specified in Article XII, compounded monthly unless otherwise specified in
Article XII.
Authenticating Agent: The Authenticating Agent appointed pursuant
to Section 8.12 and identified in Article XII which is authorized by the
Trustee to authenticate the Certificates on behalf of the Trustee. The
Authenticating Agent may be an Affiliate of CMSI.
Authorized Officer: With respect to CMSI, the Chairman of the Board of
Directors, the President, any Executive Vice President, Senior Vice President,
Vice President, Controller, Assistant Controller, Secretary, Assistant
Secretary, Treasurer or Assistant Treasurer, or any other natural person
designated in an Officer's Certificate signed by any of the foregoing officers
and furnished to the Trustee.
Available PO Loss Funds: As defined in Article XII.
Bankruptcy Code: The United States Bankruptcy Code of 1978, as amended.
Bankruptcy Coverage Termination Date: The Distribution Date upon which
the Bankruptcy Loss Amount has been reduced to zero or a negative number (or the
Subordination Depletion Date, if earlier).
Bankruptcy Loss: With respect to any Mortgage Loan, a Deficient
Valuation or Debt Service Reduction; provided however, that a Bankruptcy Loss
shall not be deemed a Bankruptcy Loss hereunder so long as the Servicer has
notified the Trustee in writing that the Servicer (or its designee) is
diligently pursuing any remedies that may exist in connection with the
representations and warranties made regarding the related Mortgage Loan and
either (A) the related Mortgage Loan is not in default with regard to payments
due thereunder or (B) delinquent payments of principal and interest under the
related Mortgage Loan and any premiums on any applicable primary hazard
insurance policy and any related escrow payments in respect of
3
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such Mortgage Loan are being advanced on a current basis without giving effect
to any Debt Service Reduction.
Bankruptcy Loss Amount: As of any Distribution Date prior to the first
anniversary of the Cut-Off Date, the Bankruptcy Loss Amount will equal the
Initial Bankruptcy Loss Amount minus the aggregate amount of Bankruptcy Losses
since the Cut-Off Date. As of any Distribution Date on or after the first
anniversary of the Cut-Off Date, an amount equal to (1) the lesser of (a) the
Bankruptcy Loss Amount calculated as of the close of business on the Business
Day immediately preceding the most recent anniversary of the Cut-Off Date
coinciding with or preceding the such Distribution Date (the "Relevant
Anniversary") and (b) the Initial Bankruptcy Loss Amount minus (2) the aggregate
amount of Bankruptcy Losses since the Relevant Anniversary.
The Bankruptcy Loss Amount may be further reduced by CMSI (including
accelerating the manner in which such coverage is reduced) provided that prior
to any such reduction, CMSI shall obtain written confirmation from each Rating
Agency that such reduction shall not adversely affect the then-current rating
assigned to the CitiCertificates by each Rating Agency and shall provide a copy
of such written confirmation to the Trustee.
Beneficial Owner: With respect to a Certificate held by a Clearing
Agency, the Person who is the beneficial owner of such Certificate as reflected
on the books of such Clearing Agency or on the books of a Person maintaining an
account with such Clearing Agency (directly or as an indirect participant, in
accordance with the rules of such Clearing Agency).
Book-Entry Certificates: The Classes or Subclasses of CitiCertificates
specified as such in Article XII.
Business Day: Any day other than a Saturday, a Sunday or a day on which
banking institutions in New York, New York or in the cities where the Trustee,
any Paying Agent, the Servicer, the Subservicer, if any, and (but only if the
day is a day on which deposits of funds received on Third Party Mortgage Loans
is being made to the Trustee by the Third Party Master Servicer) the Third Party
Master Servicer are located are authorized or obligated by law or executive
order to be closed or, if there are Book-Entry Certificates, any day on which
the relevant Clearing Agency is closed.
Buydown Account: The deposit account or accounts, which may bear
interest, created and maintained by CMSI in the name of the Trustee for the
benefit of the Mortgagors, subject to the rights of the Trustee pursuant to the
Buydown Subsidy Agreements.
Buydown Funds: Funds contributed at origination by the seller or buyer
of a property subject to a Buydown Mortgage Loan, or by any other source, plus
interest earned thereon, in order to reduce the payments required from the
Mortgagor for a specified period in specified amounts.
Buydown Mortgage Loan: Any Mortgage Loan in respect of which, pursuant
to a Buydown Subsidy Agreement, (i) the Mortgagor pays less than the full
monthly payments specified the Mortgage Note for a specified period and (ii) the
difference between the payments required under such Buydown Subsidy Agreement
and the Mortgage Note is provided from Buydown Funds.
Buydown Subsidy Agreement: The agreement relating to a Buydown
Mortgage Loan pursuant to which an Originator may apply the Buydown Funds to
a Mortgagor's payments.
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Calculated Class A Distribution Amount: With respect to any
Distribution Date, the sum of (a) the Class A Interest Amount, (b) any Class A
Unpaid Interest Shortfall, (c) the Class A Optimal Principal Amount and (d) the
PO Loss Amount.
Calculated Servicing Fee: With respect to any Distribution Date, the
Servicing Fee for each Affiliated Mortgage Loan as set forth in Article XII
without regard to whether the Servicer has received a payment on account of
interest with respect to such Mortgage Loan.
Certificate: Any CitiCertificate or Residual Certificate.
Certificate Account: The account or accounts created and maintained
pursuant to Sections 3.02 and 3.04. The term Certificate Account shall be deemed
to include an Alternative Certificate Account (as defined in Section 11.02).
Certificate Account Deposit Date: As to any Distribution Date, the
Business Day preceding such Distribution Date.
Certificate Rate: With respect to any Class or Subclass of
CitiCertificates or Certificates, the rate per annum at which interest accrues
on Certificates of such Class or such Subclass, as specified in Article XII.
Certificate Register and Certificate Registrar: The register maintained
pursuant to Section 5.02 and the Certificate Registrar identified in
Article XII.
Certificateholder or Holder: The Person in whose name a Certificate
is registered in the Certificate Register.
Citibank: Citibank, N.A., a national banking association.
CitiCertificateholder: A Holder of a CitiCertificate.
CitiCertificates: The certificates defined as such pursuant to
Article XII.
Class:...With respect to CitiCertificates, any group of
CitiCertificates designated as a Class in Article XII, with respect to any Class
L Regular Interests, the regular interests in the Constituent REMIC designated
as such in Article XII, and with respect to Residual Certificates, all Residual
Certificates having the same Class designation.
Class A Certificateholder: A registered holder of a Class A
CitiCertificate.
Class A CitiCertificate: A Certificate of any Class or Subclass
designated as a Class A CitiCertificate in Article XII.
Class A Interest Amount: With respect to any Distribution Date prior to
the Subordinated Depletion Date, the sum of the Class A Subclass Interest
Amounts with respect to such Distribution Date.
Class A Optimal Principal Amount: As defined in Article XII.
Class A Non-PO Principal Amount: As defined in Article XII.
Class A Percentage: As defined in Article XII.
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Class A Prepayment Percentage: As defined in Article XII.
Class A Principal Distribution Amount: As defined in Article XII.
Class A Principal-Only Subclass: As defined in Article XII.
Class A PO Principal Amount: As defined in Article XII.
Class A PO Subclass: As defined in Article XII.
Class A Principal Amount: The sum of the Class A Subclass Principal
Amounts of the Class A Subclasses.
Class A Subclass: As specified in Article XII.
Class A Subclass Interest Amount: As to any Distribution Date and any
Class A Subclass (other than a Class A Principal-Only Subclass), (i) the amount
of interest accrued during the related Interest Accrual Period at the applicable
Certificate Rate on the Class A Subclass Principal Amount (or in the case of any
interest only Subclass, the notional amount) of such Class A Subclass as of the
Determination Date preceding such Distribution Date minus (ii) the Class A
Subclass Interest Percentage of such Class A Subclass of (x) any Non-Supported
Interest Shortfall allocated to the Class A CitiCertificates (other than a Class
A Principal-Only Subclass) with respect to such Distribution Date and (y) the
interest portion of any Excess Special Hazard Losses, Excess Fraud Losses and
Excess Bankruptcy Losses allocated to the Class A CitiCertificates (other than a
Class A Principal-Only Subclass) with respect to such Distribution Date pursuant
to Section 13.02(e).
Class A Subclass Interest Percentage: As to any Distribution Date and
any Class A Subclass (other than a Class A Principal-Only Subclass), the
percentage calculated by dividing the Class A Subclass Interest Amount of such
Class A Subclass (determined without regard to clause (ii) of the definition
thereof) by the Class A Interest Amount (determined without regard to clause
(ii) of the definition of each Class A Subclass Interest Amount).
Class A Subclass Interest Shortfall Amount: As to any Distribution Date
and Class A Subclass (other than a Class A Principal-Only Subclass), any amount
by which the Class A Subclass Interest Amount of such Class A Subclass with
respect to such Distribution Date exceeds the amount distributed in respect of
such Class A Subclass on such Distribution Date pursuant to Paragraph second of
Section 13.01(b).
Class A Subclass Loss Denominator: As to any Distribution Date, an
amount equal to the sum of (1) the Class A Subclass Principal Amounts of the
Class A Subclasses (other than the Class A PO Subclass and any Class A Subclass
of Accrual CitiCertificates) and (2) the lesser of the Class A Subclass
Principal Amount or the initial Class A Subclass Principal Amount of each Class
A Subclass of Accrual CitiCertificates, in each case, determined as of the
preceding Distribution Date (after giving effect to distributions in reduction
of Principal Amounts and allocations of losses on such date).
Class A Subclass Loss Percentage: As to any Distribution Date and any
Class A Subclass (other than the Class A PO Subclass and any Class A Subclass of
Accrual CitiCertificates), the percentage calculated by dividing the Class A
Subclass Principal Amount of such Class A Subclass by the Class A Subclass Loss
Denominator, in each case determined as of the preceding Distribution Date
(after giving effect to distributions in reduction of Principal Amount and
allocations of losses on such date); provided that in the
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case of any interest only Subclass, such percentage shall be zero for all
Distribution Dates. As to any Distribution Date and any Class A Subclass of
Accrual CitiCertificates, the percentage calculated by dividing (i) the lesser
of the Class A Subclass Principal Amount or the initial Class A Subclass
Principal Amount of such Class A Subclass of Accrual CitiCertificates by (ii)
the Class A Subclass Loss Denominator, in each case determined as of the
preceding Distribution Date (after giving effect to distributions in reduction
of Principal Amount and allocations of losses on such date).
Class A Subclass Principal Amount: As defined in Article XII.
Class A Subclass Unpaid Interest Shortfall: As to any Distribution Date
and Class A Subclass, the amount, if any, by which the aggregate of the Class A
Subclass Interest Shortfall Amounts for such Class A Subclass for prior
Distribution Dates is in excess of the amounts distributed in respect of such
Class A Subclass on prior Distribution Dates pursuant to Paragraph third of
Section 13.01(b) or, after the Subordination Depletion Date, pursuant to
13.01(c).
Class A Unpaid Interest Shortfall: As to any Distribution Date prior to
the Subordination Depletion Date, an amount equal to the sum of the Class A
Subclass Unpaid Interest Shortfall for the Class A Subclasses.
Class B Certificateholder: A registered holder of a Class B
CitiCertificate.
Class B CitiCertificate: A Certificate of any Class or Subclass
designated as a Class B CitiCertificate in Article XII.
Class B Interest Amount: As to any Distribution Date, the sum of the
Class B Subclass Interest Amounts with respect to such Distribution Date.
Class B Percentage: As defined in Article XII.
Class B Prepayment Percentage: As defined in Article XII.
Class B Principal Distribution Amount: With respect to any Distribution
Date the sum of the Class B-1 Principal Distribution Amount, Class B-2 Principal
Distribution Amount, Class B-3 Principal Distribution Amount, Class B-4
Principal Distribution Amount and Class B-5 Principal Distribution Amount.
Class B Principal Amount: As to any Distribution Date, the sum of the
Class B Subclass Principal Amounts of the Class B Subclasses.
Class B Subclasses: As specified in Article XII.
Class B Subclass Interest Amount: As to any Distribution Date and any
Class B Subclass, (i) the amount of interest accrued during the related Interest
Accrual Period at the applicable Certificate Rate on the Class B Subclass
Principal Amount of such Class B Subclass as of the Determination Date preceding
such Distribution Date minus (ii) the Class B Subclass Interest Percentage of
such Class B Subclass of (x) any Non-Supported Interest Shortfall allocated to
the Class B CitiCertificates with respect to such Distribution Date and (y) the
interest portion of any Excess Special Hazard Losses, Excess Fraud Losses and
Excess Bankruptcy Losses allocated to the Class B CitiCertificates with respect
to such Distribution Date pursuant to Section 13.02(e).
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Class B Subclass Interest Percentage: As to any Distribution Date and
any Class B Subclass, the percentage calculated by dividing the Class B Subclass
Interest Amount of such Class B Subclass (determined without regard to clause
(ii) of the definition thereof) by the Class B Interest Amount (determined
without regard to clause (ii) of the definition of each Class B Subclass
Interest Amount).
Class B Subclass Principal Amount: As to the first Distribution Date
and any Class B Subclass, the Initial Principal Amount of such Class B Subclass
as set forth in Section 12.01(a). As of any subsequent Distribution Date, the
lesser of (i) such Initial Principal Amount less the sum of (a) all amounts
previously distributed in respect of such Class B Subclass on prior Distribution
Dates pursuant to Paragraphs eleventh, fourteenth, seventeenth, twentieth and
twenty-third, as applicable, of Section 13.01(b) and (b) the Excess Special
Hazard Losses, Excess Fraud Losses and Excess Bankruptcy Losses previously
allocated to such Class B Subclass pursuant to Section 13.02 and (ii) the Pool
Adjusted Balance less the sum of the Class A Principal Amount, the Class M
Principal Amount and the Class B Subclass Principal Amounts of the Class B
Subclasses with lower numerical designations each as of the preceding
Distribution Date (after taking into account distributions in reduction of
Principal Amount and the allocation of any Excess Special Hazard Losses, Excess
Fraud Losses and Excess Bankruptcy Losses on such date).
Class B Unpaid Interest Shortfall: With respect to any Distribution
Date, the sum of the Class B-1 Unpaid Interest Shortfall, Class B-2 Unpaid
Interest Shortfall, Class B-3 Unpaid Interest Shortfall, Class B-4 Unpaid
Interest Shortfall and Class B-5 Unpaid Interest Shortfall.
Class B-1 Interest Shortfall Amount: As to any Distribution Date any
amount by which the Class B Subclass Interest Amount of the Class B-1
CitiCertificates with respect to such Distribution Date exceeds the amount
distributed in respect of the Class B-1 CitiCertificates pursuant to Paragraph
ninth of Section 13.01(b).
Class B-1 Optimal Principal Amount: As to any Distribution Date, an
amount equal to the sum of
(i) the Class B-1 Percentage of the applicable Non-PO Percentage
of (A) the principal portion of all Monthly Payments due on the Due Date
occurring in the month of such Distribution Date on each Outstanding Mortgage
Loan, less (B) if the Bankruptcy Coverage Termination Date has occurred, the
principal portion of Debt Service Reductions;
(ii) the Class B-1 Prepayment Percentage of the applicable Non-PO
Percentage of all partial Principal Prepayments received by the Servicer during
the month preceding the month in which such Distribution Date occurs, together
with the Class B-1 Prepayment Percentage of the applicable Non-PO Percentage of
the Adjusted Balance of each Mortgage Loan which was the subject of a Principal
Prepayment in full during the month preceding the month of such Distribution
Date;
(iii) the Class B-1 Prepayment Percentage of the applicable Non-PO
Percentage of the difference between (1) the aggregate Net Liquidation Proceeds
from each Mortgage Loan which became a Liquidated Loan during the month
preceding the month of such Distribution Date minus any unreimbursed Voluntary
Advances in respect of principal previously made by the Servicer and (2) the
portion of such aggregate Net Liquidation Proceeds allocable to interest;
(iv) the Class B-1 Prepayment Percentage of the applicable Non-PO
Percentage of the Adjusted Balance of each Mortgage Loan which was repurchased
by CMSI during such preceding month pursuant to Section 2.03; and
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<PAGE>
(v) the amount of any recovery in respect of a Realized Loss
allocated to the Class B-1 CitiCertificates pursuant to Section 13.02(d).
Class B-1 Percentage: As to any Distribution Date, the percentage
calculated by multiplying (i) the Class B Percentage by (ii) a fraction, the
numerator of which is the Class B Subclass Principal Amount of the Class B-1
CitiCertificates and the denominator of which is the sum of the Class B Subclass
Principal Amounts of the Class B Subclasses (eligible to receive principal
distributions for such Distribution Date in accordance with Section 13.01(d)),
each as of the immediately preceding Distribution Date (after giving effect to
any distributions in reduction of Principal Amount and the allocation of any
losses on such date).
Class B-1 Prepayment Percentage: As to any Distribution Date, the
percentage calculated by multiplying (i) the Class B Prepayment Percentage by
(ii) a fraction, the numerator of which is the Class B Subclass Principal Amount
of the Class B-1 CitiCertificates and the denominator of which is the sum of the
Class B Subclass Principal Amounts of the Class B Subclasses (eligible to
receive principal distributions for such Distribution Date in accordance with
Section 13.01(d)), each as of the immediately preceding Distribution Date (after
giving effect to any distributions in reduction of Principal Amount and the
allocation of any losses on such date).
Class B-1 Principal Distribution Amount: With respect to any
Distribution Date, the amount distributed in respect of the Class B-1
CitiCertificates pursuant to Paragraph eleventh of Section 13.01(b).
Class B-1 Unpaid Interest Shortfall: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class B-1 Interest Shortfall
Amounts for prior Distribution Dates is in excess of the amounts distributed in
respect of the Class B-1 CitiCertificates in prior Distribution Dates pursuant
to Paragraph tenth of Section 13.01(b).
Class B-2 Interest Shortfall Amount: As to any Distribution Date, any
amount by which the Class B Subclass Interest Amount of the Class B-2
CitiCertificates with respect to such Distribution Date exceeds the amount
distributed in respect of the Class B-2 CitiCertificates on such Distribution
Date pursuant to Paragraph twelfth of Section 13.01(b).
Class B-2 Optimal Principal Amount: As to any Distribution Date, an
amount equal to the sum of:
(i) the Class B-2 Percentage of the applicable Non-PO Percentage
of (A) the principal portion of all Monthly Payments due on the Due Date
occurring in the month of such Distribution Date on each Outstanding Mortgage
Loan, less (B) if the Bankruptcy Coverage Termination Date has occurred, the
principal portion of Debt Service Reductions;
(ii) the Class B-2 Prepayment Percentage of the applicable Non-PO
Percentage of all partial Principal Prepayments received by the Servicer during
the month preceding the month in which such Distribution Date occurs, together
with the Class B-2 Prepayment Percentage of the applicable Non-PO Percentage of
the Adjusted Balance of each Mortgage Loan which was the subject of a Principal
Prepayment in full during the month preceding the month of such Distribution
Date;
(iii) the Class B-2 Prepayment Percentage of the applicable Non-PO
Percentage of the difference between (1) the aggregate Net Liquidation Proceeds
from each Mortgage Loan which became a Liquidated Loan during the month
preceding the month of such Distribution Date minus any unreimbursed Voluntary
Advances in respect of principal previously made by the Servicer and (2) the
portion of such aggregate Net Liquidation Proceeds allocable to interest;
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<PAGE>
(iv) the Class B-2 Prepayment Percentage of the applicable Non-PO
Percentage of the Adjusted Balance of each Mortgage Loan which was repurchased
by CMSI during such preceding month pursuant to Section 2.03; and
(v) the amount of any recovery in respect of a Realized Loss
allocated to the Class B-2 CitiCertificates pursuant to Section 13.02(d).
Class B-2 Percentage: As to any Distribution Date, except as set forth
in the next sentence, the Percentage calculated by multiplying (i) the Class B
Percentage by (ii) a fraction, the numerator of which is the Class B Subclass
Principal Amount of the Class B-2 CitiCertificates and the denominator of which
is the sum of the Class B Subclass Principal Amounts of the Class B Subclasses
(eligible to receive principal distributions for such Distribution Date in
accordance with Section 13. 01(d)), each as of the immediately preceding
Distribution Date (after giving effect to any distributions in reduction of
Principal Amount and the allocation of any losses on such date). In the event
that the Class B-2 CitiCertificates are not eligible to receive distributions of
principal in accordance with Section 13.01(d), the Class B-2 Percentage for such
Distribution Date will be zero.
Class B-2 Prepayment Percentage: As to any Distribution Date, except as
set forth in the next sentence, the percentage calculated by multiplying (i) the
Class B Prepayment Percentage by (ii) a fraction, the numerator of which is the
Class B Subclass Principal Amount of the Class B-2 CitiCertificates and the
denominator of which is the sum of the Class B Subclass Principal Amounts of the
Class B Subclasses (eligible to receive principal distributions for such
Distribution Date in accordance with Section 13.01(d)), each as of the
immediately preceding Distribution Date (after giving effect to any
distributions in reduction of Principal Amount and the allocation of any losses
on such date), In the event that the Class B-2 CitiCertificates are not eligible
to receive distributions of principal in accordance with Section 13.01(d), the
Class B-2 Prepayment Percentage for such Distribution Date will be zero.
Class B-2 Principal Distribution Amount: With respect to any
Distribution Date the amount distributed in respect of the Class B-2
CitiCertificates pursuant to Paragraph fourteenth of Section 13.01(b).
Class B-2 Unpaid Interest Shortfall: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class B-2 Interest Shortfall
Amounts for prior Distribution Dates is in excess of the amounts distributed in
respect of the Class B-2 CitiCertificates on prior Distribution Dates pursuant
to Paragraph thirteenth of Section 13.01(b).
Class B-3 Interest Shortfall Amount: As to any Distribution Date, any
amount by which the Class B Subclass Interest Amount of the Class B-3
CitiCertificates with respect to such Distribution Date exceeds the amount
distributed in respect of the Class B-3 CitiCertificates on such Distribution
Date pursuant to Paragraph fifteenth of Section 13.01(b).
Class B-3 Optimal Principal Amount: As to any Distribution Date, an
amount equal to the sum of:
(i) the Class B-3 Percentage of the applicable Non-PO Percentage
of (A) the principal portion of all Monthly Payments due on the Due Date
occurring in the month of such Distribution Date on each Outstanding Mortgage
Loan, less (B) if the Bankruptcy Coverage Termination Date has occurred, the
principal portion of Debt Service Reductions;
(ii) the Class B-3 Prepayment Percentage of the applicable Non-PO
Percentage of all partial Principal Prepayments received by the Servicer during
the month preceding the month in which such Distribution Date occurs, together
with the Class B-3 Prepayment Percentage of the applicable Non-PO
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<PAGE>
Percentage of the Adjusted Balance of each Mortgage Loan which was die subject
of a Principal Prepayment in full during the month preceding the month of such
Distribution Date;
(iii) the Class B-3 Prepayment Percentage of the applicable Non-PO
Percentage of the difference between (1) the aggregate Net Liquidation Proceeds
from each Mortgage Loan which became a Liquidated Loan during the month
preceding the month of such Distribution Date minus any unreimbursed Voluntary
Advances in respect of principal previously made by the Servicer and (2) the
portion of such aggregate Net Liquidation Proceeds allocable to interest;
(iv) the Class B-3 Prepayment Percentage of the applicable Non-PO
Percentage of the Adjusted Balance of each Mortgage Loan which was repurchased
by CMSI during such preceding month pursuant to Section 2.03; and
(v) the amount of any recovery in respect of a Realized Loss
allocated to the Class B-3 CitiCertificates pursuant to Section 13.02(d).
Class B-3 Percentage: As to any Distribution Date, except as set forth
in the next sentence, the percentage calculated by multiplying (i) the Class B
Percentage by (ii) a fraction, the numerator of which is the Class B Subclass
Principal Amount of the Class B-3 CitiCertificates and the denominator of which
is the sum of the Class B Subclass Principal Amounts of the Class B Subclasses
(eligible to receive principal distributions for such Distribution Date in
accordance with Section 13.01(d)), each as of the immediately preceding
Distribution Date (after giving effect to any distributions in reduction of
Principal Amount and the allocation of any losses on such date). In the event
that the Class B-3 CitiCertificates are not eligible to receive distributions of
principal in accordance with Section 13.01(d), the Class B-3 Percentage for such
Distribution Date will be zero.
Class B-3 Prepayment Percentage: As to any Distribution Date, except as
set forth in the next sentence, the percentage calculated by multiplying (i) the
Class B Prepayment Percentage by (ii) a fraction, the numerator of which is the
Class B Subclass Principal Amount of the Class B-3 CitiCertificates and the
denominator of which is the sum of the Class B Subclass Principal Amounts of the
Class B Subclasses (eligible to receive principal distributions for such
Distribution Date in accordance with Section 13.01(d)), each as of the
immediately preceding Distribution Date (after giving effect to any
distributions in reduction of Principal Amount and the allocation of any losses
on such date). In the event that the Class B-3 CitiCertificates are not eligible
to receive distributions of principal in accordance with Section 13.01(d), the
Class B-3 Prepayment Percentage for such Distribution Date will be zero.
Class B-3 Principal Distribution Amount: With respect to any
Distribution Date, the amount distributed in respect of the Class B-3
CitiCertificates pursuant to Paragraph seventeenth of Section 13.01(b).
Class B-3 Unpaid Interest Shortfall: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class B-3 Interest Shortfall
Amounts for prior Distribution Dates is in excess of the amounts distributed in
respect of the Class B-3 CitiCertificates on prior Distribution Dates pursuant
to Paragraph sixteenth of Section 13.01(b).
Class B-4 Interest Shortfall Amount: As to any Distribution Date, any
amount by which the Class B Subclass Interest Amount of the Class B-4
CitiCertificates with respect to such Distribution Date exceeds the amount
distributed in respect of the Class B-4 CitiCertificates on such Distribution
Date pursuant to Paragraph eighteenth of Section 13.01(b).
Class B-4 Optimal Principal Amount: As to any Distribution Date, an
amount equal to the sum of:
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(i) the Class B-4 Percentage of the applicable Non-PO Percentage
of (A) the principal portion of all Monthly Payments due on the Due Date
occurring in the month of such Distribution Date on each Outstanding Mortgage
Loan, less (B) if the Bankruptcy Coverage Termination Date has occurred, the
principal portion of Debt Service Reductions;
(ii) the Class B-4 Prepayment Percentage of the applicable Non-PO
Percentage of all partial Principal Prepayments received by the Servicer during
the month preceding the month in which such Distribution Date occurs, together
with the Class B-4 Prepayment Percentage of the applicable Non-PO Percentage of
the Adjusted Balance of each Mortgage Loan which was subject of a Principal
Prepayment in full during the month preceding the month of such Distribution
Date;
(iii) the Class B-4 Prepayment Percentage of the applicable Non-PO
Percentage of the difference between (1) the aggregate Net Liquidation Proceeds
from each Mortgage Loan which became a Liquidated Loan during the month
preceding the month of such Distribution Date minus any unreimbursed Voluntary
Advances in respect of principal previously made by the Servicer and (2) the
portion of such aggregate Net Liquidation Proceeds allocable to interest;
(iv) the Class B-4 Prepayment Percentage of the applicable Non-PO
Percentage of the Adjusted Balance of each Mortgage Loan which was repurchased
by CMSI during such preceding month pursuant to Section 2.03; and
(v) the amount of any recovery in respect of a Realized
Loss allocated to the Class B-4 CitiCertificates pursuant to Section 13.02(d).
Class B-4 Percentage: As to any Distribution Date, except as set forth
in the next sentence, the percentage calculated by multiplying (i) the Class B
Percentage by (ii) a fraction, the numerator of which is the Class B Subclass
Principal Amount of the Class B-4 CitiCertificates and the denominator of which
is the sum of the Class B Subclass Principal Amounts of the Class B Subclasses
(eligible to receive principal distributions for such Distribution Date in
accordance with Section 13.01(d)), each as of the immediately preceding
Distribution Date (after giving effect to any distributions in reduction of
Principal Amount and the allocation of any losses on such date). In the event
that the Class B-4 CitiCertificates are not eligible to receive distributions of
principal in accordance with Section 13.01(d), the Class B-4 Percentage for such
Distribution Date will be zero.
Class B-4 Prepayment Percentage: As to any Distribution Date, except as
set forth in the next sentence, the percentage calculated by multiplying (i) the
Class B Prepayment Percentage by (ii) a fraction, the numerator of which is the
Class B Subclass Principal Amount of the Class B-4 CitiCertificates and the
denominator of which is the sum of the Class B Subclass Principal Amounts of the
Class B Subclasses (eligible to receive principal distributions for such
Distribution Date in accordance with Section 13.01(d)), each as of the
immediately preceding Distribution Date (after giving effect to any
distributions in reduction of Principal Amount and the allocation of any losses
on such date). In the event that the Class B-4 CitiCertificates are not eligible
to receive distributions of principal in accordance with Section 13.01(d), the
Class B-4 Prepayment Percentage for such Distribution Date will be zero.
Class B-4 Principal Distribution Amount: With respect to any
Distribution Date, the amount distributed in respect of the Class B-4
CitiCertificates pursuant to Paragraph twentieth of Section 13.01(b).
Class B-4 Unpaid Interest Shortfall: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class B-4 Interest Shortfall
Amounts for prior Distribution Dates is in excess of the amounts
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<PAGE>
distributed in respect of the Class B-4 CitiCertificates on prior Distribution
Dates pursuant to Paragraph nineteenth of Section 13.01(b).
Class B-5 Interest Shortfall Amount: As to any Distribution Date, any
amount by which the Class B Subclass Interest Amount of the Class B-5
CitiCertificates with respect to such Distribution Date exceeds the amount
distributed in respect of the Class B-5 CitiCertificates on such Distribution
Date pursuant to Paragraph twenty-first of Section 13.01(b).
Class B-5 Optimal Principal Amount: As to any Distribution Date, an
amount equal to the sum of:
(i) the Class B-5 Percentage of the applicable Non-PO Percentage
of (A) the principal portion of all Monthly Payments due on the Due Date
occurring in the month of such Distribution Date on each Outstanding Mortgage
Loan, less (B) if the Bankruptcy Coverage Termination Date has occurred, the
principal portion of Debt Service Reductions;
(ii) the Class B-5 Prepayment Percentage of the applicable Non-PO
Percentage of all partial Principal Prepayments received by the Servicer during
the month preceding the month in which such Distribution Date occurs, together
with the Class B-5 Prepayment Percentage of the applicable Non-PO Percentage of
the adjusted Balance of each Mortgage Loan which was subject of a Principal
Prepayment in full during the month preceding the month of such Distribution
Date;
(iii) the Class B-5 Prepayment Percentage of the applicable Non-PO
Percentage of the difference between (1) the aggregate Net Liquidation Proceeds
from each Mortgage Loan which became a Liquidated Loan during the month
preceding the month of such Distribution Date minus any unreimbursed Voluntary
Advances in respect of principal previously made by the Servicer and (2) the
portion of such aggregate Net Liquidation Proceeds allocable to interest;
(iv) the Class B-5 Prepayment Percentage of the applicable Non-PO
Percentage of the Adjusted Balance of each Mortgage Loan which was repurchased
by CMSI during such preceding month pursuant to Section 2.03; and
(v) the amount of any recovery in respect of a Realized Loss
allocated to the Class B-5 CitiCertificates pursuant to Section 13.02(d).
Class B-5 Percentage: As to any Distribution Date, except as set forth
in the next sentence, the percentage calculated by multiplying (i) the Class B
Percentage by (ii) a fraction, the numerator of which is the Class B Subclass
Principal Amount of the Class B-5 CitiCertificates and the denominator of which
is the sum of the Class B Subclass Principal Amounts of the Class B Subclasses
(eligible to receive principal distributions for such Distribution Date in
accordance with Section 13.01(d)), each as of the immediately preceding
Distribution Date (after giving effect to any distributions in reduction of
Principal Amount and the allocation of any losses on such date). in the event
that the Class B-5 CitiCertificates are not eligible to receive distributions of
principal in accordance with Section 13.01(d), the Class B-5 Percentage for such
Distribution Date will be zero.
Class B-5 Prepayment Percentage: As to any Distribution Date, except as
set forth in the next sentence, the percentage calculated by multiplying (i) the
Class B Prepayment Percentage by (ii) a fraction, the numerator of which is the
Class B Subclass Principal Amount of the Class B-5 CitiCertificates and the
denominator of which is the sum of the Class B Subclass Principal Amounts of the
Class B Subclasses (eligible to receive principal distributions for such
Distribution Date in accordance with Section 13.01(d)), each as of the
immediately preceding Distribution Date (after giving effect to any
distributions in reduction
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of Principal Amount and the allocation of any losses on such date). In the event
that the Class B-5 CitiCertificates are not eligible to receive distributions of
principal in accordance with Section 13.01(d), the Class B-5 Prepayment
Percentage for such Distribution Date will be zero.
Class B-5 Principal Distribution Amount: With respect to any
Distribution Date, the amount distributed in respect of the Class B-5
CitiCertificates pursuant to Paragraph twenty-third of Section 13.0 l(b).
Class B-5 Unpaid Interest Shortfall: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class B-5 Interest Shortfall
Amounts for prior Distribution Dates is in excess of the amounts distributed in
respect of the Class B-5 CitiCertificates on prior Distribution Dates pursuant
to Paragraph twenty-second of Section 13.01(b).
Class L Regular Interests: Any uncertificated REMIC regular interests
designated as such pursuant to Article XII.
Class LR Certificate: Any Residual Certificate designated as such in
Article XII.
Class M Certificateholder: A Holder of a Class M CitiCertificate.
Class M Interest Amount: As to any Distribution Date, the amount of
interest accrued during the related Interest Accrual Period at the applicable
Certificate Rate on the Class M Principal Amount minus (x) any Non-Supported
Interest Shortfall allocated to the Class M CitiCertificates with respect to
such Distribution Date and (y) the interest portion of any Excess Special Hazard
Losses, Excess Fraud Losses and Excess Bankruptcy Losses allocated to the Class
M CitiCertificates with respect to such Distribution Date pursuant to Section
13.02(e).
Class M Interest Shortfall Amount: As to any Distribution Date, any
amount by which the Class M Interest Amount with respect to such Distribution
Date exceeds the amount distributed in respect of the Class M CitiCertificates
on such Distribution Date pursuant to Paragraph sixth of Section 13.01(b).
