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CHASE FUNDING, INC.,
Depositor
[ADVANTA MORTGAGE CORP. USA],
Subservicer
CHASE MANHATTAN MORTGAGE CORPORATION
Master Servicer
and
[CITIBANK, N.A.],
Trustee
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POOLING AND SERVICING AGREEMENT
Dated as of [DATE]
--------------------------------------
CHASE FUNDING MORTGAGE LOAN ASSET-BACKED CERTIFICATES, SERIES [ ]
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ARTICLE I
DEFINITIONS..............................................................................................1
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; REPRESENTATIONS AND
WARRANTIES..............................................................................................44
SECTION 2.01 Conveyance of Mortgage Loans..........................................................44
SECTION 2.02 Acceptance by Trustee of the Mortgage Loans...........................................48
SECTION 2.03 Representations, Warranties and Covenants of the Depositor............................49
SECTION 2.04 Representations and Warranties of the Subservicer.....................................59
SECTION 2.05 Substitutions and Repurchases of Mortgage Loans which are
not "Qualified Mortgages"........................................................61
SECTION 2.06 Authentication and Delivery of Certificates...........................................61
SECTION 2.07 REMIC Election........................................................................61
SECTION 2.08 Covenants of the Subservicer..........................................................63
SECTION 2.09 Representations of the Master Servicer................................................63
ARTICLE III
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS..........................................................64
SECTION 3.01 Subservicer to Service Mortgage Loans.................................................64
SECTION 3.02 Subservicing; Enforcement of the Obligations of Subservicer...........................65
SECTION 3.03 Rights of the Depositor, the Master Servicer and the Trustee
in Respect of the Subservicer....................................................66
SECTION 3.04 Trustee to Act as Subservicer.........................................................66
SECTION 3.05 Collection of Mortgage Loan Payments; Collection Account;
Certificate Account; Distribution Account.............................................67
SECTION 3.06 Collection of Taxes, Assessments and Similar Items; Escrow
Accounts..............................................................................71
SECTION 3.07 Access to Certain Documentation and Information Regarding
the Mortgage Loans...............................................................71
SECTION 3.08 Permitted Withdrawals from the Collection Account,
Certificate Account and Distribution Account.....................................72
SECTION 3.09 Sale by Master Servicer of Delinquent or Charged-off
Mortgage Loans...................................................................74
SECTION 3.10 Maintenance of Hazard Insurance.......................................................75
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SECTION 3.11 Enforcement of Due-On-Sale Clauses; Assumption
Agreements.......................................................................76
SECTION 3.12 Realization Upon Defaulted Mortgage Loans; Determination
of Excess Proceeds; Repurchase of Certain Mortgage Loans.........................77
SECTION 3.13 Trustee to Cooperate; Release of Mortgage Files.......................................80
SECTION 3.14 Documents, Records and Funds in Possession of Subservicer
to be Held for the Trustee.......................................................82
SECTION 3.15 Servicing Compensation................................................................82
SECTION 3.16 Access to Certain Documentation.......................................................83
SECTION 3.17 Annual Statement as to Compliance.....................................................83
SECTION 3.18 Annual Independent Public Accountants' Servicing Statement;
Financial Statements..................................................................83
ARTICLE IV
DISTRIBUTIONS; ADVANCES BY THE SUBSERVICER..............................................................84
SECTION 4.01 Advances..............................................................................84
SECTION 4.02 Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls........................................................85
SECTION 4.03 Distributions on the Subsidiary REMIC.................................................85
SECTION 4.04 Distributions.........................................................................85
SECTION 4.05 Monthly Statements to Certificateholders..............................................92
ARTICLE V
THE CERTIFICATES........................................................................................95
SECTION 5.01 The Certificates......................................................................95
SECTION 5.02 Certificate Register; Registration of Transfer and Exchange
of Certificates..................................................................96
SECTION 5.03 Mutilated, Destroyed, Lost or Stolen Certificates....................................101
SECTION 5.04 Persons Deemed Owners................................................................101
SECTION 5.05 Access to List of Certificateholders' Names and Addresses............................101
SECTION 5.06 Book-Entry Certificates..............................................................102
SECTION 5.07 Notices to Depository................................................................103
SECTION 5.08 Definitive Certificates..............................................................103
SECTION 5.09 Maintenance of Office or Agency......................................................104
SECTION 5.10 Authenticating Agents................................................................104
SECTION 5.11 Appointment of Paying Agent..........................................................105
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ARTICLE VI
THE DEPOSITOR, THE SUBSERVICER AND THE MASTER SERVICER.................................................105
SECTION 6.01 Respective Liabilities of the Depositor, the Subservicer and
the Master Servicer.............................................................105
SECTION 6.02 Merger or Consolidation of the Depositor, the Subservicer
or the Master Servicer..........................................................105
SECTION 6.03 Limitation on Liability of the Depositor, the Master Servicer,
the Subservicer and Others......................................................106
SECTION 6.04 Limitation on Resignation of Subservicer.............................................107
SECTION 6.05 Errors and Omissions Insurance; Fidelity Bonds.......................................107
SECTION 6.06 Compensation to the Master Servicer..................................................107
ARTICLE VII
DEFAULT; TERMINATION OF SUBSERVICER....................................................................107
SECTION 7.01 Events of Default....................................................................107
SECTION 7.02 Trustee to Act; Appointment of Successor.............................................110
SECTION 7.03 Notification to Certificateholders...................................................111
ARTICLE VIII
CONCERNING THE TRUSTEE.................................................................................111
SECTION 8.01 Duties of Trustee....................................................................111
SECTION 8.02 Certain Matters Affecting the Trustee................................................113
SECTION 8.03 Trustee Not Liable for Mortgage Loans................................................114
SECTION 8.04 Trustee May Own Certificates.........................................................114
SECTION 8.05 Master Servicer to Pay Trustee's Fees and Expenses...................................115
SECTION 8.06 Eligibility Requirements for Trustee.................................................115
SECTION 8.07 Resignation and Removal of Trustee...................................................116
SECTION 8.08 Successor Trustee....................................................................117
SECTION 8.09 Merger or Consolidation of Trustee...................................................117
SECTION 8.10 Appointment of Co-Trustee or Separate Trustee........................................117
SECTION 8.11 Tax Matters..........................................................................119
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ARTICLE IX
TERMINATION............................................................................................121
SECTION 9.01 Termination upon Liquidation or Repurchase of all
Mortgage Loans..................................................................121
SECTION 9.02 Final Distribution on the Certificates...............................................122
SECTION 9.03 Additional Termination Requirements..................................................123
ARTICLE X
MISCELLANEOUS PROVISIONS...............................................................................124
SECTION 10.01 Amendment............................................................................124
SECTION 10.02 Counterparts.........................................................................126
SECTION 10.03 Governing Law........................................................................126
SECTION 10.04 Intention of Parties.................................................................126
SECTION 10.05 Notices..............................................................................126
SECTION 10.06 Severability of Provisions...........................................................128
SECTION 10.07 Assignment...........................................................................128
SECTION 10.08 Limitation on Rights of Certificateholders...........................................128
SECTION 10.09 Inspection and Audit Rights..........................................................129
SECTION 10.10 Certificates Nonassessable and Fully Paid............................................129
EXHIBIT A FORM OF CERTIFICATES
EXHIBIT B [RESERVED]
EXHIBIT C [RESERVED]
EXHIBIT D FORM OF CLASS R CERTIFICATE
EXHIBIT E [RESERVED]
EXHIBIT F MORTGAGE LOAN SCHEDULE
EXHIBIT G [RESERVED]
EXHIBIT H FORM OF TRUSTEE CERTIFICATION
EXHIBIT I FORM OF TRANSFEREE'S LETTER AND AFFIDAVIT
EXHIBIT J FORM OF TRANSFEROR CERTIFICATE
EXHIBIT K FORM OF INVESTMENT LETTER
EXHIBIT L FORM OF RULE 144A LETTER
EXHIBIT M REQUEST FOR RELEASE
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POOLING AND SERVICING AGREEMENT, dated as of [DATE], among CHASE
FUNDING, INC., a New York corporation, as depositor (the "Depositor"), [ADVANTA
MORTGAGE CORP. USA], a Delaware corporation, as subservicer (the "Subservicer"),
CHASE MANHATTAN MORTGAGE CORPORATION, a New Jersey corporation, as Master
Servicer (the "Master Servicer") and [CITIBANK, N.A.], a national banking
association, as trustee (the "Trustee").
The Depositor is the owner of the Trust Fund that is hereby conveyed to
the Trustee in return for the Certificates. The Trust Fund for federal income
tax purposes will consist of two REMICs. The Subsidiary REMIC will consist of
all of the assets constituting the Trust Fund (other than those held by the
Master REMIC) and will be evidenced by the Subsidiary REMIC Regular Interests
(which will be uncertificated and will represent the "regular interests" in the
Subsidiary REMIC) and the SR Interest as the single "residual interest" in the
Subsidiary REMIC. The Trustee will hold the Subsidiary REMIC Regular Interests.
The Master REMIC will consist of the Subsidiary REMIC Regular Interests and will
be evidenced by the Regular Certificates (which will represent the "regular
interests" in the Master REMIC) and the MR Interest as the single "residual
interest" in the Master REMIC. The Class R Certificates initially will represent
beneficial ownership of the SR Interest and the MR Interest. The "latest
possible maturity date" for federal income tax purposes of all interests created
hereby will be the Latest Possible Maturity Date.
In consideration of the mutual agreements herein contained, the
Depositor, the Subservicer, the Master Servicer and the Trustee agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Accepted Servicing Practices: The Subservicer's normal servicing
practices, which will conform to the mortgage servicing practices of prudent
mortgage lending institutions which service for their own account mortgage loans
of the same type as the Mortgages Loans in the jurisdictions in which the
related Mortgage Properties are located.
Accrual Period: With respect to the Group I Certificates (other than
the Class IA-1 Certificates) and any Distribution Date, the calendar month
immediately preceding such Distribution Date. With respect to the Group II
Certificates and the Class IA-1 Certificates and any Distribution Date, the
period commencing on the immediately preceding Distribution Date (or, in the
case of the first Distribution Date, the Closing Date) and ending on the day
immediately preceding such Distribution Date. All calculations of interest on
the Group I Certificates (other than the Class IA-1 Certificates) will be made
on the basis of a 360-day year
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consisting of twelve 30-day months, and all calculations of interest on the
Group II Certificates and the Class IA-1 Certificates will be made on the basis
of the actual number of days elapsed in the related Accrual Period and a 360 day
year.
Adjustment Date: As to each Group II Mortgage Loan, each date on which
the related Mortgage Rate is subject to adjustment, as provided in the related
Mortgage Note.
Advance: The aggregate of the advances required to be made by the
Subservicer with respect to any Distribution Date pursuant to Section 4.01, the
amount of any such advances being equal to the sum of (A) the aggregate of
payments of principal (except with respect to the final Scheduled Payment on any
Balloon Loan) and interest (net of the Servicing Fees) on the Mortgage Loans
that were due on the related Due Date and not received as of the close of
business on the related Determination Date (including monthly interest on the
Stated Principal Balance of a Balloon Loan remaining outstanding after the Due
Date with respect to the final Scheduled Payment for such Balloon Loan) and (B)
with respect to each REO Property that has not been liquidated, an amount equal
to the excess, if any, of (x) one month's interest (adjusted to the Net Mortgage
Rate) on the Stated Principal Balance of the related Mortgage Loan over (y) the
net monthly rental income (if any) from such REO Property deposited in the
Collection Account for such Distribution Date pursuant to Section 3.12, less the
aggregate amount of any such Delinquent payments that the Subservicer has
determined would constitute a Non-Recoverable Advance were an advance to be
made with respect thereto.
Agreement: This Pooling and Servicing Agreement and any and all
amendments or supplements hereto made in accordance with the terms herein.
Amount Held for Future Distribution: As to any Distribution Date, the
aggregate amount held in the Collection Account at the close of business on the
immediately preceding Determination Date on account of (i) all Scheduled
Payments or portions thereof received in respect of the Mortgage Loans due after
the related Due Date and (ii) Principal Prepayments and Liquidation Proceeds
received in respect of such Mortgage Loans after the last day of the related
Prepayment Period (or Due Period, in the case of Liquidation Proceeds).
Applied Realized Loss Amount: With respect to any Distribution Date,
the amount, if any, by which, (i) with respect to the Group I Certificates, the
Group I Certificate Principal Balance after distributions of principal on such
Distribution Date exceeds the aggregate Stated Principal Balance of the Group I
Mortgage Loans as of such Distribution Date, and (ii) with respect to the Group
II Certificates, the Group II Certificate Principal Balance after distributions
of principal on such Distribution Date exceeds the aggregate Stated Principal
Balance of the Group II Mortgage Loans as of such Distribution Date.
Appraised Value: With respect to a Mortgage Loan the proceeds of which
were used to purchase the related Mortgage Property, the "Appraised Value" of a
Mortgaged Property is the lesser of (x) the appraised value based on an
appraisal made for the Seller by an
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independent fee appraiser at the time of the origination of the related Mortgage
Loan, and (y) the sales price of such Mortgaged Property at such time of
origination. With respect to a Mortgage Loan the proceeds of which were used to
refinance an existing mortgage loan, the "Appraised Value" is the appraised
value of the Mortgaged Property based upon the appraisal obtained at the time of
refinancing.
Assignment of Mortgage: An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient under the laws
of the jurisdiction where the related Mortgaged Property is located to reflect
of record the sale and assignment of the Mortgage Loan to the Trustee, which
assignment, notice of transfer or equivalent instrument may, if permitted by
law, be in the form of one or more blanket assignments covering Mortgages
secured by Mortgaged Properties located in the same county.
Authenticating Agent: As defined in Section 5.10 hereof.
Balloon Loan: A Mortgage Loan having an original term to stated
maturity of approximately 15 years which provides for level monthly payments of
principal and interest based on a 30-year amortization schedule, with a balloon
payment of the remaining outstanding principal balance due on such Mortgage Loan
at its stated maturity.
Book-Entry Certificates: Any of the Certificates that shall be
registered in the name of the Depository or its nominee, the ownership of which
is reflected on the books of the Depository or on the books of a person
maintaining an account with the Depository (directly, as a "Depository
Participant", or indirectly, as an indirect participant in accordance with the
rules of the Depository and as described in Section 5.06). As of the Closing
Date, each Class of Regular Certificates constitutes a Class of Book-Entry
Certificates.
Business Day: Any day other than (i) a Saturday or a Sunday, or (ii) a
day on which banking institutions in the States of Arizona, California,
Pennsylvania and Utah and in the City of New York, New York or the city in which
the Master Servicer or Subservicer is located are authorized or obligated by law
or executive order to be closed.
Certificate: Any one of the certificates of any Class executed by the
Depositor and authenticated by the Authenticating Agent in substantially the
forms attached hereto as exhibits A through D.
Certificate Account: The separate Eligible Account created and
initially maintained by the Master Servicer pursuant to Section 3.05(c) in the
name of the Trustee for the benefit of the Certificateholders and designated
"[Citibank, N.A.], as trustee, in trust for registered holders of Chase Funding
Mortgage Loan Asset-Backed Certificates, Series [ ]". Funds in the Certificate
Account shall be held in trust for the Certificateholders for the uses and
purposes set forth in this Agreement.
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Certificate Group: Either of the Group I Certificates or the Group II
Certificates.
Certificate Owner: With respect to a Book-Entry Certificate, the person
that is the beneficial owner of such Book-Entry Certificate.
Certificate Principal Balance: As to any Certificate and as of any
Distribution Date, the Initial Certificate Principal Balance of such Certificate
less the sum of (i) all amounts distributed with respect to such Certificate in
reduction of the Certificate Principal Balance thereof on previous Distribution
Dates pursuant to Section 4.04, and (ii) any Applied Realized Loss Amounts
allocated to such Certificate on previous Distribution Dates pursuant to (i)
Section 4.04(h) for the Group I Certificates and (ii) Section 4.04(i) for the
Group II Certificates.
Certificate Register: The register maintained pursuant to Section 5.02
hereof.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register (initially, Cede & Co.), as nominee for
the Depository, in the case of any Class of Regular Certificates, except that
solely for the purpose of giving any consent pursuant to this Agreement, any
Certificate registered in the name of the Depositor or any Affiliate of the
Depositor shall be deemed not to be Outstanding and the Percentage Interest
evidenced thereby shall not be taken into account in determining whether the
requisite amount of Percentage Interests necessary to effect such consent has
been obtained; provided, however, that if any such Person (including the
Depositor) owns 100% of the Percentage Interests evidenced by a Class of
Certificates, such Certificates shall be deemed to be Outstanding for purposes
of any provision hereof that requires the consent of the Holders of Certificates
of a particular Class as a condition to the taking of any action hereunder. The
Trustee is entitled to rely conclusively on a certification of the Depositor or
any Affiliate of the Depositor in determining which Certificates are registered
in the name of an Affiliate of the Depositor.
Class: All Certificates bearing the same Class designation as set forth
in Section 5.01 hereof.
Class IA-1 Certificate: Any Certificate designated as a "Class IA-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class IA-1 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class IA-1
Certificates.
Class IA-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class IA-1 Pass-Through Rate on
the Class IA-1 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by
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a trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class IA-1 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class IA-1 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class IA-1 Current Interest with respect to
prior Distribution Dates over (b) the amount actually distributed to the Class
IA-1 Certificates with respect to interest on such prior Distribution Dates and
(ii) interest on such excess (to the extent permitted by applicable law) at the
Class IA-1 Pass-Through Rate for the related Accrual Period.
Class IA-1 Margin: [ ]% per annum.
Class IA-1 Pass-Through Rate: For the first Distribution Date [ ]% per
annum. As of any Distribution Date thereafter, the lesser of (i) One-Month LIBOR
plus the Class IA-1 Margin and (ii) the Group I Net Rate.
Class IA-2 Certificate: Any Certificate designated as a "Class IA-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class IA-2 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class IA-2
Certificates.
Class IA-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class IA-2 Pass-Through Rate on
the Class IA-2 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class IA-2 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class IA-2 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class IA-2 Current Interest with respect to
prior Distribution Dates over (b) the amount actually distributed to the Class
IA-2 Certificates with respect to interest on such prior Distribution Dates and
(ii) interest on such excess (to the extent permitted by applicable law) at the
Class IA-2 Pass-Through Rate for the related Accrual Period.
Class IA-2 Pass-Through Rate: [ ]% per annum.
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Class IA-3 Certificate: Any Certificate designated as a "Class IA-3
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class IA-3 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class IA-3
Certificates.
Class IA-3 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class IA-3 Pass-Through Rate on
the Class IA-3 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class IA-3 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class IA-3 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class IA-3 Current Interest with respect to
prior Distribution Dates over (b) the amount actually distributed to the Class
IA-3 Certificates with respect to interest on such prior Distribution Dates and
(ii) interest on such excess (to the extent permitted by applicable law) at the
Class IA-3 Pass-Through Rate for the related Accrual Period.
Class IA-3 Pass-Through Rate: [ ]% per annum.
Class IA-4 Certificate: Any Certificate designated as a "Class IA-4
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class IA-4 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class IA-4
Certificates.
Class IA-4 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class IA-4 Pass-Through Rate on
the Class IA-4 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class IA-4 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
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Class IA-4 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class IA-4 Current Interest with respect to
prior Distribution Dates over (b) the amount actually distributed to the Class
IA-4 Certificates with respect to interest on such prior Distribution Dates and
(ii) interest on such excess (to the extent permitted by applicable law) at the
Class IA-4 Pass-Through Rate for the related Accrual Period.
Class IA-4 Pass-Through Rate: The lesser of (i) [ ]% per annum and (ii)
the Group I Net Rate.
Class IA-5 Certificate: Any Certificate designated as a "Class IA-5
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class IA-5 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class IA-5
Certificates.
Class IA-5 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class IA-5 Pass-Through Rate on
the Class IA-5 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class IA-5 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class IA-5 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class IA-5 Current Interest with respect to
prior Distribution Dates over (b) the amount actually distributed to the Class
IA-5 Certificates with respect to interest on such prior Distribution Date and
(ii) interest on such excess (to the extent permitted by applicable law) at the
Class IA-5 Pass-Through Rate for the related Accrual Period.
Class IA-5 Pass-Through Rate: The lesser of (i) [ ]% per annum (or on
any Distribution Date after the Optional Termination Date for the Group I
Certificates [ ]% per annum) and (ii) the Group I Net Rate.
Class IA-6 Certificate: Any Certificate designated as a "Class IA-6
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class IA-6 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class IA-6
Certificates.
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Class IA-6 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class IA-6 Pass-Through Rate on
the Class IA-6 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class IA-6 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class IA-6 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class IA-6 Current Interest with respect to
prior Distribution Dates over (b) the amount actually distributed to the Class
IA-6 Certificates with respect to interest on such prior Distribution Date and
(ii) interest on such excess (to the extent permitted by applicable law) at the
Class IA-6 Pass-Through Rate for the related Accrual Period.
Class IA-6 Pass-Through Rate: The lesser of (i) [ ]% per annum and (ii)
the Group I Net Rate.
Class IA-6 Principal Distribution Amount: As of any Distribution Date
prior to the Distribution Date in [DATE], the principal to be distributed to the
Class IA-6 Certificates equal to the product of (i) a fraction, the numerator of
which is the Certificate Principal Balance of the Class IA-6 Certificates
immediately prior to such Distribution Date and the denominator of which is the
Group I Class A Certificate Principal Balance immediately prior to such
Distribution Date, (ii) the Group I Class A Principal Distribution Amount for
such Distribution Date and (iii) the Class IA-6 PDA Factor for such Distribution
Date. With respect to the Distribution Date in [DATE] and each Distribution Date
thereafter until the Class IA-6 Certificate Principal Balance has been reduced
to zero, the Class IA-6 Principal Distribution Amount will equal the Group I
Class A Principal Distribution Amount for such Distribution Date.
Class IA-6 PDA Factor: As of any Distribution Date set forth below, the
Percentage set forth across from such Distribution Date:
Distribution Date Occurring in Percentage
[MONTH/YR]-[MONTH/YR].............................................. [ ]%
[MONTH/YR]-[MONTH/YR].............................................. [ ]%
[MONTH/YR]-[MONTH/YR].............................................. [ ]%
[MONTH/YR]-[MONTH/YR].............................................. [ ]%
[MONTH/YR]-[MONTH/YR].............................................. [ ]%
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Class IIA-1 Certificate: Any Certificate designated as a "Class IIA-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class IIA-1 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class IIA-1
Certificates.
Class IIA-1 Interest Carryover Amount: As of any Distribution Date, the
sum of (A) if on such Distribution Date the Pass-Through Rate for the Class
IIA-1 Certificates is based upon the Group II Available Funds Cap, the excess of
(i) the amount of interest the Class IIA-1 Certificates would otherwise be
entitled to receive on such Distribution Date had such rate been calculated as
the sum of One-Month LIBOR and the applicable Class IIA-1 Margin for such
Distribution Date, up to the Group II Weighted Maximum Rate Cap, over (ii) the
amount of interest payable on the Class IIA-1 Certificates at the Group II
Available Funds Cap for such Distribution Date and (B) the Class IIA-1 Interest
Carryover Amount for all previous Distribution Dates not previously paid
pursuant to Section 4.04(f)(vi), together with interest thereon at a rate equal
to the sum of One-Month LIBOR and the applicable Class IIA-1Margin for such
Distribution Date.
Class IIA-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class IIA-1 Pass-Through Rate
on the Class IIA-1 Certificate Principal Balance as of the first day of such
Accrual Period (after giving effect to all distributions of principal made or
deemed to be made as of such first day) plus the interest portion of any
previous distributions on such Class that is recovered as a voidable preference
by a trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated
on such Distribution Date to the Class IIA-1 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class IIA-1 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class IIA-1 Current Interest with respect
to prior Distribution Dates (excluding any Class IIA-1 Interest Carryover
Amount) over (b) the amount actually distributed to the Class IIA-1 Certificates
with respect to interest on such prior Distribution Dates and (ii) interest on
such excess (to the extent permitted by applicable law) at the Class IIA-1
Pass-Through Rate for the related Accrual Period.
Class IIA-1 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Group II Certificates, [ ]% per annum and, as
of any Distribution Date after such Optional Termination Date, [ ]% per annum.
Class IIA-1 Pass-Through Rate: For the first Distribution Date, [ ]%
per annum. As of any Distribution Date thereafter, the least of (i) One-Month
LIBOR plus the Class
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IIA-1 Margin, (ii) the Group II Weighted Maximum Rate Cap and (iii) the Group II
Available Funds Cap for such Distribution Date.
Class IB Applied Realized Loss Amount: As of any Distribution Date, the
sum of all Applied Realized Loss Amounts with respect to the Group I Mortgage
Loans which have been applied to the reduction of the Certificate Principal
Balance of the Class IB Certificates.
Class IB Certificate: Any Certificate designated as a "Class IB
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class IB Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class IB
Certificates.
Class IB Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class IB Pass-Through Rate on
the Class IB Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class IB Certificates. For purposes of calculating
interest, principal distributions on a Distribution Date will be deemed to have
been made on the first day of the Accrual Period in which such Distribution Date
occurs.
Class IB Interest Carryforward Amount: As of any Distribution Date, the
sum of (i) the excess of (a) the Class IB Current Interest with respect to prior
Distribution Dates over (b) the amount actually distributed to the Class IB
Certificates with respect to interest on such prior Distribution Dates and (ii)
interest on such excess (to the extent permitted by applicable law) at the Class
IB Pass-Through Rate for the related Accrual Period.
Class IB Pass-Through Rate: The lesser of (i) [ ]% per annum and (ii)
the Group I Net Rate.
Class IB Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (i) the Class IB Applied Realized Loss Amount over (ii) the sum of all
distributions in reduction of the Class IB Applied Realized Loss Amount on all
previous Distribution Dates.
Class IIB Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Group II
Mortgage Loans which have been applied to the reduction of the Certificate
Principal Balance of the Class IIB Certificates.
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<PAGE>
Class IIB Certificate: Any Certificate designated as a "Class IIB
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class IIB Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class IIB
Certificates.
Class IIB Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class IIB Pass-Through Rate on
the Class IIB Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class IIB Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class IIB Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class IIB Current Interest with respect to
prior Distribution Dates (excluding any Class IIB Interest Carryover Amount)
over (b) the amount actually distributed to the Class IIB Certificates with
respect to interest on such prior Distribution Dates and (ii) interest on such
excess (to the extent permitted by applicable law) at the Class IIB Pass-Through
Rate for the related Accrual Period.
Class IIB Interest Carryover Amount: As of any Distribution Date, the
sum of (A) if on such Distribution Date the Pass-Through Rate for the Class IIB
Certificates is based upon the Group II Available Funds Cap, the excess of (i)
the amount of interest the Class IIB Certificates would otherwise be entitled to
receive on such Distribution Date had such rate been calculated as the sum of
One-Month LIBOR and the applicable Class IIB Margin for such Distribution Date,
up to the Group II Weighted Maximum Rate Cap, over (ii) the amount of interest
payable on the Class IIB Certificates at the Group II Available Funds Cap for
such Distribution Date and (B) the Class IIB Interest Carryover Amount for all
previous Distribution Dates not previously paid pursuant to Section 4.04(f)(vi),
together with interest thereon at a rate equal to the sum of One-Month LIBOR and
the applicable Class IIB Margin for such Distribution Date.
Class IIB Margin: For any Distribution Date up to and including the
Optional Termination Date for the Group II Certificates, [ ]% per annum and, as
of any Distribution Date after such Optional Termination Date, [ ]% per annum.
Class IIB Pass-Through Rate: For the first Distribution Date, [ ]% per
annum. As of any Distribution Date thereafter, the least of (i) One-Month LIBOR
plus the Class
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<PAGE>
IIB Margin, (ii) the Group II Weighted Maximum Rate Cap and (iii) the Group II
Available Funds Cap for such Distribution Date.
Class IIB Unpaid Realized Loss Amount: As of any Distribution Date, the
excess of (i) the Class IIB Applied Realized Loss Amount over (ii) the sum of
all distributions in reduction of the Class IIB Applied Realized Loss Amounts on
all previous Distribution Dates.
Class IM-1 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Group I
Mortgage Loans which have been applied to the reduction of the Certificate
Principal Balance of the Class IM-1 Certificates.
Class IM-1 Certificate: Any Certificate designated as a "Class IM-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class IM-1 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class IM-1
Certificates.