Class M Optimal Principal Amount: As to any Distribution Date, an
amount equal to the sum of:
(i) the Class M Percentage of the applicable Non-PO Percentage of
(A) the principal portion of all Monthly Payments due on the Due Date occurring
in the month of such Distribution Date on each Outstanding Mortgage Loan, less
(B) if the Bankruptcy Coverage Termination Date has occurred, the principal
portion of Debt Service Reductions;
(ii) the Class M Prepayment Percentage of the applicable Non-PO
Percentage of all partial Principal Prepayments received by the Servicer during
the month preceding the month in which such Distribution Date occurs, together
with the Class M Prepayment Percentage of the applicable Non-PO Percentage of
the Adjusted Balance of each Mortgage Loan which was subject of a Principal
Prepayment in full during the month preceding the month of such Distribution
Date;
(iii) the Class M Prepayment Percentage of the applicable Non-PO
Percentage of the difference between (1) the aggregate Net Liquidation Proceeds
from each Mortgage Loan which became a Liquidated Loan during the month
preceding the month of such Distribution Date minus any unreimbursed Voluntary
Advances in respect of principal previously made by the Servicer and (2) the
portion of such aggregate Net Liquidation Proceeds allocable to interest;
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<PAGE>
(iv) the Class M Prepayment Percentage of the applicable Non-PO
Percentage of the Adjusted Balance of each Mortgage Loan which was repurchased
by CMSI during such preceding month pursuant to Section 2.03; and
(v) the amount of any recovery in respect of a Realized Loss
allocated to the Class M CitiCertificates pursuant to Section 13.02(d).
Class M Percentage: (a) as to any Distribution Date on which any Class
B Subclass is eligible to receive distributions in reduction of Principal
Amount, the percentage calculated by multiplying (i) the Subordinated Percentage
by (ii) a fraction, the numerator of which is the Class M Principal Amount and
the denominator of which is the sum of the Class M Principal Amount and the
Class B Subclass Principal Amounts of the Class B Subclasses eligible to receive
principal distributions for such Distribution Date in accordance with Section
13.01(d), each as of the immediately preceding Distribution Date (after giving
effect to any distributions in reduction of Principal Amount and the allocation
of any losses on such date) or (b) on all other Distribution Dates, the
Subordinated Percentage.
Class M Prepayment Percentage: (a) as to any Distribution Date on which
any Class B Subclass is eligible to receive distributions in reduction of
Principal Amount, the percentage calculated by multiplying (i) the Subordinated
Prepayment Percentage by (ii) a fraction, the numerator of which is the Class M
Principal Amount and the denominator of which is the sum of the Class M
Principal Amount and the Class B Subclass Principal Amounts of the Class B
Subclasses eligible to receive principal distributions for such Distribution
Date in accordance with Section 13.01(d), each as of the immediately preceding
Distribution Date (after giving effect to any distributions in reduction of
Principal Amount and the allocation of any losses on such date) or (b) on all
other Distribution Dates, the Subordinated Prepayment Percentage.
Class M Principal Distribution Amount: With respect to any Distribution
Date, the amount distributed in respect of the Class M CitiCertificates pursuant
to Paragraph eighth of Section 13.01(b).
Class M Principal Amount: As of any Distribution Date the lesser of (a)
the Initial Principal Amount of the Class M CitiCertificates less (i) all
amounts previously distributed to holders thereof in reduction of Principal
Amount and (ii) such Class's pro rata share of the Non-PO Percentage of the
principal portion of Excess Special Hazard Losses, Excess Fraud Losses and
Excess Bankruptcy Losses previously allocated to the Class M CitiCertificates
and (b) the Pool Adjusted Balance minus the Class A Principal Amount, each as of
the immediately preceding Distribution Date (after taking into account
distributions in reduction of Principal Amount and the allocation of any Excess
Special Hazard Losses, Excess Fraud Losses and Excess Bankruptcy Losses on such
date).
Class M Unpaid Interest Shortfall: As to any Distribution Date, the
amount, if any, by which the aggregate of the Class M Interest Shortfall Amounts
for prior Distribution Dates is in excess of the amounts distributed in respect
of the Class M CitiCertificates on prior Distribution Dates pursuant to
Paragraph seventh of Section 13.01(b).
Class R Certificate: Any Residual Certificate designated as such in
Article XII.
Clearing Agency: An organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act and the regulations of the
Commission thereunder. The initial Clearing Agency is as designated in Article
XII.
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Clearing Agency Participant: A broker, dealer, bank other financial
institution or other person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
CMSI: Citicorp Mortgage Securities, Inc., a corporation organized and
existing under the laws of the State of Delaware, or its successors in interest.
CMSI Order: A written order or request signed in the name of CMSI by an
Authorized Officer thereof.
Code: The Internal Revenue Code of 1986, as it may be amended from time
to time, any successor statutes thereto, and applicable U.S. Department of the
Treasury temporary or final regulations issued pursuant thereto.
Commission: The Securities and Exchange Commission.
Compensating Cap: With respect to any Distribution Date, the lesser of
(a) the aggregate amount of the Servicing Fee actually received on the
Affiliated Mortgage Loans for such Distribution Date and (b) the product of (x)
0.125% and (y) one-twelfth of the aggregate Adjusted Balance of the Affiliated
Mortgage Loans as of the preceding Distribution Date.
Constituent REMICs: Each of the one or more segregated asset pools
designated in Article XII as a REMIC within the Trust Fund.
Corporate Trust Office: The principal office of the Trustee at which at
any particular time its corporate trust business shall be administered, which
office at the date of the execution of this Agreement is located at the address
set forth in Article XII.
Custodial Account for P&I: The custodial account for principal and
interest established and maintained as a separate account by each Third Party
Servicer pursuant to its Third Party Servicing Agreement and caused to be
established and maintained by the Third Party Servicer, pursuant to Section
3.03.
Cut-Off Date: As defined in Article XII.
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 or any other similar
state law, except such a reduction constituting a Deficient Valuation.
Deficient Valuation: With respect to any Mortgage Loan, a valuation by
a court of competent jurisdiction of the Mortgaged Property in an amount less
than the then-outstanding indebtedness under the Mortgage Loan, or any reduction
in the amount of principal to be paid in connection with any scheduled Monthly
Payment that results in a permanent forgiveness of principal, which valuation or
reduction results from a proceeding under the Bankruptcy Code, or any other
similar state law.
Definitive Securities: Any Class or Subclass of CitiCertificates or the
Residual Certificates issued in definitive, fully registered form in accordance
with the provisions of Section 5.06 hereof.
Delinquent Amount: As of any Determination Date, an amount equal to (a)
the sum of (i) all Remittance Delinquencies (net of Uncovered Remittance
Delinquencies) as of such date, (ii) the aggregate amount of all previous Third
Party Certificate Account Advances and Affiliated Certificate Account
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Advances not yet reimbursed to the Certificate Account and (iii) Net Voluntary
Advances from the Cut-Off Date through such Determination Date, minus (b) the
sum of (i) the Voluntary Advance, if any, for the Distribution Date next
following such Determination Date and (ii) the Third Party Uncommitted Cash and
Affiliated Uncommitted Cash, if any, as of such Determination Date.
Deposit Date: Except as otherwise defined in Article XII, the Business
Day preceding each Distribution Date or if a Certificate Account is held at
Citibank, such Distribution Date.
Depository: The bank or banks (which may be Citibank, N.A. or Citibank
(New York State)) or savings and loan association or associations or trust
company or companies (which may be the Trustee or which may be, directly or
indirectly, controlled by or under common control with CMSI) at which the
Certificate Account, Buydown Account, Escrow Account, Custodial Account for P&I
and Servicing Account are established or maintained pursuant to Section 3.02,
3.03 or 3.15. Each Depository must meet the requirements set forth in Section
11.02.
Determination Date: The date or dates specified in Article XII.
Disqualified Organization: As defined in Section 5.02.
Distribution Date: The date or dates specified in Article XII.
Distribution Date Statement: The statement required to be delivered
pursuant to Section 3.04(f).
Due Date: The first day of each calendar month.
Due Period: With respect to any Determination Date, the period
beginning at the close of business on the first day of the month next preceding
the month of such Determination Date (or, in the case of the Due Period that is
applicable to the first Determination Date, beginning at the close of business
on the Cut-Off Date) and ending at the close of business on the first day of the
month of such Determination Date.
Eligible Account: Either (A) a segregated account or accounts
maintained at Citibank, N.A., provided that the short-term unsecured debt
obligations of Citibank, N.A. are rated at least "A-1" by S&P if S&P is a Rating
Agency, "F-l" by Fitch if Fitch is a Rating Agency, and "P-1" by Moody's if
Moody's is a Rating Agency, or (B) a segregated account or accounts maintained
with an institution whose deposits are insured by the Bank Insurance Fund or the
Savings Association Insurance Fund of the FDIC, the unsecured and
uncollateralized debt obligations of which shall be rated at least in the
category of "AA" by S&P if S&P is a Rating Agency, in the category of "AA" by
Fitch if Fitch is a Rating Agency, and in the category of "AA" by Moody's if
Moody's is a Rating Agency, and which has a short term rating of at least "A-1"
by S&P if S&P is a Rating Agency, "F-1" by Fitch if Fitch is a Rating Agency,
and "P-1" by Moody's if Moody's is a Rating Agency and which is either (i) a
federal savings and loan association duly organized, validly existing and in
good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws and (iv) a
principal subsidiary of a bank holding company or (C) a trust account (which
shall be a "special deposit account") maintained with the trust department of a
federal or state chartered depository institution or of a trust company, having
capital and surplus of not less than $50,000,000, acting in its fiduciary
capacity. Any Eligible Accounts maintained with the Trustee shall conform to the
preceding clause (C).
Eligible Investments: Any one or more of the following obligations or
securities:
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(i) direct obligations of, and obligations fully guaranteed by,
the United States of America, FHLMC, FNMA, the Farm Credit Banks, the Federal
Home Loan Banks, the Student Loan Marketing Association (but only with respect
to obligations backed by letters of credit or senior obligations) or any agency
or instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America; provided,
however, that any obligation of, or guaranteed by, the Federal Home Loan Banks
or the Farm Credit Banks or any obligation of. or guaranteed by, FHLMC or FNMA,
other than a senior debt obligation of FHLMC or FNMA or a mortgage participation
or pass-through certificate guaranteed by FHLMC or FNMA, excluding stripped
mortgage securities which are valued greater than par on the portion of unpaid
principal, shall be an Eligible Investment only if, at the time of investment,
such investment is acceptable to each Rating Agency;
(ii) Federal Funds, demand and time deposits in, certificates of
deposits of, or bankers' acceptances issued by, any depository institution or
trust company (including the Trustee or any agent of the Trustee, acting in
their respective commercial capacities) incorporated under the laws of the
United States of America or any state thereof and subject to supervision and
examination by federal and/or state banking authorities, so long as at the time
of such investment or contractual commitment providing for such investment the
certificate of deposit or other unsecured short-term debt obligations of such
depository institution or trust company have a credit rating of not less than
"A-1" by S&P if S&P is a Rating Agency, "P-1" by Moody's if Moody's is a Rating
Agency, and "F-1" by Fitch if Fitch is a Rating Agency; each such investment
being expressly authorized and deemed authorized by a Certificateholder's
purchase and/or acceptance of any Residual Certificate when acting in the
capacity of a fiduciary (including a "fiduciary" of an "employee benefit plan"
subject to ERISA, as those term are defined in Sections 3(21) and 3(3) of ERISA,
respectively) which purchase and/or acceptance shall also evidence and be deemed
to evidence any such Certificateholder's representation and warranty to CMSI and
the Trustee that such Certificateholder is duly authorized by and empowered
under appropriate governing instruments (for example, an employee benefit plan,
in the case of an ERISA fiduciary) to give such authorization; and money market
funds investing exclusively in any of the investments discussed in this
definition of Eligible Investments with a rating of not less than "A-1" by S&P
if S&P is a Rating Agency, "F-1" by Fitch if Fitch is a Rating Agency and "P-1"
by Moody's if Moody's is a Rating Agency.
(iii) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued or guaranteed by
an agency or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of America
(collectively, "Eligible Collateral"), in either case where such security has a
remaining maturity of one year or less and where such repurchase obligation has
been entered into with a depository institution or trust company (acting as
principal) with a rating of not less than "A-1" by S&P if S&P is a Rating
Agency, "P-1" by Moody's -if Moody's is a Rating Agency and "F-1" by Fitch if
Fitch is a Rating Agency;
(iv) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States of America or
any state thereof which have an unsecured long-term debt rating, in the event
that S&P is one of the Rating Agencies, of at least in the category of AA, in
the event that Fitch is one of the Rating Agencies, of at least in the category
of AA and in the event Moody's is one of the Rating Agencies, of at least in the
category of Aa, or an unsecured short-term debt rating, in the event that S&P is
one of the Rating Agencies, of at least A-1, in the event that Fitch is one of
the Rating Agencies, of at least F-1 and in the event Moody's is one of the
Rating Agencies, of at least P-1, at the time of such investment or contractual
commitment providing for such investment; provided, however, that securities
issued by any particular corporation will not be Eligible Investments to the
extent that investment therein will cause the then outstanding principal amount
of securities issued by such corporation and held as part of the Trust Fund to
exceed 10% of the aggregate current Principal Amount of CitiCertificates
Outstanding and of the current
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Percentage Interest of the Residual Certificates Outstanding, and the aggregate
principal amount of all cash and Eligible Investments, held in the Trust Fund;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a specified
date not more than one year after the date of issuance thereof) having at the
time of such investment a rating of not less than "A-1" by S&P if S&P is a
Rating Agency, "F-1" by Fitch if Fitch is a Rating Agency and "P-1" by Moody's
if Moody's is a Rating Agency;
(vi) a Qualified GIC;
(vii) certificates or receipts representing direct ownership
interests in future interest or principal payments on obligations of the United
States of America or its agencies or instrumentalities (which obligations are
backed by the full faith and credit of the United States of America) held by a
custodian on behalf of the holders of such receipts;
(viii) any other money market deposit, obligation, security or
investment bearing interest or sold at a discount which has an unsecured
short-term debt rating, in the event that S&P is one of the Rating Agencies, of
at least "A-1", in the event that Fitch is one of the Rating Agencies, of at
least "F-1" and, in the event that Moody's is one of the Rating Agencies, of at
least "P-1", or if such investment relates to a money market fund, such fund
must be rated in the highest rating category by each Rating Agency; and
(ix) any other demand or time deposit, obligation, security or
investment bearing interest or sold at a discount as may be acceptable to each
Rating Agency;
provided, that each such Eligible Investment is a "permitted investment" as
defined in Code Section 860G(a)(5).
Eligible Substitute Mortgage Loan: With respect to any Mortgage Loan or
Mortgage Loans included in the Trust Fund for which such Eligible Substitute
Mortgage Loan is being substituted, a Mortgage Loan for which all payments of
principal and interest due on or before the Substitution Day have been received
and which has the following characteristics:
(a) a Mortgage Note Rate equal to or greater than that of such
Mortgage Loan or, if there is more than one such Mortgage Loan, equal to or
greater than the highest Mortgage Note Rate among them;
(b) a date of maturity no later than, and no more than one year
prior to, that of any such Mortgage Loan or Mortgage Loans;
(c) an original term to maturity equal to that of such Mortgage
Loan or Mortgage Loans; and
(d) an aggregate Adjusted Balance, together with any other
Eligible Substitute Mortgage Loans being substituted for such Mortgage Loan or
Mortgage Loans, equal to or greater than that of such Mortgage Loan or Mortgage
Loans;
provided, (i) that clause (d) hereof may be satisfied by deposit in the
Certificate Account of sufficient funds so that the Adjusted Balance (calculated
by including such funds) of such Eligible Substitute Mortgage Loan satisfies
such clause (the "Substitute Adjustment Amount"), which funds shall be
separately accounted for as a reserve fund in such Certificate Account and will
be remitted to Certificateholders in the month following receipt when such
repurchase proceeds are remitted to compensate for the resulting shortfall
incurred in
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connection with such substitution of Mortgage Loans and (ii) that the Trustee
shall receive, not later than the Substitution Day, an Opinion of Counsel (who
may not be an employee of CMSI or of an Affiliate of CMSI), dated the
Substitution Day to the effect:
(A) that all documents delivered to the Trustee in connection with such
substitution comply as to form with the requirements of Section 2.04(a);
(B) that all conditions to such substitution specified in Section
2.04(a) have been satisfied;
(C) that the Eligible Substitute Mortgage Loans are "qualified
replacement mortgages" as defined in Code Section 860G(a)(4); and
(D) that the substitution of such Eligible Substitute Mortgage
Loans and the deposit of cash in the Certificate Account, if any, will not
constitute a "prohibited transaction" within the meaning of Code Section
860F(a), will not adversely affect the status of the Trust Fund as comprised of
the Constituent REMICs and will not otherwise subject the Trust Fund to any tax.
ERISA: The applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended from time to time and any applicable rule,
regulation or order promulgated thereunder.
ERISA Prohibited Holder: As defined in Section 5.02.
ERISA Restricted CitiCertificates: As defined in Article XII.
Escrow Account: The Escrow Account or Accounts established and
maintained as separate accounts by each Third Party Servicer pursuant to its
Third Party Servicing Agreement or otherwise and caused to be established and
maintained by the Master Servicer, pursuant to Section 3.03.
Event of Default: An event described in Section 7.01.
Excess Bankruptcy Loss: Any Bankruptcy Loss, or portion thereof,
which exceeds the then-applicable Bankruptcy Loss Amount.
Excess Fraud Loss: Any Fraud Loss, or portion thereof, which exceeds
the then-applicable Fraud Loss Amount.
Excess Special Hazard Loss: Any Special Hazard Loss, or portion
thereof, that exceeds the then-applicable Special Hazard Loss Amount.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Expense Rate: As to each Third Party Mortgage Loan, the sum of
the related Third Party Servicing Fee Rate and the Third Party Master
Servicing Fee Rate.
Expenses: As to each Third Party Mortgage Loan, the Expense Rate
multiplied by the Adjusted Balance of such Third Party Mortgage Loan on the Due
Date in the month preceding such Distribution Date.
Extraordinary Event: Any of the following events: (i) hostile or
warlike action in time of peace or war; (ii) the use of any weapon of war
employing atomic fission or radioactive force whether in time of peace or war;
or (iii) insurrection, rebellion, revolution, civil war or any usurped power or
action taken by any
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governmental authority in preventing such occurrences (but not including looting
or rioting occurring not in time of war).
FDIC: The Federal Deposit Insurance Corporation.
Federal Reserve Bank: The Federal Reserve Bank of New York or
successor thereto.
FHLMC: The Federal Home Loan Mortgage Corporation.
Fitch: Fitch IBCA, Inc.
FNMA: Fannie Mae.
Foreclosure Profits: As to any Distribution Date, the excess, if any,
of Net Liquidation Proceeds in respect of each Mortgage Loan that became a
Liquidated Loan during the month next preceding the month of such Distribution
Date over the sum of the unpaid principal balance of each such Liquidated Loan
plus accrued and unpaid interest at the applicable Mortgage Note Rate on the
unpaid principal balance thereof from the Due Date to which interest was last
paid by the Mortgagor (or, in the case of a Liquidated Loan that had been an REO
Mortgage Loan, from the Due Date to which interest was last deemed to have been
paid pursuant to Section 3.14) to the first day of the month following the month
in which such Mortgage Loan became a Liquidated Loan.
Fraud Coverage Termination Date: The Distribution Date upon which the
Fraud Loss Amount has been reduced to zero or a negative number (or the
Subordination Depletion Date, if earlier).
Fraud Loss Amount: As of any Distribution Date after the Cut-Off Date,
an amount equal to: (X) prior to the second anniversary of the Cut-Off Date, an
amount equal to the Initial Fraud Loss Amount minus the aggregate amount of
Fraud Losses since the Cut-Off Date, and (Y) from the second through fifth
anniversary of the Cut-Off Date, an amount equal to (1) the lesser of (a) the
Fraud Loss Amount as of the most recent anniversary of the Cut-Off Date and (b)
0.50% of the Pool Adjusted Balance as of the most recent anniversary of the
Cut-Off Date minus (2) the Fraud Losses since the most recent anniversary of the
Cut-Off Date. After the fifth anniversary of the Cut-Off Date the Fraud Loss
Amount shall be zero.
Fraud Loss: A Liquidated Loan Loss as to which there was fraud in the
origination of such Mortgage Loan.
GIC: A guaranteed investment contract or surety bond.
Guide: The Citicorp Mortgage, Inc. Servicing Guide, being the manual
relating to the mortgage loan purchase program of Citicorp Mortgage, Inc. as
such manual may be amended or supplemented from time to time.
Holder: Has the same meaning as "Certificateholder."
Independent: When used with respect to any specified Person, means such
a Person who is "independent" within the meaning of Rule 2-01(b) of the
Commission's Regulation S-X under the Exchange Act.
Initial Bankruptcy Loss Amount: As specified in Article XII.
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Initial Fraud Loss Amount: As specified in Article XII.
Initial Special Hazard Loss Amount: As specified in Article XII.
Initial Special Hazard Percentage: As specified in Article XII.
Initial Principal Amount: With respect to any Class or Subclass of
CitiCertificates, the amount specified in Article XII, with respect to any
Certificate, the amount specified thereon as the Initial Principal Amount per
Single Certificate multiplied by the number of Single Certificates represented
thereby, as specified in Article XII.
Insurance Policy: As specified in Article XII.
Insurance Proceeds: Proceeds paid in respect of a Mortgage Loan
pursuant to the Primary Mortgage Insurance Certificates, if any, amounts paid
pursuant to the primary hazard insurance policies to the extent not applied to
restore the related Mortgaged Property or released to the Mortgagor in
accordance with CMI's normal servicing procedures or, in the case of a Third
Party Servicer, the Guide, and amounts paid pursuant to any other insurance
policy or bond relating to the Mortgage Loans or the servicing thereof
Insured Certificates: As specified in Article XII.
Insurer: As specified in Article XII.
Insurer Deliverables: As specified in Article XII.
Interest Accrual Period: As specified in Article XII.
Investment Account: As and to the extent specified in Article XII, the
Certificate Account and any other account or any portion if any thereof which
consists of cash or Eligible Investments.
Investment Statement: A written statement prepared by CMSI and setting
forth its calculations made in connection with a determination pursuant to the
first paragraph of Section 3.02(a) with respect to a proposed investment of
funds in the Investment Account.
Investor Rate: As specified in Article XII.
Issue Date: The date on which Certificates are first executed,
authenticated and delivered, as specified in Article XII.
Issuer: CMSI.
Last Scheduled Distribution Date: With respect to each Class or
Subclass of CitiCertificates or Certificates, the date specified in Article XII.
LIBOR Accrual Period: As specified in Article XII, if any.
LIBOR CitiCertificates: As specified in Article XII, if any.
Liquidated Loan: A Mortgage Loan with respect to which the related
Mortgaged Property has been acquired, liquidated or foreclosed and with respect
to which the Servicer or the Master Servicer, as the case
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may be, determines that all Liquidation Proceeds which it expects to recover
have been recovered or a Mortgage Loan with respect to which the related
Mortgaged Property is retained or sold by the Mortgagor and for which the
Servicer or the Master Servicer, as the case may be, has accepted payment from
the Mortgagor in consideration for the release of the Mortgage in an amount
which is less than the outstanding principal balance of such Mortgage Loan as a
result of a determination by the Servicer or the Master Servicer, as the case
may be, that the potential Liquidation Expenses with respect to such Mortgage
Loan would exceed the amount by which the cash portion of such payment is less
than the outstanding principal balance of such Mortgage Loan.
Liquidated Loan Loss: With respect to any Distribution Date, the
aggregate of the amount of losses with respect to each Mortgage Loan which
became a Liquidated Loan prior to the Due Date preceding such Distribution Date,
equal to the excess of (i) the unpaid principal balance of each such Liquidated
Loan, plus accrued interest thereon in accordance with the amortization schedule
at the time applicable thereto at the applicable Mortgage Note Rate net, in the
case of the Third Party Mortgage Loans, the Third Party Servicing Fee from the
Due Date as to which interest was last paid with respect thereto through the
last day of the month in which such Mortgage Loan became a Liquidated Loan, over
(ii) Net Liquidation Proceeds with respect to such Liquidated Loan.
Liquidating Loan: A Mortgage Loan as to which (a) any right of any
person to terminate liquidation proceedings instituted with respect to such
Mortgage Loan by paying delinquent payment and foreclosure costs has expired or
(b) the Servicer (or Subservicer) or the Master Servicer (or Third Party
Servicer) as has accepted the deed to the property (or, in the case of
cooperative, the related stocks, shares, membership certificates and/or other
documents evidencing ownership thereof) subject to the related Mortgage in lieu
of foreclosure and in whole or partial satisfaction of such Mortgage Loan.
Liquidation Expenses: With respect to any Liquidated Loan, expenses
paid or incurred by or for the account of the Servicer or the Master Servicer
(or the Subservicer or the Third Party Servicer), or the Trust Fund for (a)
Property Protection Expenses, (b) property sales expenses, (c) foreclosure
costs, including court costs and reasonable attorneys' fees, (d) similar
expenses reasonably paid or incurred in connection with the liquidation of such
Liquidated Loan, and (e) any tax imposed on the Trust Fund with respect to a
Liquidated Loan or property received by deed in lieu of foreclosure.
Liquidation Proceeds: With regard to any Liquidated Loan, the amounts
received by the Servicer or the Master Servicer (or the Subservicer or the Third
Party Servicer) in connection with the liquidation of such Liquidated Loan,
whether through judicial foreclosure, non-judicial foreclosure, proceeds of
insurance policies, condemnation proceeds or otherwise, including payments
received from the Mortgagor in respect of such Liquidated Loan, other than
amounts required to be paid to the Mortgagor pursuant to the terms of such
Liquidated Loan or to be applied otherwise pursuant to law.
Lower-Tier Certificates: As defined in Article XII.
Lower-Tier REMIC: As defined in Article XII.
Master Servicer: CMSI, or its successor in interest, or any successor
master servicer appointed as herein provided.
Master Servicing Fee: The amount payable to the Master Servicer
pursuant to Section 3.23 hereof.
Master Servicer Fee Rate: As to any Third Party Mortgage Loan, .05%
per annum.
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Monthly Payment: As to any Mortgage Loan (including any REO Mortgage
Loan) and any Due Date, the payment of principal and interest due thereon in
accordance with the amortization schedule at the time applicable thereto (after
such adjustment for any partial Principal Prepayments and Deficient Valuations
occurring prior to such Due Date but before any adjustment to such amortization
schedule other than Deficient Valuations by reason of any bankruptcy, or similar
proceeding or any moratorium or similar waiver or grace period).
Moody's: Moody's Investors Service, Inc.
Mortgage: With respect to any Mortgage Loan, the mortgage or deed of
trust creating a first lien on and an interest (a) in the case of a Mortgage
Loan relating to a cooperative apartment in a cooperative housing corporation,
in the Mortgagor's interest therein securing a Mortgage Note and (b) in other
cases, in real property securing a Mortgage Note.
Mortgage Document Custodial Agreement: The Mortgage Document Custodial
Agreement from time to time in effect between the Mortgage Document Custodian
and the Trustee, substantially in the form of Exhibit C hereto, as the same may
be amended or modified from time to time in accordance with the terms thereof.
Mortgage Document Custodian: The Mortgage Document Custodian or
Custodians identified in Article XII or their successors in interest named
pursuant to the Mortgage Document Custodial Agreement as from time to time in
effect. The Mortgage Document Custodian may be CMSI, the Trustee, any Affiliate
of either CMSI or the Trustee or an independent entity.
Mortgage Documents: All documents contained in the Mortgage Files.
Mortgage File: The mortgage documents listed in Section 2.01 pertaining
to a particular Mortgage Loan and any additional documents required to be added
to such documents pursuant to this Agreement.
Mortgage Loan: At any time, the indebtedness of a Mortgagor evidenced
by a Mortgage Note which is secured by real property (or shares evidencing
ownership interest in a cooperative apartment in a cooperative housing
corporation) and which is sold and assigned to the Trustee and held at such time
in the Trust Fund pursuant to this Agreement, the Mortgage Loans originally so
held being identified in Exhibits B-1 and B-2 hereto.
Mortgage Loan Schedule: The list of Mortgage Loans transferred to the
Trustee as part of the Trust Fund, attached hereto as Exhibits B-1 and B-2.
Mortgage Note: With respect to a Mortgage Loan, the promissory note or
other evidence of indebtedness of the Mortgagor.
Mortgage Note Rate: For a given Mortgage Loan, the annual rate per
annum at which interest accrues on such Mortgage Loan.
Mortgaged Property: Any real property subject to a Mortgage, or any
cooperative apartment in a cooperative housing corporation.
Mortgagor: The obligor on a Mortgage Note.
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Net Liquidation Proceeds: For any period, with respect to any
Liquidated Loan the aggregate amount of interest payments, principal payments
and Liquidation Proceeds, net of related Liquidation Expenses and Insurance
Proceeds, received by the Servicer or the Master Servicer or the Third Party
Servicer or deposited in or the Certificate Account for distribution to
Certificateholders or applied to reduction of Aggregate Outstanding Advances, as
the case may be, with respect to any such Mortgage Loan, as proceeds of such
Mortgage Loan. Net Liquidation Proceeds shall be allocated first to accrued and
unpaid interest on the related Mortgage Loan and then to the unpaid principal
balance thereof
Net Note Rate: As defined in Article XII.
Net REO Proceeds: As to any REO Mortgage Loan, REO Proceeds net of any
related expenses of the Servicer or the Third Party Servicer.
Net Trustee Advances: For any period, the amount (which may be
negative) obtained by subtracting the amount of any reimbursements with respect
to Trustee Advances received in such period from the aggregate amount of Trustee
Advances made in such period.
Net Advances: For any period, the amount (which may be negative)
obtained by subtracting the amount of any reimbursements with respect to
Voluntary Advances received in such period from the aggregate amount of
Voluntary Advances made in such period.
Non-PO Percentage: As defined in Article XII.
Non-PO Pool Adjusted Balance: With respect to the Mortgage Loans as of
any date, the sum of the product as to each Mortgage Loan of (A) the Non-PO
Percentage for such Mortgage Loan and (B) the Adjusted Balance of such Mortgage
Loan.
Nonrecoverable Advance: Any portion of a Voluntary Advance previously
made or proposed to be made in respect of a Mortgage Loan which has not been
previously reimbursed to the Servicer or Master Servicer or the Third Party
Servicer or the Third Party Master Servicer and which, in the good faith
judgment of such Person would not be ultimately recoverable from Liquidation
Proceeds or other recoveries in respect of the related Mortgage Loan. The
determination by such Person 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 Trustee
and detailing the basis for such determination, but any delay or failure to send
such certificate shall not impair such Person's right to withhold or recover
such advance.
Non-Supported Interest Shortfall: With respect to any Distribution
Date, and any Class or Subclass of CitiCertificates (other than a Class A
Principal-Only Subclass), the pro rata share allocated thereto based on (in the
case of any such Class or Subclass of the CitiCertificates) the amount of
interest accrued thereon during the related Interest Accrual Period at the
Certificate Rate thereof of the sum of (x) with respect to the Affiliated
Mortgage Loans, the excess, if any, of the Prepayment Interest Shortfalls on
such Mortgage Loans over the Compensating Cap (but not including any Servicing
Fee received because of a Voluntary Advance) and (y) with respect to the Third
Party Mortgage Loans, the excess, if any, of the Prepayment Interest Shortfalls
on such Mortgage Loans over the aggregate amount paid in respect thereof by the
applicable Third Party Servicers as required under the Guide, or paid in respect
thereof by the Third Party Master Servicer. Any Servicing Fee or Master
Servicing Fee advanced by the Servicer will not be applied to reduce either
Affiliated Prepayment Interest Shortfalls or Third Party Prepayment Interest
Shortfalls.
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Officer's Certificate: A certificate signed by an Authorized Officer
of CMSI and delivered to the Trustee.
Opinion of Counsel: A written opinion of counsel, who (unless otherwise
specified herein) may be counsel for, or an employee of, CMSI or an Affiliate of
CMSI, which counsel shall be reasonably acceptable to the Trustee.
Original Class A Principal Amount: As specified in Article XII.
Original Class B-1 Percentage: As specified in Article XII.
Original Class B-1 Principal Amount: As specified in Article XII.
Original Class B-1 Subordination Level: As specified in Article XII.
Original Class B-2 Percentage: As specified in Article XII.
Original Class B-2 Principal Amount: As specified in Article XII.
Original Class B-2 Subordination Level: As specified in Article XII.
Original Class B-3 Percentage: As specified in Article XII.
Original Class B-3 Principal Amount: As specified in Article XII.
Original Class B-3 Subordination Level: As specified in Article XII.
Original Class B-4 Percentage: As specified in Article XII.
Original Class B-4 Principal Amount: As specified in Article XII.
Original Class B-4 Subordination Level: As specified in Article XII.
Original Class B-5 Percentage: As specified in Article XII.
Original Class B-5 Principal Amount: As specified in Article XII.
Original Class B Principal Amount: The sum of the Original Class B-1
Principal Amount, the Original Class B-2 Principal Amount, the Original Class
B-3 Principal Amount, the Original Class B-4 Principal Amount and the Original
Class B-5 Principal Amount. As specified in Article XII.
Original Class M Percentage: As specified in Article XII.
Original Class M Principal Amount: As specified in Article XII.
Original Class M Subordination Level: As specified in Article XII.
Original Value: With respect to the Mortgaged Property underlying a
Mortgage Loan, the lesser of the sales price of such Mortgaged Property and the
appraisal value thereof determined pursuant to an appraisal made in connection
with origination of such Mortgage Loan, except that the original appraisal of
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such Mortgaged Property may be used for a refinanced Mortgage Loan the unpaid
principal balance of which, after refinancing, does not exceed the unpaid
principal balance of the original mortgage loan at the time of refinancing by an
amount greater than the amount of the closing costs associated with such
refinancing.
Originator: The Affiliate or Affiliates of CMSI, or the third party
originators, from which CMSI is acquiring the Mortgage Loans.
Outstanding: As of any date, all Certificates theretofore authenticated
and delivered under this Agreement except:
(i) Certificates theretofore canceled by the Certificate Registrar
or delivered to the Certificate Registrar for cancellation;
(ii) CitiCertificates with respect to which money for a
distribution in the necessary amount to reduce the Principal Amount thereof to
zero has been theretofore deposited with the Trustee or any Paying Agent (other
than CMSI) in trust for the Holders of such CitiCertificates; provided, however,
that if a distribution in reduction of the Principal Amount of such
CitiCertificates to zero will be made, notice of such distribution has been duly
given pursuant to this Agreement or provision therefor, satisfactory to the
Trustee, has been made;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to this Agreement
unless proof satisfactory to the Certificate Registrar is presented that any
such Certificates are held by a holder in due course; and
(iv) Certificates alleged to have been destroyed, lost or stolen
for which replacement Certificates have been issued as provided for in Section
5.03 and authorized and delivered pursuant to the Agreement;
provided, however, that in determining whether the Holders of the requisite
percentage of the aggregate Principal Amount or Percentage Interest of any
Outstanding Certificates or of the Outstanding Certificates of any one or more
Classes thereof have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, such percentage shall be based on the
Principal Amount of such Certificate and provided, further, Certificates owned
by CMSI or any other obligor upon the Certificates or any Affiliate of CMSI or
such other obligor shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice, consent, or waiver, only
Certificates which the Trustee knows to be so owned shall be so disregarded and
except that where CMSI or any other obligor upon the Certificates or any
Affiliate of CMSI or such other obligor shall be owner of 100% of the aggregate
Principal Amount or Percentage Interest of any Outstanding Certificates, CMSI or
such other obligor or Affiliate shall be permitted to give any request, demand,
authorization, direction, notice, consent or waiver hereunder. Certificates so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Trustee the pledgee's right
so to act with respect to such Certificates and that the pledgee is not CMSI or
any other obligor upon the Certificates or any Affiliate of CMSI or such other
obligor.