Class IM-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class IM-1 Pass-Through Rate on
the Class IM-1 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class IM-1 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class IM-1 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class IM-1 Current Interest with respect to
prior Distribution Dates over (b) the amount actually distributed to the Class
IM-1 Certificates with respect to interest on such prior Distribution Dates and
(ii) interest on such excess (to the extent permitted by applicable law) at the
Class IM-1 Pass-Through Rate for the related Accrual Period.
Class IM-1 Pass-Through Rate: The lesser of (i) [ ]% per annum and (ii)
the Group I Net Rate.
Class IM-1 Unpaid Realized Loss Amount: As of any Distribution Date,
the excess of (i) the Class IM Applied Realized Loss Amount over (ii) the sum of
all distributions in reduction of the Class IM-1 Applied Realized Loss Amount on
all previous Distribution Dates.
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<PAGE>
Class IM-2 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Group I
Mortgage Loans which have been applied to the reduction of the Certificate
Principal Balance of the Class IM-2 Certificates.
Class IM-2 Certificate: Any Certificate designated as a "Class IM-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class IM-2 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class IM-2
Certificates.
Class IM-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class IM-2 Pass-Through Rate on
the Class IM-2 Certificate Principal Balance as of the first day of such Accrual
Period (after giving effect to all distributions of principal made or deemed to
be made as of such first day) plus the interest portion of any previous
distributions on such Class that is recovered as a voidable preference by a
trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated on
such Distribution Date to the Class IM-2 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class IM-2 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class IM-2 Current Interest with respect to
prior Distribution Dates over (b) the amount actually distributed to the Class
IM-2 Certificates with respect to interest on such prior Distribution Dates and
(ii) interest on such excess (to the extent permitted by applicable law) at the
Class IM-2 Pass-Through Rate for the related Accrual Period.
Class IM-2 Pass-Through Rate: The lesser of (i) [ ]% per annum and (ii)
the Group I Net Rate.
Class IM-2 Unpaid Realized Loss Amount: As of any Distribution Date,
the excess of (i) the Class IM-2 Applied Realized Loss Amount over (ii) the sum
of all distributions in reduction of the Class IM-2 Applied Realized Loss Amount
on all previous Distribution Dates.
Class IIM-1 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Group II
Mortgage Loans which have been applied to the reduction of the Certificate
Principal Balance of the Class IIM-1 Certificates.
Class IIM-1 Certificate: Any Certificate designated as a "Class IIM-1
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
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<PAGE>
Class IIM-1 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class IIM-1
Certificates.
Class IIM-1 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class IIM-1 Pass-Through Rate
on the Class IIM-1 Certificate Principal Balance as of the first day of such
Accrual Period (after giving effect to all distributions of principal made or
deemed to be made as of such first day) plus the interest portion of any
previous distributions on such Class that is recovered as a voidable preference
by a trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated
on such Distribution Date to the Class IIM-1 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class IIM-1 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class IIM-1 Current Interest with respect
to prior Distribution Dates (excluding any Class IIM-1 Interest Carryover
Amount) over (b) the amount actually distributed to the Class IIM-1 Certificates
with respect to interest on such prior Distribution Dates and (ii) interest on
such excess (to the extent permitted by applicable law) at the Class IIM-1
Pass-Through Rate for the related Accrual Period.
Class IIM-1 Interest Carryover Amount: As of any Distribution Date, the
sum of (A) if on such Distribution Date the Pass-Through Rate for the Class
IIM-1 Certificates is based upon the Group II Available Funds Cap, the excess of
(i) the amount of interest the Class IIM-1 Certificates would otherwise be
entitled to receive on such Distribution Date had such rate been calculated as
the sum of One-Month LIBOR and the applicable Class IIM-1 Margin for such
Distribution Date, up to the Group II Weighted Maximum Rate Cap, over (ii) the
amount of interest payable on the Class IIM-1 Certificates at the Group II
Available Funds Cap for such Distribution Date and (B) the Class IIM-1 Interest
Carryover Amount for all previous Distribution Dates not previously paid
pursuant to Section 4.04(f)(vi), together with interest thereon at a rate equal
to the sum of One-Month LIBOR and the applicable Class IIM-1 Margin for such
Distribution Date.
Class IIM-1 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Group II Certificates, [ ]% per annum and, as
of any Distribution Date after such Optional Termination Date, [ ]% per annum.
Class IIM-1 Pass-Through Rate: For the first Distribution Date, [ ]%
per annum. As of any Distribution Date thereafter, the least of (i) One-Month
LIBOR plus the Class IIM-1 Margin, (ii) the Group II Weighted Maximum Rate Cap
and (iii) the Group II Available Funds Cap for such Distribution Date.
Class IIM-1 Unpaid Realized Loss Amount: As of any Distribution Date,
the excess of (i) the Class IIM-1 Applied Realized Loss Amount over (ii) the sum
of all distributions
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<PAGE>
in reduction of the Class IIM-1 Applied Realized Loss Amounts on all previous
Distribution Dates.
Class IIM-2 Applied Realized Loss Amount: As of any Distribution Date,
the sum of all Applied Realized Loss Amounts with respect to the Group II
Mortgage Loans which have been applied to the reduction of the Certificate
Principal Balance of the Class IIM-2 Certificates.
Class IIM-2 Certificate: Any Certificate designated as a "Class IIM-2
Certificate" on the face thereof, in the form of Exhibit A hereto, representing
the right to distributions as set forth herein.
Class IIM-2 Certificate Principal Balance: As of any date of
determination, the aggregate Certificate Principal Balance of the Class IIM-2
Certificates.
Class IIM-2 Current Interest: As of any Distribution Date, the interest
accrued during the related Accrual Period at the Class IIM-2 Pass-Through Rate
on the Class IIM-2 Certificate Principal Balance as of the first day of such
Accrual Period (after giving effect to all distributions of principal made or
deemed to be made as of such first day) plus the interest portion of any
previous distributions on such Class that is recovered as a voidable preference
by a trustee in bankruptcy, less any Non-Supported Interest Shortfall allocated
on such Distribution Date to the Class IIM-2 Certificates. For purposes of
calculating interest, principal distributions on a Distribution Date will be
deemed to have been made on the first day of the Accrual Period in which such
Distribution Date occurs.
Class IIM-2 Interest Carryforward Amount: As of any Distribution Date,
the sum of (i) the excess of (a) the Class IIM-2 Current Interest with respect
to prior Distribution Dates (excluding any Class IIM-2 Interest Carryover
Amount) over (b) the amount actually distributed to the Class IIM-2 Certificates
with respect to interest on such prior Distribution Dates and (ii) interest on
such excess (to the extent permitted by applicable law) at the Class IIM-2
Pass-Through Rate for the related Accrual Period.
Class IIM-2 Interest Carryover Amount: As of any Distribution Date, the
sum of (A) if on such Distribution Date the Pass-Through Rate for the Class
IIM-2 Certificates is based upon the Group II Available Funds Cap, the excess of
(i) the amount of interest the Class IIM-2 Certificates would otherwise be
entitled to receive on such Distribution Date had such rate been calculated as
the sum of One-Month LIBOR and the applicable Class IIM-2 Margin for such
Distribution Date, up to the Group II Weighted Maximum Rate Cap, over (ii) the
amount of interest payable on the Class IIM-2 Certificates at the Group II
Available Funds Cap for such Distribution Date and (B) the Class IIM-2 Interest
Carryover Amount for all previous Distribution Dates not previously paid
pursuant to Section 4.04(f)(vi), together with interest thereon at a rate equal
to the sum of One-Month LIBOR and the applicable Class IIM-2 Margin for such
Distribution Date.
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<PAGE>
Class IIM-2 Margin: As of any Distribution Date up to and including the
Optional Termination Date for the Group II Certificates, [ ]% per annum and, as
of any Distribution Date after such Optional Termination Date, [ ]% per annum.
Class IIM-2 Pass-Through Rate: For the first Distribution Date, [ ]%
per annum. As of any Distribution Date thereafter, the least of (i) One-Month
LIBOR plus the Class IIM-2 Margin, (ii) the Group II Weighted Maximum Rate Cap
and (iii) the Group II Available Funds Cap for such Distribution Date.
Class IIM-2 Unpaid Realized Loss Amount: As of any Distribution Date,
the excess of (i) the Class IIM-2 Applied Realized Loss Amount over (ii) the sum
of all distributions in reduction of the Class IIM-2 Applied Realized Loss
Amounts on all previous Distribution Dates.
Class R Certificate: Any one of the Class R Certificates executed by
the Depositor and authenticated by the Authenticating Agent in substantially the
form set forth in Exhibit D.
Closing Date: [DATE].
Code: The Internal Revenue Code of 1986, including any successor or
amendatory provisions.
Collection Account: The separate Eligible Account created and initially
maintained by the Subservicer pursuant to Section 3.05(b) in the name of the
Trustee for the benefit of the Certificateholders and designated "[Citibank,
N.A.], as trustee, in trust for registered holders of Chase Funding Mortgage
Loan Asset-Backed Certificates, Series [ ]". Funds in the Collection Account
shall be held in trust for the Certificateholders for the uses and purposes set
forth in this Agreement.
Compensating Interest: With respect to any Mortgage Loan, an amount
equal to the amount set forth in Section 4.02 hereof, to be applied to the
interest portion of a Prepayment Interest Shortfall on such Mortgage Loan
pursuant to Section 4.02 hereof.
Corporate Trust Office: The designated office of the Trustee in the
State of New York where at any particular time its corporate trust business with
respect to this Agreement shall be administered, which office at the date of the
execution of this Agreement is located at [ADDRESS].
Corresponding Classes: With respect to Subsidiary REMIC Interest I, the
Group I Certificates. With respect to Subsidiary REMIC Interest II, the Group II
Certificates.
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Current Interest: Any of the Class IA-1 Current Interest, the Class
IA-2 Current Interest, the Class IA-3 Current Interest, the Class IA-4 Current
Interest, the Class IA-5 Current Interest, the Class IA-6 Current Interest, the
Class IIA-1 Current Interest, the Class IM-1 Current Interest, the Class IIM-1
Current Interest, the Class IM-2 Current Interest, the Class IIM-2 Current
Interest, the Class IB Current Interest or the Class IIB Current Interest.
Custodian: The custodian for the Mortgage Files appointed by the
Trustee. The initial Custodian shall be Bank One Trust Company, N.A.
Cut-off Date: [DATE].
Cut-off Date Principal Balance: The unpaid principal balance thereof as
of the close of business on the calendar day immediately preceding the Cut-off
Date after application of all payments of principal due on or prior to the
Cut-off Date, whether or not received, and all Principal Prepayments received
prior to the Cut-off Date, but without giving effect to any installments of
principal received in respect of Due Dates on and after the Cut-off Date.
Definitive Certificates: As defined in Section 5.06.
Deleted Mortgage Loan: A Mortgage Loan replaced or to be replaced by a
Replacement Mortgage Loan.
Delinquent: A Mortgage Loan is "delinquent" if any payment due thereon
is not made pursuant to the terms of such Mortgage Loan by the close of business
on the day such payment is scheduled to be due. A Mortgage Loan is "30 days
delinquent" if such payment has not been received by the close of business on
the corresponding day of the month immediately succeeding the month in which
such payment was due, or, if there is no such corresponding day (e.g., as when a
30-day month follows a 31-day month in which a payment was due on the 31st day
of such month), then on the last day of such immediately succeeding month.
Similarly for "60 days delinquent," "90 days delinquent" and so on.
Denomination: With respect to each Certificate, the amount set forth on
the face thereof as the "Initial Principal Balance of this Certificate".
Depositor: Chase Funding, Inc., a New York corporation, or its
successor in interest.
Depository: The initial Depository shall be The Depository Trust
Company ("DTC"), the nominee of which is Cede & Co., or any other organization
registered as a "clearing agency" pursuant to Section 17A of the Securities
Exchange Act of 1934, as amended. The Depository shall initially be the
registered Holder of the Book-Entry Certificates. The Depository shall at all
times be a "clearing corporation" as defined in Section 8-102(3) of the Uniform
Commercial Code of the State of New York.
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<PAGE>
Depository Agreement: With respect to Classes of Book-Entry
Certificates, the agreement among the Depositor, the Trustee and the initial
Depository.
Depository Participant: A broker, dealer, bank or other financial
institution or other Person for whom from time to time a Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
Determination Date: With respect to any Distribution Date, the 15th day
of the month of such Distribution Date or, if such 15th day is not a Business
Day, the immediately preceding Business Day.
Distribution Account: The separate Eligible Account created and
maintained by the Master Servicer pursuant to Section 3.05 in the name of the
Trustee for the benefit of the Certificateholders and designated "[Citibank,
N.A.], as trustee, in trust for registered holders of Chase Funding Mortgage
Loan Asset-Backed Certificates, Series [ ]". Funds in the Distribution Account
shall be held in trust for the Certificateholders for the uses and purposes set
forth in this Agreement.
Distribution Date: The 25th day of each calendar month after the
initial issuance of the Certificates, or if such 25th day is not a Business Day,
the next succeeding Business Day, commencing in [DATE].
Due Date: With respect to any Distribution Date and any Mortgage Loan,
the day during the related Due Period on which a Scheduled Payment is due.
Due Period: With respect to any Distribution Date, the period beginning
on the second day of the calendar month preceding the calendar month in which
such Distribution Date occurs (or, in the case of the first Distribution Date,
beginning on the Cut-off Date) and ending on the first day of the month in which
such Distribution Date occurs.
Eligible Account: An account that is (i) maintained with a depository
institution the long-term unsecured debt obligations of which are rated by each
Rating Agency in one of its two highest rating categories, or (ii) maintained
with the corporate trust department of a bank which has a rating of at least
Baa3 or P-3 by Moody's, or (iii) an account or accounts the deposits in which
are fully insured by the FDIC, or (iv) an account or accounts, acceptable to
each Rating Agency without reduction or withdrawal of the rating of any Class of
Certificates, as evidenced in writing in a depository institution in which such
accounts are insured by the FDIC (to the limit established by the FDIC), the
uninsured deposits in which accounts are otherwise secured such that, as
evidenced by an Opinion of Counsel delivered to and acceptable to the Trustee
and each Rating Agency, the Certificateholders have a claim with respect to the
funds in such account and a perfected first security interest against any
collateral (which shall be limited to Permitted Investments) securing such funds
that is superior to claims of any other depositors or creditors of
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<PAGE>
the depository institution with which such account is maintained, or (v)
otherwise acceptable to each Rating Agency, as evidenced by a letter from each
Rating Agency.
ERISA: The Employee Retirement Income Security Act of 1974, as amended.
ERISA Restricted Certificate: Each of the Class IM-1, Class IM-2, Class
IB, Class IIM-1, Class IIM-2, Class IIB and Class R Certificates.
Event of Default: As defined in Section 7.01 hereof.
Excess Proceeds: With respect to any Liquidated Loan, any Liquidation
Proceeds that are in excess of the sum of (i) the unpaid principal balance of
such Liquidated Loan as of the date of such liquidation plus (ii) interest at
the Mortgage Rate from the Due Date as to which interest was last paid or
advanced to Certificateholders (and not reimbursed to the Subservicer) up to the
Due Date in the month in which such Liquidation Proceeds are required to be
distributed on the unpaid principal balance of such Liquidated Loan outstanding
during each Due Period as to which such interest was not paid or advanced.
FDIC: The Federal Deposit Insurance Corporation, or any successor
thereto.
FHLMC: Freddie Mac, a corporate instrumentality of the United States
created and existing under Title III of the Emergency Home Finance Act of 1970,
as amended, or any successor thereto.
FNMA: Fannie Mae, a federally chartered and privately owned corporation
organized and existing under the Federal National Mortgage Association Charter
Act, or any successor thereto.
Gross Margin: The percentage set forth in the related Mortgage Note for
each of the Mortgage Loans in Loan Group II which is to be added to the
applicable index for use in determining the Mortgage Rate on each Adjustment
Date, and which is set forth in the Mortgage Loan Schedule for each of the Group
II Mortgage Loans.
Group I Certificate Principal Balance: For any date of determination,
the sum of the Class IA-1 Certificate Principal Balance, the Class IA-2
Certificate Principal Balance, the Class IA-3 Certificate Principal Balance, the
Class IA-4 Certificate Principal Balance, the Class IA-5 Certificate Principal
Balance, the Class IA-6 Certificate Principal Balance, the Class IM-1
Certificate Principal Balance, the Class IM-2 Certificate Principal Balance and
the Class IB Certificate Principal Balance, in each case for such date of
determination.
Group I Certificates: Any of the Class IA-1, Class IA-2, Class IA-3,
Class IA-4, Class IA-5, Class IA-6, Class IM-1, Class IM-2 or Class IB
Certificates.
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Group I Class A Certificate Principal Balance: For any date of
determination, the sum of the Class IA-1 Certificate Principal Balance, the
Class IA-2 Certificate Principal Balance, the Class IA-3 Certificate Principal
Balance, the Class IA-4 Certificate Principal Balance, the Class IA-5
Certificate Principal Balance and the Class IA-6 Certificate Principal Balance,
in each case for such date of determination.
Group I Class A Certificates: Any of the Class IA-1, Class IA-2, Class
IA-3, Class IA-4, Class IA-5 Certificates or Class IA-6 Certificates.
Group I Class A Principal Distribution Amount: With respect to any
Distribution Date (i) prior to the Group I Stepdown Date or any Distribution
Date on which a Group I Trigger Event exists, 100% of the Group I Principal
Distribution Amount for such Distribution Date and (ii) on or after the Group I
Stepdown Date where a Group I Trigger Event does not exist, the excess of (A)
the Group I Class A Certificate Principal Balance immediately prior to such
Distribution Date over (B) the lesser of (I) [ ]% of the Stated Principal
Balance of the Group I Mortgage Loans as of the end of the immediately preceding
Due Period and (II) the excess of the Stated Principal Balance of the Group I
Mortgage Loans as of the end of the immediately preceding Due Period over $[ ];
provided, however, that in no event will the Group I Class A Principal
Distribution Amount with respect to any Distribution Date exceed the Group I
Class A Certificate Principal Balance.
Group I Class B Principal Distribution Amount: With respect to any
Distribution Date on or after the Group I Stepdown Date and as long as a Group I
Trigger Event does not exist, the excess of (i) the sum of (A) the Group I Class
A Certificate Principal Balance (after taking into account distribution of the
Group I Class A Principal Distribution Amount on such Distribution Date), (B)
the Class IM-1 Certificate Principal Balance (after taking into account
distribution of the Group I Class IM-1 Distribution Amount on such Distribution
Date), (C) the Class IM-2 Certificate Principal Balance (after taking into
account distribution of the Group I Class IM-2 Principal Distribution Amount for
such Distribution Date), and (D) the Class IB Certificate Principal Balance
immediately prior to such Distribution Date over (ii) the lesser of (A) [ ]% of
the Stated Principal Balance of the Group I Mortgage Loans as of the end of the
preceding Due Period and (B) the excess of the Stated Principal Balances of the
Group I Mortgage Loans as of the end of the preceding Due Period over $[ ],
provided, however, that after the Group I Class A Certificate Principal Balance,
the Class IM-1 Certificate Principal Balance and the Class IM-2 Certificate
Principal Balance has been reduced to zero, the Group I Class B Principal
Distribution Amount for such Distribution Date will equal 100% of the Group I
Principal Distribution Amount for such Distribution Date remaining after any
distributions on such Class A, Class M-1 and Class M-2 Certificates and
provided, further, however, that in no event will the Group I Class B Principal
Distribution Amount with respect to any Distribution Date exceed the Class IB
Certificate Principal Balance.
Group I Class IM-1 Principal Distribution Amount: With respect to any
Distribution Date on or after the Group I Stepdown Date, 100% of the Group I
Principal
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Distribution Amount for such Distribution Date if the Group I Class A
Certificate Principal Balance has been reduced to zero and a Group I Trigger
Event exists, or as long as a Group I Trigger Event does not exist, the excess
of (i) the sum of (A) the Group I Class A Certificate Principal Balance (after
taking into account distributions of the Group I Class A Principal Distribution
Amount on such Distribution Date) and (B) the Class IM-1 Certificate Principal
Balance immediately prior to such Distribution Date over (ii) the lesser of (A)
[ ]% of the Stated Principal Balances of the Group I Mortgage Loans as of the
end of the preceding Due Period and (B) the excess of the Stated Principal
Balances for the Group I Mortgage Loans as of the end of the preceding Due
Period over $[ ]. Notwithstanding the foregoing, (i) on any Distribution Date
prior to the Stepdown Date on which the Certificate Principal Balance of each
Class of Group I Class A Certificates has been reduced to zero, the Group I
Class IM-1 Principal Distribution Amount will equal the lesser of (A) the
outstanding Certificate Principal Balance of the Class IM-1 Certificates and (B)
100% of the Group I Principal Distribution Amount remaining after any
distributions on such Class A Certificates and (ii) in no event will the Group I
Class IM-I Principal Distribution Amount with respect to any Distribution Date
exceed the Class IM-1 Certificate Principal Balance.
Group I Class IM-2 Principal Distribution Amount: With respect to any
Distribution Date on or after the Group I Stepdown Date, 100% of the Group I
Principal Distribution Amount for such Distribution Date if the Group I Class A
Certificate Principal Balance and the Class IM-1 Certificate Principal Balance
have been reduced to zero and a Group I Trigger Event exists, or as long as a
Group I Trigger Event does not exist, the excess of (i) the sum of (A) the Group
I Class A Certificate Principal Balance (after taking into account distributions
of the Group I Class A Principal Distribution Amount on such Distribution Date),
(B) the Class IM-1 Certificate Principal Balance (after taking into account
distributions of the Group I Class IM-1 Principal Distribution Amount on such
Distribution Date) and (C) the Class IM-2 Certificate Principal Balance
immediately prior to such Distribution Date over (ii) the lesser of (A) [ ]% of
the Stated Principal Balances of the Group I Mortgage Loans as of the end of the
preceding Due Period and (B) the excess of the Stated Principal Balances for the
Group I Mortgage Loans as of the end of the preceding Due Period over $[ ].
Notwithstanding the foregoing, (i) on any Distribution Date prior to the
Stepdown Date on which the Certificate Principal Balance of each Class of Group
I Class A Certificates and the Class IM-1 Certificates has been reduced to
zero, the Group I Class IM-2 Principal Distribution Amount will equal the lesser
of (A) the outstanding Certificate Principal Balance of the Class IM-2
Certificates and (B) 100% of the Group I Principal Distribution Amount remaining
after any distributions on such Class A and Class M-1 Certificates and (ii) in
no event will the Group I Class IM-2 Principal Distribution Amount with respect
to any Distribution Date exceed the Class IM-2 Certificate Principal Balance.
Group I Extra Principal Distribution Amount: With respect to any
Distribution Date, an amount equal to (i) prior to the Group I Stepdown Date,
the excess of (A) the sum of (I) the Group I Certificate Principal Balance
(reduced by the Group I Principal Funds with respect to such Distribution Date)
and (II) $[ ] over (B) the Stated Principal Balance of the Group I
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Mortgage Loans as of the end of the preceding Due Period and (ii) on and after
the Group I Stepdown Date, (A) the sum of (I) the Group I Certificate Principal
Balance and (II) the greater of (x) [ ]% of the Stated Principal Balance of the
Group I Mortgage Loans as of the end of the preceding Due Period and (y) $[ ]
less (B) the Stated Principal Balance of the Group I Mortgage Loans as of the
end of the preceding Due Period, provided, however, that if on any Distribution
Date a Group I Trigger Event is in effect, the Group I Extra Principal
Distribution Amount will not be reduced to the percentage of the then current
Stated Principal Balance of the Group I Mortgage Loans (and will remain fixed at
such percentage of the then current Stated Principal Balance of the Group I
Mortgage Loans as of the Due Date immediately prior to the occurrence of the
Group I Trigger Event) until the next Distribution Date on which a Group I
Trigger Event is not in effect. Notwithstanding the foregoing, the Group I Extra
Principal Distribution Amount will equal zero with respect to each Distribution
Date up to and including the Distribution Date in [DATE].
Group I Interest Funds: With respect to Group I Mortgage Loans and any
Servicer Advance Date, the sum, without duplication, of (i) all scheduled
interest due during the related Due Period and received before the related
Servicer Remittance Date or advanced on or before the related Servicer
Remittance Date less the sum of (a) the Servicing Fee with respect to the Group
I Mortgage Loans and (b) the Master Servicer Fee with respect to the Group I
Mortgage Loans, (ii) all Advances relating to interest with respect to the Group
I Mortgage Loans, (iii) all Compensating Interest with respect to the Group I
Mortgage Loans, (iv) Liquidation Proceeds with respect to the Group I Mortgage
Loans (to the extent such Liquidation Proceeds relate to interest) and (v)
prepayment penalties and late payment fees received with respect to the Group I
Mortgage Loans during the related Prepayment Period, and less all
Non-Recoverable Advances with respect to the Group I Mortgage Loans relating to
interest reimbursed during the related Due Period.
Group I Mortgage Loans: The pool of Mortgage Loans identified in the
Mortgage Loan Schedule as having a Mortgage Rate which is fixed for the life of
the related Mortgage, including any Mortgage Loans delivered in replacement
thereof.
Group I Net Rate: With respect to any Distribution Date, the weighted
average Net Mortgage Rate for Mortgage Loans in Loan Group I (calculated based
upon the Stated Principal Balance of such Mortgage Loans as of the preceding
Distribution Date) as of the related Due Date.
Group I Principal Distribution Amount: With respect to each
Distribution Date, the sum of (i) the Group I Principal Funds for such
Distribution Date and (ii) any Group I Extra Principal Distribution Amount for
such Distribution Date.
Group I Principal Funds: With respect to the Group I Mortgage Loans and
any Distribution Date, the sum, without duplication, of (i) the scheduled
principal due during the related Due Period and received before the related
Servicer Remittance Date or Advanced on or
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before the related Servicer Remittance Date, (ii) prepayments collected in the
related Prepayment Period, (iii) the Stated Principal Balance of each Mortgage
Loan that was repurchased by the Depositor during the related Prepayment Period,
(iv) the amount, if any, by which the aggregate unpaid principal balance of any
Replacement Mortgage Loan is less than the aggregate unpaid principal balance of
the related Deleted Mortgage Loans delivered by the Depositor in connection with
a substitution of a Mortgage Loan pursuant to Section 2.03(c), and (v) all
Liquidation Proceeds collected during the related Due Period (to the extent such
Liquidation Proceeds related to principal) less all Non-Recoverable Advances
relating to principal with respect to the Group I Mortgage Loans and all
Non-Recoverable Advances reimbursed during the related Due Period.
Group I Required Percentage: As of any Distribution Date following a
Group I Stepdown Date, the quotient of (i) the excess of (A) the Stated
Principal Balances of the Group I Mortgage Loans as of such Distribution Date
over (B) the Certificate Principal Balance of the most senior Class of Group I
Certificates outstanding, prior to giving effect to distributions to be made on
such Distribution Date and (ii) the Stated Principal Balance of the Group I
Mortgage Loans as of such Distribution Date.
Group I Stepdown Date: The later to occur of (i) the Distribution Date
in [DATE] or (ii) the first Distribution Date on which the Group I Class A
Certificate Principal Balance (reduced by the Group I Principal Funds with
respect to such Distribution Date) is less than or equal to [ ]% of the Stated
Principal Balances of the Group I Mortgage Loans.
Group I Subordinated Certificates: The Class IM-1, Class IM-2 and Class
IB Certificates.
Group I Trigger Event: With respect to the Group I Certificates after a
Group I Stepdown Date, the Distribution Date on which the product of (A) two
(2.0) and (B) the quotient of (i) the aggregate Stated Principal Balance of all
Group I Mortgage Loans which are 60 or more days Delinquent (including, for the
purposes of this calculation, Group I Mortgage Loans in foreclosure and REO
Properties) and (ii) the Stated Principal Balance of the Group I Mortgage Loans
as of the preceding Servicer Advance Date, equals or exceeds the Group I
Required Percentage.
Group II Available Funds Cap: As of any Distribution Date with respect
to the Group II Certificates, a per annum rate equal to 12 times the quotient of
(i) the total scheduled interest on the Mortgage Loans in Loan Group II based on
the Net Mortgage Rates on the related Due Date and (ii) the Group II Certificate
Principal Balance as of the first day of the applicable Accrual Period.
Group II Certificates: Any of the Class IIA-1, Class IIM-1, Class IIM-2
and Class IIB Certificates.
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Group II Certificate Principal Balance: The sum of the Class IIA-1
Certificate Principal Balance, Class IIM-1 Certificate Principal Balance, Class
IIM-2 Certificate Principal Balance and the Class IIB Certificate Principal
Balance.