Outstanding Mortgage Loan: With respect to any Due Date, a Mortgage
Loan which, prior to such Due Date, was not the subject of a Principal
Prepayment in full, did not become a Liquidated Mortgage Loan and was not
purchased pursuant to Sections 2.02 or 2.03.
Pass-Through Rate: With respect to a Mortgage Loan as of any date or
for any period, the applicable Mortgage Note Rate (i) less the Servicing Fee in
the case of an Affiliated Mortgage Loans, or (ii) less the Expense Rate in the
case of Third Party Mortgage Loans. Any regular monthly remittance of interest
at the
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Pass-Through Rate for a Mortgage Loan is based upon annual interest at such rate
on the Adjusted Balance as of the first day of the month of such Mortgage Loan
divided by twelve. Interest at the Pass-Through Rate shall be computed on the
basis of a 360-day year, each month being assumed to have 30 days.
Any partial remittance of interest at such rate by reason of a full
Principal Prepayment is based upon annual interest at such rate on the prepaid
principal balance of the related Mortgage Loan multiplied by a fraction, the
numerator of which is the actual number of days elapsed in the month of such
prepayment to the date of such prepayment and the denominator of which is 360.
With respect to all of the Affiliated Mortgage Loans and some of the Third Party
Mortgage Loans, the Mortgagors are not required to pay interest on any partial
Principal Prepayments on Mortgage Loans which are received during any calendar
month. The amounts required to be paid pursuant to Section 3.25 are in addition
to any interest payments made by the Mortgagor and passed through on full and
partial prepayments.
Paying Agent: Each paying agent identified in Article XII which is
authorized to make distributions with respect to the Certificates on behalf of
the Trustee. A Paying Agent may be CMSI or an Affiliate of CMSI and, if not CMSI
or an Affiliate of CMSI, must be authorized to exercise corporate trust powers
under the laws of its jurisdiction of organization.
Percentage Interest: With respect to a Class of Residual Certificates,
if the Residual Certificate has a Principal Amount as specified in Article XII,
the Initial Principal Amount of such Residual Certificate (expressed as a
percentage) of the aggregate Initial Principal Amount of the Residual
Certificates and, if the Residual Certificate does not have a Principal Amount,
the portion represented by such Residual Certificate (expressed as a percentage)
of the total ownership interest in the applicable Constituent REMIC represented
by all Residual Certificates of such Class. With respect to any CitiCertificate
of an interest-only Class or Subclass of CitiCertificates, the ratio of the
notional amount of such CitiCertificate to the aggregate notional amount of the
entire Class or Subclass.
Person: Any legal person, including any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof
Plan: As defined in Section 5.02.
PO Loss Amount: As defined in Article XII.
PO Percentage: As defined in Article XII.
Pool Adjusted Balance: With respect to the Mortgage Loans as of any
date, the aggregate of the Adjusted Balances of all Mortgage Loans.
Pool Distribution Amount: As of any Distribution Date, the funds
eligible for distribution to the Holders of the Certificates on such
Distribution Date, being all amounts deposited into the Certificate Account, but
excluding the following:
(a) Affiliated Uncommitted Cash and Third Party Uncommitted Cash
which will not be used on such Distribution Date for an Affiliated Certificate
Account Advance or a Third Party Certificate Account Advance;
(b) all permitted withdrawals from the Certificate Account
pursuant to Section 3.16, and
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(c) all income from Eligible Investments that are held in an
Investment Account.
Pool Value: Except as otherwise defined in Article XII, as of any
Determination Date or as of the Cut-Off Date, as applicable, with respect to any
Mortgage Loan, the Adjusted Balance of such Mortgage Loan as of the Due Date in
the month in which such Determination Date or Cut-Off Date occurs.
Pooling Agreement: The Pooling Agreement (as defined in the preamble to
this Standard Terms Document) entered into with respect to a particular series
of Certificates and into which this Standard Terms Document is incorporated by
reference.
Predecessor Certificates: With respect to any particular Certificate of
a Class or Subclass, every previous Certificate of that Class or Subclass
evidencing all or a portion of the same Principal Amount or Percentage Interest
as that evidenced by such particular Certificate; and for the purpose of this
definition, any Certificate authenticated and delivered under Section 5.03 in
lieu of a lost, destroyed or stolen Certificate shall be deemed to evidence the
same Principal Amount, notional amount or Percentage Interest, as the case may
be, as the lost, destroyed or stolen Certificate.
Prepaid Installment: With respect to any Mortgage Loan, any installment
of principal thereof and interest thereon received prior to the scheduled Due
Date for such installment, as an early payment thereof and not as a Principal
Prepayment with respect to such Mortgage Loan.
Prepayment Interest Shortfall: As to any Mortgage Loan that was the
subject of a Principal Prepayment applied during the prior calendar month, an
amount equal to the difference between (a) one month of interest on such
Principal Prepayment at the Mortgage Note Rate and (b) the amount of interest,
if any with respect to such month that was actually received from the Mortgagor
in connection with such Principal Prepayment.
Prepayment Principal: With respect to any Distribution Date, the sum of
all amounts that constitute (x) full or partial Principal Prepayments received
in the month preceding the month in which such Distribution Date occurs and (y)
the Adjusted Balance of each Mortgage Loan which, in the month preceding the
month in which the Distribution Date occurs was repurchased pursuant to the
terms of this Pooling Agreement.
Primary Mortgage Insurance Certificate: The certificate of primary
mortgage insurance relating to a particular Mortgage Loan to the extent
initially set forth in the Mortgage Loan Schedule.
Principal Amount: On any Distribution Date,
(i) with respect to a Class A CitiCertificate of any Subclass, its pro
rata share based on the Initial Principal Amount of the applicable Class A
Subclass Principal Amount;
(ii) with respect to a Class M CitiCertificate, its pro rata share
based on the Initial Principal Amount of the Class M CitiCertificates and
(iii) with respect to a Class B CitiCertificate of any Subclass, its
pro rata share based on the Initial Principal Amount of the applicable Class B
Subclass Principal Amount.
Principal Prepayment: With regard to any particular Mortgage Loan, any
payment of principal on such Mortgage Loan which is received in advance of its
scheduled Due Date and is not accompanied by an
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amount as to interest representing scheduled interest for any month subsequent
to the month of prepayment, excluding any proceeds of or advances on any
Liquidated Loan.
Private Certificates: As defined in Article XII.
Proceeding: Any suit in equity, action at law or other judicial or
administrative proceeding.
Property Protection Expenses: With respect to Mortgage Loans, expenses
paid or incurred by or for the account of CMSI or the Trust Fund in accordance
with the related Mortgages for (a) real estate property taxes and property
repair, replacement protection and preservation expenses and (b) similar
expenses reasonably paid or incurred to preserve or protect the value of such
Mortgages.
Qualified GIC: A GIC, assigned to the Trustee, or entered into by the
Trustee at the direction of CMSI, on or before the Issue Date, providing for the
investment of funds insuring a minimum or fixed rate of return on investments of
such funds, which contract or surety bond shall
(a) be an obligation of an insurance company, trust company,
commercial bank (which may be Citibank or Citibank (New York State)) or other
entity whose credit standing is acceptable to each Rating Agency;
(b) provide that the Trustee may exercise all of the rights of
CMSI under such contract or surety bond without the necessity of the taking of
any action by CMSI;
(c) provide that if at any time (subject to the second proviso of
this paragraph (c)) the then current credit standing of the obligor under such
guaranteed investment contract is such that continued investment pursuant to
such contract of funds included in the Trust Fund would result in a downgrading
of any rating of any Class or Subclass of the CitiCertificates, the Trustee may
terminate such contract and be entitled to the return of all funds previously
invested thereunder, together with accrued interest thereon at the interest rate
provided under such contract through the date of delivery of such funds to the
Trustee, provided that the Trustee shall not be charged with knowledge of any
such potential downgrading unless it shall have received written notice of such
potentiality from the provider of the GIC which must be obligated to give such
notice at least once per year; provided, further, that upon any such event CMSI,
by written notice to the Trustee, may replace such contract with a substitute
GIC having substantially the same terms (including without limitation a rate of
return at least as high as the contract being replaced) so long as such
substitute contract has an obligor with a credit standing no less than the
credit standing of the obligor under the contract to be replaced at the time the
contract was executed and such fact is certified by CMSI to the Trustee;
(d) provide that the Trustee's interest therein shall be
transferable to any successor trustee hereunder;
(e) provide that the funds invested thereunder and accrued
interest thereon be available not later than the day prior to any Distribution
Date on which such funds may be required for distribution hereunder; and
(f) meet such other standards as may be specified in Article XII.
Qualified Nominee: A Person (who may not be CMSI or an Affiliate of
CMSI) in whose name Eligible Investments held by the Trustee hereunder may be
registered as nominee of the Trustee in lieu of registration in the name of the
Trustee, provided that the following conditions shall be satisfied in connection
with such registration:
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(a) the instruments governing the creation and operation of the
nominee provide that neither the nominee nor any owner of an interest in the
nominee (other than the Trustee) shall have any interest, beneficial or
otherwise, in any Eligible Investments at any time held in the name of the
nominee, except for the purpose of transferring and holding legal title thereto;
(b) the nominee and the Trustee have entered into a binding
agreement in substantially the form to be provided by CMSI establishing that any
Eligible Investments held in the name of the nominee are to be held by the
nominee as agent (other than commission agent or broker) or nominee for the
account of the Trustee; and
(c) in connection with the registration of any Eligible Investment
in the name of the nominee, all requirements under applicable governmental
regulations necessary to effect a valid registration of transfer of such
Eligible Investment are complied with as evidenced to the Trustee upon its
request by an Opinion of Counsel.
Rating Agencies: The nationally recognized statistical rating
organization(s) identified in Article XII.
Realized Losses: With respect to any Distribution Date, Liquidated Loan
Losses (including Special Hazard Losses and Fraud Losses) and Bankruptcy Losses
incurred in the month preceding the month of such Distribution Date.
Record Date: As defined in Article XII.
Reimbursable Class A Non-PO Losses: An amount of principal allocated to
the Class A CitiCertificates (other than the Class A PO Subclass) pursuant to
Section 13.02.
Reimbursable Class A PO Losses: An amount of principal allocated to the
Class A PO Subclass pursuant to Section 13.02.
Reimbursable Class B Losses: An amount of principal allocated to the
Class B CitiCertificates pursuant to Section 13.02.
Reimbursable Class M Losses: An amount of principal allocated to the
Class M CitiCertificates pursuant to Section 13.02.
REMIC: A "real estate mortgage investment Third Party" within the
meaning of Code Section 860D. References to the "REMIC" are to the
Constituent REMICs constituted by the Trust Fund.
REMIC Provisions: The provisions of the federal income tax law relating
to REMICs, which appear at Sections 860A through 860G of the Code, and related
provisions and regulations promulgated thereunder, as the foregoing may be in
effect from time to time.
Remittance Delinquencies: With respect to any Determination Date, the
aggregate of the originally scheduled interest (which in the case of a Buydown
Mortgage Loan shall be deemed to be no less than the amount of accrued and
unpaid interest at the related Mortgage Note Rate) less, in the case of the
Third Party Mortgage Loans, the aggregate amount of Expenses, and principal
installments (as adjusted for any Principal Prepayments) on Mortgage Loans due
from and payable by the Mortgagors (or, in the case of a Buydown Mortgage Loan,
the related Buydown Account) on (but not before) the Due Date next preceding
such Determination Date but not paid on or before such Determination Date.
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Remittances: All payments listed in Sections 3.03 and 3.14 which are
received by the Trust Fund with respect to Mortgage Loans.
REO Mortgage Loan: Any Mortgage Loan which is not a Liquidated Loan and
as to which the related Mortgaged Property is held as part of the Trust Fund.
REO Proceeds: Proceeds, net of any related expenses, received in
respect of any REO Mortgage Loan (including, without limitation, proceeds from
the rental of the related Mortgaged Property).
REO Property: A Mortgaged Property acquired by the Trust Fund through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan or otherwise treated as having been acquired pursuant to the REMIC
Provisions.
Report Date: As defined in Section 3.09.
Required Amount of Certificates: (i) 66 2/3% or more of the aggregate
Voting Interest of the outstanding CitiCertificates, if affected by the
occurrence of any Event of Default and (ii) 66 2/3% or more of the aggregate
Outstanding Percentage Interest of the Residual Certificates, if affected by
such an Event of Default.
Reserve Fund: As defined in Article XII.
Residual Certificate: As defined in Article XII.
Responsible Officer: With regard to any Person, the Chairman or any
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
executive vice president, senior vice president, first vice president, second
vice president, vice president, any assistant vice president, the Secretary, any
assistant secretary, the Treasurer, any assistant treasurer, the Cashier, any
assistant or deputy cashier, any trust officer or assistant trust officer, the
Controller and any assistant controller or any other officer of such Person
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 of such Person to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject; provided, however,
that in respect of the Trustee, "Responsible Officer" shall only mean any such
officer who is employed in the Corporate Trust Department or a similar group for
the Trustee.
Retail Reserve Fund: As defined in Article XII.
S&P: Standard and Poor's Ratings Group, a division of McGraw Hill, Inc.
Servicer: CMSI, or its successor in interest, or any successor servicer
appointed as herein provided.
Servicing Account: The account, if any, created and maintained pursuant
to Section 3.15.
Servicing Fee: As defined in Article XII.
Servicing Officer: Any officer of CMSI, any Subservicer or Third Party
Servicer involved in, or responsible for, the administration and servicing of
the Trust Fund whose name appears on a list of servicing
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officers attached to an Officer's Certificate furnished to the Trustee by CMSI,
as such list may from time to time be amended.
Similar Law: As defined in Section 5.02.
Single Certificate: As set forth in Article XII.
Special Hazard Loss: (i) A Liquidated Loan Loss suffered by a Mortgaged
Property on account of direct physical loss, exclusive of (a) any loss covered
by a hazard policy or a flood insurance policy maintained in respect of such
Mortgaged Property pursuant to Section 3.18 and (b) any loss caused by or
resulting from:
(1) normal wear and tear;
(2) infidelity, conversion or other dishonest act on the part
of the Trustee, the Servicer or any of their agents or employees; or
(3) errors in design, faulty workmanship or faulty materials,
unless the collapse of the property or a part thereof ensues;
or (ii) any Liquidated Loan Loss suffered by the Trust Fund arising from or
related to the presence or suspected presence of hazardous wastes or hazardous
substances on a Mortgaged Property unless such loss to a Mortgaged Property is
covered by a hazard policy or a flood insurance policy maintained in respect of
such Mortgaged Property pursuant to Section 3.18.
Special Hazard Loss Amount: As of any Distribution Date, an amount
equal to the Initial Special Hazard Loss Amount minus the sum of (i) the
aggregate amount of Special Hazard Losses and (ii) the Adjustment Amount (as
defined below) as most recently calculated. For each anniversary of the Cut-Off
Date, the Adjustment Amount shall be calculated and shall be equal to the
amount, if any, by which the amount calculated in accordance with the preceding
sentence (without giving effect to the deduction of the Adjustment Amount for
such anniversary) exceeds the greater of (A) the product of the Special Hazard
Percentage for such anniversary multiplied by the Pool Adjusted Balance on the
Distribution Date immediately preceding such anniversary and (B) twice the
Adjusted Balance of the Mortgage Loan in the Trust Fund which has the largest
Adjusted Balance on the Distribution Date immediately preceding such
anniversary.
Special Hazard Percentage: As of each anniversary of the Cut-Off Date,
the greater of (i) 1.00% and (ii) the largest percentage obtained by dividing
the aggregate Adjusted Balances (as of the immediately preceding Distribution
Date) of the Mortgage Loans secured by Mortgaged Properties located in a single,
five-digit ZIP code area in the State of California by the Pool Adjusted Balance
of all the Mortgage Loans as of such anniversary.
Special Hazard Termination Date: The Distribution Date upon which the
Special Hazard Loss Amount has been reduced to zero or a negative number (or the
Subordination Depletion Date, if earlier).
Standard Accrual Period: As defined in Article XII.
Startup Day: As defined in Article XII.
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Subclass: With respect to a Class of CitiCertificates, any group of
such Class designated as a Subclass in Article XII.
Subordinated CitiCertificates: The Class M and Class B
CitiCertificates.
Subordinated CitiCertificate Percentage: With respect to any
Distribution Date, 100% less the Class A Percentage.
Subordinated Prepayment Percentage: With respect to any Distribution
Date, the difference between 100% and the Class A Prepayment Percentage for
such date.
Subordination Depletion Date: The first Distribution Date on which
the Principal Amount of the Subordinated CitiCertificates has been reduced to
zero.
Subservicer: Any person or persons to which CMSI may delegate its
servicing obligations hereunder pursuant to Section 6.06.
Subservicing Agreement: The Subservicing Agreement between CMSI and
the Subservicer, substantially in the form of Exhibit D hereto.
Substitution Adjustment Amount: The meaning ascribed to such term in
the definition of Eligible Substitute Mortgage Loan.
Substitution Day: As defined in Section 2.04.
Third Party Certificate Account Advance: With respect to any
Distribution Date, the amount of any Third Party Uncommitted Cash to be
distributed to Certificateholders to cover Remittance Delinquencies related to
any Third Party Mortgage Loan on such Distribution Date.
Third Party Master Servicer: The entity named as such in Article XII,
and its successors and permitted assigns.
Third Party Master Servicing Fee Rate: The rate per annum specified in
Article XII.
Third Party Mortgage Loans: The Mortgage Loans (if any) listed in
Exhibit B-1 hereto.
Third Party Servicer: Any person with which the Master Servicer has
entered into a Third Party Servicing Agreement and which satisfies the
requirements set forth herein. Each Third Party Mortgage Loan shall have a Third
Party Servicer.
Third Party Servicing Agreement: The written contract between the
Master Servicer and any Third Party Servicer relating to servicing and/or
administration of certain Third Party Mortgage Loans as provided in Section
3.12.
Third Party Servicing Fee: The amount payable to the Third Party
Servicers pursuant to Section 3.23 hereof
Third Party Servicing Fee Rate: With respect to any Third Party
Mortgage Loan, the rate specified as such on Exhibit B-1 hereto under the
heading "Sub Fee".
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Third Party Trustee Advances: The aggregate of the advances with
respect to the Third Party Mortgage Loans made by the Trustee pursuant to
Section 8.13, and deposited into the Certificate Account, the amount of any such
Third Party Trustee Advance with respect to a Distribution Date being no more
than (a) the aggregate of Remittances on the Third Party Mortgage Loans that
were due on the preceding Due Date and delinquent as of the related
Determination Date, less (b) the sum of Voluntary Advances in respect of Third
Party Mortgage Loans and the amount of Third Party Uncommitted Cash.
Third Party Uncommitted Cash: Any Uncommitted Cash relating to a Third
Party Mortgage Loan.
Transfer Instrument: A deed transferring an interest in property
subject to a mortgage.
Trustee: The Person executing this Agreement as Trustee, or its
successor in interest, or any successor trustee appointed as herein provided.
Trustee Advances: The aggregate amount of Affiliated Trustee Advances
and Third Party Trustee Advances.
Trustee Failure: As to any Distribution Date, the failure of the
Trustee to deposit an Affiliated Trustee Advance or Third Party Trustee Advance
in the Certificate Account as required under Section 8.13.
Trustee Failure Advance: As to any Distribution Date subsequent to the
Advance Account Funding Date, the amount, if any, required to be deposited in
the Certificate Account from amounts withdrawn from the Advance Account on
account of a Trustee Failure, which amount is equal to the lesser of (i) the
amount of any Third Party Trustee Advance or Affiliated Trustee Advance required
to be made by the Trustee with respect to such Distribution Date but not made,
and (ii) the then applicable Advance Account Available Advance Amount.
Trust Fund: The corpus of the trust created by this Agreement,
consisting of the Mortgage Loans, the Certificate Account, any Upper-Tier REMIC
Account, any Retail Reserve Fund, any reinvestment income earned on funds in an
Investment Account, REO Property and the Primary Mortgage Insurance
Certificates, any other insurance policies with respect to the Mortgage Loans,
and the rights of the Trustee under any Reserve Fund and any Insurance Policy.
Uncommitted Cash: As of any Determination Date, any cash in the
Certificate Account representing Principal Prepayments posted or Liquidation
Proceeds deposited on or after the Due Date immediately preceding such
Determination Date and all related payments of interest and all payments which
represent earl y receipt of scheduled payments of principal and interest due on
a date or dates subsequent to such Due Date.
Uncovered Remittance Delinquency: Any Remittance Delinquency determined
by the Servicer or the Master Servicer to be the result of the occurrence of an
Extraordinary Event (but not including a Remittance Delinquency determined to be
eligible for an advance pursuant to Section 3.04(g)).
Unpaid PO Loss Amount: As defined in Article XII.
Underwriters: As defined in Article XII.
Upper-Tier Certificates: As specified in Article XII.
Upper-Tier REMIC: As defined in Article XII.
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Upper-Tier REMIC Account: Any account or accounts that are required to
be established (in the same manner as the Certificate Account is established)
and maintained pursuant to Section 12.04.
U.S. Person: A citizen or resident of the United States of America, a
corporation, partnership (except to the extent provided in applicable Treasury
regulations) or other entity created or organized in or under the laws of the
United States of America or any political subdivision thereof, an estate that is
subject to U.S. federal income tax regardless of the source of its income or a
trust if a court within the United States is able to exercise primary
supervision over the administration of such trust, and one or more such U.S.
Persons have the authority to control all substantial decisions of such trust
(or, to the extent provided in applicable Treasury regulations, certain trusts
in existence on August 20, 1996 which are eligible to elect to be treated as
U.S. Persons).
Voluntary Advance: The aggregate of the advances made by the Servicer,
the Master Servicer, the Third Party Master Servicer or a Third Party Servicer
and deposited into the Certificate Account pursuant to the Agreement, the amount
of any such Voluntary Advance with respect to a Distribution Date being no more
than (a) the aggregate of Remittances on the Mortgage Loans that were due on the
preceding Due Date and delinquent as of the related Determination Date, after
adjustment of delinquent interest payments to interest at the Mortgage Note Rate
less, in the case of the Third Party Mortgage Loans, the Expense Rate and plus
the amount of any Affiliated Certificate Account Advance and Third Party
Certificate Account Advance with respect to the preceding Distribution Date,
less (b) the amounts to be used to make an Affiliated Certificate Account
Advance and Third Party Certificate Account Advance on the next succeeding
Distribution Date.
Voting Interest: As specified in Article XII.
Section 1.02. Calculations Respecting Mortgage Loans.
(a) In connection with all calculations required to be made
pursuant to this Agreement with respect to Remittances on any Mortgage Loan, any
payments on the Mortgage Loans or any payments on any other assets included in a
Trust Fund, the rules set forth in this Section 1.02 shall be applied.
(b) Calculations with respect to Remittances on Mortgage Loans
shall be made on a mortgage-loan-by-mortgage-loan basis, based upon current
information as to the terms of such Mortgage Loans and reports of payments
received on such Mortgage Loans supplied to CMSI by the Person responsible for
the servicing thereof and satisfying such requirement, if any, as may be set
forth in Article III.
(c) Each Remittance receivable with respect to a Mortgage Loan
shall be assumed to be received on the Due Date.
ARTICLE II
CONVEYANCE OF TRUST FUND;
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Conveyance of Trust Fund. CMSI, concurrently with the
execution and delivery of this Agreement, does hereby transfer, assign, set over
and otherwise convey to the Trustee without recourse all the right, title and
interest of CMSI in and to the Trust Fund, including without limitation all of
the right, title and interest of CMSI in the Mortgage Loans, including all
Remittances received or receivable by CMSI on or with respect to the Mortgage
Loans (other than payments of principal and interest due and payable on the
Mortgage Loans, and Principal Prepayments thereon received, on or before the
Cut-Off Date), together
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with all of its right, title and interest in and to the proceeds of any title,
hazard or other insurance policies, or Primary Mortgage Insurance Certificates,
related to such Mortgage Loans. The transfer of the Mortgage Loans accomplished
hereby is absolute and is intended by the parties hereto as a sale. CMSI shall
not transfer any property to the Trust Fund except as otherwise expressly
permitted by this Agreement.
(a) In connection with such transfer and assignment of Mortgage
Loans (other than Mortgage Loans secured by shares in a cooperative housing
corporation), CMSI does herewith deliver to the Mortgage Document Custodian on
behalf of the Trustee to be held in trust the following documents or instruments
with respect to each Mortgage Loan so transferred and assigned (except where,
and to the extent, CMSI is complying with Section 2.01(c)):
(i) The Mortgage Note, endorsed by manual or facsimile
signature without recourse by the Originator or an Affiliate of the
Originator in blank or to the Trustee showing a complete chain of
endorsements from the named payee to the Trustee or from the named
payee to the Affiliate of the Originator and from such Affiliate to the
Trustee;
(ii) The original recorded Mortgage, with evidence of
recording thereon or a copy of the Mortgage certified by the public
recording office in those jurisdictions where the public recording
office retains the original;
(iii) Any original assumption, modification, buydown or
conversion-to-fixed-interest-rate agreement applicable to the Mortgage;
(iv) An assignment from the Originator or an Affiliate of the
Originator to the Trustee in recordable form of the Mortgage which may
be included, where permitted by local law, in a blanket assignment or
assignments of the Mortgage to the Trustee, including any intervening
assignments and showing a complete chain of title from the original
mortgagee named under the Mortgage to the Originator or an Affiliate of
the Originator and to the Trustee;
(v) The original or a copy of the title insurance policy
(which may be a certificate or a short form policy relating to a master
policy of tide insurance) pertaining to the Mortgaged Property, or in
the event such original title policy is unavailable, a copy of the
preliminary title report and the lender's recording instructions, with
the original to be delivered within 180 days of the Closing Date or
other evidence of title; and
(vi) Any related Primary Mortgage Insurance Certificate and
related policy or a copy thereof
(b) In connection with the transfer and assignment of Mortgage
Loans secured by shares in a cooperative housing corporation, CMSI does herewith
deliver to the Mortgage Document Custodian on behalf of the Trustee to be held
in trust the following documents or instruments with respect to each Mortgage
Loan secured by shares in a cooperative housing corporation so transferred and
assigned (except where, and to the extent, CMSI is complying with Section
2.01(c)):
The Mortgage Note, endorsed by manual or facsimile signature without
recourse by the Originator or an Affiliate of the Originator in blank or to the
Trustee showing a complete chain of endorsements and assignments from the named
payee to the Trustee or from the named payee to the Affiliate of the Originator
and from such Affiliate to the Trustee;
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(ii) The original Mortgage, with evidence of recording thereon
(if recordation was required under applicable law);
(iii) Any original assumption, modification, buydown or
conversion-to-fixed-interest-rate agreement applicable to the Mortgage;
(iv) The original stocks, shares, membership certificate or
other contractual agreement evidencing ownership;
(v) The original stock power executed in blank;
(vi) The original executed security agreement or similar
document and all assignments thereof showing a complete chain of
assignment from the named secured party to the Trustee;
(vii) The original executed proprietary lease or occupancy
agreement and all assignments thereof showing a complete chain of
assignment from the named secured party to the Trustee;
(viii) The original executed recognition agreement and all
executed assignments of recognition agreement showing a complete chain
of assignment from the named secured party to the Trustee;
(ix) (Except for Mortgage Loans (x) secured by Mortgaged
Properties in the State of New Jersey or (y) originated prior to
October 1988 and secured by Mortgaged Properties in the State of New
York) the executed UCC-1 financing statement with evidence of recording
thereon and executed original UCC-3 financing statements or other
appropriate UCC financing statements required by state law, evidencing
a complete and unbroken chain from the mortgagee to the Trustee with
evidence of recording thereon (or in a form suitable for recordation);
and
(x) Any related Primary Mortgage Insurance Certificate and
related policy.
In addition, CMSI, concurrently with the execution and delivery of this
Agreement and in connection with such transfer and assignment of Mortgage Loans
shall deposit in the Certificate Account the amount of all payments received by
CMSI after the Cut-Off Date and prior to the Issue Date with respect to the
Mortgage Loans, to the extent such payments are being transferred and assigned
to the Trustee hereunder, except any portion of such payments on Mortgage Loans
(including servicing fees with respect thereto) of a type not required to be
deposited therein as specified in Article XI or Article XII.
(c) In instances where an original recorded Mortgage cannot be
delivered by CMSI to the Trustee prior to or concurrently with the execution and
delivery of this Agreement, due to a delay in connection with the recording of
such Mortgage, CMSI may, (a) in lieu of delivering such original recorded
Mortgage referred to in clause (a)(ii) or (b)(ii) above, deliver to the Trustee
a copy thereof, provided that CMSI certifies that the original Mortgage has been
delivered to a title insurance company for recordation after receipt of its
policy of title insurance or binder therefor (which may be a certificate
relating to a master policy of title insurance), and (b) in lieu of delivering
the completed assignment in recordable form referred to in clause (a)(iv) or
(b)(ii) and (b)(ix) above to the Trustee, deliver such assignment to the Trustee
completed except for recording information. In all such instances, CMSI will
deliver the original recorded Mortgage and completed assignment (if applicable)
to the Trustee promptly upon receipt of such Mortgage. In instances where an
original recorded Mortgage has been lost or misplaced, CMSI or the related title
insurance company may deliver, in lieu of such Mortgage, a copy of such Mortgage
bearing recordation information and certified as true and correct by the office
in which recordation thereof was made. In
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instances where the original or a copy of the title insurance policy referred to
in clause (a)(v) above (which may be a certificate relating to a master policy
of title insurance) pertaining to the Mortgaged Property relating to a Mortgage
Loan cannot be delivered by CMSI to the Trustee prior to or concurrently with
the execution and delivery of this Agreement because such policy is not yet
available, CMSI may, in lieu of delivering the original or a copy of such title
insurance referred to in clause (a)(v) above, deliver to the Trustee a binder
with respect to such policy (which may be a certificate relating to a master
policy of title insurance) and deliver the original or a copy of such policy
(which may be a certificate relating to a master policy of title insurance) to
the Trustee when available, in instances where an original assumption,
modification, buydown or conversion-to-fixed-interest-rate agreement cannot be
delivered by CMSI to the Trustee prior to or concurrently with the execution and
delivery of this Agreement, CMSI may, in lieu of delivering the original of such
agreement referred to in clause (a)(iii) or (b)(iii) above, deliver a certified
copy thereof CMSI will deliver the original assumption, modification, buydown or
conversion-to-fixed-interest-rate agreement to the Trustee promptly upon receipt
thereof.
CMSI agrees, at its own expense, to prepare each assignment referred to
in clause (a)(iv) or (b)(vi) and (b)(ix) above. CMSI shall prepare and deliver a
copy of each such assignment to the Trustee as soon as practicable but not later
than 60 days after the date of initial issuance of the CitiCertificates. In the
case of each Mortgage relating to a Mortgaged Property located in the State of
Maryland, CMSI intends to effect recordation of each such assignment (or to
supply the Trustee with evidence of recordation) as soon as practicable after
the date of initial issuance of the CitiCertificates in the appropriate public
office for real property records. Except as provided in this paragraph, neither
CMSI nor any Originator or Affiliate of any Originator shall have any obligation
to record any assignment of any Mortgage in order to name the Trustee as
mortgagee of record. The preceding sentence shall not be in derogation of the
obligation of CMSI, the Originators and Affiliates of the Originators to record
(and supply the Trustee with evidence thereof) assignments of Mortgages required
in order that CMSI, an Originator or an Affiliate of an Originator be shown as
mortgagee of record of each Mortgage.
CMSI agrees, at its own expense, to record any UCC-3 financing
statements not previously recorded (and to supply the Trustee with evidence of
such recordation). CMSI intends to effect such recordation as soon as
practicable after the date of initial issuance of the CitiCertificates in the
appropriate public office.
In the case of Mortgage Loans which have been prepaid in full after the
Cut-Off Date and prior to the date of execution and delivery of this Agreement,
CMSI, in lieu of delivering the above documents to the Trustee, herewith
delivers to the Trustee a certification of a Servicing Officer as set forth in
Section 3.22.
In connection with such transfer and delivery of the balance of the
Trust Fund, CMSI, concurrently with the execution and delivery of this
Agreement, shall deposit into the Certificate Account cash in the amount (if
any) specified in Article XII.
Wherever it is provided in this Section 2.01(c) that any document,
evidence or information relating to a Mortgage Loan be delivered or supplied to
the Trustee, CMSI shall do so by delivery thereof to the Mortgage Document
Custodian on behalf of the Trustee.
Section 2.02. Acceptance by Trustee. The Trustee, by execution and
delivery hereof, acknowledges receipt, subject to the review described in the
succeeding sentence, of the documents and other property referred to in Section
2.01 and declares that the Trustee holds and will hold such documents and other
property, including property yet to be received in the Trust Fund, in trust,
upon the trusts herein set forth, for the benefit of all present and future
Certificateholders. The Mortgage Document Custodian on behalf of the Trustee
shall, for the benefit of the Trustee and the Certificateholders, review each
Mortgage File within 90 days after execution and delivery of this Agreement, to
ascertain that all required documents have been executed, received and recorded,
if applicable, and that such documents relate to the Mortgage Loans identified
in Exhibits B-1 and B-2 hereto. If in the course of such review the Mortgage
Document Custodian
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finds a document or documents constituting a part of a Mortgage File to be
defective in any material respect, the Mortgage Document Custodian shall
promptly so notify the Trustee and CMSI, whereupon CMSI shall have a period of
180 days within which to correct or cure any such defect (including correction
or cure by substitution of Mortgage Loans to the extent permitted by Section
2.04). If any such material defect has not been corrected or cured, CMSI will,
not later than 180 days after the Mortgage Document Custodian's notice
respecting such defect, repurchase the related Mortgage Loan from the Trustee at
a price equal to (i) 100% of the Adjusted Balance on such Mortgage Loan, after
taking into account any principal payable thereon on the Due Date in the month
of repurchase, plus (ii) accrued and unpaid interest thereon at the Mortgage
Note Rate less in the case of a Third Party Mortgage Loan, the applicable
Expense Rate, to the first day of the month in which proceeds of such repurchase
are distributed to the Certificateholders, plus (iii) any unreimbursed payments
with respect to such Mortgage Loan, to the extent not covered in (ii) above, as
part of a Voluntary Advance, a Trustee Advance or an Advance Account Advance
whereupon all Voluntary Advances, Trustee Advances and Advance Account Advances
will be reimbursed to the Trustee or deemed reimbursed to CMSI, as the case may
be, with respect to such Mortgage Loan by such respective amounts.