Group II Class A Certificate Principal Balance: The Class IIA-1
Certificate Principal Balance.
Group II Class A Certificates: The Class IIA-1 Certificates.
Group II Class A Principal Distribution Amount: With respect to any
Distribution Date (i) prior to the Group II Stepdown Date or any Distribution
Date on which a Group II Trigger Event exists, 100% of the Group II Principal
Distribution Amount for such Distribution Date and (ii) on or after the Group II
Stepdown Date where a Group II Trigger Event does not exist, the excess of (A)
the Group II Class A Certificate Principal Balance immediately prior to such
Distribution Date over (B) the lesser of (I) [ ]% (or [ ]%, if a Group II Stepup
Trigger Event has occurred and is continuing) of the Stated Principal Balance of
the Group II Mortgage Loans as of the end of the preceding Due Period and (II)
the excess of the Stated Principal Balance of the Group II Mortgage Loans as of
the end of the preceding Due Period over $[ ]; provided, however, that in no
event will the Group II Class A Principal Distribution Amount with respect to
any Distribution Date exceed the Group II Class A Certificate Principal Balance.
Group II Class B Principal Distribution Amount: With respect to any
Distribution Date on or after the Group II Stepdown Date and as long as a Group
II Trigger Event does not exist, the excess of (i) the sum of (A) the Group II
Class A Certificate Principal Balance (after taking into account distribution of
the Group II Class A Principal Distribution Amount on such Distribution Date),
(B) the Class IIM-1 Certificate Principal Balance after taking into account
distribution of the Group II Class IIM-1 Principal Distribution Amount on such
Distribution Date), (C) the Class IIM-2 Certificate Principal Balance (after
taking into account distribution of the Group II Class IIM-2 Principal
Distribution Amount for such Distribution Date), and (D) the Class IIB
Certificate Principal Balance immediately prior to such Distribution Date over
(ii) the lesser of (A) [ ]% (or [ ]% if a Group II Stepup Trigger Event has
occurred and is continuing) of the Stated Principal Balance of the Group II
Mortgage Loans as of the end of the preceding Due Period and (B) the excess of
the Stated Principal Balances of the Group II Mortgage Loans as of the end of
the preceding Due Period over $[ ]; provided, however, that after the Group II
Class A Certificate Principal Balance, the Class IIM-1 Certificate Principal
Balance and the Class IIM-2 Certificate Principal Balance has been reduced to
zero, the Group II Class B Principal Distribution Amount for such Distribution
Date will equal 100% of the Group II Principal Distribution Amount for such
Distribution Date remaining after any distributions on such Class A, Class M-1
and Class M-2 Certificates and provided, further, however, that in no event will
the Group II Class B Principal Distribution Amount with respect to any
Distribution Date exceed the Class IIB Certificate Principal Balance.
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<PAGE>
Group II Class IIM-1 Principal Distribution Amount: With respect to any
Distribution Date on or after the Group II Stepdown Date, 100% of the Group II
Principal Distribution Amount for such Distribution Date if the Group II Class A
Certificate Principal Balance has been reduced to zero and a Group II Trigger
Event exists, or as long as a Group II Trigger Event does not exist, the excess
of (i) the sum of (A) the Group II Class A Certificate Principal Balance (after
taking into account distributions of the Group II Class A Principal Distribution
Amount on such Distribution Date) and (B) the Class IIM-1 Certificate Principal
Balance immediately prior to such Distribution Date over (ii) the lesser of (A)
[ ]%, (or [ ]% if a Group II Stepup Trigger Event has occurred and is
continuing) of the Stated Principal Balances of the Group II Mortgage Loans as
of the end of the preceding Due Period and (B) the excess of the Stated
Principal Balances for the Group II Mortgage Loans as of the end of the
preceding Due Period over $[ ]. Notwithstanding the foregoing, (i) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of Group II Class A Certificates has been reduced to zero,
the Group II Class IIM-1 Principal Distribution Amount will equal the lesser of
(A) the outstanding Certificate Principal Balance of the Class IIM-1
Certificates and (B) 100% of the Group II Principal Distribution Amount
remaining after any distributions on such Class A Certificates and (ii) in no
event will the Group II Class IIM-1 Principal Distribution Amount with respect
to any Distribution Date exceed the Class IIM-1 Certificate Principal Balance.
Group II Class IIM-2 Principal Distribution Amount: With respect to any
Distribution Date on or after the Group II Stepdown Date, 100% of the Group II
Principal Distribution Amount for such Distribution Date if the Group II Class A
Certificate Principal Balance and the Class IIM-1 Certificate Principal Balance
have been reduced to zero and a Group II Trigger Event exists, or as long as a
Group II Trigger Event does not exist, the excess of (i) the sum of (A) the
Group II Class A Certificate Principal Balance (after taking into account
distributions of the Group II Class A Principal Distribution Amount on such
Distribution Date), (B) the Class IIM-1 Certificate Principal Balance (after
taking into account distributions of the Group II Class IIM-1 Principal
Distribution Amount on such Distribution Date) and (C) the Class IIM-2
Certificate Principal Balance immediately prior to such Distribution Date over
(ii) the lesser of (A) [ ]% (or [ ]% if a Group II Stepup Trigger Event has
occurred and is continuing) of the Stated Principal Balances of the Group II
Mortgage Loans as of the end of the preceding Due Period and (B) the excess of
the Stated Principal Balances of the Group II Mortgage Loans as of the end of
the preceding Due Period over $[ ]. Notwithstanding the foregoing, (i) on any
Distribution Date prior to the Stepdown Date on which the Certificate Principal
Balance of each Class of Group II Class A Certificates and the Class IIM-1
Certificates has been reduced to zero, the Group II Class IIM-2 Principal
Distribution Amount will equal the lesser of (A) the outstanding Certificate
Principal Balance of the Class IIM-2 Certificates and (B) 100% of the Group II
Principal Distribution Amount remaining after any distributions on such Class A
and Class M-1 Certificates and (ii) in no event will the Group II Class IIM-2
Principal Distribution Amount with respect to any Distribution Date exceed the
Class IIM-2 Certificate Principal Balance.
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Group II Extra Principal Distribution Amount: With respect to any
Distribution Date, an amount equal to (i) prior to the Group II Stepdown Date,
the excess of (A) the sum of (I) the Group II Certificate Principal Balance
(reduced by the Group II Principal Funds with respect to such Distribution Date)
and (II) $[ ](or $[ ], if a Group II Stepup Trigger Event has occurred and is
continuing) over (B) the Stated Principal Balance of the Group II Mortgage Loans
as of the end of the preceding Due Period and (ii) on and after the Group II
Stepdown Date, (A) the sum of (I) the Group II Certificate Principal Balance and
(II) the greater of (x) [ ]% of the Stated Principal Balance of the Group II
Mortgage Loans as of the end of the preceding Due Period and (y) $[ ]less (B)
the Stated Principal Balance of the Group II Mortgage Loans as of the end of the
preceding Due Period; provided, however, that if on any Distribution Date, a
Group II Trigger Event is in effect, the Group II Extra Principal Distribution
Amount will not be reduced to the percentage of the then current Stated
Principal Balance of the Group II Mortgage Loans (and will remain fixed at such
percentage of the then current Stated Principal Balance of the Group II Mortgage
Loans as of the Due Date immediately prior to the occurrence of the Group II
Trigger Event) until the next Distribution Date on which a Group II Trigger
Event is not in effect. Notwithstanding the foregoing, the Group II Extra
Principal Distribution Amount will equal zero with respect to each Distribution
Date up to and including the Distribution Date in [DATE].
Group II Interest Funds: With respect to Group II Mortgage Loans and
any Servicer Advance Date, the sum, without duplication, of (i) all scheduled
interest due during the related Due Period and received before the related
Servicer Remittance Date or advanced on or before the related Servicer
Remittance Date less the sum of (a) the Servicing Fee with respect to the Group
II Mortgage Loans and (b) the Master Servicer Fee with respect to the Group II
Mortgage Loans, (ii) all Advances relating to interest with respect to the Group
II Mortgage Loans, (iii) all Compensating Interest with respect to the Group II
Mortgage Loans, (iv) Liquidation Proceeds with respect to the Group II Mortgage
Loans (to the extent such Liquidation Proceeds relate to interest) and (v)
prepayment penalties and late payment fees received with respect to the Group II
Mortgage Loans during the related Prepayment Period, and less all
Non-Recoverable Advances with respect to the Group II Mortgage Loans relating to
interest reimbursed during the related Due Period.
Group II Mortgage Loans: The pool of Mortgage Loans identified in the
Mortgage Loan Schedule as having a Mortgage Rate which is adjustable, including
any Mortgage Loans delivered in replacement thereof.
Group II Principal Distribution Amount: With respect to each
Distribution Date, the sum of (i) the Group II Principal Funds for such
Distribution Date and (ii) any Group II Extra Principal Distribution Amount for
such Distribution Date.
Group II Principal Funds: With respect to the Group II Mortgage Loans
and any Distribution Date, the sum, without duplication, of (i) the scheduled
principal due during the related Due Period and received before the related
Servicer Remittance Date or advanced on or
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<PAGE>
before the related Servicer Remittance Date, (ii) prepayments collected in the
related Prepayment Period, (iii) the Stated Principal Balance of each Mortgage
Loan that was repurchased by the Depositor during the related Prepayment Period,
(iv) the amount, if any, by which the aggregate unpaid principal balance of any
Replacement Mortgage Loan is less than the aggregate unpaid principal of the
related Deleted Mortgage Loans delivered by the Depositor in connection with a
substitution of a Mortgage Loan pursuant to Section 2.03(c) and (v) all
Liquidation Proceeds collected during the related Due Period (to the extent such
Liquidation Proceeds related to principal) less all Non-Recoverable Advances
relating to principal with respect to the Group II Mortgage Loans and all
Non-Recoverable Advances reimbursed during the related Due Period.
Group II Required Percentage: As of any Distribution Date following a
Group II Stepdown Date, the quotient of (i) the excess of (A) the Stated
Principal Balances of the Group II Mortgage Loans as of such Distribution Date,
over (B) the Certificate Principal Balance of the most senior Class of Group II
Certificates outstanding, prior to giving effect to distributions to be made on
such Distribution Date and (ii) the Stated Principal Balance of the Group II
Mortgage Loans as of such Distribution Date.
Group II Stepdown Date: The later to occur of (i) the Distribution Date
in [DATE] or (ii) the first Distribution Date on which (A) the Group II Class A
Certificate Principal Balance (reduced by the Group II Principal Funds with
respect to such Distribution Date) is less than or equal to (B) [ ]% (or [ ]%,
if a Group II Stepup Trigger Event has occurred and continuing) of the Stated
Principal Balances of the Group II Mortgage Loans as of such Distribution Date.
Group II Stepup Trigger Event: Any Distribution Date on which either of
the following circumstances exists:
(A) cumulative Realized Losses for the Group II Mortgage Loans as of
such Distribution Date as a percentage of the aggregate Stated
Principal Balance of the Group II Mortgage Loans as of the Cut-off Date
equals or exceeds the following percentages:
Distribution Date Percentage
----------------- ----------
[MONTH/YR] - [MONTH/YR].................................. [ ]%
[MONTH/YR] - [MONTH/YR].................................. [ ]%
[MONTH/YR] - [MONTH/YR].................................. [ ]%
[MONTH/YR] - [MONTH/YR].................................. [ ]%
[MONTH/YR] and thereafter................................ [ ]%
or (B) the Three Month Rolling Average of Group II Mortgage Loans that
are 60 days or more Delinquent as of such Distribution Date as a
percentage of the aggregate Stated
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Principal Balance of the Group II Mortgage Loans as of such
Distribution Date equals or exceeds the following percentages:
Distribution Date Percentage
----------------- ----------
[MONTH/YEAR] - [MONTH/YEAR].............................. [ ]%
[MONTH/YEAR] - [MONTH/YEAR].............................. [ ]%
[MONTH/YEAR] - [MONTH/YEAR].............................. [ ]%
[MONTH/YEAR] - [MONTH/YEAR].............................. [ ]%
[MONTN/YEAR] and thereafter.............................. [ ]%
Group II Subordinated Certificates: The Class IIM-1, Class IIM-2 and
Class IIB Certificates.
Group II Trigger Event: With respect to the Group II Certificates after
a Group II Stepdown Date, the Distribution Date on which the product of (A) two
and one-half (2.5) times and (B) the quotient of (i) the aggregate Stated
Principal Balance of all Group II Mortgage Loans which are 60 or more days
Delinquent (including, for the purposes of this calculation, Group II Mortgage
Loans in foreclosure and REO Properties) and (ii) the Stated Principal Balance
of the Group II Mortgage Loans as of the preceding Servicer Advance Date, equals
or exceeds the Group II Required Percentage.
Group II Weighted Maximum Rate Cap: As of any Distribution Date, a rate
equal to (i) the weighted average of the Maximum Mortgage Rates on the Group II
Mortgage Loans (calculated based upon the Stated Principal Balance of such
Mortgage Loans as of the preceding Distribution Date) on such Distribution Date
minus (ii) the sum of (a) the Servicing Fee Rate and (b) the Master Servicer Fee
Rate.
Initial Adjustment Date: As to any Mortgage Loan in Loan Group II, the
first Adjustment Date following the origination of such Mortgage Loan.
Initial Certificate Principal Balance: With respect to any Certificate,
the Certificate Principal Balance of such Certificate or any predecessor
Certificate on the Closing Date as set forth in Section 5.01 hereof.
Initial Mortgage Rate: As to each Mortgage Loan, the Mortgage Rate in
effect prior to the Initial Adjustment Date.
Insurance Policy: With respect to any Mortgage Loan included in the
Trust Fund, any insurance policy, including all riders and endorsements thereto
in effect with respect to such Mortgage Loan, including any replacement policy
or policies for any Insurance Policies.
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Insurance Proceeds: Proceeds paid in respect of the Mortgage Loans
pursuant to any Insurance Policy or any other insurance policy covering a
Mortgage Loan, to the extent such proceeds are payable to the mortgagee under
the Mortgage, the Subservicer or the trustee under the deed of trust and are not
applied to the restoration of the related Mortgaged Property or released to the
Mortgagor in accordance with the procedures that the Subservicer would follow in
servicing mortgage loans held for its own account, in each case other than any
amount included in such Insurance Proceeds in respect of Insured Expenses.
Insured Expenses: Expenses covered by an Insurance Policy or any other
insurance policy with respect to the Mortgage Loans.
Interest Carryforward Amount: Any of the Class IA-1 Interest
Carryforward Amount, the Class IA-2 Interest Carryforward Amount, the Class IA-3
Interest Carryforward Amount, the Class IA-4 Interest Carryforward Amount, the
Class IA-5 Interest Carryforward Amount, the Class IA-6 Interest Carryforward
Amount, the Class IM-1 Interest Carryforward Amount, the Class IM-2 Interest
Carryforward Amount, the Class IB Interest Carryforward Amount, the Class IIM-1
Interest Carryforward Amount, the Class IIM-2 Interest Carryforward Amount and
the Class II-B Interest Carryforward Amount, as the case may be.
Interest Carryover Amount: Any of the Class IIA-1 Interest Carryover
Amount, the Class IIM-1 Interest Carryover Amount, the Class IIM-2 Interest
Carryover Amount or Class IIB Interest Carryover Amount, as the case may be.
Interest Determination Date: With respect to the Group II Certificates
and the Class IA-1 Certificates, (i) for any Accrual Period other than the first
Accrual Period, the second LIBOR Business Day preceding the commencement of such
Accrual Period and (ii) for the first Accrual Period, [DATE].
Latest Possible Maturity Date: The Distribution Date following the
third anniversary of the scheduled maturity date of the Mortgage Loan in the
Trust Fund having the latest scheduled maturity date as of the Cut-off Date.
LIBOR Business Day: Any day on which banks in the City of London,
England and New York City, U.S.A. are open and conducting transactions in
foreign currency and exchange.
Liquidated Loan: With respect to any Distribution Date, a defaulted
Mortgage Loan that has been liquidated through deed-in-lieu of foreclosure,
foreclosure sale, trustee's sale or other realization as provided by applicable
law governing the real property subject to the related Mortgage and any security
agreements and as to which the Subservicer has certified (in accordance with
Section 3.12) in the related Prepayment Period that it has received all amounts
it expects to receive in connection with such liquidation.
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<PAGE>
Liquidation Proceeds: Amounts, including Insurance Proceeds, received
in connection with the partial or complete liquidation of Mortgage Loans,
whether through trustee's sale, foreclosure sale, sale by the Master Servicer
pursuant to Section 3.09 or otherwise or amounts received in connection with any
condemnation or partial release of a Mortgaged Property and any other proceeds
received in connection with an REO Property, less the sum of related
unreimbursed Advances, Servicing Fees, Servicing Advances and any other expenses
related to such Mortgage Loan.
Loan Group: Either of the Group I Mortgage Loans or the Group II
Mortgage Loans.
Loan Group I: The Group I Mortgage Loans.
Loan Group II: The Group II Mortgage Loans.
Loan-to-Value Ratio: The fraction, expressed as a percentage, the
numerator of which is the original principal balance of the related Mortgage
Loan and the denominator of which is the lesser of (X) the Appraised Value of
the related Mortgaged Property and (Y) the sales price of the related Mortgaged
Property at the time of origination.
Master REMIC: As described in the Preliminary Statement.
Master Servicer: Chase Manhattan Mortgage Corporation, a New Jersey
corporation, or its successor in interest.
Master Servicer Fee: With respect to any Mortgage Loan and any
Distribution Date, the fee payable to the Master Servicer pursuant to Section
6.06 equal to the product of (a) 1/12th of the Master Servicer Fee Rate and (b)
the Stated Principal Balance of such Mortgage Loan as of the immediately
preceding Distribution Date.
Master Servicer Fee Rate: A per annum rate equal to [ ]%.
Maximum Mortgage Rate: With respect to each Group II Mortgage Loan, the
maximum rate of interest set forth as such in the related Mortgage Note.
Minimum Mortgage Rate: With respect to each Group II Mortgage Loan, the
minimum rate of interest set forth as such in the related Mortgage Note.
Monthly Statement: The statement delivered to the Certificateholders
pursuant to Section 4.05.
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Mortgage: The mortgage, deed of trust or other instrument creating a
first lien on or first priority ownership interest in an estate in fee simple in
real property securing a Mortgage Note.
Mortgage File: The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents delivered
to the Trustee to be added to the Mortgage File pursuant to this Agreement.
Mortgage Loans: Such of the Group I Mortgage Loans and Group II
Mortgage Loans transferred and assigned to the Trustee pursuant to the
provisions hereof as from time to time are held as a part of the Trust Fund
(including any REO Property), the mortgage loans so held being identified in the
Mortgage Loan Schedule, notwithstanding foreclosure or other acquisition of
title of the related Mortgaged Property. Any mortgage loan that was intended by
the parties hereto to be transferred to the Trust Fund as indicated by such
Mortgage Loan Schedule which is in fact not so transferred for any reason shall
continue to be a Mortgage Loan hereunder until the Purchase Price with respect
thereto has been paid to the Trust Fund.
Mortgage Loan Schedule: The list of Mortgage Loans (as from time to
time amended by the Trustee to reflect the deletion of Deleted Mortgage Loans
and the addition of Replacement Mortgage Loans pursuant to the provisions of
this Agreement) transferred to the Trustee as part of the Trust Fund and from
time to time subject to this Agreement, attached hereto as Exhibit F, setting
forth the following information with respect to each Mortgage Loan:
(i) the loan number;
(ii) the Appraised Value;
(iii) the unpaid principal balance of the Mortgage Loan;
(iv) the Initial Mortgage Rate;
(v) the maturity date and the months remaining before
maturity date;
(vi) the original principal balance;
(vii) the Cut-off Date Principal Balance;
(viii) the first payment date of the Mortgage Loan;
(ix) the Scheduled Payment in effect as of the Cut-off Date;
(xi) the Loan-to-Value Ratio at origination;
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<PAGE>
(xii) a code indicating whether the residential dwelling at the
time of origination was represented to be owner-occupied;
(xiii) a code indicating the property type;
(xiv) with respect to each Group II Mortgage Loan;
(a) the frequency of each Adjustment Date;
(b) the next Adjustment Date;
(c) the Maximum Mortgage Rate;
(d) the Minimum Mortgage Rate;
(e) the Mortgage Rate as of the Cut-off Date;
(f) the related Periodic Rate Cap;
(g) the Gross Margin; and
(xv) location of the related Mortgaged Property.
Mortgage Note: The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan
and all amendments, modifications and attachments thereto.
Mortgage Pool: The aggregate of the Mortgage Loans identified in the
Mortgage Loan Schedule.
Mortgage Rate: The annual rate of interest borne by a Mortgage Note
from time to time.
Mortgaged Property: The underlying property securing a Mortgage Loan.
Mortgagor: The obligor on a Mortgage Note.
MR Interest: The sole class of "residual interest" in the Master REMIC.
Net Mortgage Rate: As to each Mortgage Loan, and at any time, the per
annum rate equal to the then current Mortgage Rate less the sum of (a) the
Servicing Fee Rate and (b) the Master Servicer Fee Rate.
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Non-Book-Entry Certificate: Any Certificate other than a Book-Entry
Certificate.
Non-Recoverable Advance: Any portion of an Advance previously made or
proposed to be made by the Subservicer that, in the good faith judgment of the
Subservicer, will not or, in the case of a current delinquency, would not, be
ultimately recoverable by the Subservicer from the related Mortgagor, related
Liquidation Proceeds or otherwise.
Non-Recoverable Servicing Advance: Any portion of a Servicing Advance
previously made or proposed to be made by the Subservicer that, in the good
faith judgment of the Subservicer, will not be ultimately recoverable by the
Subservicer from the related Mortgagor, related Liquidation Proceeds or
otherwise.
Non-Supported Interest Shortfall: As defined in Section 4.02.
Officer's Certificate: A certificate (i) signed by the Chairman of the
Board, the Vice Chairman of the Board, the President, a vice president (however
denominated), an Assistant Vice President, the Treasurer, the Secretary, or one
of the assistant treasurers or assistant secretaries of the Depositor, the
Master Servicer or the Subservicer (or any other officer customarily performing
functions similar to those performed by any of the above designated officers and
also to whom, with respect to a particular matter, such matter is referred
because of such officer's knowledge of and familiarity with a particular
subject) or (ii), if provided for in this Agreement, signed by a Servicing
Officer, as the case may be, and delivered to the Depositor, the Master Servicer
and the Trustee, as the case may be, as required by this Agreement.
One-Month LIBOR: With respect to any Accrual Period, the rate
determined by the Master Servicer on the related Interest Determination Date on
the basis of (a) the offered rates for one-month United States dollar deposits,
as such rates appear on Telerate page 3750, as of 11:00 a.m. (London time) on
such Interest Determination Date or (b) if such rate does not appear on Telerate
Page 3750 as of 11:00 a.m. (London time), the offered rates of the Reference
Banks for one-month United States dollar deposits, as such rates appear on the
Reuters Screen LIBO Page, as of 11:00 a.m. (London time) on such Interest
Determination Date. If One-Month LIBOR is determined pursuant to clause (b)
above, on each Interest Determination Date, One-Month LIBOR for the related
Accrual Period will be established by the Master Servicer as follows:
(i) If on such Interest Determination Date two or more Reference Banks
provide such offered quotations, One-Month LIBOR for the related
Accrual Period shall be the arithmetic mean of such offered
quotations (rounded upwards if necessary to the nearest whole
multiple of [ ]%).
(ii) If on such Interest Determination Date fewer than two Reference
Banks provide such offered quotations, One-Month LIBOR for the
related Accrual
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Period shall be the higher of (i) One-Month LIBOR as determined on
the previous Interest Determination Date and (ii) the Reserve
Interest Rate.
Opinion of Counsel: A written opinion of counsel, who may be counsel
for the Depositor, the Master Servicer or the Subservicer, reasonably acceptable
to each addressee of such opinion; provided, however, that with respect to
Section 6.04 or 10.01, or the interpretation or application of the REMIC
Provisions, such counsel must (i) in fact be independent of the Depositor, the
Master Servicer and the Subservicer, (ii) not have any direct financial interest
in the Depositor, the Master Servicer or the Subservicer or in any affiliate of
either, and (iii) not be connected with the Depositor, the Master Servicer or
the Subservicer as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
Optional Termination: The termination of either Loan Group hereunder
pursuant to the purchase of the Mortgage Loans pursuant to the last sentence of
Section 9.01 hereof.
Optional Termination Amounts: With respect to either Loan Group, the
Repurchase Price paid by the Master Servicer in connection with any repurchase
of all of the Mortgage Loans in such Loan Group pursuant to Section 9.01.
Optional Termination Date: With respect to either Loan Group, the
Distribution Date on which the aggregate Stated Principal Balance of the
Mortgage Loans in such Loan Group is equal to or less than 10% of the aggregate
Initial Certificate Principal Balance of the Certificates in such Loan Group.
Original Mortgage Loan: The mortgage loan refinanced in connection with
the origination of a Refinancing Mortgage Loan.
OTS: The Office of Thrift Supervision.
Outstanding: With respect to the Certificates as of any date of
determination, all Certificates theretofore executed and authenticated under
this Agreement except: (i) Certificates theretofore canceled by the Master
Servicer or delivered to the Master Servicer for cancellation; and (ii)
Certificates in exchange for which or in lieu of which other Certificates have
been executed by the Depositor and delivered by the Master Servicer pursuant to
this Agreement.
Outstanding Mortgage Loan: As of any Distribution Date, a Mortgage Loan
with a Stated Principal Balance greater than zero that was not the subject of a
Principal Prepayment in full, and that did not become a Liquidated Loan, prior
to the end of the related Prepayment Period.
Ownership Interest: As to any Certificate, any ownership interest in
such Certificate including any interest in such Certificate as the Holder
thereof and any other interest therein, whether direct or indirect, legal or
beneficial.
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Paying Agent: As defined in Section 5.11 hereof.
Percentage Interest: With respect to:
(i) any Class, the percentage interest in the undivided
beneficial ownership interest in the related Certificate Group
evidenced by such Class which shall be equal to the Class Certificate
Principal Balance of such Class divided by the Class Principal Balance
of all Classes in such Certificate Group; and
(ii) any Certificate, the Percentage Interest evidenced
thereby of the related Class shall equal the percentage obtained by
dividing the Denomination of such Certificate by the aggregate of the
Denominations of all Certificates of such Class.
Periodic Rate Cap: As to each Group II Mortgage Loan and the related
Mortgage Note, the provision therein that limits permissible increases and
decreases in the Mortgage Rate on any Adjustment Date.