Notwithstanding the preceding two sentences, any material defect that causes a
Mortgage Loan to fail to constitute a "qualified mortgage" within the meaning of
Code Section 860G(a)(3) shall either be corrected or cured by CMSI or, failing
such correction or cure, CMSI shall repurchase such Mortgage Loan at the price
described in the preceding sentence (or, if within two years of the Startup Day,
or such other period as may be permitted by the REMIC Provisions, substitute an
Eligible Substitute Mortgage Loan therefor pursuant to Section 2.04) no later
than 90 days after the discovery of such material defect. Any such repurchase
shall be considered a prepayment in full of such Mortgage Loan on such Due Date
and shall be deposited (net of reimbursed Voluntary Advances, Trustee Advances
and Advance Account Advances) by CMSI in the Certificate Account and, upon
receipt by the Trustee of written notification of such deposit signed by an
Authorized Officer of CMSI, the Trustee shall direct the Mortgage Document
Custodian to release to CMSI the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment furnished to the Trustee, in
each case without recourse, as CMSI shall reasonably request, to vest in CMSI
any Mortgage Loan released pursuant hereto. Any repurchase by CMSI of a Mortgage
Loan hereunder shall be deemed to include the right to receive any Remittance
thereon payable after the month of repurchase, and the Trustee shall, upon
receipt of any such Remittance, promptly remit the amount of such Remittance to
CMSI. It is understood and agreed that the obligation of CMSI to repurchase any
Mortgage Loan or make a substitution therefor pursuant to Section 2.04 as to
which a material defect in a constituent document exists shall constitute the
sole remedy against CMSI with respect to such defect available to the
Certificateholders or the Trustee on behalf of the Certificateholders.
The Trustee may, concurrently with the execution and delivery hereof or
at any time thereafter, enter into a Mortgage Document Custodial Agreement
substantially in the form of Exhibit C hereto pursuant to which the Trustee
appoints a Mortgage Document Custodian to hold the Mortgage Documents in trust
for the Trustee and the benefit of the Trustee and all present and future
Certificateholders, which may provide that the Mortgage Document Custodian shall
conduct the review of each Mortgage File required under the first paragraph of
this Section 2.02, provided that, if the Mortgage Document Custodian so
appointed is CMSI or an Affiliate of CMSI, the Trustee shall conduct such
review.
Section 2.03. Representations and Warranties of CMSI. CMSI hereby
represents and warrants to the Trustee that:
(i) The information set forth in Exhibit B hereto was true and
correct in all material respects as of the date or dates respecting which such
information is furnished;
(ii) As of the Issue Date, each Mortgage will be a valid first
lien on the property securing the related Mortgage Note subject only to (a) the
lien of current real property taxes and assessments
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as limited in clause (vi) below, (b) covenants, conditions and restrictions,
rights of way, easements and other matters of public record as of the date of
recording of such Mortgage, such exceptions appearing of record being acceptable
to mortgage lending institutions generally or specifically reflected in the
appraisal obtained in connection with the origination of the related Mortgage
Loan, (c) other matters to which like properties are commonly subject which do
not in the aggregate materially interfere with the benefits of the security
intended to be provided by such Mortgage and (d) in addition, in the case of a
Mortgage on a cooperative apartment in a cooperative housing corporation, the
right of the related cooperative to cancel the related shares and terminate the
proprietary lease for unpaid assessments (general and special) owed by the
Mortgagor;
(iii) Immediately prior to the transfer of the Mortgage Loans
to the Trustee, CMSI has good title to, and is the sole legal owner of, each
Mortgage Loan (except as set forth in clause (v) below) and immediately upon the
transfer and assignment herein contemplated, CMSI will have taken all steps
necessary so that the Trustee will have good title to, and will be the sole
legal owner of, each Mortgage Loan (except as set forth in clause (v) below);
(iv) As of the Cut-Off Date, no payment of principal of or
interest on or in respect of any Mortgage Loan was 30 days or more past due (a
Mortgage Loan being considered 30 days past due in a given month when payment
due on the first day of the prior month has not been made on or before the last
day of such prior month) or has been 30 days or more past due more than once for
the twelve months preceding the Cut-Off Date;
(v) As of the Issue Date, there is no mechanics' lien or claim
for work, labor or material affecting the premises subject to any Mortgage which
is or may be a lien prior to, or equal with, the lien of such Mortgage except
those which are insured against by the title insurance policy referred to in (x)
below;
(vi) As of the Issue Date, there is no delinquent tax or
assessment lien against any Mortgaged Property;
(vii) As of the Issue Date, there is no valid offset, defense
or counterclaim to any Mortgage Note or Mortgage, including the obligation of
the Mortgagor to pay the unpaid principal and interest on such Mortgage Note;
(viii) As of the Issue Date, each Mortgaged Property is free
of material damage and is in good repair;
(ix) Each Mortgage at the time it was originated complied in
all material respects with applicable state and federal laws, including, without
limitation, usury, equal credit opportunity, recording and disclosure laws;
(x) A lender's title insurance policy or binder (which shall
have been approved as such by either FNMA or the FHLMC) or other assurance of
title customary in the relevant jurisdiction therefor, was issued on the date of
the origination of each Mortgage Loan (other than a Mortgage Loan relating to a
cooperative apartment), and, as of the Issue Date, each such policy, binder or
assurance is valid and remains in full force and effect;
(xi) The Mortgage Loans conform in all material respects with
the descriptions thereof in the Prospectus and the Prospectus Supplement
relating to the Certificates;
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(xii) Each Mortgage Loan having an original principal amount
exceeding 90% of its Original Value is covered by primary mortgage insurance at
least until the outstanding principal amount thereof is less than or equal to
80% of either the Original Value through principal payments by the Mortgagor or
the value thereof as determined by a new appraisal delivered subsequent to
origination. So long as it is in effect, such primary mortgage insurance covers
the losses arising from defaults in an amount equal to the excess, of the
outstanding principal amount of such Mortgage Loan over 75% of the Original
Value of such Mortgage Loan;
(xiii) The original principal amount of each Mortgage
Loan was not more than 95% of the Original Value of such Mortgage Loan; and
(xiv) With respect to each Buydown Mortgage Loan, the Buydown
Funds deposited in the Buydown Account, if any, will be sufficient, after
crediting interest at the rate per annum, if any, specified in the buydown
agreement compounded monthly to the Buydown Account and adding the amounts
required to be paid by the Mortgagor, to make the scheduled payments stated in
the Mortgage Note for the term of the Buydown Subsidy Agreement.
It is understood and agreed that the representations and warranties set
forth in this Section 2.03 shall survive delivery of the respective Mortgage
Files to the Trustee. Upon discovery by CMSI or the Trustee of a breach of any
of the foregoing representations and warranties which materially and adversely
affects the interests of the Certificateholders in the related Mortgage Loan
(including any Mortgage Loan substituted for a nonconforming Mortgage Loan
pursuant to Section 2.04), the party discovering such breach shall give prompt
written notice to the other parties hereto. If within 60 days of the date of
such notice of breach or, with the prior written consent of a Responsible
Officer of the Trustee, such longer period specified in such consent, CMSI does
not cure such breach in all material respects (including by substitution of one
or more Eligible Substitute Mortgage Loans if and to the extent permitted by
Section 2.04), CMSI shall repurchase such Mortgage Loan from the Trustee.
Any such repurchase of a Mortgage Loan by CMSI shall be accomplished in
the manner and at the repurchase price set forth in Section 2.02. Any such
repurchase shall be considered a prepayment in full of such Mortgage Loan on
such Due Date and shall be deposited (net of all Voluntary Advances, Trustee
Advances and Advance Amount Advances with respect to such Mortgage Loan, which
shall be reimbursed to the Trustee or deemed reimbursed to CMSI, as the case may
be) by CMSI in the Certificate Account and, upon receipt by the Trustee of
written notification of such deposit signed by an Authorized Officer of CMSI,
the Trustee shall release to CMSI the related Mortgage File and shall execute
and deliver such instruments of transfer or assignment, in each case without
recourse, as CMSI shall reasonably request, to vest in CMSI any Mortgage Loan
released pursuant hereto. Any repurchase by CMSI of a Mortgage Loan hereunder
shall be deemed to include the right to receive any Remittance thereon payable
after the month of repurchase, and the Trustee shall, upon receipt of any such
Remittance, promptly remit the amount of such Remittance to CMSI. It is
understood and agreed that the obligation of CMSI to repurchase any Mortgage
Loan as to which a breach occurred and is continuing and the limited indemnity
set forth in the following paragraph shall constitute the sole remedies against
CMSI respecting such breach available to the Certificateholders or the Trustee
on behalf of the Certificateholders.
Section 2.04. Substitution of Eligible Substitute Mortgage Loans for
Nonconforming Mortgage Loans.
(a) CMSI shall have the right, in an event requiring a repurchase
pursuant to Section 2.02 or 2.03, to substitute one or more Eligible Substitute
Mortgage Loans for any one or more nonconforming Mortgage Loans, any such
substitution to take place on the day designated by CMSI (the "Substitution
Day")
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occurring before a date two years after the Startup Day (or, if the Substitution
Day is not a Business Day, the next proceeding Business Day), subject to the
satisfaction of the conditions set forth in Section 2.01 and subject to the
satisfaction of the following conditions;
(i) no Event of Default shall have occurred and be
continuing;
(ii) the aggregate Adjusted Balance of all Eligible Substitute
Mortgage Loans substituted on the Substitution Day (determined with respect to
each Eligible Substitute Mortgage Loan as of the Substitution Day) shall not
exceed an amount equal to 40% of the aggregate Adjusted Balance of all Mortgage
Loans as of the Closing Date;
(iii) the Trustee shall have received an Officer's Certificate
(A) stating that all conditions precedent to such substitution specified in this
subsection (a) have been satisfied and attaching as an exhibit a supplemental
Mortgage Loan schedule (the "Supplemental Mortgage Loan Schedule") setting forth
the same type of information as appears on the Mortgage Loan Schedule and
representing as to the accuracy thereof and (B) confirming that the
representations and warranties contained in Section 2.03 (other than paragraphs
(i) and (xi) thereof) are true and correct in all material respects with respect
to the Eligible Substitute Mortgage Loans on and as of the Substitution Day,
provided that remedies for the inaccuracy of such representation are limited as
set forth in Sections 2.02, 2.03 and this 2.04; and
(iv) the Trustee shall have received, not later than the
Substitution Day, an Opinion of Counsel (who may not be an employee of CMSI or
of an Affiliate of CMSI) and, if required by such counsel, a letter from an
accountant, dated the Substitution Day, to the effect (A) that all conditions to
such substitution specified in this subsection (a) have been satisfied, (B) that
the Eligible Substitute Mortgage Loans are "qualified replacement mortgages"
within the meaning of Code Section 860G(a)(4), and (C) that the substitution of
such Eligible Substitute Mortgage Loans will not result in the disqualification
of any Constituent REMIC as a REMIC under the Code or otherwise subject any
Constituent REMIC to any tax.
(b)......In the event that, on the Substitution Day, any Prepaid
Installments have been received in the Certificate Account with respect to such
Mortgage Loan, the full amount of such Prepaid Installment shall be paid on the
Substitution Day to CMSI from the Certificate Account.
(c)......Concurrently with the satisfaction of the conditions set forth
in Section 2.04(a) above and the grant of such Eligible Substitute Mortgage
Loans to the Trustee pursuant to Section 2.04(a) above, (A) Exhibit B to this
Agreement shall be deemed to be amended to exclude all Mortgage Loans being
replaced by such Eligible Substitute Mortgage Loans and to include, pursuant to
Section 10.01, the information set forth on the Supplemental Mortgage Loan
Schedule with respect to such Eligible Substitute Mortgage Loans, and all
references in this Agreement to Mortgage Loans shall include such Eligible
Substitute Mortgage Loans and (B) the Trustee shall release to CMSI the
nonconforming Mortgage Loan or Loans and execute and deliver such instruments of
transfer or assignment as may be required to transfer, without recourse, to CMSI
such nonconforming Mortgage Loan or Loans.
Section 2.05. Authentication of Certificates. The Trustee has
authenticated and delivered or caused to be authenticated and delivered to or
upon the order of CMSI, in accordance with the CMSI Order, in exchange for the
Mortgage Loans, concurrently with the transfer and assignment to the Trustee of
the Mortgage Loans, Certificates duly authenticated by the Trustee in authorized
denominations evidencing the entire ownership of the Trust Fund. The Trustee
acknowledges that to the extent it holds any Class L Regular Interests, it holds
such Class L Regular Interests as assets of the Upper-Tier REMIC.
ARTICLE III
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CERTIFICATE ACCOUNT; PAYMENTS AND STATEMENTS TO
CERTIFICATEHOLDERS; ADMINISTRATION AND SERVICING OF
MORTGAGE LOANS
Section 3.01. Collection of Moneys. Except as otherwise expressly
provided herein, the Trustee may demand or cause to be demanded payment or
delivery of, and shall receive and collect, directly and without intervention or
assistance of any fiscal agent or other intermediary, all money and other
property payable to or receivable by the Trustee pursuant to this Agreement. The
Trustee shall hold all money and property received by it as part of the Trust
Fund and shall apply it as provided in this Agreement.
CMSI shall make reasonable efforts to collect all payments called for
under the terms and provisions of the Mortgage Loans and shall, to the extent
such procedures shall be consistent with this Agreement, follow such normal
collection procedures as it deems necessary and advisable. CMSI shall not be
required to institute litigation with respect to collection of any payment if it
reasonably questions its ability to enforce the provision of the Mortgage Loan
under which such payment is required. Consistent with the foregoing, CMSI may in
its discretion (a) waive any late payment charge or any prepayment charge or
penalty interest in connection with the prepayment of a Mortgage Loan or any
assumption fees or other fees which may be collected in the ordinary course of
servicing such Mortgage Loan and (b) arrange with a Mortgagor a schedule for the
payment of principal and interest due and unpaid after the applicable Due Date,
provided, if the arrangement is for a period of more than 90 days, CMSI
reasonably believes that without such arrangement the Mortgagor would default on
the related Mortgage Loan. Regardless of whether any arrangement of the type
described in clause (b) above is made, any such Mortgage Loan shall be
considered delinquent for all purposes of this Pooling Agreement.
Section 3.02. Certificate Account. (a) On or before the Issue Date,
CMSI shall open or cause to be opened with a Depository, Depositories or the
Trustee one or more accounts in the name of the Trustee, which shall
collectively be the "Certificate Account". The Certificate Account will be an
Investment Account if so specified in Article XII; otherwise, the Certificate
Account will be a non-interest bearing account. CMSI, on behalf of the Trustee,
shall promptly deposit, or cause to be deposited, daily in the Certificate
Account, within one Business Day following receipt and posting, all Remittances
related to Affiliated Mortgage Loans received by it. Remittances related to the
Third Party Mortgage Loans shall be deposited into the Custodial Accounts for
P&I and the Certificate Account in accordance with Section 3.03. All
Remittances, any amount required to be deposited in the Certificate Account
pursuant to Section 2.01, all other deposits therein pursuant to this Agreement,
and all investments made with such moneys, including all income or other gain
from such investments, shall be held by the Trustee in the Certificate Account
as part of the Trust Fund as herein provided, except for amounts from Buydown
Funds required to be deposited pursuant to Section 3.06, which shall be held by
the Trustee in the Buydown Account on behalf of the Mortgagors, subject to
withdrawal by the Trustee or CMSI as servicer for the purposes set forth in
subsections (b) and (c) of Section 3.04. All funds withdrawn from the
Certificate Account pursuant to subsection (b) of Section 3.04 for the purpose
of making distributions to the Certificateholders shall be applied in accordance
with said subsections. The Trustee shall take such steps as CMSI may reasonably
request in order to enable CMSI to make deposits to and withdrawals from the
Certificate Account in accordance with Sections 3.03, 3.14 and 3.16.
Funds in the Certificate Account shall be invested and reinvested by
the Trustee at CMSI's written direction (subject to subsections (c) and (d) of
this Section 3.02) in one or more Eligible Investments bearing interest or sold
at discount. Notwithstanding the foregoing, no investment of any amount held in
the Certificate Account may mature later than the Business Day immediately
preceding the next Distribution Date; provided, however, that investments
(including repurchase agreements)
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on which the Trustee, in its commercial capacity, is the obligor, may mature on
a Distribution Date if, under this Section 3.02, such investment could otherwise
mature on the Business Day immediately preceding such Distribution Date.
All income from investment of moneys deposited in a Certificate
Account, and all proceeds of disposition of any assets in the Certificate
Account, shall be deposited by the Trustee, the Servicer or the Master Servicer
in such Certificate Account immediately upon receipt, and any loss resulting
from such investment shall be charged to such Certificate Account. The Trustee
shall have no liability for any loss incurred in connection with any investment
or any sale or liquidation thereof pursuant hereto, unless caused by its
negligence or willful misconduct.
CMSI may deposit in each of the Certificate Account, Servicing Account
and Buydown Account the appropriate payments, collections and funds in respect
of one or more series of certificates issued under a registration statement
covering the CitiCertificates or similar certificates; provided that the senior
class of certificates of each such other series and the senior Class of
CitiCertificates are rated "AAA" or its equivalent (with respect to any Insured
Certificates, without regard to the Insurance Policy) or in the category "AA" or
its equivalent and the subordinated class of certificates of each such other
series and the subordinated Class of CitiCertificates are rated in the same
category by each Rating Agency, and provided further that separate accounting is
maintained.
(b) Funds and other property in the Certificate Account shall not
be commingled with any other moneys or property of the Trustee. Notwithstanding
the foregoing, the Trustee may hold any funds or other property received or held
by it as part of the Certificate Account in collective accounts maintained by it
in the normal course of its business and containing funds or property held by it
for other persons; provided that such accounts are under the sole control of the
Trustee and the Trustee maintains adequate records indicating the ownership of
all such funds or property and the portions thereof held for credit to the
Certificate Account.
(c) CMSI will not direct the Trustee to make any investment of any
funds in the Certificate Account or to sell any investment held in the
Investment Account except under the following terms and conditions:
(i) each such investment shall be made in the name of the
Trustee (in its capacity as such) or in the name of a Qualified Nominee of the
Trustee; and
(ii) each such investment shall be a "cash flow investment" as
defined in Code Section 860G(a)(6).
(d) Generally, no Eligible Investment shall be disposed of prior
to its maturity; provided, however, if any amounts are needed for disbursement
from the Certificate Account and sufficient uninvested funds are not available
therein to make such disbursement, in the absence of a CMSI Order for the
liquidation of investments held therein in an amount sufficient to provide the
required funds, the Trustee shall cause to be sold or otherwise converted to
cash a sufficient amount of the investments in the Certificate Account;
provided, further, however, that prior to any such sale or conversion to cash,
the Trustee shall have received (i) an Opinion of Counsel (which opinion may not
be provided by an employee of CMSI or of an Affiliate of CMSI) that such sale or
conversion to cash shall not constitute a "prohibited transaction" under Code
Section 860F(a), or (ii) (a) if such sale or conversion to cash constitutes such
a "prohibited transaction", the consent of the Holders of 100% Percentage
Interest of the Residual Certificates to the prohibited transaction together
with each such Holder's proportionate share of any tax imposed on the Trust Fund
attributable to such transaction and (b) an Opinion of Counsel (which opinion
may not be provided by an employee of CMSI or of an Affiliate of CMSI) that such
transaction will not disqualify any Constituent REMIC as a REMIC.
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(e) The Trustee shall not in any way be held liable by reason of
any insufficiency in the Certificate Account or the Buydown Account except for
losses on investments which are liabilities of the Trustee in its commercial
capacity.
(f) Unless it shall have otherwise agreed in writing with CMSI,
the Trustee shall not be required to enter into repurchase obligations for the
investment of funds in the Investment Account with any Person whose repurchase
obligations would be Eligible Investments only if the requirements of subclause
(B) of clause (iii) of the definition of the term "Eligible Investments" were
complied with in connection with such investment.
Section 3.03. Third Party Mortgage Loans; Custodial Accounts for P&I
and Certificate Account Deposits.
(a) The Master Servicer shall cause to be established and
maintained segregated Custodial Accounts for P&I and segregated Escrow Accounts
in accordance with the requirements of the Guide and shall deposit or cause to
be deposited therein within two Business Days the amounts related to the Third
Party Mortgage Loans required by the Third Party Servicing Agreements to be so
deposited. Proceeds received with respect to individual Third Party Mortgage
Loans from any title, hazard or other insurance policy covering such Mortgage
Loan other than any Primary Mortgage Insurance Certificate shall be deposited
first in the applicable Escrow Account if required for the restoration or repair
of the related Mortgaged Property. Proceeds from such insurance policies not so
deposited in the applicable Escrow Account and proceeds from any Primary
Mortgage Insurance Certificate shall be deposited in the Custodial Account for
P&I and shall be applied to the balances of the related Third Party Mortgage
Loans as payments of interest and principal. Third Party Servicers are
authorized to make withdrawals from the Custodial Accounts for P&I for the
purposes required or permitted by this Agreement and in accordance with the
Guide. The Trustee shall have no responsibility for monitoring such withdrawals.
The Custodial Accounts for P&I shall each bear a designation clearly indicating
that the funds deposited therein are held for the benefit of the Servicer and/or
the owners of the Third Party Mortgage Loans. Amounts deposited in any Custodial
Account for P&I shall be fully insured by the FDIC or the National Credit Union
Share Insurance Fund. To the extent amounts received for deposit in any
Custodial Account for P&I will not be fully insured, such excess shall either,
at the option of the Master Servicer, be secured by one or more Eligible
Investments maturing not later than the Determination Date with respect to such
amounts or in every other case be promptly remitted to the Certificate Account
or the account referred to in Subsection (d) below, such Eligible Investments as
evidenced by an Opinion of Counsel delivered and acceptable to the Trustee to
the effect that the Master Servicer has either a claim to the funds held by the
institution or a perfected first security interest against any such Eligible
Investments superior to the claims of any other depositor or general creditor of
such institution.
The Master Servicer shall advance the payment of property taxes and
insurance premiums and other similar payments relating to the Third Party
Mortgage Loans that are not timely paid by the Mortgagors or advanced by the
Third Party Servicers or the Third Party Master Servicer on the date when such
tax, premium or other cost for which such payment is intended is due, but the
Master Servicer shall be required to so advance only to the extent that such
advances, in the good faith judgment of the Master Servicer, will be recoverable
by the Master Servicer out of Insurance Proceeds or Liquidation Proceeds or
otherwise from the related Third Party Mortgage Loans.
Any amounts received by a Third Party Servicer with respect to a Third
Party Mortgage Loan shall be deemed to have been received by the Master Servicer
for purposes of this Agreement. In the event a Third Party Servicer fails to
remit any amounts received by the Third Party Servicer and required to be
remitted hereunder, the Master Servicer shall be obligated to transmit the
required amounts to the Trustee regardless of the failure of the Third Party
Servicer.
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The Master Servicer shall keep, or cause to be kept, and maintain, or
cause to be maintained, separate accounting on a Mortgage Loan by Mortgage Loan
basis, for any remittances to or payments from the Custodial Accounts for P&I.
(b) Not later than the Determination Date, the Master Servicer
shall withdraw or direct the withdrawal from any funds in the Custodial Accounts
for P&I and deposit into the Certificate Account the following amounts:
(i) Scheduled installments of principal and interest on the
Third Party Mortgage Loans received or advanced by the Third Party
Servicers or the Third Party Master Servicer which were due the first
day of the current month, net of Third Party Servicing Fees due Third
Party Servicers;
(ii) Principal Prepayments in full and Liquidation and
Insurance Proceeds net of Third Party Servicing Fees due Third Party Servicers;
(iii) Partial prepayments of principal received by the Third
Party Servicer for such Mortgage Loans in the immediately preceding
calendar month, or the current month in the case of partial prepayments
received with the scheduled installments of principal and interest
which were due on the first day of the current month; and
(iv) Payments for repurchase of Third Party Mortgage Loans
by Third Party Servicers.
(c) Except as otherwise provided herein, the following payments
and collections received or made by the Master Servicer shall be deposited into
the Certificate Account on the Certificate Account Deposit Date (other than in
respect of principal of and interest on the Mortgage Loans due on or before the
Cut-Off Date):
Not later than the Certificate Account Deposit Date, the foregoing
withdrawals and any amounts remitted to the Third Party Servicers pursuant to
paragraph (a) and (b) above shall be deposited into the Certificate Account;
provided, however, that (x) any Principal Prepayments in full, Liquidation or
Insurance Proceeds with respect to the Third Party Mortgage Loans shall not be
required to be deposited in the Certificate Account earlier than the Certificate
Account Deposit Date in the month succeeding the month in which such amount was
received by the related Third Party Servicer and (y) the Substitution Adjustment
Amount in connection with any Substitute Mortgage Loan and the proceeds from the
repurchase of a Third Party Mortgage Loan shall not be required to be deposited
in the Certificate Account earlier than the Certificate Account Deposit Date in
the month following the month during which the circumstances which gave rise to
such substitution or repurchase occurred.
In addition, the Master Servicer shall deposit (or cause to be
deposited) in the Certificate Account not later than the third Business Day
preceding each Certificate Account Deposit Date, in the case of clause (i) and
in the case of clauses (ii) through (iv) below on the Certificate Account
Deposit Date:
(i) Any Voluntary Advances with respect to the Third Party
Mortgage Loans in respect of such Distribution Date;
(ii) The amount, if any, with respect to a Third Party
Mortgage Loan which was prepaid in full by the Mortgagor or for which a
final liquidation has occurred during the preceding calendar month
required to be deposited by the Master Servicer pursuant to Section
3.25 hereof;
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(iii) All Liquidation Proceeds received in the preceding month
by the Master Servicer in connection with the liquidation of defaulted
Third Party Mortgage Loans, net of related Liquidation Expenses;
(iv) All Insurance Proceeds with respect to a Third Party
Mortgage Loan received in the preceding month by the Master Servicer,
other than proceeds applied to the restoration or repair of the related
Mortgaged Property; and
(v) With respect to the Third Party Mortgage Loans, any amount
required to be deposited pursuant to Section 3.21.
CMSI shall deposit in the Certificate Account not later than the
Certificate Account Deposit Date the Substitution Adjustment Amount in
connection with any Substitute Mortgage Loan being substituted and the amount
specified in Sections 2.02 and 2.03 paid by CMSI in respect of any Third Party
Mortgage Loan or property acquired in respect thereof as to which the
circumstances giving rise to substitution or purchase occurred during the month
preceding such Certificate Account Deposit Date (and not substituted or
purchased by a Third Party Servicer for which a deposit has already been made to
such Third Party Servicer's Custodial Account for P&I or otherwise deposited by
the Master Servicer).
(d) Prior to the Certificate Account Deposit Date the Master
Servicer may deposit the amounts described in Section 3.03(b) in a separate
account in the name of the Master Servicer and the Trustee (such account shall
be maintained in the trust department of a Depositor and shall bear a
designation clearly indicating that the principal of all investments in such
account is held for the benefit of the Trustee on behalf of the
Certificateholders) (the "Investment Account") for investment only in one or
more Eligible Investments. The Master Servicer shall bear any and all losses
incurred on any investments made with such funds and shall be entitled to retain
all gains realized on such investments as additional compensation for its
services as Master Servicer. The amount of any losses incurred in respect of any
such investments shall be deposited in the Investment Account by the Master
Servicer out of its own funds immediately as realized. Any successor master
servicer appointed pursuant to this Agreement shall not be responsible for
losses attributable to its predecessor. No investments held in the Investment
Account shall mature later than the Certificate Account Deposit Date.
Section 3.04. Distributions. (a) By 11:00 a.m. (New York City time) on
each Distribution Date, the Trustee shall cause to be distributed from the
Certificate Account (or, to the extent provided in Articles XII and XIII, the
Upper-Tier REMIC Account) or shall cause the Paying Agent to distribute from a
designated account to each Certificateholder of record on the related Record
Date (other than as provided in Section 9.01 respecting the final distribution)
by check mailed to such Certificateholder at the address appearing in the
Certificate Register; if eligible for wire transfer as set forth in Article XII
and if the Trustee has received wiring instructions from the Certificateholder
by wire transfer; or by such other means of payment as such Certificateholder,
CMSI, the Paying Agent and the Trustee (if it is making payments directly to the
Certificateholders) shall agree, the amount required to be distributed to such
Certificateholder pursuant to the Certificates and this Agreement. If wiring
instructions are received by the Trustee, such instructions will remain in
effect until changed by such Certificateholder by written notice to the Paying
Agent and the Trustee at least five Business Days prior to a subsequent
Distribution Date.
In the event CMSI appoints a Paying Agent, the Trustee will, on or
prior to each Distribution Date, deposit, in immediately available funds from
funds available in the Certificate Account, in an account designated by the
Paying Agent the amount required to be distributed to the Certificateholders on
such Distribution Date pursuant to subsections (b) and (c) of this Section 3.04
and, unless such Paying Agent is CMSI, the Trustee will promptly notify CMSI of
its deposit or its failure to make such deposit. CMSI will
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cause any Paying Agent which is not the Trustee to execute and deliver to the
Trustee an instrument in which such Paying Agent agrees with the Trustee that
such Paying Agent will:
(1) hold all amounts deposited with it by CMSI or the Trustee for
payment on the Certificates in trust for the benefit of the Certificateholders
until such amounts are paid to such Certificateholders or otherwise disposed of
as herein provided;
(2) give the Trustee notice of any default by CMSI the making of
any such deposit; and
(3) at any time during the continuance of any default of CMSI in
making such a deposit, upon the written request of the Trustee, forthwith pay to
the Trustee all amounts so held in trust by such Paying Agent.
For each distribution to the Certificateholders or deposit with the
Paying Agent, the Servicer will use Affiliated Uncommitted Cash to make an
Affiliated Certificate Account Advance and the Master Servicer will use Third
Party Uncommitted Cash to make a Third Party Certificate Account Advance to
cover any Remittance Delinquencies relating to the Affiliated Mortgage Loans or
Third Party Mortgage Loans, respectively, prior to making any Voluntary Advances
or requesting that the Trustee (in its individual capacity) make a Third Party
Trustee Advance or Affiliated Trustee Advance (or an Advance Account Advance).
(b) Based on payments received with respect to the Mortgage Loans,
on each Determination Date the Servicer shall determine:
(i) the Pool Distribution Amount;
(ii) the Class A Interest Amount, the Class A Unpaid Interest
Shortfall, the Class M Interest Amount, the Class M Unpaid Interest Shortfall,
the Class B Subclass Interest Amount for each Class B Subclass and the Class
B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Unpaid Interest Shortfall for
each Class B Subclass;
(iii) the Class A Optimal Principal Amount, the Class A Non-PO
Principal Amount, the Class A PO Principal Amount, Class M Optimal Principal
Amount and the Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Optimal
Principal Amounts;
(iv) the Class A Principal Distribution Amount, the Class M
Principal Distribution Amount and the Class B-1, Class B-2, Class B-3, Class B-4
and Class B-5 Principal Distribution Amount;
(v) the PO Loss Amount;
(vi) the Available PO Loss Funds;
(vii) the Insurance Premium, if any, and
(viii) Such other information as may be required to determine
the distributions to be made to Certificateholders in accordance with Article
XII.
On each Distribution Date, the Trustee shall distribute or cause to be
distributed from funds on deposit in the Certificate Account (or, to the extent
provided in Articles XII and XIII, the Upper-Tier REMIC Account) to each
Certificateholder of record on the preceding Record Date such
Certificateholder's share
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(based on the denomination represented by Certificates of the applicable Class
held by such Holder) of the amounts distributable to such Class or Subclass in
accordance with the priorities set forth in Articles XII and XIII, each such
amount being the amount thereof set forth in the applicable Distribution Date
Statement. Any such amount withdrawn for application to amounts distributable in
respect of interest or in reduction of Principal Amount pursuant to subsection
(d) of this Section 3.04, but not distributed because of the non-presentation of
the related Certificates, or because the check for such payment is returned
undelivered, shall be set aside and held by the Trustee in a separate trust
account for the benefit of the Holders of such Certificates, and all such
amounts will be deemed to have been distributed to such Holders for the purpose
of any calculations required by this Agreement and will no longer be available
for application to any other amounts due under this Agreement; provided, that
after two years, any such amount that remains in such separate account shall be
paid to the Holder of the Class LR or Class R Certificate, as appropriate
(except that any amounts representing reimbursement for Insured Payments shall
be paid to the Insurer), and after such payment the Holders of such Certificates
shall be required to seek payments as unsecured general creditors from the
Holder of the Class LR or Class R Certificate, as the case may be.
(c) On each Distribution Date, so long as CMSI shall have prepared
and delivered to the Trustee a Distribution Date Statement in respect of such
Distribution Date and the Trustee (based on such statement) shall have made, or,
in accordance with this Section 3.03, set aside from amounts in the Certificate
Account an amount sufficient to make the distributions on the Certificates then
required to be made as indicated in such Distribution Date Statement, plus an
amount equal to the Affiliated Uncommitted Cash and the Third Party Uncommitted
Cash, if any, to be in the Certificate Account as of such Distribution Date (to
the extent not required for either a Third Party Certificate Account Advance or
an Affiliated Certificate Account Advance), the amount of which unremitted cash
shall have been certified to the Trustee by CMSI, the cash balance, if any, then
remaining in the related Certificate Account shall be withdrawn from such
Certificate Account by or on behalf of the Trustee and applied to the payment of
the CMSI Fee, if any (to the extent not already retained by the Servicer or
Master Servicer pursuant to Section 3.23), the amount of such payment being set
forth in a certificate of a Servicing Officer or a Responsible Officer, as the
case may be. The balance, if any, of the amount so withdrawn shall be paid on
such Distribution Date by or on behalf of the Trustee to the Holder of the Class
LR Certificate. The Trustee is hereby authorized by CMSI to authorize, and the
Trustee hereby authorizes, the Depository to withdraw the amount of such balance
from the Certificate Account and pay it to the Holder of the Class LR
Certificate, on its behalf in accordance with such Servicer's Certificate.