Permitted Investments: At any time, any one or more of the following
obligations and securities:
(i) obligations of the United States or any agency thereof,
provided such obligations are backed by the full faith and credit of
the United States;
(ii) general obligations of or obligations guaranteed by any
state of the United States or the District of Columbia receiving the
highest long-term debt rating of each Rating Agency rating the
Certificates, or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each such Rating Agency as evidenced by a letter from
each Rating Agency;
(iii)commercial or finance company paper which is then
receiving the highest commercial or finance company paper rating of
each such Rating Agency, or such lower rating as will not result in the
downgrading or withdrawal of the ratings then assigned to the
Certificates by each such Rating Agency as evidenced by a letter from
each Rating Agency;
(iv) certificates of deposit, demand or time deposits, or
bankers' acceptances issued by any depository institution or trust
company incorporated under the laws of the United States or of any
state thereof and subject to supervision and examination by federal
and/or state banking authorities, provided that the commercial paper
and/or long term unsecured debt obligations of such depository
institution or trust company are then rated one of the two highest
long-term and the highest short-term ratings of each such Rating Agency
for such securities, or such lower ratings as will not result in the
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downgrading or withdrawal of the rating then assigned to the
Certificates by any such Rating Agency as evidenced by a letter from
each Rating Agency;
(v) demand or time deposits or certificates of deposit issued
by any bank or trust company or savings institution to the extent that
such deposits are fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation rated in the two highest
long-term or the highest short-term ratings of each Rating Agency
containing, at the time of the issuance of such agreements, such terms
and conditions as will not result in the downgrading or withdrawal of
the rating then assigned to the Certificates by any such Rating Agency
as evidenced by a letter from each Rating Agency;
(vii) repurchase obligations with respect to any security
described in clauses (i) and (ii) above, in either case entered into
with a depository institution or trust company (acting as principal)
described in clause (v) above;
(viii) securities (other than stripped bonds, stripped coupons
or instruments sold at a purchase price in excess of 115% of the face
amount thereof) bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any
state thereof which, at the time of such investment, have one of the
two highest long term ratings of each Rating Agency or such lower
rating as will not result in the downgrading or withdrawal of the
rating then assigned to the Certificates by any such Rating Agency, as
evidenced by a signed writing delivered by each such Rating Agency;
(ix) interests in any money market fund which at the date of
acquisition of the interests in such fund and throughout the time such
interests are held in such fund has the highest applicable long term
rating by each such Rating Agency or such lower rating as will not
result in the downgrading or withdrawal of the ratings then assigned to
the Certificates by each such Rating Agency as evidenced by a letter
from each Rating Agency;
(x) short term investment funds sponsored by any trust company
or national banking association incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by each such Rating Agency in their respective highest
applicable rating category or such lower rating as will not result in
the downgrading or withdrawal of the ratings then assigned to the
Certificates by each such Rating Agency as evidenced by a letter from
each Rating Agency; and
(xi) such other investments having a specified stated maturity
and bearing interest or sold at a discount acceptable to each Rating
Agency as will not result in the
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downgrading or withdrawal of the rating then assigned to the
Certificates by any such Rating Agency, as evidenced by a signed
writing delivered by each such Rating Agency;
provided, that no such instrument shall be a Permitted Investment if such
instrument (i) evidences the right to receive interest only payments with
respect to the obligations underlying such instrument, (ii) is purchased at a
premium or above par or (iii) is purchased at a deep discount; provided,
further, that no such instrument shall be a Permitted Investment (A) if such
instrument evidences principal and interest payments derived from obligations
underlying such instrument and the interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations, or (B) if it may be redeemed at
a price below the purchase price (the foregoing clause (B) not to apply to
investments in units of money market funds pursuant to clause (ix) above); and
provided, further, that no amount beneficially owned by any REMIC (including,
without limitation, any amounts collected by the Subservicer but not yet
deposited in the Collection Account) may be invested in investments (other than
money market funds) treated as equity interests for Federal income tax purposes,
unless the Master Servicer shall receive an Opinion of Counsel, at the expense
of Master Servicer, to the effect that such investment will not adversely affect
the status of the Trust Fund as a REMIC under the Code or result in imposition
of a tax on the Trust Fund. Permitted Investments that are subject to prepayment
or call may not be purchased at a price in excess of par.
Permitted Transferee: Any person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in section 521 of the Code) that
is exempt from tax imposed by Chapter 1 of the Code (including the tax imposed
by section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in section 860E(c)(1) of the Code) with respect to any
Class R Certificate, (iv) rural electric and telephone cooperatives described in
section 1381(a)(2)(C) of the Code, and (v) a Person that is not a citizen or
resident of the United States, a corporation or partnership (or other entity
treated as a corporation or partnership for United States federal income tax
purposes) created or organized in or under the laws of the United States or any
State thereof or the District of Columbia or an estate whose income from sources
without the United States is includable in gross income for United States
federal income tax purposes regardless of its connection with the conduct of a
trade or business within the United States, or a trust if a court within the
United States is able to exercise primary supervision over the administration of
the trust and one or more United States persons have authority to control all
substantial decisions of the trust, unless such Person has furnished the
transferor, the Master Servicer and the Trustee with a duly completed Internal
Revenue Service Form 4224 or applicable successor form. The terms "United
States," "State" and "International Organization" shall have the meanings set
forth in section 7701 of the Code or successor provisions. A corporation will
not be treated as an instrumentality of the United States or of any State
thereof for these purposes if all of its activities are subject to tax
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and, with the exception of the Federal Home Loan Mortgage Corporation, a
majority of its board of directors is not selected by such government unit.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government, or any agency or political subdivision thereof.
Pool Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances, as of such Distribution Date, of the
Mortgage Loans that were Outstanding Mortgage Loans as of such date.
Prepayment Assumption: A rate of prepayment, as described in the
Prospectus Supplement, relating to the Certificates in a Certificate Group.
Prepayment Interest Shortfall: With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a partial Principal Prepayment or
a Principal Prepayment in full (other than a Principal Prepayment in full
resulting from the purchase of a Mortgage Loan pursuant to Section 2.02, 2.03,
3.12 or 9.01 hereof), the amount, if any, by which (i) one month's interest at
the applicable Net Mortgage Rate on the Stated Principal Balance of such
Mortgage Loan as of the preceding Distribution Date or in the case of a partial
Principal Prepayment on the amount of such prepayment exceeds (ii) the amount of
interest paid or collected in connection with such Principal Prepayment.
Prepayment Period: As to any Distribution Date, the period beginning
with the opening of business on the first day of the calendar month preceding
the month in which such Distribution Date occurs and ending on the close of
business on the last day of such month.
Principal Prepayment: Any Mortgagor payment or other recovery of (or
proceeds with respect to) principal on a Mortgage Loan (including Mortgage Loans
purchased or repurchased under Sections 2.02, 2.03, 3.12 and 9.01 hereof) that
is received in advance of its scheduled Due Date and is not accompanied by an
amount as to interest representing scheduled interest due on any date or dates
in any month or months subsequent to the month of prepayment. Partial Principal
Prepayments shall be applied by the Subservicer in accordance with the terms of
the related Mortgage Note.
Prospectus Supplement: The Prospectus Supplement dated [DATE] relating
to the public offering of the Group I Certificates and the Group II
Certificates.
PUD: A Planned Unit Development.
Purchase Price: With respect to any Mortgage Loan (x) required to be
repurchased by the Seller, pursuant to Section 2.02 or, 2.03 hereof or (y) that
the Master Servicer has a right to purchase pursuant to Section 3.12 hereof, an
amount equal to the sum of (i) 100%
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of the unpaid principal balance of the Mortgage Loan as of the date of such
purchase together with any unreimbursed Servicing Advances and (ii) accrued
interest thereon at the applicable Net Mortgage Rate from (a) the date through
which interest was last paid by the Mortgagor to (b) the Due Date in the month
in which the Purchase Price is to be distributed to Certificateholders.
Rating Agency: Moody's Investors Service ("Moody's"), and Fitch IBCA,
Inc. ("Fitch"). If any such organization or its successor is no longer in
existence, "Rating Agency" shall be a nationally recognized statistical rating
organization, or other comparable Person, designated by the Depositor, notice of
which designation shall be given to the Trustee. References herein to a given
rating category of a Rating Agency shall mean such rating category without
giving effect to any modifiers.
Realized Loss: With respect to (i) a Liquidated Loan, the amount, if
any, by which the Stated Principal Balance and accrued interest thereon at the
Net Mortgage Rate exceeds the amount actually recovered by the Subservicer with
respect thereto (net of reimbursement of Advances and Servicing Advances) at the
time such Mortgage Loan became a Liquidated Loan or (ii) with respect to a
Mortgage Loan which is not a Liquidated Loan, any amount of principal that the
Mortgagor is no longer legally required to pay (except for the extinguishment of
debt that results from the exercise of remedies due to default by the
Mortgagor).
Record Date: With respect to any Distribution Date, the close of
business on the last Business Day of the month preceding the month in which the
applicable Distribution Date occurs.
Reference Banks: Barclays Bank PLC, The Chase Manhattan Bank,
[Citibank, N.A.] and NatWest, N.A.; provided that if any of the foregoing banks
are not suitable to serve as a Reference Bank, then any leading banks selected
by the Master Servicer which are engaged in transactions in Eurodollar deposits
in the international Eurocurrency market (i) with an established place of
business in London, England, (ii) whose quotations appear on the Reuters Screen
LIBO Page on the relevant Interest Determination Date and (iii) which have been
designated as such by the Master Servicer.
Refinancing Mortgage Loan: Any Mortgage Loan originated in connection
with the refinancing of an existing mortgage loan.
Regular Certificate: Any one of the Group I Certificates or the Group
II Certificates.
REMIC: A "real estate mortgage investment conduit" within the meaning
of section 860D of the Code. References herein to "the REMIC" shall mean either
of (or, as the context requires, both of) the Master REMIC or the Subsidiary
REMIC created hereunder.
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REMIC Provisions: Provisions of the federal income tax law relating to
real estate mortgage investment conduits, which appear at sections 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
proposed, temporary and final regulations and published rulings, notices and
announcements promulgated thereunder, as the foregoing may be in effect from
time to time as well as provisions of applicable state laws.
REO Property: A Mortgaged Property acquired by the Subservicer through
foreclosure or deed-in-lieu of foreclosure in connection with a defaulted
Mortgage Loan.
Replacement Mortgage Loan: A Mortgage Loan substituted by the Depositor
for a Deleted Mortgage Loan, which must, on the date of such substitution, as
confirmed in a Request for Release, substantially in the form of Exhibit M, (i)
have a Stated Principal Balance, after deduction of the principal portion of the
Scheduled Payment due in the month of substitution, not in excess of, and not
less than 90% of the Stated Principal Balance of the Deleted Mortgage Loan; (ii)
with respect to any Group I Mortgage Loan, have a Mortgage Rate not less than or
no more than 1% per annum higher than the Mortgage Rate of the Deleted Mortgage
Loan and, with respect to any Group II Mortgage Loan: (a) have a Maximum
Mortgage Rate no more than 1% per annum higher or lower than the Maximum
Mortgage Rate of the Deleted Mortgage Loan; (b) have a Minimum Mortgage Rate no
more than 1% per annum higher or lower than the Minimum Mortgage Rate of the
Deleted Mortgage Loan; (c) have the same index and Periodic Rate Cap as that of
the Deleted Mortgage Loan and a Gross Margin not more than 1% per annum higher
or lower than that of the Deleted Mortgage Loan; (d) not permit conversion of
the related Mortgage Rate to a fixed Mortgage Rate and (e) currently be accruing
interest at a rate not more than 1% per annum higher or lower than that of the
Deleted Mortgage Loan; (iii) have the same or higher credit quality
characteristics than that of the Deleted Mortgage Loan; (iv) have a
Loan-to-Value Ratio no higher than that of the Deleted Mortgage Loan; (v) have a
remaining term to maturity no greater than (and not more than one year less
than) that of the Deleted Mortgage Loan; (vi) provide for a prepayment charge on
terms substantially similar to those of the prepayment charge, if any, of the
Deleted Mortgage Loan; (vii) have the same lien priority as the Deleted Mortgage
Loan; (viii) constitute the same occupancy type as the Deleted Mortgage Loan;
and (ix) comply with each representation and warranty set forth in Section 2.03
hereof.
Repurchase Price: As defined in Section 9.01.
Request for Release: The Request for Release submitted by the
Subservicer or the Master Servicer to the Trustee, substantially in the form of
Exhibit M hereto.
Required Insurance Policy: With respect to any Mortgage Loan, any
insurance policy that is required to be maintained from time to time under this
Agreement.
Reserve Interest Rate: With respect to any Interest Determination Date
for the Group II Certificates and the Class IA-1 Certificates, the rate per
annum that the Master Servicer
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determines to be (i) the arithmetic mean (rounded upwards if necessary to the
nearest whole multiple of [ ]%) of the one-month United States dollar lending
rates which New York City banks selected by the Master Servicer are quoting on
the relevant Interest Determination Date to the principal London offices of
leading banks in the London interbank market or (ii) in the event that the
Master Servicer can determine no such arithmetic mean, the lowest one-month
United States dollar lending rate which New York City banks selected by the
Master Servicer are quoting on such Interest Determination Date to leading
European banks.
Responsible Officer: When used with respect to the Trustee, any Vice
President, any Assistant Vice President, the Secretary, any Assistant Secretary,
any Trust Officer or any other officer of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also to whom, with respect to a particular matter, such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject.
Reuters Screen LIBO Page: The display designated as page "LIBO" on the
Reuters Monitor Money Rates Service (or such other page as may replace such LIBO
page on that service for the purpose of displaying London interbank offered
rates of major banks.
Sale Agreement: The Mortgage Loan Sale Agreement dated as of [DATE]
between the Depositor and the Seller.
Scheduled Payment: The scheduled monthly payment on a Mortgage Loan due
on any Due Date allocable to principal and/or interest on such Mortgage Loan.
Securities Act: The Securities Act of 1933, as amended.
Seller: Chase Manhattan Mortgage Corporation, a New Jersey corporation,
or its successor in interest.
Servicer Advance Date: As to any Distribution Date, the related
Servicer Remittance Date.
Servicer Remittance Date: With respect to any Distribution Date, the
18th day of the month in which such Distribution Date occurs, or if such 18th
day is not a Business Day, the Business Day preceding such 18th day.
Servicing Advances: All customary, reasonable and necessary "out of
pocket" costs and expenses incurred in the performance by the Subservicer of its
servicing obligations hereunder, including, but not limited to, the cost of (i)
the preservation, restoration and protection of a Mortgaged Property, including
without limitation advances in respect of real estate taxes and assessments,
(ii) any collection, enforcement or judicial proceedings, including without
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limitation foreclosures, collections and liquidations, (iii) the conservation,
management, sale and liquidation of any REO Property and (iv) compliance with
the obligations under Section 3.10.
Servicing Fee: As to each Mortgage Loan and any Distribution Date, the
sum of (i) an amount equal to one month's interest at the Servicing Fee Rate on
the Stated Principal Balance of such Mortgage Loan as of the preceding
Distribution Date or, in the event of any payment of interest that accompanies a
Principal Prepayment in full made by the Mortgagor, interest at the Servicing
Fee Rate on the Stated Principal Balance of such Mortgage Loan as of the
preceding Distribution Date for the period covered by such payment of interest
and (ii) any amount payable to the Subservicer from the Trust Fund pursuant to
the Subservicing Side Letter Agreement, dated [DATE] among the Depositor, the
Subservicer, the Master Servicer and the Trustee (as the same may be amended
from time to time) in connection with (A) the modification of a Mortgage Loan by
the Subservicer, (B) the acceptance by the Subservicer of a short payoff with
respect to a Mortgage Loan or (C) the acquisition of a Mortgaged Property on
behalf of the Trust Fund by deed in lieu of foreclosure.
Servicing Fee Rate: With respect to each Mortgage Loan, [ ]% per annum.
Servicing Officer: Any officer of the Subservicer involved in, or
responsible for, the administration and servicing of the Mortgage Loans whose
name and facsimile signature appear on a list of servicing officers furnished to
the Trustee and the Master Servicer by the Subservicer on the Closing Date
pursuant to this Agreement, as such list may from time to time be amended.
SR Interest: The sole class of "residual interest" in the Subsidiary
REMIC.
Startup Date: As defined in Section 2.07 hereof.