(d) All reductions in Principal Amount of a Certificate (or one or
more Predecessor Certificates) effected by distributions made on any
Distribution Date or reductions thereof without distributions pursuant to
Article XIII or otherwise in accordance with this Pooling Agreement shall be
binding upon all Holders of such Certificate and of any Certificate issued upon
the registration of transfer thereof or in exchange therefor or in lieu thereof,
whether or not such distribution is noted on such Certificate. The final
distribution on each Certificate (including the final distribution on any
Certificate receiving a distribution in connection with a termination pursuant
to Section 9.01) shall be payable only upon presentation and surrender thereof
on or after the Distribution Date therefor at the office or agency of the
Trustee maintained by the Trustee for such purpose pursuant to Article XII.
Whenever, on the basis of distributions on the Mortgage Loans received
and expected to be received since the preceding Determination Date, CMSI expects
that the Principal Amount of any Class of CitiCertificates will be reduced to
zero on the next Distribution Date it shall, not later than the third day
preceding such Distribution Date, mail or cause to be mailed to the Trustee and
each such Person in whose name a CitiCertificate to be so retired is registered
at the close of business on the applicable Record Date a notice to the effect
that:
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(i) CMSI expects that funds sufficient to reduce such
Principal Amount to zero will be available in the Certificate Account on such
Distribution Date, and
(ii) if such funds are available, (A) such final distribution
will be made on such Distribution Date, but only upon presentation and surrender
of such CitiCertificate at the office or agency of the Trustee maintained for
such purpose pursuant to Article XII (the address of which shall be set forth in
such notice), and (B) no interest shall accrue on such CitiCertificate after the
end of the related Interest Accrual Period with respect to such Distribution
Date.
(e) Subject to the foregoing provisions of this Section, each
Certificate delivered under this Agreement upon registration of transfer of or
in exchange for or in lieu of any other Certificate shall carry the rights to
unpaid distributions that were carried by such other Certificate. Any checks
mailed pursuant to subsection (a) of this Section 3.04 and returned undelivered
shall be held in accordance with Section 3.04(b).
(f) Not later than the third Business Day next preceding each
Distribution Date, the Servicer shall prepare or cause to be prepared a
statement (a "Distribution Date Statement") with respect to such Distribution
Date setting forth:
(i) the Distribution Amount for such Distribution Date
(including the portion thereof which represents any Reimbursable Class A Non-PO
Losses, Reimbursable Class A PO Losses, Reimbursable Class M Losses and
Reimbursable Class B Losses for such Distribution Date);
(ii) the aggregate amount of interest accrued during the
related Interest Accrual Period on all Outstanding CitiCertificates and
Certificates and any Non-Supported Interest Shortfalls;
(iii) the aggregate amount of interest to be distributed on
each Class of CitiCertificates then Outstanding, identifying the portion thereof
attributable to Class A Unpaid Interest Shortfalls, Class M Unpaid Interest
Shortfalls or Class B Unpaid Interest Shortfalls;
(iv) the aggregate distribution in reduction of Principal
Amount to be made in respect of each Class of CitiCertificates then Outstanding;
(v) the amount in reduction of Principal Amount of the
CitiCertificates not the result of distributions in reduction of Principal
Amount;
(vi) whether the amount expected to be available in the
Certificate Account on such Distribution Date will be sufficient to pay on such
Distribution Date all amounts specified in clauses (iii) and (iv) above and, if
not, the percentages of each such amount which may be paid in accordance with
the priorities set forth in Section 3.04(b) from the amounts expected to be
available in the Certificate Account;
(vii) the amounts included in such statement pursuant to
clauses (iii) and (iv) above, expressed in each case per $1,000 Initial
Principal Amount (or initial notional amount) to be paid on such Distribution
Date,
(viii) the aggregate amounts of Servicing Fee and Master
Servicing Fee, if any, to be paid pursuant to Section 3.04(c);
(ix) the Special Hazard Loss Amount, Fraud Loss Amount and
Bankruptcy Loss Amount after giving effect to any changes thereto in respect of
the applicable Distribution Date;
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(x) the amount, if any, to be withdrawn from the Certificate
Account and paid over to the Holder of the Class LR Certificate on such
Distribution Date pursuant to Section 3.04(c); and
(xi) the Principal Amount of the CitiCertificates which will
remain Outstanding after giving effect to the distributions to be made on such
Distribution Date, expressed both on an aggregate basis and per $1,000 Initial
Principal Amount.
Each Distribution Date Statement shall be delivered, by 10:00 a.m. (New York
City time) on the date on which it is due to be prepared, by or on behalf of
CMSI, to the Trustee. The foregoing requirements shall be satisfied by timely
delivery of the reports to Certificateholders required pursuant to Section 3.05,
which collectively shall then be deemed a "Distribution Date Statement" for
purposes of this Agreement, with a copy to the Trustee and the Paying Agent.
(g) In the event that a Voluntary Advance is to be made on any
Distribution Date, the advancing Person shall deposit, in the case of an
Affiliated Mortgage Loan, in the Certificate Account not later than the Business
Day next preceding the Distribution Date an amount equal to such Voluntary
Advance or, in the case of a Third Party Mortgage Loan, an amount equal to such
advance in accordance with Section 3.03. It is understood and agreed that the
election of the Servicer or the Master Servicer or the Third Party Master
Servicer or a Third Party Servicer to make any such advance as permitted by this
subsection (g) of Section 3.04 is based upon its good faith judgment that the
amount of such advance will be recoverable from future payments and proceeds on
the related Mortgage Loan, and that no obligation, express or implied, exists
respecting any such advance.
Section 3.05. Reports to Certificateholders. The Trustee will include,
or will cause to be included, with each distribution to Holders of
CitiCertificates and will send, or cause to be sent to the Rating Agencies and
each Underwriter, a statement, prepared or caused to be prepared by CMSI and
delivered to the Trustee, setting forth the following information (per $1,000
Initial Principal Amount or initial notional amount, as to (i) and (ii) below):
(i) to each Certificateholder of a Class of CitiCertificates
on which a distribution in reduction of the Principal Amount is then being made,
the amount of such distribution which represents a reduction in the Principal
Amount and the amount which represents interest, and the Principal Amount of a
Single Certificate after giving effect to the reduction of Principal Amount on
such Distribution Date;
(ii) to each Certificateholder of a Class of CitiCertificates
on which a distribution of interest only is then being made, the aggregate
Principal Amount or notional amount of Certificates Outstanding of each Class
after giving effect to the distributions in reduction of Principal Amount, if
any, made on such Distribution Date occurring subsequent to the last such report
and any reduction in Principal Amount pursuant to Section 13.02 including, if
any Accrual CitiCertificates are Outstanding, the aggregate Principal Amount of
Accrual CitiCertificates Outstanding and the amount of any accrued interest
added to the Principal Amount thereof on such Distribution Date;
(iii) the amount of Servicing Fee and Master Servicing Fee
received by CMSI during the calendar month preceding the month of such
distribution, as reduced, in the case of the Servicing Fee, in an amount up to
the Compensating Cap in connection with any Prepayment Interest Shortfalls;
(iv) the book value of any real estate acquired by the Trust
Fund through foreclosure or otherwise;
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(v) the aggregate Adjusted Balance of the Mortgage Loans as of
the last day of the month next preceding the month of such distribution after
giving effect to payments on the Mortgage Loans due on the related Due Date and
Principal Prepayments distributed on the Distribution Date;
(vi) the number and aggregate principal amount of Mortgage
Loans delinquent 30 days and 60 or more days (as determined by CMSI under the
Mortgage Bankers Association method);
(vii) the aggregate amount of Remittances received on
Mortgage Loans during the related Due Period;
(viii) any Voluntary Advances, Trustee Advances, Advance
Account Advances, Certificate Account Advances and any other amounts charged
thereto in respect of the applicable Distribution Date;
(ix) the Class A Subclass Principal Amount (or notional
amount) of each Subclass of Class A CitiCertificates, the Class M Principal
Amount and the Class B Subclass Principal Amount of each Subclass of the Class B
CitiCertificates on such Distribution Date;
(x) any Class A Unpaid Interest Shortfall, Class M Unpaid
Interest Shortfall and Class B Unpaid Interest Shortfall applicable to the
next succeeding Distribution Date;
(xi) the amount in reduction of Principal Amount of the
CitiCertificates not the result of distributions in reduction of Principal
Amount;
(xii) the Class A Principal Amount, the Class M Principal
Amount and the Class B Principal Amount as of the following Determination Date
after giving effect to the distribution of principal made and losses allocated
with respect to such Distribution Date; and
(xiii) the Class A Percentage, the Class A Prepayment
Percentage, the Class M Percentage, the Class M Prepayment Percentage, the Class
B-1 Percentage, the Class B-1 Prepayment Percentage, the Class B-2 Percentage,
the Class B-2 Prepayment Percentage, the Class B-3 Percentage, the Class B-3
Prepayment Percentage, the Class B-4 Percentage, the Class B-4 Prepayment
Percentage, the Class B-5 Percentage and the Class B-5 Prepayment Percentage for
the following Distribution Date.
The Trustee will send, or will cause to be sent through the Certificate
Registrar, to Holders of Residual Certificates a statement setting forth the
information in paragraphs (i) through (viii).
CMSI will provide Certificateholders that are federally insured savings
and loan associations with certain reports, and will provide access to
information and documentation regarding the Mortgage Loans included in the Trust
Fund, sufficient to permit such associations to comply with applicable
regulations of the Office of Thrift Supervision.
In addition to the foregoing, CMSI, on behalf of the Trustee, shall
file with the Internal Revenue Service and furnish to Certificateholders such
statements or information at such times and in such manner as may be required by
the Code.
Section 3.06. Application of Buydown Funds. On or before the Issue Date
if there are any Buydown Mortgage Loans in the Trust Fund, CMSI shall open or
cause to be opened the Buydown Account with the Depository in the name of the
Trustee, on behalf of the Mortgagors. With respect to each Buydown Mortgage
Loan, on the Business Day next following receipt of the Mortgagor's required
monthly payment
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under the buydown agreement, CMSI will withdraw from the Buydown Account and
deposit, or cause to be deposited. in immediately available funds in the
Certificate Account an amount which, when added to such Mortgagor's payment,
will equal the full monthly payment due under the Mortgage Note. No later than
the fifth Business Day preceding the last Business Day of each calendar month,
CMSI will deposit, or cause to be deposited, in the Buydown Account in
immediately available funds an amount equal to interest at the rate per annum
specified in the buydown agreement compounded monthly on the Buydown Funds with
respect to each Buydown Mortgage Loan.
If a Buydown Mortgage is fully prepaid while Buydown Funds remain in
the Buydown Account, the unpaid principal balance of such Buydown Mortgage Loan
will be reduced by the amount of such Buydown Funds (which reduction shall
constitute a Principal Prepayment) and, on the Business Day next following the
date of such Principal Prepayment, CMSI shall deposit, or cause to be deposited,
in the Certificate Account, such Buydown Funds. If the property securing a
Buydown Mortgage Loan is sold in liquidation of the Buydown Mortgage Loan
(either by CMSI or the insurer under any related Primary Mortgage Insurance
Certificate) while Buydown Funds remain in the Buydown Account, such Buydown
Funds shall be (i) deposited in the Certificate Account on the Business Day next
following such liquidation as a reduction of the unpaid principal balance of
such Buydown Mortgage Loan or (ii) if and to the extent required under any
applicable Primary Mortgage Insurance Certificate, paid to the insurer of the
Mortgage Loan.
Section 3.07. Tax Returns and Reports to Certificateholders.
(a) For federal income tax purposes, each of the Constituent
REMICs shall have a calendar year taxable year and shall maintain its books on
the accrual method of accounting.
(b) The Servicer shall prepare and file or cause to be prepared
and filed with the Internal Revenue Service and applicable state or local tax
authorities income tax or information returns for each taxable year with respect
to each Constituent REMIC, containing such information and at the times and in
the manner as may be required by the Code or state or local tax laws,
regulations, or rules, and shall furnish or cause to be furnished to
Certificateholders, the schedules, statements or information at such times and
in such manner as may be required thereby. Within 30 days of the Startup Day,
the Servicer shall furnish or cause to be furnished to the Internal Revenue
Service, on Form 8811 or as may otherwise be required by the Code, the name,
title, address, and telephone number of the person that the Holders of the
CitiCertificates may contact for tax information relating thereto, together with
such additional information as may be required by such Form, and shall update
such information at the time or times and in the manner required by the Code.
Such federal, state or local income tax or information returns shall be signed
by the Trustee or such other person as may be required to sign such returns by
the Code or state or local tax laws, regulations or rules.
(c) In the first federal income tax return of each of the
Constituent REMICs for its short taxable year ending December 31 in the year in
which the Startup Day occurs, REMIC status shall be elected for such taxable
year and all succeeding taxable years.
(d) The Servicer will maintain such records relating to each of
the Constituent REMICs, including but not limited to the income, expenses,
assets and liabilities thereof, and the adjusted basis of the property thereof
determined at such intervals as may be required by the Code, as may be necessary
to prepare the foregoing returns, schedules, statements or information.
(e) Each Holder of a Residual Certificate shall be deemed to have
agreed, by acceptance thereof, to be bound by this Section 3.07 and by Section
5.02 and by the "REMIC-Related Provisions" set forth in Article XII.
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Section 3.08. Intentionally Omitted.
Section 3.09. Reports by Independent Accountants. (a) CMSI hereby
appoints KPMG Peat Marwick LLP as its Independent Accountants for purposes of
preparing and delivering the reports or certificates required by this Section
3.09. Upon any resignation by such firm, CMSI shall promptly appoint a successor
thereto that shall also be a firm of Independent Accountants of recognized
national reputation. If CMSI shall fall to appoint a successor to a firm of
Independent Accountants which has resigned within 15 days after such
resignation, CMSI shall promptly notify the Trustee of such failure in writing.
If CMSI shall not have appointed a successor within 10 days thereafter, the
Trustee shall promptly appoint a successor firm of Independent Accountants of
recognized national reputation. The fees of such Independent Accountants and any
such successor shall be payable by CMSI as Servicer, or any successor Servicer.
(b) On or before March 31 in relation to the Affiliated Mortgage
Loans and September 30 in relation to the Third Party Mortgage Loans of each
year (each, a "Report Date"), beginning with the March 31 and September 30,
respectively in the year which begins not less than three months after the date
of the initial issuance of the Certificates, CMSI, at its expense, shall cause
the firm of Independent Accountants appointed pursuant to Section 3.09(a) (who
may also render other services to CMSI) to furnish a report to the Trustee and
to the Insurer to the effect that such firm has examined certain documents and
records relating to the servicing of mortgage loans under pooling and servicing
agreements substantially similar to this Pooling Agreement (which agreements
shall be described in a schedule to such statement), and that such examination,
which has been conducted substantially in compliance with the audit guide for
audits of non-supervised mortgagees approved by the Department of Housing and
Urban Development, the Uniform Single Attestation Program for Mortgage Bankers
or the Audit Program for Mortgage serviced by FHLMC for use by independent
public accountants (to the extent that the procedures in such audit guide are
applicable to the servicing obligations set forth in such agreements), has
disclosed no items of noncompliance with the provisions of this Pooling
Agreement which, in the opinion of such firm, are material, except for such
items of noncompliance as shall be set forth in such report. For purposes of
such report, such firm may conclusively presume that any pooling and servicing
agreement which governs certificates offered under a common registration
statement under the Act, covering the CitiCertificates or similar certificates
with the CitiCertificates is substantially similar to the Pooling Agreement,
unless such other pooling and servicing agreement expressly states otherwise.
Section 3.10. CMSI to Act as Servicer of Affiliated Mortgage Loans.
CMSI (or any subservicer to whom such duties are delegated pursuant to Section
6.06 hereof) shall service and administer the Affiliated Mortgage Loans and
shall have the power and authority, acting alone, to do any and all things in
connection with such servicing and administration which it may deem necessary or
desirable. The Servicer shall service the Affiliated Mortgage Loans in
accordance with its normal servicing procedures for mortgage loans held in its
own portfolio. CMSI may perform its servicing responsibilities in connection
with the Affiliated Mortgage Loans through agents or independent contractors as
set forth in Section 6.06. Without limiting the generality of the foregoing,
CMSI shall continue, and is hereby authorized and empowered by the Trustee, to
execute and deliver, on behalf of itself, the Certificateholders 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 Affiliated Mortgage Loans and with respect to the properties
subject to their respective Mortgages. The Trustee shall furnish CMSI with any
powers of attorney and other documents necessary or appropriate to enable CMSI
to carry out its servicing and administrative duties hereunder.
All costs incurred by CMSI in effecting the timely payment of taxes and
assessments on the properties related to the Affiliated Mortgage Loans subject
to the Mortgages shall not, for the purpose of calculating monthly distributions
to the Certificateholders, be added to the amount owing under the related
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Mortgage Loans, notwithstanding that the terms of such Mortgage Loans so permit,
and such costs shall be recoverable by CMSI pursuant to Section 3.16.
The relationship of CMSI (and of any successor to CMSI as servicer or
Master Servicer under this Pooling Agreement) to the Trustee under this Pooling
Agreement is intended by the parties to be that of an independent contractor and
not that of a joint venturer, partner or agent.
Section 3.11. CMSI to Act as Master Servicer of Third Party Mortgage
Loans. CMSI, as Master Servicer, shall service and administer the Third Party
Mortgage Loans and shall have full power and authority, acting alone and/or
through a Third Party Master Servicer and Third Party Servicers, to do any and
all things in connection with such servicing and administration which it may
deem necessary or desirable in connection therewith. Without limiting the
generality of the foregoing, the Master Servicer in its own name is hereby
authorized and empowered by the Trustee, to execute and deliver, on behalf of
the Certificateholders 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 Third Party Mortgage Loans
and with respect to the properties subject to the Mortgages. The Trustee shall
furnish the Master Servicer with any powers of attorney and other documents
reasonably necessary or appropriate to enable the Master Servicer to carry out
its servicing and administrative duties of the Third Party Mortgage Loans.
Unless otherwise specified herein with respect to specific obligations
of the Master Servicer, the Master Servicer shall service and administer the
Third Party Mortgage Loans in the best interests of, and for the benefit of, the
Certificateholders, in accordance with prudent mortgage loan servicing standards
and procedures accepted in the mortgage banking industry and in accordance with
the Guide. The Master Servicer shall promptly notify the Trustee in writing of
any event, circumstance or occurrence which may adversely affect the ability of
the Master Servicer to service any Third Party Mortgage Loan or to otherwise
perform and carry out its duties, responsibilities and obligations under and
accordance with this Agreement. The Master Servicer shall at all times maintain
accurate records and books of account and an adequate system of audit and
internal controls. All accounting and loan servicing records pertaining to each
Third Party Mortgage Loan shall be maintained in such manner as will permit the
Trustee, or its duly authorized representatives and designees to examine and
audit and make legible reproductions of records during reasonable business
hours. All such records shall be maintained for the period required by the Guide
or such longer period as is required by law.
The Master Servicer intends to perform its servicing and administration
functions, as Master Servicer, pursuant to this Agreement through the Third
Party Master Servicer and the Third Party Servicers. All actions by the Third
Party Servicers or the Third Party Master Servicer with respect to the servicing
and administration of the Third Party Mortgage Loans shall be treated as though
done by the Master Servicer itself. All documents, instruments or contracts
executed by the Third Party Servicers on behalf of the Master Servicer shall be
treated by the Trustee as though executed by the Master Servicer itself.
All costs incurred by the Master Servicer or by the Third Party Master
Servicer or any Third Party Servicers in effecting the timely payment of taxes
and assessments on the properties subject to the Third Party Mortgage Loans
shall not, for the purpose of calculating monthly distributions to
Certificateholders, be added to the amount owing under the related Third Party
Mortgage Loans, notwithstanding that the terms of such Third Party Mortgage Loan
so permit, and such costs shall be recoverable by the Master Servicer to the
extent permitted by Section 3.16.
Section 3.12. Servicing Agreements between Master Servicer and Third
Party Servicers; Enforcement of Third Party Servicers. (a) The Master Servicer
may enter into Third Party Servicing
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Agreements with Third Party Servicers for the servicing and administration of
certain of the Third Party Mortgage Loans. References in this Agreement to
actions taken or to be taken by the Master Servicer in servicing the Third Party
Mortgage Loans include actions taken or to be taken by a Third Party Servicer on
behalf of the Master Servicer. Each Third Party Servicing Agreement will be upon
such terms and conditions as are not inconsistent with this Agreement and as the
Master Servicer and the Third Party Servicer have agreed and shall be effective
as of the date of conveyance of the Third Party Mortgage Loans by CMSI to the
Trustee. With the approval of the Master Servicer, a Third Party Servicer may
delegate its servicing obligations to third-party servicers, but such Third
Party Servicers will remain obligated under the related Third Party Servicing
Agreement. The Master Servicer and any Third Party Servicer may enter into
amendments thereto; provided, however, that any such amendments shall be
consistent with and not violate the provisions of this Agreement.
(b) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Third Party Servicer under the related Servicing
Agreement including, without limitation, the obligation to make advances in
respect of delinquent payments as required by a Servicing Agreement, to purchase
a Mortgage Loan on account of defective documentation, as described in Section
2.02, or on account of a breach of a representation or warranty, as described in
Section 2.03. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Servicing Agreements and the pursuit of
other appropriate remedies, shall be in such form and carried out to such an
extent and at such time as the Master Servicer, 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. The Mater Servicer may perform its obligations
under this Subsection (b) directly or through the Third Party Master Servicer.
Section 3.13. Liability of the Master Servicer. Notwithstanding any
Third Party Servicing Agreement, any of the provisions of this Agreement
relating to agreements or arrangements between the Master Servicer or a Third
Party Servicer or reference to actions taken through a Third Party Servicer or
otherwise, the Master Servicer shall remain obligated and liable to the Trustee
and Certificateholders for the servicing and administering of the Third Party
Mortgage Loans in accordance with the provisions of Section 3.11 without
diminution of such obligation or liability by virtue of indemnification from the
Third Party Servicer and to the same extent and under the same terms and
conditions as though the Master Servicer alone were servicing and administering
the Third Party Mortgage Loans. For purposes of making distributions to
Certificateholders all amounts received by a Third Party Servicer in connection
with the Third Party Mortgage Loans shall be deemed to have been received by the
Master Servicer, and with respect to any successor Master Servicer from the time
such successor Master Servicer becomes the Master Servicer, whether or not such
amounts are actually remitted by the Third Party Servicer to the Master
Servicer. The Master Servicer shall be entitled to enter into any agreement with
a Third Party Servicer and nothing contained in this Agreement shall be deemed
to limit or modify such indemnification.
Section 3.14. Collection of Certain Mortgage Loan Payments with respect
to an Affiliated Mortgage Loan; Certificate Account. The Servicer shall deposit
or cause to be deposited in the Certificate Account for Affiliated Mortgage
Loans the following amounts:
(i) All payments (other than payments due and payable, and
Principal Prepayments received, on or before the Cut-Off Date) on account of
principal, including Principal Prepayments, on the Affiliated Mortgage Loans;
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(ii) All payments (other than those due and payable on or before
the Cut-Off Date) on account of interest on the Affiliated Mortgage Loans, net
of any Servicing Fee retained by it pursuant to Section 3.23;
(iii) Any Buydown Funds required to be deposited pursuant to Section
3.06;
(iv) All Liquidation Proceeds with respect to Affiliated Mortgage
Loans other than proceeds to be applied to the restoration or repair of the
property subject to the related Mortgage or released to the related Mortgagor in
accordance with normal servicing procedures;
(v) All proceeds of any Affiliated Mortgage Loans or property
acquired in respect thereof repurchased pursuant to Sections 2.02, 2.03, 2.04 or
9.01 (including any reserve funds established pursuant to Section 2.02);
(vi) Any Voluntary Advance with respect to an Affiliated Mortgage
Loan or Affiliated Trustee Advance;
(vii) Any Advance Account Advance with respect to an Affiliated
Mortgage Loan; and
(viii) The amount the Servicer is required to pay into the
Certificate Account pursuant to Section 3.25 with respect to an Affiliated
Mortgage Loan.
CMSI shall cause all amounts collected with respect to the Affiliated Mortgage
Loans to be deposited in immediately available funds on the Business Day
following CMSI's receipt of cash or a check or other instrument representing
payment of any such amount. In the event that CMSI must repay any such amount,
by reason of the reversal of a provisional credit owing to the dishonor of a
Mortgagor's check or otherwise, CMSI shall promptly (x) withhold (or cause to be
withheld) a corresponding amount from a subsequent deposit into the Certificate
Account, and (y) restate (or cause to be restated) its accounts appropriately.
The foregoing requirements for deposit in the Certificate Account shall be
exclusive (except with respect to payments of Voluntary Advances made with
respect to Affiliated Mortgages pursuant to Section 3.04(g) and any Advance
Account Advance pursuant to Section 8.14), it being understood and agreed that,
without limiting the generality of the foregoing, amounts required to be
deposited into the Servicing Account, amounts in the nature of prepayment
charges, late payment charges, assumption fees and other fees and proceeds of
reimbursements of Property Protection Expenses received with respect to
Affiliated Mortgage Loans need not be deposited by CMSI in the Certificate
Account.
Section 3.15. Collection of Taxes, Assessments and Other Items,
Servicing Account. In addition to the Certificate Account, Escrow Accounts,
Custodial Accounts for P&I and the Buydown Account, CMSI shall establish and
maintain or cause to be established and maintained with Depositories Servicing
Accounts and shall deposit therein all collections of taxes, assessments,
primary mortgage or hazard insurance premiums or comparable items for the
account of the Mortgagors. Withdrawals from the Servicing Account may be made
only to effect payment of taxes, assessments, primary mortgage or hazard
insurance premiums or comparable items, to reimburse CMSI out of related
collections for any payments made pursuant to Section 3.10 regarding taxes and
assessments, Section 3.17 regarding premiums on Primary Mortgage Insurance
Certificates and Section 3.18 regarding premiums on standard hazard insurance
policies, to refund to any Mortgagors any sums determined to be overages, or to
pay interest owed to Mortgagors on such account to the extent required by law or
to clear and terminate such accounts at the termination of this Agreement in
accordance with Section 9.01.
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Section 3.16. Permitted Withdrawals from the Certificate Account. CMSI
may, from time to time, make (or cause to be made) payments from the Certificate
Account for the following purposes, in order of priority listed:
(i) To pay itself the Servicing Fee and Expenses (to the extent
not withheld from payments of interest received on the Mortgage Loans);
(ii) To effect reimbursement for Liquidation Expenses theretofore
incurred in respect of any Mortgage Loan in an amount not to exceed the amount
of Liquidation Proceeds deposited in respect of such Mortgage Loan pursuant to
Sections 3.04 and 3.10, net of the Servicing Fee or, Expenses, as applicable, as
hereinafter specified, and, to the extent that Liquidation Proceeds after such
reimbursement are excess of the principal balance of the related Mortgage Loan
together with accrued and unpaid interest thereon at the Mortgage Note Rate to
the date of purchase at the foreclosure sale, liquidation proceeding or
otherwise, pay to itself an amount equal to such excess and to pay itself the
amounts due the Servicer under Section 3.21 relating to deficiency actions;
(iii) To effect reimbursement for Voluntary Advances, or to
reimburse the Trustee for Third Party Trustee Advances or Affiliated Trustee
Advances, with respect to Mortgage Loans the right to reimbursement pursuant to
this clause (iii) being limited to amounts received on particular Mortgage Loans
(including, for this purpose, Insurance Proceeds and Liquidation Proceeds) that
represent late recoveries of payments of principal and/or interest respecting
which any such advance was made;
(iv) To effect reimbursement for any Voluntary Advances or Trustee
Advance, as applicable (or portion thereof) that the advancing Person has
determined in good faith to have become Nonrecoverable Advances;
(v) To effect reimbursement for advances made with respect to any
Mortgage Loan as contemplated by Section 3.10 in payment of taxes or
assessments, pursuant to Section 3.17 in payment of premiums on Primary Mortgage
Insurance Certificates, and pursuant to Section 3.18 in payment of hazard
insurance premiums (except premiums on the blanket policy referred to in Section
3.18) in any amount not heretofore reimbursed out of the Servicing Account, in
each case to the extent and only to the extent that reimbursements of such
advances with respect to such Mortgage Loans have been deposited in the
Certificate Account pursuant to Sections 3.03 or 3.14;
(vi) To make payments permitted pursuant to the last sentence of
Section 6.03;
(vii) To effect reimbursement for Voluntary Advances, to reimburse
the Trustee for Third Party Trustee Advances and Affiliated Trustee Advances, to
reimburse the Advance Account for any Advance Account Advances, theretofore made
in respect of any Mortgage Loan in an amount not to exceed at any time in the
aggregate the amount of payments from time to time deposited in the Certificate
Account and not required to be distributed to the Certificateholders (including,
for this purpose, Liquidation Proceeds and Insurance Proceeds covering the
property subject to the related Mortgage);
(viii) To make payments in the amounts and in the manner provided in
Sections 3.04, 12.01 and 13.01;
(ix) To clear and terminate the Certificate Account pursuant to
Section 9.01; and
(x) To pay to itself or the Seller, as the case may be, with
respect to each Mortgage Loan or property acquired in respect thereof that has
been purchased pursuant to Section 2.02, 2.03 or 9.01, all
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amounts received thereon following such purchase and not distributed as of the
date on which the related Adjusted Balance or Purchase Price is determined.
CMSI shall keep and maintain (or cause to be kept and maintained)
separate accounting records, on a Mortgage Loan-by-Mortgage Loan basis, for the
purpose of accounting for withdrawals from the Certificate Account pursuant to
clauses (ii), (iii), (iv),(vi), (vii), (viii) and (xi) of this Section;
provided, however. that it is understood and agreed that such records need not
be retained by CMSI for a period longer than its five most recent fiscal years.
Section 3.17. Maintenance of Primary Mortgage Insurance Certificates.
CMSI covenants and agrees to exercise its best reasonable efforts to cause to be
maintained and kept in full force and effect each Primary Mortgage Insurance
Certificate in accordance with the terms of such Primary Mortgage Insurance
Certificate. CMSI agrees to effect the timely payment of the premium on each
Primary Mortgage Insurance Certificate, and such costs not otherwise recoverable
shall be recoverable by CMSI pursuant to Section 3.16. In connection with its
activities as administrator and servicer of the Mortgage Loans, CMSI agrees to
present, on behalf of itself, the Trustee and the Certificateholders, claims to
the insurer under each Primary Mortgage Insurance Certificate and, in this
regard, to take such reasonable action as shall be necessary to permit recovery
under any Primary Mortgage Insurance Certificate respecting a defaulted Mortgage
Loan. Pursuant to Section 3.16, any amounts collected by CMSI under any Primary
Mortgage Insurance Certificate shall be deposited in the Certificate Account,
subject to withdrawal pursuant to Section 3.16. CMSI shall have the power to
substitute for any Primary Mortgage Insurance Certificate another substantially
equivalent policy issued by another insurer, provided that no such substitution
shall be made unless (i) CMSI shall have been advised by each Rating Agency that
such substitution will not negatively affect the then-current rating by such
Rating Agency of the CitiCertificates (with respect to any Insured Certificates,
without regard to the Insurance Policy) or (ii) the claims-paying ability of the
primary mortgage insurer is, at the time of such substitution, rated by each
Rating Agency rating the CitiCertificates at least in the category of "AA" or
its equivalent.
Section 3.18. Maintenance of Hazard Insurance, Property Protection
Expenses. CMSI shall cause to be maintained for each Mortgage Loan (other than a
Mortgage Loan relating to a cooperative apartment) hazard insurance with
extended coverage in an amount which is at least equal to (a) the maximum
insurable value of the improvements securing such Mortgage Loan if such amount
is less than the unpaid principal balance on the related Mortgage Loan, (b) the
principal balance owing on such Mortgage Loan if such amount is greater than or
equal to 80% but is less than or equal to 100% of the insurable value or (c) 80%
of the insurable value if principal balance the Mortgage Loan is less than 80%
of the insurable value. Except in the case of cooperative apartments, CMSI shall
also maintain on property acquired upon foreclosure, or by deed in lieu of
foreclosure, hazard fire insurance with extended coverage in an amount which is
at least equal to the lesser of (a) the maximum insurable value from time to
time of the improvements which are a part of such property or (b) the unpaid
principal balance from time to time on such Mortgage Loan at the time of such
foreclosure or deed in lieu of foreclosure plus accrued interest at the Mortgage
Note Rate and the good-faith estimate of CMSI of related Liquidation Expenses to
be incurred in connection therewith. To the extent provided in Sections 3.10 and
3.04, amounts collected by CMSI under any such policies shall be deposited in
the Certificate Account (other than in the case of Third Party Mortgage Loans,
amounts to be applied to the restoration or repairs of the related Mortgaged
Property or property thus acquired or amounts released to the Mortgagor in
accordance with the Guide). Any cost incurred by CMSI in maintaining any such
insurance shall not, for the purpose of calculating monthly distributions to the
Certificateholders, be added to the amount owing under the related Mortgage
Loan, notwithstanding that the terms of the Mortgage Loan may so permit. Such
costs shall be recoverable by CMSI pursuant to Sections 3.04 and 3.16. In cases
in which property securing any Mortgage Loan is located in a federally
designated flood area, the hazard insurance to be maintained for such Mortgage
Loan shall include flood insurance. It is understood and agreed
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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. If CMSI shall obtain
and maintain a blanket policy insuring against hazard losses on all of the
Mortgage Loans, it shall conclusively be deemed to have satisfied its
obligations as set forth in the first sentence of this Section 3.16, it being
understood and agreed that such policy may contain a deductible clause, in which
case CMSI shall, in the event that there shall not have been maintained on the
related Mortgaged Property a policy complying with the first sentence of this
Section, and there shall have been a loss which would have been covered by such
policy, deposit in the Certificate Account the amount not otherwise payable
under the blanket policy because of such deductible clause.
Section 3.19. Assumption and Modification Agreements Relating to
Mortgage Loans. In any case in which property relating to a Mortgage Loan
subject to a Mortgage has been or is about to be conveyed by the Mortgagor, CMSI
shall exercise (or cause to be exercised) the right to accelerate the maturity
of such Mortgage Loan under any due-on-sale clause applicable thereto to the
extent of its contractual arrangements with such Mortgagor. If it is prevented,
as provided in the last paragraph of this Section, from enforcing any such
clause or if the Mortgage Loan does not contain an enforceable due-on-sale
provision, CMSI is authorized to take or enter into an assumption and
modification agreement from or with the Person to whom such property has been or
is about to be conveyed, pursuant to which such Person becomes liable under the
related Mortgage Note and the Mortgagor remains liable thereon; provided, that
such Mortgage Loan as assumed or modified meets the requirements set forth in
this Pooling Agreement with respect to the Mortgage Loans initially included in
the Trust Fund and that the Mortgage Loan shall continue to be covered by my
related Primary Mortgage Insurance Certificate and hazard insurance policy. CMSI
shall notify the Trustee that any assumption and modification agreement has been
completed by forwarding to the Mortgage Document Custodian (with a copy to the
Trustee) an original thereof, which original shall be added by the Mortgage
Document Custodian 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. In connection with any
such agreement, the interest rate of the related Mortgage Note shall not be
changed nor shall any other term affecting the amount or timing of payment on
the Mortgage Loan be changed. Any fee collected by CMSI for entering into any
such agreement will be retained by CMSI as additional servicing compensation.
Notwithstanding the foregoing paragraph of this Section or any other
provision of this Pooling Agreement, CMSI 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, or transfer of the property subject to a Mortgage
without the assumption thereof, by operation of law or by reason of any
assumption or transfer which CMSI reasonably believes it may be restricted by
law from preventing or which would result in non-coverage of any resulting loss
that would otherwise be covered under the Mortgage Pool Insurance Policy and any
related Primary Mortgage Insurance Certificate, for any reason whatsoever.
Section 3.20. Intentionally Omitted.
Section 3.21. Realization on Defaulted Mortgage Loans. CMSI shall use
its best efforts, consistent with its customary servicing procedures, to
foreclose upon or otherwise comparably convert the ownership of properties
securing such of the Mortgage Loans as come into and continue in default and as
to which no satisfactory arrangements can be made for collection of delinquent
payments pursuant to Section 3.01. Consistent with the foregoing, CMSI shall use
reasonable efforts to realize upon defaulted Mortgage Loans in such manner as
will maximize the receipt of principal and interest by the Certificateholders,
taking into account, among other things, the timing of foreclosure proceedings.
In the event a deficiency action is available against the Mortgagor or any other
person, CMSI may proceed for the deficiency. The Servicer
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or Master Servicer may retain twenty-five percent of the net proceeds received
from a Mortgagor pursuant to a deficiency action as compensation for entering
into such deficiency action. Foreclosure on shares issued by cooperative housing
corporations shall be by sale in accordance with the provisions of Article 9 of
the Uniform Commercial Code in effect in the applicable jurisdiction.
In the event that title to any Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure, the deed or certificate of sale
shall be issued to the Trustee, or to its nominee on behalf of the Trust Fund.
Notwithstanding any such acquisition of title and cancellation of the related
Mortgage Loan, such Mortgage Loan shall (except for purposes of Section 9.01) be
considered to be an Outstanding Mortgage Loan such time as the Mortgaged
Property shall be sold and such Mortgage Loan becomes a Liquidated Loan.
Consistent with the foregoing for purposes of all calculations hereunder so long
as such Mortgage Loan shall be considered to be an Outstanding Mortgage Loan, it
shall be assumed that the related Mortgage Note and its amortization schedule in
effect on and after such acquisition of title (after giving effect to any
previous Principal Prepayments, and before any adjustment thereto by reason of
any Deficient Valuations and Debt Service Reductions or any similar proceeding
or any moratorium or similar waiver or grace period) remain in effect
(notwithstanding that the indebtedness evidence by such Mortgage Note shall have
been discharged), subject to adjustment to reflect the application of REO
Proceeds received in any month. Net REO Proceeds received in any month shall be
deemed to have been received first in payment of the accrued interest that
remained unpaid on the date that such Mortgage Loan became an REO Mortgage Loan,
with the excess thereof, if any, being deemed to have been received in respect
of the delinquent principal installments that remained unpaid on such date.
Thereafter, Net REO Proceeds received in any month shall be applied to the
payment of installments of principal and accrued interest on such Mortgage Loan
deemed to be due and payable in accordance with the terms of such Mortgage Note
and such amortization schedule. If such Net REO Proceeds exceed the then
delinquent principal and interest installments on such Mortgage Loan, the excess
shall be treated as a Principal Prepayment received in respect of such Mortgage
Loan.
In connection with any Liquidated Loan as to which CMSI has accepted a
deed in lieu of foreclosure, CMSI shall dispose of such Mortgaged Property prior
to the close of the third calendar year beginning after the year of acquisition
by the applicable Constituent REMIC unless (i) the Trustee shall have been
supplied with an Opinion of Counsel to the effect that the holding by the
applicable Constituent REMIC of such Mortgaged Property subsequent to such
period (and specifying the period beyond such period for which the Mortgaged
Property may be held) will not result in the imposition of taxes on "prohibited
transactions" of any of the Constituent REMICs as defined in Code Section 860F,
or cause any of the Constituent REMICs to fail to qualify as a REMIC at any time
that any CitiCertificates are Outstanding, in which case the applicable
Constituent REMIC may continue to hold such Mortgaged Property (subject to any
conditions contained in such Opinion of Counsel), or (ii) CMSI shall have
applied for, prior to the expiration of such period, an extension of such period
in the manner contemplated by Code Section 856(e)(3), in which case such period
shall be extended by the applicable period. Notwithstanding any other provision
of this Agreement, unless otherwise required pursuant to applicable state law,
no Mortgaged Property acquired by the applicable Constituent REMIC shall be (x)
rented (or allowed to continue to be rented) or otherwise used for the
production of income by or on behalf of the applicable Constituent REMIC in such
a manner or pursuant to any terms that would (1) cause such Mortgaged Property
to fall to qualify at any time as "foreclosure property" within the meaning of
Code Section 860G(a)(8), (2) subject any of the Constituent REMICs to the
imposition of any federal or state income taxes on "net income from foreclosure
property" earned from such Mortgaged Property within the meaning of Code Section
860G(c), or (3) cause the sale of such Mortgaged Property to result in the
receipt by any of the applicable Constituent REMICs of any income from
non-permitted assets as described in Code Section 860F(a)(2)(B) or (y) sold in
such manner or pursuant to any terms that would subject any of the Constituent
REMICs to the imposition of any federal or state income taxes on "net income
from foreclosure property" within the meaning of Code Section 860G(c), unless
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CMSI has agreed to indemnify and hold harmless each Constituent REMIC with
respect to the imposition of any such taxes.
The foregoing is subject to the provision that, in any case in which
property subject to a Mortgage shall have suffered damage, whether from an
Uninsured Cause or otherwise, CMSI shall not be required to expend its own funds
in connection with any foreclosure or towards the restoration of such property
unless it shall determine in its discretion (a) that such restoration and/or
foreclosure will increase the net proceeds of liquidation of the related
Mortgage Loan to the Certificateholders after reimbursement to itself for such
expenses and (b) that such expenses will be recoverable by CMSI through either
Liquidation Proceeds or Insurance Proceeds (with respect to each of which it
shall have priority for purposes of withdrawals from the Certificate Account
pursuant to Section 3.16 from the related property, as contemplated in Section
3.16.) CMSI 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
3.16. Notwithstanding the above, CMSI shall not be entitled to recover legal
expenses incurred in connection with liquidation proceedings where the Mortgagor
pays all delinquent payments and expenses and such proceedings are terminated
prior to liquidation, other than sums received from the Mortgagor for such
expenses.
Notwithstanding anything to the contrary contained in this Section
3.21, the Servicer shall be under no obligation to foreclose upon or otherwise
convert the ownership of any Mortgaged Property which it believes may be
contaminated with or affected by pollutants, contamination, hazardous wastes or
hazardous substances. The Servicer shall not be liable to the Certificateholders
if, based on its belief that no such contamination or effect exists, the
Servicer forecloses on a Mortgaged Property and takes title to such Mortgaged
Property, and thereafter such Mortgaged Property is determined to be so
contaminated or affected.
In the event CMSI does not elect to foreclose on a Mortgaged Property,
CMSI may, in the exercise of its judgment, elect to accept a payment or
payments, in connection with the sale by the Mortgagor of such Mortgaged
Property or the retention by the Mortgagor of such Mortgaged Property, in
aggregate amount less than the outstanding balance of the related Mortgage Loan
and accrued interest thereon.
The Trustee shall furnish CMSI with any powers of attorney and other
documents necessary, or appropriate to enable CMSI to carry out its efforts in
realizing upon defaulted Mortgage Loans hereunder.
Section 3.22. Trustee to Cooperate; Release of Mortgage Files. Upon the
payment in full of any Mortgage Loan or upon the receipt by CMSI of a
notification that payment in full will be escrowed in a manner customary for
such purpose, CMSI will immediately notify the Trustee by a certification (which
certification shall include a statement to the effect that all amounts received,
and all amounts required to be paid by CMSI pursuant to either Section 3.03 or
3.14 hereof, in connection with such payment which are required to be deposited
to the Certificate Account pursuant to Section 3.03 or 3.14 have been or will be
so deposited) of a Servicing Officer and shall request delivery to it of the
Mortgage File. Upon receipt of such certification and request, the Trustee shall
promptly direct the Mortgage Document Custodian to release the related Mortgage
Documents to CMSI. Upon any such payment in full, CMSI is authorized to execute,
pursuant to the authorization contained in Section 3.10, 3.11 or 3.14 as
applicable, an instrument of satisfaction regarding such Mortgage, which
instrument of satisfaction shall be recorded by CMSI if required by applicable
law and be delivered to the Person entitled thereto, it being understood and
agreed that no expenses incurred in connection with such instrument of
satisfaction shall be withdrawn from the Certificate Account. From time to time
and as appropriate for the servicing or foreclosure of any Mortgage Loan,
including for this purpose collection under any Primary Mortgage Insurance
Certificate, the Trustee shall, upon request of CMSI and delivery to the Trustee
of a receipt signed by a Servicing Officer, direct the Mortgage Document
Custodian to release the related Mortgage Documents to CMSI and shall execute
such
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documents furnished to the Trustee as shall be necessary to the prosecution
of any such proceedings. Such receipt shall obligate CMSI to return the Mortgage
Documents to the Trustee or the Mortgage Document Custodian, as the case may be,
when the need therefor by CMSI no longer exists unless the Mortgage Loan shall
have been prepaid or liquidated in the interim, in which case, upon receipt of a
certificate of a Servicing Officer similar to that hereinabove specified to such
effect, the receipt shall be released by the Trustee to CMSI.
Section 3.23. Servicing Fee, Payment of Certain Expenses by CMSI. In
lieu of receiving the Servicing Fee for the Affiliated Mortgage Loans pursuant
to Section 3.04(c), CMSI as Servicer shall be entitled, prior to the payment of
the amounts described in Section 3.04(b), to withhold and pay to itself out of
each payment received by it on account of interest on each Affiliated Mortgage
Loan (subject to the other provisions of this Section) up to an amount which,
when deducted, will make the portion of interest on each Affiliated Mortgage
Loan being deposited in the Certificate Account for the applicable period equal
to the Pass-Through Rate. In addition, CMSI shall be entitled to receive the
Servicing Fee out of Liquidation Proceeds or Insurance Proceeds, in each case to
the extent permitted by Section 3.16. Any Servicing Fee payable to CMSI pursuant
to this Section shall be payable prior to any other distributions pursuant to
Article XII. Prepayment charges, assumption fees, late payment or other similar
charges shall be retained by CMSI as additional servicing compensation. Any
amounts that CMSI shall be required to deposit in the Certificate Account
pursuant to Section 3.25 shall be deemed to reduce the Servicing Fee to which
CMSI is entitled pursuant to this Section.
The Third Party Master Servicer, as compensation for its activities,
shall be entitled to receive on each Distribution Date an amount with respect to
each Third Party Mortgage Loan as to which a monthly installment of principal
and interest has been received equal to one-twelfth of the Third Party Master
Servicing Fee Rate for such Mortgage Loan multiplied by the Adjusted Balance on
which such installment of interest accrued.
As compensation for its activities under its Third Party Servicing
Agreements, each Third Party Servicer shall be entitled to an amount with
respect to each Third Party Mortgage Loan as to which a monthly installment of
principal and interest has been received equal to one-twelfth of the Third Party
Servicing Fee Rate for such Mortgage Loan multiplied by the Adjusted Balance on
which such installment of interest accrued. Each Third Party Servicer is
required to pay all expenses incurred by it in connection with its servicing
activities under its Third Party Servicing Agreement (including advance payment
of premiums for Primary Mortgage Insurance Certificates, if required) and shall
not be entitled to reimbursement therefor except as specifically provided in the
Third Party Servicing Agreement and not inconsistent with this Agreement.
CMSI shall be required to pay all expenses incurred by it in connection
with its activities hereunder and shall not be entitled to reimbursement
therefor except as provided in Sections 3.15, 3.16 and 3.21.
Section 3.24. Reports. (a) CMSI shall provide (or cause to be provided)
to the Paying Agent (if CMSI is not the Paying Agent) and the Trustee (if the
Trustee is not the Paying Agent) not later than 10:00 a.m. New York City time on
the Business Day next preceding the Distribution Date a statement of the
information set forth in clauses (i) through (viii) of Section 3.05, such
information to be given in the aggregate.
(b) Not later than 15 Business Days after receipt of a written
request from the Trustee, CMSI shall forward (or cause to be forwarded) to the
Trustee a statement, certified by a Servicing Officer, of the aggregate of
deposits in and withdrawals from the Certificate Account for each category of
deposit specified
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in Section 3.03 and 3.14 and each category of withdrawal specified in Section
3.16 for the immediately preceding distribution period or any prior distribution
period or periods specified by the Trustee.
(c) The Trustee may at any time during normal business hours
inspect and copy at CMSI's expense CMSI's books, records and accounts with
respect to the Mortgage Loans.
(d) CMSI shall provide (or cause to be provided) to any Insurer
the Insurer Deliverables.
Section 3.25. Payments by CMSI. CMSI shall deposit in the Certificate
Account not later than the Distribution Date in the month next succeeding the
month in which Principal Prepayments are received the amount set forth in the
next paragraph.
For Affiliated Mortgage Loans CMSI as Servicer shall deposit an amount
equal to the difference between (a) the product of (i) all such Principal
Prepayments related to the Affiliated Mortgage Loans received in the month prior
to the month in which the Distribution Date for such Determination Date falls
and (ii) the Pass-Through Rate divided by (iii) twelve (calculated on the basis
of a 360-day year, each month being assumed to have 30 days) less (b) the amount
of interest on such Principal Prepayments related to the Affiliated Mortgage
Loans required to be paid by the Mortgagors (adjusted to the Pass-Through Rate).
Such deposit shall be paid from, and limited to, the Servicing Fee received with
respect to scheduled interest payments due on the Affiliated Mortgage Loans on
the Due Date in the month in which such Distribution Date occurs or Principal
Prepayments related to the Affiliated Mortgage Loans received in the preceding
calendar month and other Servicing Fees received with respect to the calendar
month preceding the month in which such Distribution Date occurs. Such deposit
shall be applied first to interest with respect to partial Principal Prepayments
related to the Affiliated Mortgage Loans and second to interest with respect to
Principal Prepayments related to the Affiliated Mortgage Loans in full. No such
deposit shall be considered to be a Voluntary Advance by CMSI or be reimbursable
to CMSI, from cash in the Certificate Account or otherwise.
For each Third Party Mortgage Loan CMSI, as Master Servicer shall cause
to be deposited an amount equal to (x) the amount by which the annual interest
at the related Mortgage Note Rate (net of the related Expense Rate) on the
prepaid Adjusted Balance of such Third Party Mortgage Loan divided by twelve
exceeds (y) the interest paid by Mortgagor from the due date of the last
scheduled payment of principal and interest on such Mortgage Loan to the date of
such prepayment (adjusted to the Mortgage Note Rate (net of the related Expense
Rate). Not later than the Distribution Date immediately succeeding such
Determination Date, the Master Servicer shall deposit in the Certificate Account
from its own funds the amount determined by aggregating, for each such Mortgage
Loan for which the amount determined pursuant to (x) above exceeds the amount
determined pursuant to (y) above, the amount of each such excess, but only to
the extent of (and in reduction of) the Master Servicer Fee payable to it
pursuant to Section 3.23 for the calendar month in which such prepaid principal
balance is received.
Section 3.26. Refinancings of Mortgage Loans. In addition to waivers
and arrangements permitted by Section 3.01, CMSI reserves the right to offer
refinancings of any Affiliated Mortgage Loan or Third Party Mortgage Loan, if
such refinancing arises out of a request by the related Mortgagor for a
refinancing or a modification, or for other relief from the provisions of the
related Mortgage Loan.
On the Deposit Date in the month next following the effective date of
the refinancing of any Mortgage Loan pursuant to this Section, CMSI shall
deposit, or cause to be deposited, into the Collection Account an amount equal
to the prepayment in full of such Mortgage Loan (net of all Voluntary Advances
and Trustee Advances with respect to such Mortgage Loan, which shall be
reimbursed to the Trustee or deemed reimbursed to CMSI, as the case may be) and,
upon receipt by the Trustee of written notification of
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such deposit signed by an Authorized Officer of CMSI, the related Mortgage File
shall be released, and the Trustee shall comply with the provisions of Section
3.22.
For the purposes of this Section, a "refinancing" will include any
process with a Mortgagor that results in the refinanced Mortgage Loan be
identified and serviced as a "new mortgage loan" in the books, records and
servicing files of the Servicer.
ARTICLE IV
RESERVE FUND
[Reserved]
ARTICLE V
THE CERTIFICATES
Section 5.01. The Certificates. The CitiCertificates and Residual
Certificates shall be substantially in the forms set forth as Exhibits hereto.
The Certificates shall be issued in the denominations specified in Article XII
and shall be executed by manual or facsimile signature on behalf of CMSI by its
Chairman, President or one of its Vice Presidents under its seal imprinted
thereon and attested by the manual or facsimile signature of its Secretary or
one of its Assistant Secretaries. Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures were
affixed, authorized to sign on behalf of CMSI shall bind CMSI, notwithstanding
that such individuals or any of them have ceased to be so authorized prior to
the authentication and delivery of such Certificates or did not hold such
offices at the date of such Certificates. No Certificate shall be entitled to
any benefit under this Agreement, or be valid for any purpose, unless there
appears on such Certificate a certificate of authentication substantially in the
form set forth in Exhibit A hereto or, if an Authenticating Agent is appointed
pursuant to Section 8.12, executed by the Trustee or the Authenticating Agent by
manual signature, and such certificate upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. The CitiCertificates shall be engraved, printed or
lithographed in such manner as to comply with the requirements of The Depository
Trust Company or other Clearing Agency if such CitiCertificates are book-entry
securities.
Until such time as Definitive Certificates are issued pursuant to
Section 5.06, each CitiCertificate designated as a Book-Entry Certificate in
Article XII shall be held in book-entry form and shall bear a legend in
substantially the following form:
"Unless this certificate is presented by an authorized representative
of [the Clearing Agency] to the Issuer or its agent for registration of
transfer, exchange or payments and any certificate issued is registered in the
name of [the Clearing Agency] or such other name as requested by an authorized
representative of [the Clearing Agency] and any payment is made to [the Clearing
Agency], any transfer, pledge or other use hereof for value or otherwise by or
to any person is wrongful since the registered owner hereof, [the Clearing
Agency], has an interest herein."
(b) Upon original issuance, the Book-Entry Certificates shall be
issued in the form of one or more typewritten certificates, to be delivered to
the initial Clearing Agency, by, or on behalf of, the Issuer. Such
CitiCertificates shall initially be registered on the Certificate Register in
the name of the nominee of
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the initial Clearing Agency, and no Beneficial Owner will receive a definitive
certificate representing such Beneficial Owner's interest in the Book-Entry
Certificates, except as provided in Section 5.06. Unless and until definitive,
fully registered certificates ("Definitive Certificates") have been issued to
Beneficial Owners pursuant to Section 5.06:
(i) the provisions of this Section 5.01(b) shall be in
full force and effect;
(ii) the Issuer, the Servicer, Master Servicer, the
Certificate Registrar and the Trustee may deal with the Clearing Agency for all
purposes (including the making of distributions on the Book-Entry Certificates
and the taking of actions by the Holders of Book-Entry Certificates) as the
authorized representative of the Beneficial Owners;
(iii) to the extent that the provisions of this Section
5.01(b) conflict with any other provisions of this Agreement, the provisions of
this Section 5.01(b) shall control;
(iv) the rights of Beneficial Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by law,
the rules, regulations and procedures of the Clearing Agency and agreements
between such Beneficial Owners and the Clearing Agency and/or the Clearing
Agency Participants, and all references in this Agreement to actions by
Certificateholders shall, with respect to the Book-Entry Certificates, refer to
actions taken by the Clearing Agency upon instructions from the Clearing Agency
Participants, and all references in this Agreement to distributions, notices,
reports and statements to Certificateholders shall, With respect to the
Book-Entry Certificates, refer to distributions, notices, reports and statements
to the Clearing Agency or its nominee, as registered holder of the Book-Entry
Certificates, as the case may be, for the distribution to Beneficial Owners in
accordance with the procedures of the Clearing Agency; and
(v) the initial Clearing Agency will make book-entry transfers
among the Clearing Agency Participants and receive and transmit distributions of
principal and interest on the CitiCertificates to the Clearing Agency
Participants, for distribution by such Clearing Agency Participants to the
Beneficial Owners or their nominees.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Holders of Book-Entry
Certificates evidencing specified voting interests, such direction or consent
shall be given by Beneficial Owners having the requisite percentage interests.
Unless and until Definitive Certificates have been issued to Beneficial
Owners pursuant to Section 5.06, copies of the reports or statements referred to
in Section 3.05 shall be available to Beneficial Owners upon written request to
the Trustee at the Corporate Trust Office.
Section 5.02. Registration of Transfer and Exchange of Certificates.
CMSI shall maintain or cause to be maintained in accordance with the provisions
of Section 6.05 a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, CMSI shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at the
office or agency maintained by CMSI set forth in Article XII, CMSI shall execute
and the Trustee or the Authenticating Agent shall authenticate and deliver, in
the name of the designated transferee or transferee, one or more new
Certificates in authorized denominations of the same aggregate number of Single
Certificates or the same aggregate Percentage Interest, as the case may be.
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At the option of the Certificateholder, Certificates may, be exchanged
for other Certificates of authorized denominations evidencing the same aggregate
number of Single Certificates or the same aggregate Percentage Interest, as the
case may be, upon surrender of the Certificates to be exchanged at any such
office or agency. Whenever any Certificates are so surrendered for exchange,
CMSI shall execute and the Trustee or Authenticating Agent shall authenticate
and deliver the Certificates which the Certificateholder making the exchange is
entitled to receive. Every Certificate presented or surrendered for registration
of transfer or exchange shall be accompanied by a written instrument of transfer
in form satisfactory to the Trustee, CMSI and the Certificate Registrar duly
executed by the Holder thereof or his attorney duly authorized in writing.
Notwithstanding the foregoing, no transfer or exchange of any Residual
Certificate shall be made by the Trustee or Authenticating Agent unless the
Certificateholder making the exchange has complied with the provisions of this
Agreement, the respective Certificate and applicable securities laws.
No service charge shall be made for any registration of transfer or
exchange of the Certificates, but the Certificate Registrar may require payment
of a sum sufficient to cover any tax or governmental charge that may be imposed
in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer and exchange
shall be canceled and, subject to the record retention requirements of the
Exchange Act, subsequently destroyed by the Trustee or, at its direction, by the
Certificate Registrar.
CMSI and the Trustee will cause the Certificate Registrar to provide to
the Paying Agent, if the Paying Agent is not the Certificate Registrar, not
later than the third Business Day next preceding the Distribution Date, the
names and addresses of the Certificateholders as of the Record Date and the
number of Single Certificates or Percentage Interest held of record by each of
them.
Notwithstanding the foregoing, no legal or beneficial interest in all
or any portion of a Residual Certificate may be transferred, directly or
indirectly, to a "disqualified organization" win the meaning of Code Section
860E(e)(5), or to an agent of a disqualified organization (including a broker,
nominee, or other middleman) (an "Agent") and any such purported transfer shall
be void and of no effect. Further, no legal or beneficial interest in all or any
portion of a Residual Certificate may be registered in the name of a Plan or a
Person investing the assets of a Plan (such Plan or Person an "ERISA Prohibited
Holder") or in the name of a person that is not (i) a U.S. Person or (ii) a
non-U.S. Person that holds the Residual Certificate in connection with the
conduct of a trade or business within the United States and has furnished the
transferor and the Trustee with an effective Internal Revenue Service Form 4224
or (iii) a non-U.S. Person that has delivered to both the transferor and the
Trustee an opinion of a nationally recognized tax counsel to the effect that the
transfer of the Residual Certificate to it is in accordance with the
requirements of the Code and the regulations promulgated thereunder and that
such transfer of the Residual Certificate will not be disregarded for federal
income tax purposes (any such person who is not described in clauses (i), (ii)
or (iii) above being referred to herein as a "Non-permitted Foreign Holder").
CMSI shall not execute and the Trustee or Authenticating Agent shall not
authenticate and deliver, a new Residual Certificate in connection with any
transfer of a Residual Certificate. and neither CMSI nor the Trustee shall
accept a surrender for transfer or registration of transfer, or register the
transfer of, any Residual Certificate unless the transferor shall have provided
to CMSI and the Trustee an affidavit, substantially in the form marked as
Appendix 1 hereto, signed by the transferee, to the effect that the transferee
is not such a disqualified organization, an agent for any entity as to which the
transferee has not received a substantially similar affidavit, an ERISA
Prohibited Holder or a Non-permitted Foreign Holder, accompanied by a written
statement signed by the transferor to the effect that, as of the time of the
transfer. the transferor has no actual knowledge that such affidavit is false.
Upon notice by CMSI that any legal or beneficial interest in any portion of a
Residual Certificate has been transferred, directly or indirectly, to a
disqualified organization or an Agent in contravention of the foregoing
restrictions, the Trustee shall furnish to the Internal Revenue Service and the
transferor of such Residual
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Certificate or to such Agent, within 60 days of the request therefor by such
transferor or such Agent, and CMSI agrees to provide the Trustee with the
computation of such information necessary to the application of Code Section
860E(e) as may be required by the Code, including but not limited to the present
value of the total anticipated excess inclusions with respect to such Residual
Certificate (or portion thereof) for periods after such transfer. At the
election of CMSI, the reasonable cost of computing and furnishing such
information may be charged to the transferor or such Agent; however, the Trustee
and CMSI shall in no event be excused from furnishing such information. Every
holder of a Residual Certificate shall be deemed to have consented to such
amendments to the Pooling Agreement as may be required to further effectuate the
restrictions on transfer of Residual Certificates to a disqualified
organization, an Agent, an ERISA Prohibited Holder or a Non-permitted Foreign
Holder.
The affidavit described in the preceding paragraph shall also contain
the statement of the transferee that it (i) has historically paid its debts as
they have come due and intends to do so in the future, (ii) understands that it
may incur liabilities in excess of cash flows generated by the Residual
Certificate, (iii) intends to pay taxes associated with holding the Residual
Certificate as they become due and (iv) will not transfer the Residual
Certificate to any person or entity that does not provide a similar affidavit.
The transferor's statement to the Trustee accompanying the affidavit shall state
that the transferor has no knowledge or reason to know that the statements made
by the transferee with respect to clauses (i) and (iii) of the preceding
sentence are false. Each Residual Certificate shall bear a legend referring to
the restrictions contained in this paragraph and the preceding paragraph.
Notwithstanding the foregoing, no transfer of any Private Certificate
may be made unless such Private Certificate has been registered under the Act
and applicable state securities or "blue sky" laws, or an exemption from the Act
and applicable state securities or "blue sky" laws is available. Upon surrender
for registration of transfer of any Private Certificate, (1) the Trustee shall
not accept surrender for transfer or registration of transfer of, or register
the transfer of, any Private Certificate and (2) CMSI shall not execute, and the
Trustee shall not authenticate and deliver, any new Private Certificate in
connection with the transfer of any Private Certificate, unless either (A) such
Private Certificate has been registered under the Act and applicable state
securities or "blue sky" laws, or (B) exemptions from the registration
requirements of the Act and applicable state securities or "blue sky" laws are
available, and the transferee delivers to the Issuer and the Trustee a letter
substantially to the effect set forth in Exhibit E to this Agreement and (1) if
such transferee is not a "Qualified Institutional Buyer" within the meaning of
Rule 144A of the Act, and if so requested by CMSI, in its sole discretion, an
opinion of counsel acceptable to CMSI shall have been delivered to CMSI and the
Trustee to the effect that such transfer is in compliance with either subclause
(A) or subclause (B) of this clause (i) of this Section 5.02; or (2) if such
transfer is to a non-institutional investor, unless such investor is an
accredited investor (as defined in Regulation D under the Act), has a net worth
(exclusive of primary residence) of at least $1,000,000 as confirmed in writing
to the Trustee.
No transfer of an ERISA Restricted CitiCertificate may be made unless
any proposed transferee (i) executes a representation letter in substantially
the form of Exhibit F hereto and in substance satisfactory to the Trustee and
the Issuer either stating (a) that it is not, and is not acting on behalf of,
any employee benefit plan subject to Title I of ERISA or Section 4975 of the
Code, or a governmental plan, as defined in Section 3(32) of ERISA, subject to
any federal, state or local law ("Similar Law") which is, to a material extent,
similar to the foregoing provisions of ERISA or the Code (collectively, a
"Plan") or using the assets of any such Plan to effect such purchase or (b) as
to the Class M or Class B CitiCertificates only, it is an insurance company and
the source of funds used to purchase the Class M CitiCertificates or the Class B
CitiCertificates is an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60 ("PTE
95-60"), 60 Fed. Reg. 35925 (July 12, 1995)) and there is no Plan with respect
to which the amount of such general accounts reserves and liabilities for the
contracts) held by or on behalf of such Plan and all other Plans maintained by
the same employer (or affiliate thereof as defined in Section
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V(a)(1) of PTE 95-60) or by the same employee organization, exceed 10% of the
total of all reserves and liabilities of such general account (as such amounts
are determined under Section I(a) of PTE 95-60) at the date of acquisition or
(ii) provides (A) an opinion of counsel in form and substance satisfactory to
the Trustee and the Issuer that the purchase or holding of ERISA Restricted
CitiCertificate by or on behalf of such Plan will not result in the assets of
the Trust being deemed to be "plan assets" and subject to the prohibited
transaction provisions of ERISA and the Code or Similar Law and will not subject
the Master Servicer, Servicer, CMSI or the Trustee to any obligation in addition
to those undertaken in this Agreement and (B) such other opinions of counsel,
officers' certificates and agreements as Citicorp, CMSI or the Trustee may
require in connection with such transfer.
Section 5.03. Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate is surrendered to the Certificate Registrar or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss or theft of any Certificate and (b) there is delivered to CMSI, the
Certificate Registrar and the Trustee such security or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Certificate Registrar or the Trustee that such Certificate has been
acquired by a bona fide purchaser, CMSI shall execute and the Trustee or
Authenticating Agent shall authenticate and deliver, in exchange for or in lieu
of such mutilated, destroyed, lost or stolen Certificate, a new Certificate of
like tenor and Initial Principal Amount, initial notional amount or Percentage
Interest. In connection with the issuance of any new Certificate under this
Section 5.03, the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other expenses (including the fees and expenses of the
Trustee and the Certificate Registrar) connected therewith. Any duplicate
Certificate issued pursuant to this Section 5.03 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued on
the Issue Date, whether or not the lost, stolen or destroyed Certificate shall
be found at any time.
Section 5.04. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, CMSI, the Trustee, any Insurer, the
Certificate Registrar and any agent of CMSI, the Trustee or the Certificate
Registrar may treat the Person in whose name such Certificate is registered as
the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 3.03 and for all other purposes whatsoever, and neither
CMSI, the Trustee, any Insurer, the Certificate Registrar nor any agent of CMSI,
the Trustee or the Certificate Registrar shall be affected by any notice to the
contrary.
Section 5.05. Access to List of Certificateholders' Names and
Addresses. If the Trustee is not the Certificate Registrar and at any time
requests CMSI or the Certificate Registrar in writing to provide a list of the
names and addresses of Certificateholders, CMSI will furnish or (if the
Certificate Registrar is not CMSI) cause the Certificate Registrar to furnish to
the Trustee, within 15 days after receipt of a request, such list as of the most
recent Record Date, in such form as the Trustee may reasonably require. If three
or more Certificateholders (i) request such information in writing from the
Trustee, (ii) state that such Certificateholders desire to communicate with
other Certificateholders with respect to their rights under this Agreement or
under the Certificates and (iii) provide a copy of the communication which such
Certificateholders propose to transmit, then the Trustee shall, within five
Business Days after the receipt of such request, afford such Certificateholders
access during normal business hours to the most recent list held by the Trustee,
if any. If such list is as of a date more than 90 days prior to the date of
receipt of such Certificateholders' request, the Trustee shall promptly request
from CMSI or the Certificate Registrar a current list and shall afford such
Certificateholders access to such list promptly upon its receipt by the Trustee.
Every Certificateholder, by receiving and holding a Certificate, agrees that
neither CMSI, the Certificate Registrar nor the Trustee shall be held
accountable by reason of the disclosure of any such information as to the list
of the Certificateholders hereunder, regardless of the source from which such
information was derived.
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Section 5.06. Definitive Certificates. If (i)(A) the Servicer advises
the Trustee in writing that the Clearing Agency is no longer willing or able
properly to discharge its responsibilities as depository with respect to the
Book-Entry Certificates, and (B) the Servicer is unable to locate a qualified
successor, (ii) the Servicer, at its option, advises the Trustee in writing that
it elects to terminate the book-entry system through the Clearing Agency or
(iii) after the occurrence of dismissal or resignation of the Servicer,
Beneficial Owners representing an aggregate Principal Amount of not less than
51% of the aggregate Voting Interest of each outstanding Subclass of Book-Entry
Certificates advise the Trustee through the Clearing Agency and Clearing Agency
Participants in writing that the continuation of a book-entry system through the
Clearing Agency is no longer in the best interests of the Beneficial Owners, the
Trustee shall notify the Beneficial Owners, through the Clearing Agency, of the
occurrence of any such event and of the availability of Definitive Certificates
to Beneficial Owners requesting the same. Upon surrender to the Trustee by the
Clearing Agency of the CitiCertificates held of record by its nominee,
accompanied by re-registration instructions and directions to execute and
authenticate new CitiCertificates from CMSI, the Trustee shall execute and
authenticate Definitive Certificates for deliver, at its Corporate Trust Office.
CMSI shall arrange for, and will bear all costs of, the printing and issuance of
such Definitive Certificates. Neither CMSI, the Servicer nor the Trustee shall
be liable for any delay in delivery of such instructions by the Clearing Agency
and may conclusively rely on, and shall be protected in relying on. such
instructions.
Section 5.07. Notices to Clearing Agency. Whenever notice or other
communication to the Holders of Book-Entry Certificates is required under this
Agreement, unless and until Definitive Certificates shall have been issued to
Beneficial Owners pursuant to Section 5.06, the Trustee shall have all such
notices and communications specified herein to be given to Holders of Book-Entry
Certificates to the Clearing Agency.
ARTICLE VI
CMSI
Section 6.01. Liability of CMSI. CMSI shall be liable in accordance
herewith only to the extent of the obligations specifically undertaken by CMSI
herein.
Section 6.02. Merger or Consolidation of, or Assumption of the
Obligations of, CMSI. Any corporation into which CMSI may be merged or
consolidated, or any corporation resulting from an, merger, conversion or
consolidation to which CMSI shall be a party, or any corporation succeeding to
the business of CMSI, or any corporation, more than 50% of the voting stock of
which is, directly or indirectly, owned by Citicorp, which executes an agreement
of assumption to perform every obligation of CMSI hereunder, shall be the
successor of CMSI hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding; provided, that in the event that any such successor
corporation executes such agreement of assumption, CMSI shall not thereby be
released from any of its obligations or liabilities hereunder.
Section 6.03. Limitation on Liability of CMSI and Others. Neither CMSI
nor any of its directors, officers, employees and agents shall be under any
liability to the Trust Fund or the Certificateholders for any action taken or
for refraining from the taking of any action pursuant to this Agreement, or for
errors in judgment, provided, however, that neither CMSI nor any such person
will be protected 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. CMSI and any director or officer or employee or agent of any of it
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. CMSI and
any of its directors, officers, employees or agents shall be indemnified and
held harmless by the Trust Fund against any loss, liability or expense incurred
in connection with any suit in equity, action at law or
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other proceedings relating to this Agreement or the Certificates, other than any
loss, liability or expense incurred by reason of willful misfeasance, bad faith
or gross negligence in the performance of duties hereunder or reckless disregard
of obligations and duties hereunder. CMSI shall not be under any obligation to
appear in, prosecute or defend any legal action which is not incidental to its
duties to service the Mortgage Loans in accordance with this Agreement and which
in its respective opinion may involve it in any expense or liability, provided,
however, that CMSI may in its sole discretion undertake any such action which it
may deem necessary or desirable in respect of this Agreement and the rights and
duties of the parties hereto and the interests of the Certificateholders
hereunder. In such event, the legal expenses and costs of such whom and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust Fund and CMSI shall be entitled to be reimbursed therefor out of the
Certificate Account.
Section 6.04. CMSI Not to Resign. Subject to the provisions of Sections
6.02 and 6.06, CMSI shall not resign from the obligations and duties hereby
imposed on it without the consent of the Trustee, any Insurer, the Holders of
more than 66-2/3% of the Voting Interests of the CitiCertificates then
Outstanding and 66-2/3% of the Percentage Interests of the Residual
Certificates, except upon a determination that the performance of its duties
hereunder is no longer permissible under applicable law. Any such determination
permitting the resignation of CMSI shall be evidenced by an Opinion of Counsel
to such effect delivered to the Trustee. No resignation by CMSI shall become
effective until the Trustee or a successor servicer and master servicer shall
have assumed the responsibilities and obligations of CMSI in accordance with
Section 7.02.
Section 6.05. Maintenance of Office or Agency. CMSI shall maintain or
cause to be maintained at its expense an office or offices or agency or agencies
where the Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon CMSI in respect of the
Certificates and this Agreement may be served. CMSI initially appoints the
Certificate Registrar designated in Article XII as its office for purposes of
receipt of notices and demands. CMSI will give prompt written notice to the
Trustee and to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
Section 6.06. Delegation of Duties. CMSI may at any time without notice
or consent delegate any duties hereunder to any entity, including an entity more
than 50% of the stock of which is owned, directly or indirectly, by Citicorp;
provided that such entity has been approved as a seller/servicer by the Federal
Housing Administration, the Government National Mortgage Association ("GNMA"),
FNMA or FHLMC. Such delegation shall not, however, relieve CMSI of its
responsibility with respect to such duties.
Section 6.07. Insurance. CMSI shall, for so long as it acts as Servicer
and Master Servicer under this Agreement, 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 and agents. Each such policy or policies and bond shall,
together, comply with the requirements from time to time of FNMA or FHLMC for
persons performing servicing for mortgage loans purchased by such association.
ARTICLE VII
DEFAULT
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Section 7.01. Events of Default. If any one of the following events
("Events of Default") shall occur and be continuing:
(a) Any failure by CMSI, if CMSI is the Paying Agent, to
distribute to Certificateholders any payment required under the terms of this
Agreement (including any payment required to be made by CMSI pursuant to Section
3.25 hereof) or, if CMSI is not the Paving Agent, to pay over or to cause to be
paid over to the Paying Agent for such distribution, any payment so required or
to remit to the Trustee for deposit in the Certificate Account any payment
required to be made under the terms of this Agreement (including any payment
required to be made by CMSI pursuant to Section 3.25 hereof) which failure
continues unremedied for a period of (A) 10 Business Days after the date on
which written notice of such failure shall have been given to CMSI by or on
behalf of the Trustee, or to CMSI and the Trustee, by the Holders of the
Required Amount of the Certificates if CMSI falls to distribute or remit the
full amount of a required payment as the result of an error in calculating the
amount of such required payment or (B) 3 Business Days after written notice of
such failure shall have been given to CMSI as provided above if CMSI falls to
distribute or remit the full amount of a required payment for any reason other
than as a result of an error in calculation; or
(b) Failure on the part of CMSI to repurchase any Mortgage Loan as
required pursuant to Section 2.02 or 2.03 or to reimburse any Trustee Advance as
required pursuant to 8.13 hereof which continues unremedied for a period of 60
Business Days after the date upon which written notice of such failure shall
have been given to CMSI by or on behalf of the Trustee, or to CMSI and the
Trustee, by the Holders of the Required Amount of Certificates; or
(c) Failure on the part of CMSI duty to observe or perform in any
material respect any other covenants or agreements of CMSI set forth in the
Certificates or in this Agreement, which failure (A) materially affects the
rights of the Certificateholders and (B) continues unremedied for a period of 60
Business Days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given to CMSI by or on behalf of the
Trustee, or to CMSI and the Trustee, by the Holders of the Required Amount of
CitiCertificates; or
(d) The entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the appointment of
a conservator, receiver or liquidator for CMSI in any insolvency, readjustment
of debt, marshaling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of 60 consecutive days; or
(e) CMSI shall consent to the appointment of a conservator or
receiver or liquidator in any insolvency readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to CMSI or of or
relating to substantially all of its property, or CMSI shall admit in writing
its inability to pay its debts generally as they become due, file a petition to
take advantage of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations;
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Trustee or the Holders of the Required Amount of
Certificates, by notice then given in writing to CMSI (and to the Trustee if
given by the Certificateholders) may terminate all of the rights and obligations
of CMSI as Servicer of the Affiliated Mortgage Loans and as Master Servicer of
the Third Party Mortgage Loans under this Agreement. On and after the receipt by
CMSI of such written notice, all authority and power of CMSI under this
Agreement, whether with respect to the Certificates or the Mortgage Loans or
otherwise, shall pass to and be vested the Trustee pursuant to and under this
Section 7.01; and, without limitation, the Trustee is hereby authorized and
empowered to execute and deliver, on behalf of CMSI as attorney-in-fact or
otherwise,
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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 of the Mortgage
Loans and related documents or otherwise. CMSI agrees to cooperate with the
Trustee in effecting the termination of the responsibilities and rights of CMSI
hereunder, including, without limitation, the transfer to the successor servicer
for the administration by it of all cash amounts which shall at the time be held
by CMSI for deposit, or have been deposited by CMSI, in the Certificate Account
or Servicing Account or which shall thereafter be received with respect to the
Mortgage Loans. In addition to any other amounts which are then payable, or,
notwithstanding the termination of its activities as servicer and master
servicer of the Mortgage Loans, may become payable to CMSI under this Agreement
CMSI shall be entitled to receive out of any delinquent payment on account of
interest on a Mortgage Loan, due during the period prior to the notice pursuant
to this Section 7.01 which terminates the obligation and rights of CMSI
hereunder and received after such notice, that portion of such payment which it
would have received if such notice had not been given.
Section 7.02. Trustee to Act; Appointment of Successor. On and after
the time CMSI receives a notice of termination pursuant to Section 7.01, the
Trustee shall be the successor in all respects to CMSI in its capacity as
servicer and master servicer under this Agreement and the transactions set forth
or provided for herein and shall be subject to all the responsibilities, duties,
limitations on liabilities and liabilities relating thereto placed on CMSI by
the terms and provisions hereof As compensation therefor, the Trustee shall,
except as provided in Section 7.01, be entitled to such compensation (whether
payable out of the Certificate Account or otherwise) as CMSI would have been
entitled to hereunder if no such notice of termination had been given.
Notwithstanding the above, the Trustee may, if it shall be unwilling so to act,
or shall, if it is legally unable so to act, appoint, or petition a court of
competent jurisdiction to appoint, any established housing finance institution
having a net worth of not less than $5,000,000 and approved as seller/servicer
by GNMA, FNMA or FHLMC as the successor to CMSI hereunder in the assumption of
all or any part of the responsibilities, duties or liabilities of CMSI
hereunder. The Trustee or successor to CMSI appointed hereunder shall not,
however, be required to advance funds held in the Certificate Account or
elsewhere, or to repurchase Mortgage Loans. Pending appointment of a successor
to CMSI hereunder, unless the Trustee is prohibited by law from so acting, 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 the Mortgage Loans as it and
such successor shall agree; provided, however, that no such compensation shall
be in excess of that permitted CMSI hereunder. The Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
Any successor to CMSI as servicer and master servicer shall during the
term of its service as servicer and Master Servicer maintain in force the policy
or policies which CMSI is required to maintain pursuant to Section 6.07.
Section 7.03. Notification to Certificateholders. Upon any, termination
or appointment of a successor to CMSI pursuant to this Article VII, the Trustee
shall give or cause to be given prompt written notice thereof to the
Certificateholders at their respective addresses appearing in the Certificate
Register.
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties of the Trustee. The Trustee, prior to the
occurrence of an Event of Default and after the curing of all Events of Default
which may have occurred, undertakes to perform such duties and
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only such duties as are specifically set forth in this Agreement. If an Event of
Default has occurred (which has not been cured), 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. If the Trustee is
incorporated or organized under the laws of the State of New York, then, in
considering what actions are or are not prudent in the circumstances, to the
extent applicable, the Trustee shall consider the matters enumerated in Section
126(2)(a) through (e) of the New York Real Property Law, as such law is in
effect on the date of this Agreement, and in addition, the Trustee shall comply
with the provisions of subdivisions (3),(4) and (5) of Section 126 of the New
York Real Property Law, as such law is in effect on the date of this Agreement,
which provisions are hereby incorporated by reference in this Agreement if
herein set forth in full.
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.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own misconduct; provided, however, that:
(a) Prior to the occurrence of an Event of Default, and after the
curing 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 if any certificates, statements, or
opinions furnished to the Trustee and conforming to the requirements of this
Agreement;
(b) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the pertinent
facts;
(c) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in accordance
with the direction of the Holders of the Required Amount of Certificates
relating to the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement;
(d) The Trustee shall not be charged with knowledge of any default
(other than a default in payment to the Trustee) specified in clauses (i), (ii)
and (iii) of Section 7.01 or an Event of Default under clause (iv) or (v) unless
a Responsible Officer of the Trustee assigned to and working in the Corporate
Trust Office obtains actual knowledge of such failure or the Trustee receives
written notice of such failure at its Corporate Trust Office from CMSI or the
Holders of the Required Amount of Certificates.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, mid
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of CMSI under this Agreement, except during such time, if
any, as the Trustee shall be the
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successor to, and be vested with the rights, duties, powers and privileges of,
CMSI in accordance with the terms of this Agreement.
Section 8.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 8.01:
(a) The Trustee may rely and shall be protected in acting, or
refraining from acting upon any resolution, Officer's Certificate, certificate
of auditors or any other certificate, statement, instruments, opinion. report,
notice, request, consent, order, appraisal, bond or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect of
any action taken or suffered or omitted by it hereunder in good faith and in
accordance with such Opinion of Counsel;
(c) Whenever in the administration of this Agreement the Trustee
or its agent shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, including any
action by the Trustee pursuant to Section 10.01 hereof, the Trustee or its agent
(unless other evidence be herein specifically prescribed) may request and, in
the absence of bad faith on its part, rely upon any Officer's Certificate;
(d) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation hereunder or in relation hereto, at the request, order or
direction of any of the Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby; nothing contained herein shall,
however, relieve the Trustee of the obligations, upon the occurrence of an Event
of Default (which has not been cured), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and skill in
their exercise as a prudent man would exercise or use under the circumstances in
the conduct of his own affairs;
(e) 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;
(f) Prior to the occurrence of an Event of Default and after the
curing 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 documents, unless
requested in writing so to do by the Holders of the Required Amount of
Certificates; provided, however, that if the payment within a reasonable time to
the Trustee of the costs, expenses or liabilities likely to be incurred by it in
the making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against such cost,
expense or liability as a condition to such proceeding. The reasonable expense
of every such examination shall be paid by CMSI or, if paid by the Trustee,
shall be reimbursed by CMSI upon demand. Nothing in this clause (vi) shall
derogate the obligation of CMSI to observe any applicable law prohibiting
disclosure of information regarding the Mortgagors;
(g) The Trustee may appoint agents (which may include the Issuer
and its affiliates) to perform any of the responsibilities of the Trustee, which
agents shall have any or all of the rights, powers, duties and
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obligations of the Trustee conferred on them by such appointment, provided that
the Trustee shall continue to be responsible for its duties and obligations
under this Agreement; and
(h) The Trustee shall not be responsible for the selection of the
Mortgage Document Custodian or Mortgage Note Custodian, nor for the acts or
omissions by either of them in performance of their respective responsibilities
and obligations specified herein or in the Mortgage Document Custodial Agreement
or any other applicable agreement.
Section 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of CMSI and the Trustee assumes no responsibility for the correctness
of the same. The Trustee makes no representations as to the validity or
sufficiency of this Agreement, the Mortgage Document Custodial Agreement or of
the Certificates (other than the certificate of authentication on the
Certificates) or of any Mortgage Loan or related document. The Trustee shall not
be accountable for the use or application by CMSI of any of the Certificates or
of the proceeds of such Certificates or for the use or application of any funds
paid to CMSI in respect of the Mortgage Loans or deposited in or withdrawn from
the Certificate Account or Servicing Account by CMSI. The Trustee shall have no
liability for any losses incurred as a result of (i) any failure of the Trust
Fund to qualify as the specified separate Constituent REMICs, (ii) any
termination, inadvertent or otherwise, of the status of the Trust Fund as the
specified separate Constituent REMICs, (iii) any tax on prohibited transactions
imposed by Code Section 860F(a)(1), (iv) any tax on net income from foreclosure
property imposed by Code Section 860G(c), (v) any tax on contributions to any
Constituent REMIC after the Startup Day imposed by Code Section 860G(d), (vi)
any erroneous calculation or determination or any act or omission of CMSI
hereunder or (vii) any erroneous information included in any federal, state or
local income tax or information return prepared pursuant to Section 3.06;
provided, that the Trustee shall not be excused hereby from liability for its
own negligence, bad faith or failure to perform its duties as specified herein.
Section 8.04. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of one or more
of the Certificates with the same rights as it would have if it were not Trustee
and may otherwise deal with CMSI or any of its Affiliates as if it were not the
Trustee.
Section 8.05. Trustee's Fees and Expenses. Trustee's fees and expenses
(and those of any co-trustee appointed pursuant to Section 8.10), any
Co-Certificate Registrar, any Mortgage Document, Custodian, Depository, any
Co-Paying Agent, any Authenticating Agent appointed pursuant to Section 8.12 and
any agent of the Trustee appointed pursuant to Section 8.02(g) shall be paid by
CMSI, as Servicer, in accordance with Article XII. In consideration of paying
the amounts payable pursuant to this Section 8.05, CMSI may retain the Trustee
Fee payable with respect to the Third Party Mortgage Loans. The Trustee (and any
such co-trustee) shall be entitled to reasonable compensation (which shall not
be limited by any provision of law with respect to the compensation of a trustee
of an express trust) for all services rendered by them in the execution of the
trust or trusts hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, and upon notice to CMSI, the Trustee
will be paid or reimbursed by CMSI for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any of the
provisions of this Agreement (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly in
its employ) except any such expense, disbursement or advance as may arise from
its negligence or bad faith or which is the responsibility of the
Certificateholders hereunder.
The Trustee, each Co-Certificate Registrar, each Note Custodian, each
Mortgage Document Custodian, each Depository, each Co-Paying Agent, each
Authenticating Agent and any agent appointed pursuant to Section 8.02 are
entitled to indemnification from CMSI, as Servicer or Master Servicer, and will
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be held harmless against any loss, liability or expense incurred without
negligence or bad faith on their part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the
costs and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their powers or duties
hereunder. Such indemnification shall survive the payment of the Certificates
and termination of the Trust Fund, as well as the resignation or removal of CMSI
as Servicer (if such action which caused the need for the indemnification
occurred while CMSI acted as Servicer), and for purposes of such indemnification
neither the negligence nor bad faith of any of the entities enumerated in the
preceding sentence shall be imputed to, or adversely affect, the right of any
other enumerated person to be entitled to indemnification.
Section 8.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be a corporation or a national banking association,
other than an Affiliate of CMSI, having its principal office in the same state
as that in which the initial Trustee under this Agreement has its principal
office (or in the State of New York) and organized and doing business under the
laws of such State or the United States of America, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least $30,000,000 and subject to supervision or examination by federal or state
authority. If such corporation or national banking association publishes reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purposes of this
Section 8.06, the combined capital and surplus of such corporation or national
banking association shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section 8.06, the Trustee shall resign immediately in the manner and with
the effect specified in Section 8.07.
Section 8.07. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to CMSI. Upon receiving such notice of resignation, CMSI shall
promptly appoint a successor Trustee by written instrument , in duplicate, one
copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and having accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provision of Section 8.06 and shall fail to resign after written
request therefor by CMSI, or if at any time the Trustee shall be legally unable
to act, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conversion or liquidation, then CMSI may remove the Trustee.
If it removes the Trustee under the authority of the immediately preceding
sentence, CMSI shall promptly appoint a successor Trustee by written instrument,
in duplicate, one copy of which instrument shall be delivered to the Trustee so
removed and one copy to the successor Trustee.
The Trustee may also be removed at any time (i) by the Issuer, (a) if
the Trustee ceases to be eligible to continue as such under the Pooling
Agreement or if the Trustee becomes insolvent, (b) if the Trustee breaches any
of its duties under the Pooling Agreement which materially adversely affects the
Certificateholders, (c) if through the performance or nonperformance of certain
actions by the Trustee, the rating assigned to the CitiCertificates would be
lowered or (d) if the credit rating of the Trustee is downgraded to a level
which would result in the rating assigned to the CitiCertificates to be lowered;
or (ii) by the holders of Certificates evidencing more than 50% of the Voting
Interest of the CitiCertificates then outstanding and more than 50% of the
Percentage Interests of the Residual Certificates.
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Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 8.07 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 CMSI and to
its predecessor Trustee an instrument accepting such appointment hereunder
(including the duties of the Trustee, in its individual capacity, as stated in
Section 8.13 and, if applicable, Section 8.14 herein), and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed or conveyance, shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder with like effect as if originally named as Trustee. The
predecessor Trustee shall deliver to the successor Trustee all Mortgage Files
and related documents and statements held by it hereunder; and, if any Mortgage
Notes or Mortgage Documents are then held by the Mortgage Note Custodian or
Mortgage Document Custodian, respectively, pursuant to a Custodial Agreement,
the predecessor Trustee and the Mortgage Note Custodian or the Mortgage Document
Custodian, as the case may be, shall amend such Custodial Agreement to make the
successor Trustee the successor to the predecessor Trustee thereunder; and CMSI
and the predecessor Trustee shall execute and deliver such instruments and do
other such things as may reasonably be required for 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 8.08 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 8.08, CMSI shall mail notice of the succession of such Trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If CMSI fails to mail such notice within 10 days after
acceptance of appointment by the successor Trustee, the successor Trustee shall
cause such notice to be mailed at the expense of CMSI.
Section 8.09. Merger or Consolidation of Trustee. Any corporation or
national banking association into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation or national banking
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or national banking association
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation or national banking association shall be eligible under the
provisions of Section 8.06, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
Section 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Fund or property securing any Mortgage Note may at the time be
located, CMSI and the Trustee acting jointly shall have the power and shall
execute and deliver all instruments to appoint one or more Persons approved by
the Trustee to act as co-trustee or co-trustees jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust Fund, and
to vest in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, 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 CMSI and the Trustee may consider necessary
and desirable. If CMSI shall not have joined in such appointment within 15 days
after the receipt by it of a request so to do, or in the case an Event of
Default shall have occurred and be continuing, the Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee hereunder
shall be required to meet the terms of eligibility as a successor trustee
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under Section 8.06 and no notice to the Certificateholders of the appointment of
any co-trustee or separate trustee shall be required under Section 8.08.
Every separate trustee and co-trustee shall, to the extent permitted by
law and by the instrument appointing such separate trustee or co-trustee, be
appointed and act subject to the following provisions and conditions:
(a) 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 (it
being understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining such act), 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 CMSI 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 singly by such separate trustee or co-trustee,
but solely at the direction of the Trustee;
(b) No trustee hereunder shall be held personally liable by reason
of any act or omission of any other trustee hereunder; and
(c) CMSI and the Trustee acting jointly may at any time accept the
resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article 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 of the provisions of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Every such instrument shall be filed with the Trustee and a
copy thereof given to CMSI.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 8.11. Tax Returns. The Trustee, upon request, will furnish CMSI
with all such information as may be reasonably required in connection with the
preparation of all federal, state and local income tax or information returns of
each Constituent REMIC. The Trustee shall sign the federal and, if applicable,
state and local income tax returns of each Constituent REMIC.
Section 8.12. Appointment of Authenticating Agent. At any time when any
of the Certificates remain outstanding the Trustee may appoint an Authenticating
Agent or Agents (which may include CMSI or any of its affiliates) which shall be
authorized to act on behalf of the Trustee to authenticate Certificates, and
Certificates so authenticated shall be entitled to the benefit of this Agreement
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference made in this Agreement to the
authentication and delivery of Certificates by the Trustee or the Trustee's
certificate of
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authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to CMSI and shall at all times be
a corporation or national banking association organized and doing business under
the laws of the United States of America, any state thereof or the District of
Columbia, authorized under such laws to act as Authenticating Agent, having a
combined capital and surplus of not less than $15,000,000, authorized under such
laws to do a trust business and subject to supervision or examination by federal
or state authority. If such Authenticating Agent publishes reports of condition
at least annually, pursuant to law or to the requirements of said supervising or
examining authority, then for the purposes of this Section 8.12, the combined
capital and surplus of such Authenticating Agent shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time an Authenticating Agent shall cease to be eligible
in accordance with the provisions of this Section 8.12, such Authenticating
Agent shall resign immediately in the manner and with the effect specified in
this Section 8.12.
Any corporation or national banking association into which an
authenticating Agent may be merged in or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, conversion or consolidation to which such Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate agency or corporate trust business of an Authenticating Agent, shall
continue to be an Authenticating Agent, provided such corporation or national
banking association shall be otherwise eligible under this Section 8.12, without
the execution or filing of any paper or any further act on the part of the
Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written notice
thereof to the Trustee and to CMSI. The Trustee may at any time terminate the
agency of an Authenticating Agent by giving written notice thereof to such
Authenticating Agent and to CMSI. Upon receiving such a notice of resignation or
upon such a termination, or in case at any time such Authenticating Agent shall
cease to be eligible in accordance with the Authenticating Agent which shall be
provisions of this Section 8.12, the Trustee may appoint a successor acceptable
to CMSI and shall mail written notice of such appointment by first-class mail,
postage prepaid to all Certificateholders as their names and addresses appear in
the Certificate Register. Any successor Authenticating Agent upon acceptance of
its appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally named as
an Authenticating Agent herein. No successor Authenticating Agent shall be
appointed unless eligible under the provisions of this Section 8.12.
Any reasonable compensation paid to an Authenticating Agent for its
services under this Section 8.12 shall be a reimbursable expense pursuant to
Section 8.05 if paid by the Trustee.
If an appointment is made pursuant to this Section 8.12, the
Certificates may have endorsed thereon, in addition to the Trustee's certificate
of authentication, an alternate certificate of authentication in the following
form:
"This is one of the Certificates referred to in the within-mentioned
Agreement.
__________________
As Trustee
By___________________________
Authenticating Agent
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By__________________________
Authenticating Signature"
Section 8.13. Delinquency Advances. On any Deposit Date, the Trustee
(in its individual capacity and not as Trustee) shall deposit funds equal to the
Delinquent Amount for the related Determination Date into the Certificate
Account; provided that the Trustee (in such individual capacity) shall be
obligated to make such deposit only to the extent of funds determined by it (in
its sole discretion) to be recoverable from future Remittances, Net Recoveries
and other proceeds or collections on or in respect of the Mortgage Loans,
provided, however, the Trustee may only recover funds for Delinquent Amounts
relating to Third Party Mortgage Loans or Affiliated Mortgage Loans from
Remittances, Net Recoveries and other proceeds relating to Third Party Mortgage
Loans or Affiliated Mortgage Loans, respectively. CMSI shall pay to the Trustee
a servicing administration fee of $100 in respect of each Deposit Date on which
the Trustee (in such individual capacity) makes such a deposit, promptly after
CMSI receives notice thereof from the Trustee. CMSI shall also reimburse the
Trustee for the amount of any such deposit on the Business Day CMSI receives
notice from the Trustee of the amount thereof, provided that if such notice is
received after 1:00 p.m., New York City time, on a Business Day, such
reimbursement shall be made to the Trustee on the next following Business Day,
not later than 1:00 p.m. To the extent the Trustee receives an amount on or in
respect of the Third Party Mortgage Loans or Affiliated Mortgage Loans,
respectively, identified to it as being in respect of any such deposit, the
Trustee shall repay to CMSI the amount of such reimbursement not later than the
Business Day after the Trustee receives the same. Promptly after the Trust Fund
is terminated pursuant to Article IX hereof, CMSI shall notify the Trustee in
writing of the amount of Third Party Trustee Advances and Affiliated Trustee
Advances that were not recovered from future Remittances, Net Recoveries or
other proceeds or collections on or in respect of the Third Party Mortgage Loans
or Affiliated Mortgage Loans, respectively. The Trustee (in such individual
capacity) shall reimburse CMSI for the amount of Third Party Trustee Advances or
Affiliated Trustee Advances not so recovered and repaid to CMSI on the next
Business Day after its receipt of notice thereof. CMSI shall furnish to the
Trustee such information within CMSI's possession with respect to the Mortgage
Loans as the Trustee may require, in order to make a determination that any
advance made by the Trustee will be recoverable.
Section 8.14. Advance Account, Trustee Failure Advances. If the
Advance Account Trigger Applicability is specified in Article XII as applicable
to the CitiCertificates, then:
(a) In the event that an Advance Account Trigger Date occurs, the
Servicer will notify the Trustee in writing of such occurrence and, the
Servicer, the Trustee, in both its individual capacity and as Trustee, shall
enter into an agreement in a form substantially similar to that attached hereto
with the Advance Account Depository on or prior to the Advance Account Funding
Date. The Advance Account shall be in the name of the Advance Account
Depository, as trustee for the benefit of the Trustee and the Trustee, in its
individual capacity, and its permitted successors in interest ("permitted
successors"), as their interest may appear.
(b) On or prior to the Advance Account Funding Date, the Trustee,
in its individual capacity, shall pay to the Advance Account Depository, for
deposit into the Advance Account an amount in cash equal to (i) the product of
(A) 0.20% and (B) the Adjusted Balance of the Mortgage Loans as of the close of
business on the Advance Account Trigger Date or (ii) such lesser amount as
Moody's may specify.
(c) The Trustee shall, no later than 3:00 p.m., New York time, on
the Business Day preceding each Distribution Date occurring subsequent to the
Advance Account Funding Date as to which the Trustee has failed to deposit
timely a Third Party Trustee Advance or Affiliated Trustee Advance in the
Certificate
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Account as required by Section 8.13, submit a Notice for Payment to
the Advance Account Depository requesting a Trustee Failure Advance from the
Advance Account.
(d) The Advance Account shall be reimbursed for any Advance
Account Advance from future Remittances, Net Recoveries or other proceeds or
collections or in respect of the Third Party Mortgage Loans or Affiliated
Mortgage Loans, as provided for in this Agreement (the aggregate of such amounts
as to any Distribution Date, the "Advance Account Reimbursement Amount").
(e) On or before each Distribution Date occurring on or after the
Advance Account Funding Date, the Servicer shall pay, to the extent of funds
available, to the Advance Account by wire transfer of immediately available
funds the Advance Account Reimbursement Amount with respect to such Distribution
Date as provided in the Agreement.
(f) On each Distribution Date, the amount in the Advance Account
will be reduced and released to the extent permitted in the Advance Account
Depository Agreement.
(g) Notwithstanding the foregoing, an alternative method of
limited support for the Trustee's obligation to make advances in respect of the
Mortgage Loans may be provided, if such change does not cause the then current
ratings of the CitiCertificates or any outstanding Class or Subclass thereof to
be lowered by Moody's.
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ARTICLE IX
TERMINATION
Section 9.01. Termination upon Repurchase by CMSI or Liquidation of all
Mortgage Loans. The respective obligations and responsibilities of CMSI and the
Trustee created hereby and the Trust Fund created hereby shall terminate upon
(a) the repurchase by CMSI of all of the Mortgage Loans and all property
acquired in respect of any Mortgage Loan remaining in the Trust Fund at a price
equal to the sum of (i) 100% of the Adjusted Balance of each Mortgage Loan on
the first day of the month of repurchase (after giving effect to payments of
principal due on such first day) plus accrued interest at the Investor Rate for
each Mortgage Loan to but not including the Due Date in the month in which the
related distribution is made to Certificateholders, after the deduction of
unreimbursed Voluntary Advances, Advance Account Advances (other than such
payments and advances in respect of interest in excess of the Investor Rate on
the Mortgage Loans, Third Party Trustee Advances and Affiliated Trustee Advances
made prior to the month of repurchase, whereupon such Voluntary Advances,
Advance Account Advances Third Party Trustee Advances and Affiliated Trustee
Advances will be reimbursed to the Trustee or deemed reimbursed to CMSI, as the
case may be, by such deductions, and (ii) the appraised value of any acquired
property in the Trust Fund (less the good faith estimate of CMSI of liquidation
expenses to be incurred in connection with its disposal thereof), such appraisal
to be conducted by an appraiser mutually agreed upon by CMSI and the Trustee, or
(b) the later of (i) the maturity or other liquidation (or any advance with
respect thereto) of the last Mortgage Loan remaining in the Trust Fund and the
disposition of all property acquired upon foreclosure or by deed in lieu of
foreclosure of any Mortgage Loan and (ii) the payment to the Certificateholders
and to the Insurer, as subrogee of any Insured Certificates, of all amounts
required to be paid to them pursuant to this Agreement; 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 lawful descendants of Joseph P.
Kennedy, the late Ambassador of the United States of America to the Court of St.
James's, living on the date of this Agreement. Such termination shall occur only
in connection with a "qualified liquidation" of each Constituent REMIC within
the meaning of Code Section 860F(a)(4)(A), pursuant to which the Trustee shall
sell or otherwise dispose of all of the remaining assets of the Trust Fund and
make all required distributions to Certificateholders within 90 days of the
adoption of a plan of complete liquidation. For this purpose, the notice of
termination described in the next paragraph shall be the adoption of a plan of
complete liquidation described in Code Section 860F(a)(4)(A)(i), which shall be
deemed to occur on the date the first such notice is mailed. Such date shall be
specified in the final federal income tax return of each Constituent REMIC
constituted by the Trust Fund. The right of CMSI to repurchase all of the
Mortgage Loans on any Distribution Date pursuant to clause (a) above shall be
conditioned upon (A) the aggregate Adjusted Balances of such Mortgage Loans, at
the time of any such repurchase and after giving effect to distributions to be
made on such Distribution Date, aggregating an amount less than 5% of the
aggregate Adjusted Balance of the Mortgage Loans as of the Cut-Off Date, which
amount is set forth in Article XII and (B) any other condition set forth in the
related Pooling Agreement. Any other method of termination or repurchase of the
Trust Fund than as set forth above must be based on the receipt by the Trustee
of an Opinion of Counsel (who may not be an employee of CMSI or of an Affiliate
of CMSI) or other evidence that such termination and repurchase will be part of
a "qualified liquidation" within the meaning of Code Section 860F(a)(4)(A), will
not adversely affect the status of the Trust Fund as the separate Constituent
REMICs under the Code and will not otherwise subject the Trust Fund to any tax.
CMSI shall have the right, in its sole discretion, to transfer its
right to repurchase all of the Mortgage Loans pursuant to clause (a) above to
any third party of choice.
Notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to the Certificateholders mailed not earlier than 30 days
nor more than 60
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days prior to such Distribution Date specifying (A) the Distribution Date upon
which final payment of the Certificates will be made upon presentation arid
surrender of the Certificates at the office therein designated, (B) the amount
of such final payment and (C) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon presentation
and surrender of the Certificates at the office of the Paying Agent therein
specified. CMSI shall give such notice to the Trustee and, if applicable, the
Certificate Registrar, the Mortgage Document Custodian and the Paying Agent at
the time such notice given to the Certificateholders. In the event such notice
is given, CMSI shall deposit in the Certificate Account or the account
designated by the Paying Agent if CMSI is not the Paying Agent, on the Business
Day next preceding the Distribution Date with respect to such final
distribution, an amount equal to the final payment in respect of the
Certificates. Upon certification to the Trustee by an Authorized Officer of CMSI
following such final deposit, and delivery by CMSI of an Opinion of Counsel to
the effect that all conditions set forth in this Article IX have been met, the
Trustee shall promptly release to CMSI the Mortgage Files for the Mortgage
Loans. Any such repurchase shall occur only during the month of, and prior to
the Determination Date relating to, the Distribution Date on which such amounts
will be distributed to Certificateholders.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto. Interest shall not accrue for the period of any delay in the payment of
a Certificate resulting from the failure of a Holder to surrender the
Certificate in accordance herewith.
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ARTICLE X
GENERAL PROVISIONS
Section 10.01. Amendment. This Agreement may be amended from time to
time by CMSI and the Trustee, without the consent of any of the
Certificateholders, (a) to cure any ambiguity, (b) to correct or supplement any
provisions herein or therein which may be inconsistent with any other provisions
herein or therein, (c) to add any other provisions with respect to matters or
questions arising under this Agreement. which shall not be inconsistent with the
provisions of this Agreement, (d) to comply with any requirements imposed by the
Code, (e) to establish a "qualified reserve fund" within the meaning of Code
Section 860G(a)(7)(B) or (f) to maintain the status of the Trust Fund as
separate Constituent REMICs. This Agreement may also be amended by CMSI and the
Trustee, without Certificateholder consent, if CMSI delivers an Opinion of
Counsel acceptable to the Trustee and the Insurer to the effect that such
amendment will not materially adversely affect the interests of the
Certificateholders or the Insurer, respectively. The Trustee hereby agrees to
execute and deliver any amendment to this Agreement, provided by CMSI to it,
that conforms to the applicable provisions of the preceding two sentences of
this paragraph provided, however, that the Trustee may, but shall not be
obligated to, enter into any such amendment that affects the Trustee's own
rights, duties or immunities under this Agreement or otherwise.
Except as otherwise provided in Section 4.04, this Agreement may also
be amended from time to time by CMSI and the Trustee with the consent of the
Holders of Certificates evidencing, in the aggregate, not less than 66-2/3% of
the Voting Interest of the CitiCertificates affected by such amendment (after
giving effect to the first proviso to the definition of "Outstanding" in Article
I; and provided that if any Class of CitiCertificates is affected differently in
any material respect by such amendment than the other affected Classes, the
consent of the Holders of Certificates evidencing 66-2/3% of the Voting Interest
of each such differently affected Class shall be required) and, if the Residual
Certificates or any Insurer are materially and adversely affected by such
amendment, 66-2/3% of the Percentage Interests of the Residual Certificates so
affected, or any Insurer, respectively, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Agreement, or of modifying in any manner the rights of the Holders of the
Certificates; provided, however, that (i) in connection with any such amendment,
CMSI shall deliver an Opinion of Counsel acceptable to the Trustee (x)
identifying any Class of CitiCertificates that may be affected differently in
any material respect than the other affected Classes (or stating that there is
no such differently affected Class) and (y) identifying any Class whose
Certificateholders would not be materially adversely affected by such amendment
and (ii) no such amendment shall, without the consent of the Holders of all
Certificates then Outstanding, (a) reduce in any manner the amount of, or delay
the timing of, collections or payments received on Mortgage Loans or
distributions which are required to be made on any Certificate or (b) reduce the
aforesaid percentage required to consent to any such amendment. Promptly after
the execution of any such amendment or consent the Trustee shall furnish or
cause to be furnished written notification of the substance of such amendment
(or a copy thereof) to each Certificateholder.
It shall not be necessary for the consent of Certificateholders under
this Section 10.01 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 the Certificateholders shall be subject to such reasonable
requirements as the Trustee may prescribe. Any proposed amendment is subject to
the receipt by the Trustee, at the expense of the party proposing such amendment
(or at the expense of the Trust Fund if proposed by the Trustee) that the
amendment will not cause any Constituent REMIC to fail to qualify as a REMIC or
subject any Constituent REMIC to tax.
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Section 10.02. Recordation of Agreement. 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 which this Agreement may
be recorded, and in any other appropriate public recording office or elsewhere,
such recordation to be effected by CMSI and at its expense upon request of the
Trustee, who will act at the direction of the Holders of a majority by
Percentage Interest of the Residual Certificates, but only upon request of the
Trustee accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Certificateholders;
provided, however, that CMSI shall not be required to effect recordation of this
Agreement unless, prior thereto, CMSI shall have become obligated to record each
assignment relating to the Mortgages pursuant to Section 2.01 hereto.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 10.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust
Fund, nor otherwise affect the rights, obligations and liabilities of the
parties hereto or any of them.
No Certificateholder shall have any right to vote (except as provided
in Section 10.01) or in any manner otherwise control the operation and
management of the Trust Fund or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to time as
partners (except to the extent provided in Code Section 860F(e) with respect to
Holders of Residual Certificates) or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken by the parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of default and of the continuance thereto as herein before provided, and unless
also the Holders of the Required Amount of Certificates 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 being understood and intended,
and being expressly covenanted by each Certificateholder with every other
Certificateholder and the Trustee, that no one or more Holders of Certificates
shall have any right in any manner whatever by virtue or by availing itself or
themselves of any provisions of this Agreement to affect, disturb or prejudice
the rights of the Holders of any other of the Certificates, or to obtain or seek
to obtain priority over or preference to any other such Holder, or to enforce
any right under this Agreement, except in the manner herein provided and for the
equal, ratable and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 10.03, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 10.04. Governing Law. This Agreement and the Certificates
issued pursuant to this Agreement shall be construed in accordance with the laws
of the State of New York, provided
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that the immunities and standards of care of the Trustee shall be governed by
the law of the jurisdiction in which is located its Corporate Trust Office.
Section 10.05. Intention of Parties. The execution and delivery of this
Agreement shall constitute an acknowledgment by CMSI on behalf of the
Certificateholders that it intends hereby to establish and maintain (for federal
income tax purposes) a "real estate mortgage investment Third Party" within the
meaning of Code Section 860D and CMSI is hereby granted all necessary powers to
further such intent.
Section 10.06. Notices. All communications relating to this Agreement
including all demands and notices shall be in writing and shall be deemed to
have been duly given if personally delivered at or mailed by first class mail,
to (a) in the case of CMSI, to the address for notices set forth in Article XII
and (b) in the case of the Trustee, to the address for notices set forth in
Article XII; or, as to each party, at such other address as shall be designated
by such party in a written notice to each other party. Any notice required or
permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice; provided that notices to the Trustee
shall be effective only upon receipt.
Section 10.07. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 10.08. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.02, 6.04 and 6.06, this
Agreement may not be assigned by CMSI without the prior written consents of the
Trustee and the Holders of CitiCertificates aggregating not less than 66-2/3% of
the Principal Amount then Outstanding (after giving effect to the first proviso
to the definition of "Outstanding" in Article I) and 66-2/3% of the Percentage
Interests of the Residual Certificates then Outstanding.
Section 10.09. Certificates Nonassessable and Fully Paid. It is the
intention of the Trustee that the Certificateholders shall not be personally
liable for obligations of the Trust Fund, that the interests represented by the
Certificates shall be nonassessable for any losses or expenses of the Trust Fund
or for any reason whatsoever, and that the Certificates upon authentication
thereof by the Trustee pursuant to Section 2.05 are and shall be deemed fully
paid.
Section 10.10. Counterparts. This Agreement may be signed in any
number of counterparts, each of which will be deemed an original, which taken
together shall constitute one and the same instrument.
ARTICLE XI
Section 11.01. Annual Statement as to Compliance. CMSI will deliver to
the Trustee, any Insurer and to each Holder of a Certificate holding
Certificates representing in excess of 50% of the Principal Amount or Percentage
Interest, as the case may be, on or before March 31 with respect to the
Affiliated Mortgage Loans and September 30 with respect to the Third Party
Mortgage Loans of each year which begins not less than three months after the
date of the initial issuance of the Certificates, an Officer's Certificate
stating that (a) a review of the activities of CMSI during the preceding
calendar year and of its performance under this Agreement has been made under
such officer's supervision and (b) to the best of such officer's knowledge,
based on such review, CMSI has fulfilled all its obligations under this
Agreement throughout such year, or if there has been a default in the
fulfillment of any such obligation, specifying each such default
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known to such officer and the nature and status thereof and (c) in the case of
the Third Party Mortgage Loans, as to each Third Party Servicer, that (i) a
review of the activities of such Third Party Servicer during the preceding
calendar year and performance under the Guide has been made under such officer's
supervision, and (ii) to the best of such officer's knowledge, based on such
review, the Third Party Servicer has fulfilled all of its obligations under the
Guide throughout such year.
Section 11.02. Depositories. CMSI may at any time and from time to time
in its discretion transfer the Certificate Account, Buydown Account, if any,
Escrow Account, Custodial Accounts for P&I or Servicing Account to a bank,
savings and loan association or trust company organized under the laws of the
United States or any State thereof (an "eligible depository"). Upon such
transfer, such transferee bank, savings and loan association or trust company
shall be deemed to be a Depository with respect to the account or accounts so
transferred. In the event that the long-term debt obligations of any Depository
of the Certificate Account, Buydown Account Escrow Account, Custodial Accounts
for P&I or Servicing Account shall be rated at less than A by Fitch if Fitch is
a Rating Agency, or the short-term debt obligations of such Depository shall be
rated by S&P at less than A-1 if S&P is a Rating Agency, by Fitch at less than
F-1 if Fitch is a Rating Agency and by Moody's at less than P-1 if Moody's is a
Rating Agency and such account does not otherwise meet the requirements of this
Section 11.02, then within five Business Days of such reduction, CMSI shall (A)
transfer or direct the Trustee in writing to transfer the Certificate Account,
Buydown Account, Escrow Account, Custodial Accounts for P&I or Servicing Account
to an eligible depository the long-term debt obligations of which are not rated
by Fitch if Fitch is a Rating Agency at less than A and the short-term debt
obligations of which are not rated at less than A-1 by S&P if S&P is a Rating
Agency, F-1 by Fitch if Fitch is a Rating Agency and P-1 by Moody's if Moody's
is a Rating Agency (the "Rating Requirements"), (B) establish another account in
the corporate trust department of the Trustee or if such Trustee has a long-term
and short-term debt rating at least equal to the Rating Requirements, in any
department of the Trustee (the "Alternative Certificate Account", the
"Alternative Buydown Account" "Alternative Escrow Account", "Alternative
Custodial Accounts for P&I" or the "Alternative Servicing Account", as the case
may be) and transfer the funds from the Buydown Account to the Alternative
Buydown Account direct the Servicer or a Third Party Servicer, as applicable to
remit in accordance with this Agreement any funds deposited into the Servicing
Account, Escrow Account or Custodial Accounts for P&I to the Alternative
Servicing Account, Alternative Escrow Account or Alternative Custodial Account
for P&I, respectively, and direct the Servicer or Master Servicer to remit in
accordance with this Agreement any funds deposited into the Certificate Account
to the Alternative Certificate Account, (C) (i) cause such Depository to pledge
securities in the manner provided by applicable law or (ii) pledge or cause to
be pledged securities, which shall be held by the Trustee or its agent free and
clear of the lien of any third party, in a manner conferring on the Trustee a
perfected first lien and otherwise reasonably satisfactory to the Trustee; such
pledge in either case to secure such Depository's performance of its obligations
in respect of the Certificate Account, Buydown Account, Escrow Account,
Custodial Accounts for P&I or Servicing Account to the extent, if any, that such
obligation is not fully insured by the FDIC; provided, however, that prior to
the day a Depository or CMSI, as the case may be, pledges securities pursuant to
this subsection (C), CMSI, any Insurer and the Trustee shall have received the
written assurance of each Rating Agency that the pledging of such securities and
any arrangements or agreements relating thereto will not result in a reduction
or withdrawal of the then-current rating of the CitiCertificates (with respect
to any Insured Certificates, without reference to the Insurance Policy), (D)
establish an account or accounts or enter into an agreement so that the existing
Certificate Account, Buydown Account, Escrow Account, Custodial Accounts for P&I
or Servicing Account is supported by a letter of credit or some other form of
credit support which issuer of such letter of credit or other form of credit
support has a long-term and short-term debt rating at least equal to the Rating
Requirements; provided, however, that prior to the establishment of such an
account or the entering into of such an agreement, CMSI, any Insurer and the
Trustee shall have received written assurance from each Rating Agency that the
establishment of such an account or the entering into of such an agreement so
that the existing Certificate Account, Buydown Account or Servicing Account is
supported by a letter of
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credit or some other form of credit support will not result in a reduction or
withdrawal of the then-current rating on the CitiCertificates (with respect to
any Insured Certificates, without reference to the Insurance Policy) (E)
establish another account which constitutes an Eligible Account or (F) make such
other arrangements as to which CMSI, any Insurer and the Trustee have received
prior written assurance from each Rating Agency that such arrangement will not
result in a reduction or withdrawal of the then-current rating on the
CitiCertificates. In the event that the rating on the CitiCertificates has been
downgraded as a result of a rating downgrade of the Depository, for purposes of
this paragraph, the then-current rating on the CitiCertificates shall be the
rating assigned to the CitiCertificates prior to any such downgrade (with
respect to any Insured Certificates, without reference to the Insurance Policy).
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Appendix 1
TRANSFEREE'S AFFIDAVIT
AFFIDAVIT PURSUANT TO SECTION
860E(e)(4) OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED
STATE OF )
):
COUNTY OF )
[ ], being first duly sworn, deposes and says:
1. That he is [____________] of [___________] (the "Investor"), a
[state type of entity] duly organized and existing under the laws of the
[State of ____________] [United States], on behalf of which he makes this
affidavit.
2. That the Investor's Taxpayer Identification Number is [_____].
3. That the Investor is not a "disqualified organization" within
the meaning of Section 860E(e)(5) of the Internal Revenue Code of 1986, as
amended (the "Code") or an ERISA Prohibited Holder, and will not be a
"disqualified organization" or an ERISA Prohibited Holder as of [ , ], and that
the Investor is not acquiring a Citicorp Mortgage Securities, Inc. REMIC
Pass-Through Certificates, Series 1999-__ Class [LR] [R] Certificate (the
"Residual Certificate") for the account of, or as agent (including a broker,
nominee or other middleman) for, any person or entity from which it has not
received an affidavit substantially in the form of this affidavit. For these
purposes, a "disqualified organization" means the United States, any state or
political subdivision thereof, any foreign governments any international
organization, any agency or instrumentality of any of the foregoing (other than
an instrumentality if all of its activities are subject to tax and a majority of
its board of directors is not appointed by such governmental entity), any
cooperative organization furnishing electric energy or providing telephone
service to persons in rural areas described in Code Section 1381(a)(2)(C), or
any organization (other than a farmers' cooperative described in Code Section
521) that is exempt from federal income tax unless such organization is subject
to the tax on unrelated business income imposed by Code Section 511. For these
purposes, an "ERISA Prohibited Holder" means an employee benefit plan the
investment of which is regulated under Section 406 of the Employee Retirement
Income Security Act of 1974, as amended, and/or Code Section 4975 or a
governmental plan, as defined in Section 3(32) of ERISA, subject to any federal,
state or local law which is, to a material extent, similar to the foregoing
provisions of ERISA or the Code (collectively, a "Plan") or a Person investing
the assets of a Plan.
4. That the Investor historically has paid its debts as they have
come due and intends to pay its debts as they come due in the future and the
Investor intends to pay taxes associated with holding the Residual Certificate
as they become due.
5. That the Investor understands that it may incur tax
liabilities with respect to the Residual Certificate in excess of cash flows
generated by the Residual Certificate.
6. That the Investor will not transfer the Residual Certificate
to any person or entity as to which the Investor has actual knowledge that the
requirements set forth in paragraph 3, paragraph 4 or paragraph 7 hereof are not
satisfied or that the Investor has reason to know does not satisfy the
requirements set forth in paragraph 4 hereof.
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7. That the investor (i) is not a Non-U.S. Person or (ii) is a
Non-U.S. Person that holds the Residual Certificate in connection with the
conduct of a trade or business within the United States and has furnished the
transferor and the Trustee with an effective Internal Revenue Service Form 4224
or (iii) is a Non-U.S. Person that has delivered to both the transferor and the
Trustee an opinion of a nationally recognized tax counsel to the effect that the
transfer of the Residual Certificate to it is in accordance with the
requirements of the Code and the regulations promulgated thereunder and that
such transfer of the Residual Certificate will not be disregarded for federal
income tax purposes. "Non-U.S. Person" shall mean an individual, corporation,
partnership or other person other than a "U.S. Person." U.S. Person shall mean a
citizen or resident of the United States, a corporation, partnership (except to
the extent provided in applicable Treasury regulations) or other entity created
or organized in or under the laws of the United States or any political
subdivision thereof, an estate that is subject to U.S. federal income tax
regardless of the source of its income or a trust if a court within the United
States is able to exercise primary supervision over the administration of such
trust, and one or more such U.S. Persons have the authority to control all
substantial decisions of such trust (or, to the extent provided in applicable
Treasury regulations, certain trusts in existence on August 20, 1996 which are
eligible to be treated as U.S. Persons).
8. That the Investor agrees to such amendments of the Pooling and
Servicing Agreement dated as of ________1 , 1999 between Citicorp Mortgage
Securities, Inc. and [Trustee] (the "Pooling and Servicing Agreement") as may be
required to further effectuate the restrictions on transfer of the Citicorp
Mortgage Securities, Inc. REMIC Pass-Through Certificates, Series 1999-__
Residual Certificate to such a "disqualified organization," an agent thereof, an
"ERISA Prohibited Holder" or a person that does not satisfy the requirements of
paragraphs 4, 5 and 7 hereof.
9. That the Investor consents to the irrevocable designation of
CMSI as its agent to act as "tax matters person" of the [Lower-Tier]
[Upper-Tier] REMIC pursuant to the Pooling and Servicing Agreement, and if such
designation is not permitted by the Code and applicable law, to act as tax
matters person if requested to do so.
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[________] this ____ day of 19__.
__________________
By:_______________
Name:
Title:
COUNTY OF )
)
STATE OF )
Personally appeared before me the above-named [___________], known or
proved to me to be the same person who executed the foregoing instrument and to
be the [___________] fact of the Investor, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of the
Investors.
Subscribed and sworn to before me this ___ day of ________ 19___.
2
February 16, 1999
Citicorp Mortgage Securities, Inc.
909 Third Avenue
New York, NY 10043
Citicorp
399 Park Avenue
New York, NY 10043
Ladies and Gentlemen:
This opinion is being provided by the undersigned, as an Associate General
Counsel--Corporate Law of Citigroup Inc. I have acted as your counsel in
connection with the Registration Statement on Form S-3 (the "Registration
Statement") being filed today with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended (the "Act"). The Registration
Statement covers a total of $10 billion aggregate principal amount of
Certificates (the "Certificates") of one or more series to be issued by Citicorp
Mortgage Securities, Inc. ("CMSI") evidencing fractional undivided interests in
a trust or trusts to be created by CMSI; and guaranties (the "Guaranties") that
may be issued by Citicorp with respect to the Certificates.
Each series of Certificates will be issued pursuant to a separate Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement" for such series)
between CMSI and a commercial bank, savings and loan association or trust
company (the "Trustee" for such series). The Trustee for a series will be
entitled to the benefits of any Guaranty for such series.
I, or attorneys under my supervision, have examined originals or copies,
certified or otherwise identified to my satisfaction, of such corporate records
of CMSI and Citicorp, such other documents and certificates of public
officials, officers and representatives of CMSI and Citicorp and other persons
and such other documents, agreements and instruments, and I have made such
investigations of law, as I have deemed appropriate as a basis for the opinions
expressed below. In arriving at the opinions expressed below, I have assumed
that the signatures on all documents that I have examined are genuine. In
addition, I have assumed that each of the Certificates, each Pooling and
Servicing Agreement and each Guaranty will be in substantially the form set
forth in the applicable form of Pooling and Servicing Agreement filed or to be
filed as an exhibit to the Registration Statement; and that each Trustee will
have the power, authority and legal right to enter into the related Pooling and
Servicing Agreement.
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Based on the foregoing, I am of the opinion that:
1. Each of Citicorp and CMSI is a corporation duly incorporated and validly
existing under the laws of the State of Delaware;
2. When the issuance, execution and delivery of any particular series of
Certificates have been duly authorized by CMSI, and when the Certificates
of such series have been duly executed and delivered by CMSI, duly
authenticated by the applicable Trustee and issued and sold as contemplated
by the Registration Statement and the prospectus delivered pursuant to
Section 5 of the Act in connection therewith, such Certificates will be
legally and validly issued, fully paid and nonassessable and entitled to
the benefits provided by the applicable Pooling and Servicing Agreement;
3. When a Pooling and Servicing Agreement has been duly and validly
authorized, executed and delivered by CMSI and a Trustee, such Pooling and
Servicing Agreement will constitute a valid and binding obligation of
CMSI subject, as to enforcement, to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting the rights of creditors
generally and to general principles of equity and the discretion of the
court (regardless of whether enforceability is considered in a proceeding
in equity or at law); and
4. When a series of Certificates that has the benefit of a Guaranty has been
duly issued under a Pooling and Servicing Agreement and issued and sold as
contemplated by the Registration Statement and the prospectus delivered
pursuant to Section 5 of the Act in connection therewith, and when the
issuance of a Guaranty for such series of Certificates has been duly
authorized by Citicorp and such Guaranty has been duly executed and
delivered to such Trustee, such Guaranty will be a valid and binding
obligation of Citicorp, subject, as to enforcement, to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws affecting
the rights of creditors generally and to general principles of equity and
the discretion of the court (regardless of whether enforceability is
considered in a proceeding in equity or at law).
The opinions expressed herein are limited to the laws of the State of New York,
the General Corporation Law of the State of Delaware and the federal laws of the
United States of America.
2
<PAGE>
I hereby consent to the use and filing of this opinion as an exhibit to the
Registration Statement and to the reference to this opinion under the heading
"Legal Matters" in any prospectus filed in connection with the Registration
Statement. In giving such consent, I do not thereby admit that I come within the
category of persons whose consent is required under Section 7 of the Act or the
rules and regulations of the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Marla A. Berman
- -------------------
Marla A. Berman
3
February 16, 1999
Citicorp Mortgage Securities, Inc.
909 Third Avenue
New York, New York 10043
Citicorp
399 Park Avenue
New York, New York 10043
Re: REMIC Pass-Through Certificates
Gentlemen:
I am a Vice President of Citibank, N.A., and have acted as your tax
counsel in connection with the proposed issuance of REMIC Pass-Through
Certificates (the "Certificates") pursuant to a Registration Statement on Form
S-3 (the "Registration Statement), which is being filed with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"). Capitalized terms used and not otherwise defined herein are
intended to have the respective meanings ascribed to such terms in the
Registration Statement.
In rendering the opinion set forth below, I have examined and relied
upon the following: (1) the Registration Statement and the Prospectus forming a
part thereof (the "Prospectus"), substantially in the form to be filed with the
Commission; (2) the forms of Pooling and Servicing Agreements filed and being
filed as exhibits to the Registration Statement; and (3) such other documents,
materials, and authorities as I have deemed necessary in order to enable me to
render my opinion set forth below.
As your tax counsel, I have advised you with respect to certain federal
income tax aspects of the proposed issuance of the Certificates. Such advice has
formed the basis for the description of material federal income tax consequences
for holders of the Certificates that appears under the headings "Taxation of
Certificate Holders" and "Taxation of the Trust" in the Prospectus. Such
description does not purport to discuss all possible federal income tax
ramifications of the proposed issuance of the
1
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Citicorp Mortgage Securities
Citicorp
February 16, 1999
Page 2
Certificates, but, with respect to those federal income tax consequences which
are discussed, in my opinion the description is accurate in all material
respects.
The foregoing opinions are based on the facts and circumstances set
forth in the Prospectus and in the other documents reviewed by me. My opinion as
to the matters set forth herein could change with respect to a particular Series
of Certificates as a result of changes in facts and circumstances, change in the
terms of the documents reviewed by me, or changes in the law subsequent to the
date hereof. As the Registration Statement contemplates Series of Certificates
with numerous different characteristics, the particular characteristics of each
Series of Certificates must be considered in determining the applicability of
this opinion to a particular Series of Certificates.
I hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to the reference to this opinion under the heading
"Taxation of the Trust" in the Prospectus, without admitting that I am an
"expert" within the meaning of the Act or the rules or regulations of the
Commission issued thereunder.
Very truly yours,
/s/ Rona Daniels
----------------
Rona Daniels
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned Director and/or
Officer of CITICORP, a Delaware corporation, and/or CITIBANK, N.A., a national
association, hereby constitutes and appoints each of GREGORY C. EHLKE, PETER M.
GALLANT, HEIDI G. MILLER, JOHN F. RICE and MARTIN A. WATERS his true and lawful
attorney and agent, in the name and on behalf of the undersigned, to do any and
all acts and things in connection with the registration statement dated the date
hereof (the "Registration Statement") to be filed with the United States
Securities and Exchange Commission or the Office of the Comptroller of the
Currency, including specifically, but without limiting the generality of the
foregoing, the power and authority to execute the Registration Statement in the
name of the undersigned in his capacity as Director and/or Officer of Citicorp
and/or Citibank, N.A., any and all amendments, including post-effective
amendments, to the Registration Statement, any and all documents and instruments
filed as part of or in connection with the Registration Statement or amendments
thereto, any and all documents and instruments which the said attorney and agent
may deem necessary or advisable to enable Citicorp and/or Citibank, N.A. to
comply with the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, and any rules and regulations and requirements of the
United States Securities and Exchange Commission in respect thereof, or with any
rules and regulations of the Office of the Comptroller of the Currency, and any
and all documents and instruments which the said attorney and agent may deem
necessary or advisable to enable Citicorp and/or Citibank, N.A. to comply with
the securities or other similar laws of jurisdictions outside of the United
States of America in respect thereof; and
HEREBY RATIFIES AND CONFIRMS all that the said attorneys and agents, or
any of them, has done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand.
Dated: February 16, 1999.
/s/ John S. Reed
----------------------------
Name: John S. Reed
Title: Chairman and Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned Director and/or
Officer of CITICORP, a Delaware corporation, and/or CITIBANK, N.A., a national
association, hereby constitutes and appoints each of GREGORY C. EHLKE, PETER M.
GALLANT, HEIDI G. MILLER, JOHN F. RICE and MARTIN A. WATERS his true and lawful
attorney and agent, in the name and on behalf of the undersigned, to do any and
all acts and things in connection with the registration statement dated the date
hereof (the "Registration Statement") to be filed with the United States
Securities and Exchange Commission or the Office of the Comptroller of the
Currency, including specifically, but without limiting the generality of the
foregoing, the power and authority to execute the Registration Statement in the
name of the undersigned in his capacity as Director and/or Officer of Citicorp
and/or Citibank, N.A., any and all amendments, including post-effective
amendments, to the Registration Statement, any and all documents and instruments
filed as part of or in connection with the Registration Statement or amendments
thereto, any and all documents and instruments which the said attorney and agent
may deem necessary or advisable to enable Citicorp and/or Citibank, N.A. to
comply with the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, and any rules and regulations and requirements of the
United States Securities and Exchange Commission in respect thereof, or with any
rules and regulations of the Office of the Comptroller of the Currency, and any
and all documents and instruments which the said attorney and agent may deem
necessary or advisable to enable Citicorp and/or Citibank, N.A. to comply with
the securities or other similar laws of jurisdictions outside of the United
States of America in respect thereof; and
HEREBY RATIFIES AND CONFIRMS all that the said attorneys and agents, or
any of them, has done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand.
Dated: February 16, 1999.
/s/ Paul J. Collins
----------------------
Name: Paul J. Collins
Title: Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned Director and/or
Officer of CITICORP, a Delaware corporation, and/or CITIBANK, N.A., a national
association, hereby constitutes and appoints each of GREGORY C. EHLKE, PETER M.
GALLANT, HEIDI G. MILLER, JOHN F. RICE and MARTIN A. WATERS his true and lawful
attorney and agent, in the name and on behalf of the undersigned, to do any and
all acts and things in connection with the registration statement dated the date
hereof (the "Registration Statement") to be filed with the United States
Securities and Exchange Commission or the Office of the Comptroller of the
Currency, including specifically, but without limiting the generality of the
foregoing, the power and authority to execute the Registration Statement in the
name of the undersigned in his capacity as Director and/or Officer of Citicorp
and/or Citibank, N.A., any and all amendments, including post-effective
amendments, to the Registration Statement, any and all documents and instruments
filed as part of or in connection with the Registration Statement or amendments
thereto, any and all documents and instruments which the said attorney and agent
may deem necessary or advisable to enable Citicorp and/or Citibank, N.A. to
comply with the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, and any rules and regulations and requirements of the
United States Securities and Exchange Commission in respect thereof, or with any
rules and regulations of the Office of the Comptroller of the Currency, and any
and all documents and instruments which the said attorney and agent may deem
necessary or advisable to enable Citicorp and/or Citibank, N.A. to comply with
the securities or other similar laws of jurisdictions outside of the United
States of America in respect thereof; and
HEREBY RATIFIES AND CONFIRMS all that the said attorneys and agents, or
any of them, has done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand.
Dated: February 16, 1999.
/s/ William R. Rhodes
---------------------------------
Name: William R. Rhodes
Title: Vice Chairman and Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned Director and/or
Officer of CITICORP, a Delaware corporation, and/or CITIBANK, N.A., a national
association, hereby constitutes and appoints each of GREGORY C. EHLKE, PETER M.
GALLANT, HEIDI G. MILLER, JOHN F. RICE and MARTIN A. WATERS his true and lawful
attorney and agent, in the name and on behalf of the undersigned, to do any and
all acts and things in connection with the registration statement dated the date
hereof (the "Registration Statement") to be filed with the United States
Securities and Exchange Commission or the Office of the Comptroller of the
Currency, including specifically, but without limiting the generality of the
foregoing, the power and authority to execute the Registration Statement in the
name of the undersigned in his capacity as Director and/or Officer of Citicorp
and/or Citibank, N.A., any and all amendments, including post-effective
amendments, to the Registration Statement, any and all documents and instruments
filed as part of or in connection with the Registration Statement or amendments
thereto, any and all documents and instruments which the said attorney and agent
may deem necessary or advisable to enable Citicorp and/or Citibank, N.A. to
comply with the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, and any rules and regulations and requirements of the
United States Securities and Exchange Commission in respect thereof, or with any
rules and regulations of the Office of the Comptroller of the Currency, and any
and all documents and instruments which the said attorney and agent may deem
necessary or advisable to enable Citicorp and/or Citibank, N.A. to comply with
the securities or other similar laws of jurisdictions outside of the United
States of America in respect thereof; and
HEREBY RATIFIES AND CONFIRMS all that the said attorneys and agents, or
any of them, has done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand.
Dated: February 16, 1999.
/s/ H. Onno Ruding
--------------------------------
Name: H. Onno Ruding
Title: Vice Chairman and Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned Director and/or
Officer of CITICORP, a Delaware corporation, and/or CITIBANK, N.A., a national
association, hereby constitutes and appoints each of GREGORY C. EHLKE, PETER M.
GALLANT, HEIDI G. MILLER, JOHN F. RICE and MARTIN A. WATERS his true and lawful
attorney and agent, in the name and on behalf of the undersigned, to do any and
all acts and things in connection with the registration statement dated the date
hereof (the "Registration Statement") to be filed with the United States
Securities and Exchange Commission or the Office of the Comptroller of the
Currency, including specifically, but without limiting the generality of the
foregoing, the power and authority to execute the Registration Statement in the
name of the undersigned in his capacity as Director and/or Officer of Citicorp
and/or Citibank, N.A., any and all amendments, including post-effective
amendments, to the Registration Statement, any and all documents and instruments
filed as part of or in connection with the Registration Statement or amendments
thereto, any and all documents and instruments which the said attorney and agent
may deem necessary or advisable to enable Citicorp and/or Citibank, N.A. to
comply with the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, and any rules and regulations and requirements of the
United States Securities and Exchange Commission in respect thereof, or with any
rules and regulations of the Office of the Comptroller of the Currency, and any
and all documents and instruments which the said attorney and agent may deem
necessary or advisable to enable Citicorp and/or Citibank, N.A. to comply with
the securities or other similar laws of jurisdictions outside of the United
States of America in respect thereof; and
HEREBY RATIFIES AND CONFIRMS all that the said attorneys and agents, or
any of them, has done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand.
Dated: February 16, 1999.
/s/ Victor J. Menezes
---------------------------------------
Name: Victor J. Menezes
Title: Director and Corporate Executive
Vice President
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned Director and/or
Officer of CITICORP, a Delaware corporation, and/or CITIBANK, N.A., a national
association, hereby constitutes and appoints each of GREGORY C. EHLKE, PETER M.
GALLANT, HEIDI G. MILLER, JOHN F. RICE and MARTIN A. WATERS his true and lawful
attorney and agent, in the name and on behalf of the undersigned, to do any and
all acts and things in connection with the registration statement dated the date
hereof (the "Registration Statement") to be filed with the United States
Securities and Exchange Commission or the Office of the Comptroller of the
Currency, including specifically, but without limiting the generality of the
foregoing, the power and authority to execute the Registration Statement in the
name of the undersigned in his capacity as Director and/or Officer of Citicorp
and/or Citibank, N.A., any and all amendments, including post-effective
amendments, to the Registration Statement, any and all documents and instruments
filed as part of or in connection with the Registration Statement or amendments
thereto, any and all documents and instruments which the said attorney and agent
may deem necessary or advisable to enable Citicorp and/or Citibank, N.A. to
comply with the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, and any rules and regulations and requirements of the
United States Securities and Exchange Commission in respect thereof, or with any
rules and regulations of the Office of the Comptroller of the Currency, and any
and all documents and instruments which the said attorney and agent may deem
necessary or advisable to enable Citicorp and/or Citibank, N.A. to comply with
the securities or other similar laws of jurisdictions outside of the United
States of America in respect thereof; and
HEREBY RATIFIES AND CONFIRMS all that the said attorneys and agents, or
any of them, has done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand.
Dated: February 16, 1999.
/s/ Robert I. Lipp
--------------------
Name: Robert I. Lipp
Title: Director
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the undersigned Director and/or
Officer of CITICORP, a Delaware corporation, and/or CITIBANK, N.A., a national
association, hereby constitutes and appoints each of GREGORY C. EHLKE, PETER M.
GALLANT, HEIDI G. MILLER, JOHN F. RICE and MARTIN A. WATERS his true and lawful
attorney and agent, in the name and on behalf of the undersigned, to do any and
all acts and things in connection with the registration statement dated the date
hereof (the "Registration Statement") to be filed with the United States
Securities and Exchange Commission or the Office of the Comptroller of the
Currency, including specifically, but without limiting the generality of the
foregoing, the power and authority to execute the Registration Statement in the
name of the undersigned in his capacity as Director and/or Officer of Citicorp
and/or Citibank, N.A., any and all amendments, including post-effective
amendments, to the Registration Statement, any and all documents and instruments
filed as part of or in connection with the Registration Statement or amendments
thereto, any and all documents and instruments which the said attorney and agent
may deem necessary or advisable to enable Citicorp and/or Citibank, N.A. to
comply with the Securities Act of 1933, as amended, the Securities Exchange Act
of 1934, as amended, and any rules and regulations and requirements of the
United States Securities and Exchange Commission in respect thereof, or with any
rules and regulations of the Office of the Comptroller of the Currency, and any
and all documents and instruments which the said attorney and agent may deem
necessary or advisable to enable Citicorp and/or Citibank, N.A. to comply with
the securities or other similar laws of jurisdictions outside of the United
States of America in respect thereof; and
HEREBY RATIFIES AND CONFIRMS all that the said attorneys and agents, or
any of them, has done, shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand.
Dated: February 16, 1999.
/s/ Heidi G. Miller
------------------------------
Name: Heidi G. Miller
Title: Chief Financial Officer
<PAGE>