Stated Principal Balance: With respect to any Mortgage Loan or related
REO Property (i) as of the Cut-off Date, the Cut-off Date Principal Balance
thereof, and (ii) as of any Distribution Date, such Cut-off Date Principal
Balance minus the sum of (a) the principal portion of the Scheduled Payments (x)
due with respect to such Mortgage Loan during each Due Period ending prior to
such Distribution Date and (y) that were received by the Subservicer as of the
close of business on the Determination Date related to such Distribution Date or
with respect to which Advances were made on each Servicer Advance Date prior to
such Distribution Date (b) all Principal Prepayments with respect to such
Mortgage Loan received on or prior to the last day of the related Prepayment
Period, and all Liquidation Proceeds to the extent applied by the Subservicer as
recoveries of principal in accordance with Section 3.12 with respect to such
Mortgage Loan, that were received by the Subservicer as of the close of business
on the last day of the related Due Period. Notwithstanding the foregoing, the
Stated Principal Balance of a Liquidated Loan shall be deemed to be zero.
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Subservicer: [Advanta Mortgage Corp. USA], a Delaware corporation, or
its successor in interest.
Subservicing Agreement: As defined in Section 3.02(a).
Subservicing Side Letter Agreement: The Subservicing Side Letter
Agreement, dated [DATE], by and among the Master Servicer, the Subservicer, the
Depositor and the Trustee.
Subsidiary REMIC: As described in Section 2.07.
Subsidiary REMIC Interest: Any one of the Subsidiary REMIC Regular
Interests or the SR Interest.
Subsidiary REMIC Regular Interest: Any one of the "regular interests"
in the Subsidiary REMIC described in Section 2.07.
Substitution Adjustment Amount: The meaning ascribed to such term
pursuant to Section 2.03(c).
Substitution Amount: With respect to any Mortgage Loan substituted
pursuant to Section 2.03(c), the excess of (x) the principal balance of the
Mortgage Loan that is substituted for, over (y) the principal balance of the
related substitute Mortgage Loan, each balance being determined as of the date
of substitution.
Tax Matters Person: The person designated as "tax matters person" in
the manner provided under Treasury regulation Section 1.860F-4(d) and temporary
Treasury regulation Section 301.6231(a)(7)-1T.
Three Month Rolling Average: As of any Distribution Date, the average
percentage (based on Stated Principal Balance as of the Distribution Date in the
third most recently ended (or second most recently ended or most recently ended
month in the case of the second and first Distribution Dates respectively )) of
Group II Mortgage Loans which are 60 days or more Delinquent (including Mortgage
Loans in foreclosure and REO Property) as of the last day of each of the three
(or one and two in the case of the first and second Distribution Dates,
respectively) most recently ended months.
Transfer: Any direct or indirect transfer or sale of any Ownership
Interest in a Certificate.
Trust Fund: The corpus of the trust (the "Chase Funding Trust, Series [
]") created hereunder consisting of (i) the Mortgage Loans and all interest and
principal received on or with respect thereto on and after the Cut-off Date to
the extent not applied in computing the
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Cut-off Date Principal Balance thereof, exclusive of interest not required to be
deposited in the Collection Account pursuant to Section 3.05(b)(ii); (ii) the
Collection Account, the Certificate Account, the Distribution Account, and all
amounts deposited therein pursuant to the applicable provisions of this
Agreement; (iii) property that secured a Mortgage Loan and has been acquired by
foreclosure, deed in lieu of foreclosure or otherwise; (iv) the mortgagee's
rights under the Insurance Policies with respect to the Mortgage Loan; and (v)
all proceeds of the conversion, voluntary or involuntary, of any of the
foregoing into cash or other liquid property.
Trustee: [Citibank, N.A.], a national banking association, not in its
individual capacity, but solely in its capacity as trustee for the benefit of
the Certificateholders under this Agreement, and any successor thereto, and any
corporation or national banking association resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee as may from time to time be serving as successor trustee
hereunder.
Voting Rights: The portion of the voting rights of all the Certificates
that is allocated to any Certificates for purposes of the voting provisions
hereunder. Voting Rights allocated to each Class of Certificates shall be
allocated 95% to the Group I Certificates and Group II Certificates, and 5% to
the Class R Certificates, with the allocation among the Group I Certificates and
Group II Certificates to be in proportion to the Class Certificate Principal
Balance of each Class relative to the Class Certificate Principal Balance of all
other Classes. Voting Rights will be allocated among the Certificates of each
such Class in accordance with their respective Percentage Interests.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof,
does hereby sell, transfer, assign, set over and convey to the Trustee without
recourse all the right, title and interest of the Depositor in and to the
Mortgage Loans, including all interest and principal received on or with respect
to the Mortgage Loans on or after the Cut-off Date (other than Scheduled
Payments due on the Mortgage Loans on or before the Cut-off Date).
In connection with such assignment, the Depositor does hereby deliver
to, and deposit with, the Trustee the following documents or instruments with
respect to each Mortgage Loan so assigned:
(A) (I) Original Mortgage Note (or a lost note affidavit
(including a copy of the original Mortgage Note)) or (II) original
Consolidation, Extension and Modification
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Agreement (or a lost note affidavit (including a copy of the
original Consolidation, Extension and Modification Agreement), in
either case endorsed, "Pay to the order of [Citibank, N.A.], as
trustee, without recourse."
(B) The original Mortgage (including all riders thereto) with
evidence of recording thereon, or a copy thereof certified by the
public recording office in which such mortgage has been recorded or, if
the original Mortgage has not been returned from the applicable public
recording office, a true certified copy, certified by the Seller, of
the original Mortgage together with a certificate of the Seller
certifying that the original Mortgage has been delivered for recording
in the appropriate public recording office of the jurisdiction in which
the Mortgaged Property is located.
(C) The original Assignment of Mortgage to "[Citibank, N.A.],
as trustee," which assignment shall be in form and substance acceptable
for recording, or a copy certified by the Seller as a true and correct
copy of the original Assignment which has been sent for recordation.
Subject to the foregoing, such assignments may, if permitted by law, be
by blanket assignments for Mortgage Loans covering Mortgaged Properties
situated within the same county. If the Assignment of Mortgage is in
blanket form, a copy of the Assignment of Mortgage shall be included in
the related individual Mortgage File.
(D) The original policy of title insurance, including riders
and endorsements thereto, or if the policy has not yet been issued, a
written commitment or interim binder or preliminary report of title
issued by the title insurance or escrow company.
(E) Originals of all recorded intervening Assignments of
Mortgage, or copies thereof, certified by the public recording office
in which such Assignments or Mortgage have been recorded showing a
complete chain of title from the originator to the Depositor, with
evidence of recording, thereon, or a copy thereof certified by the
public recording office in which such Assignment of Mortgage has been
recorded or, if the original Assignment of Mortgage has not been
returned from the applicable public recording office, a true certified
copy, certified by the Seller of the original Assignment of Mortgage
together with a certificate of the Seller certifying that the original
Assignment of Mortgage has been delivered for recording in the
appropriate public recording office of the jurisdiction in which the
Mortgaged Property is located.
(F) Originals, or copies thereof certified by the public
recording office in which such documents have been recorded, of each
assumption, extension, modification, written assurance or substitution
agreements, if applicable, or if the original of such document has not
been returned from the applicable public recording office, a true
certified copy, certified by the Seller, of such original document
together with certificate of Seller certifying the original of such
document has been delivered for recording in the
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appropriate recording office of the jurisdiction in which the
Mortgaged Property is located.
(G) If the Mortgaged Note or Mortgage or any other material
document or instrument relating to the Mortgaged Loan has been signed
by a person on behalf of the Mortgagor, the original power of attorney
or other instrument that authorized and empowered such person to sign
bearing evidence that such instrument has been recorded, if so required
in the appropriate jurisdiction where the Mortgaged Property is located
(or, in lieu thereof, a duplicate or conformed copy of such instrument,
together with a certificate of receipt from the recording office,
certifying that such copy represents a true and complete copy of the
original and that such original has been or is currently submitted to
be recorded in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located), or if the
original power of attorney or other such instrument has been delivered
for recording in the appropriate public recording office of the
jurisdiction in which the Mortgaged Property is located.
If in connection with any Mortgage Loan the Depositor cannot deliver
the Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, with evidence of recording thereon
concurrently with the execution and delivery of this Agreement solely because of
a delay caused by the public recording office where such Mortgage, Assignments
of Mortgage or assumption, consolidation or modification, as the case may be,
has been delivered for recordation, the Depositor shall deliver or cause to be
delivered to the Trustee written notice stating that such Mortgage, Assignments
of Mortgage or assumption, consolidation or modification, as the case may be,
has been delivered to the appropriate public recording office for recordation.
Thereafter, the Depositor shall deliver or cause to be delivered to the Trustee
such Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, with evidence of recording indicated thereon
upon receipt thereof from the public recording office.
The Master Servicer shall cause to be recorded in the appropriate
public recording office for real property records each Assignment of Mortgage
referred to in this Section 2.01 as soon as practicable. While each Assignment
of Mortgage to be recorded is being recorded, the Master Servicer shall deliver
to the Trustee a photocopy of such document. If any such Assignment of Mortgage
is returned unrecorded to the Master Servicer because of any defect therein, the
Master Servicer shall cause such defect to be cured and such document to be
recorded in accordance with this paragraph. The Depositor shall deliver or cause
to be delivered each original recorded Assignment of Mortgage and intermediate
assignment to the Trustee within 270 days of the Closing Date or shall deliver
to the Trustee on or before such date an Officer's Certificate stating that such
document has been delivered to the appropriate public recording office for
recordation, but has not been returned solely because of a delay caused by such
recording office. In any event, the Depositor shall use all reasonable efforts
to cause each such document with evidence of recording thereon to be delivered
to the Trustee within 300 days of the Closing Date.
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The ownership of each Mortgage Note, the Mortgage and the contents of
the related Mortgage File is vested in the Trustee. Neither the Depositor, the
Subservicer nor the Master Servicer shall take any action inconsistent with such
ownership and shall not claim any ownership interest therein. The Depositor, the
Subservicer and the Master Servicer shall respond to any third party inquiries
with respect to ownership of the Mortgage Loans by stating that such ownership
is held by the Trustee on behalf of the Certificateholders. Mortgage documents
relating to the Mortgage Loans not delivered to the Trustee are and shall be
held in trust by the Subservicer, for the benefit of the Trustee as the owner
thereof, and the Subservicer's possession of the contents of each Mortgage File
so retained is for the sole purpose of servicing the related Mortgage Loan, and
such retention and possession by the Subservicer is in a custodial capacity
only. The Depositor agrees to take no action inconsistent with the Trustee's
ownership of the Mortgage Loans, to promptly indicate to all inquiring parties
that the Mortgage Loans have been sold and to claim no ownership interest in the
Mortgage Loans.
It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Seller deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Seller to the Depositor deemed to be secured by said pledge and that the Trustee
shall be deemed to be an independent custodian for purposes of perfection of the
security interest granted to the Depositor. If the conveyance of the Mortgage
Loans from the Depositor to the Trustee is characterized as a pledge, it is the
intention of this Agreement that this Agreement shall constitute a security
agreement under applicable law, and that the Depositor shall be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title and interest in, to and under the Mortgage Loans, all
payments of principal of or interest on such Mortgage Loans, all other rights
relating to and payments made in respect of the Trust Fund, and all proceeds of
any thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.
In addition to the conveyance made in the first paragraph of this
Section 2.01, the Depositor does hereby convey, assign and set over to the
Trustee all of its right, title and interest assigns to the Trustee for the
benefit of the Certificateholders those representations and warranties of the
Seller contained in the Sale Agreement and the benefit of the repurchase
obligations and the obligations of the Seller contained in the Sale Agreement to
take, at the request of the Depositor or the Trustee, all action on its part
which is reasonably necessary to ensure the enforceability of a Mortgage Loan.
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SECTION 2.02. Acceptance by Trustee of the Mortgage Loans.
Except as set forth in the Exception Report delivered contemporaneously
herewith (the "Exception Report"), the Trustee acknowledges receipt of the
Mortgage Note for each Mortgage Loan and delivery of a Mortgage File (but does
not acknowledge receipt of all documents required to be included in such
Mortgage File) with respect to each Mortgage Loan and declares that it holds and
will hold such documents and any other documents constituting a part of the
Mortgage Files delivered to it in trust for the use and benefit of all present
and future Certificateholders. The Depositor will cause the Seller to repurchase
any Mortgage Loans to which an exception was taken in the Exception Report
unless such exception is cured to the satisfaction of the Trustee within 45
Business Days of the Closing Date.
The Trustee agrees, for the benefit of Certificateholders, to review
each Mortgage File delivered to it within 270 days after the Closing Date to
ascertain that all documents required by Section 2.01 have been executed and
received, and that such documents relate to the Mortgage Loans identified in
Exhibit F that have been conveyed to it. If the Trustee finds any document or
documents constituting a part of a Mortgage File to be missing or defective
(that is, mutilated, damaged, defaced or unexecuted) in any material respect,
the Trustee shall promptly (and in any event within no more than five Business
Days) after such finding so notify the Subservicer, the Seller and the
Depositor. In addition, the Trustee shall also notify the Subservicer, the
Seller and the Depositor, if (a) in examining the Mortgage Files, the
documentation shows on its face (i) any adverse claim, lien or encumbrance, (ii)
that any Mortgage Note was overdue or had been dishonored, (iii) any evidence on
the face of any Mortgage Note or Mortgage of any security interest or other
right or interest therein, or (iv) any defense against or claim to the Mortgage
Note by any party or (b) the original Mortgage with evidence of recording
thereon with respect to a Mortgage Loan is not received within 270 days of the
Closing Date. The Trustee shall request that the Seller correct or cure such
omission, defect or other irregularity, or substitute a Mortgage Loan pursuant
to the provisions of Section 2.03(c), within 90 days from the date the Seller
was notified of such omission or defect and, if the Seller does not correct or
cure such omission or defect within such period, that the Seller purchase such
Mortgage Loan from the Trustee within 90 days from the date the Trustee notified
the Seller of such omission, defect or other irregularity at the Purchase Price
of such Mortgage Loan. The Purchase Price for any Mortgage Loan purchased
pursuant to this Section 2.02 shall be paid to the Subservicer and deposited by
the Subservicer in the Collection Account promptly upon receipt, and, upon
receipt by the Trustee of written notification of such deposit signed by a
Servicing Officer, the Trustee shall promptly release to the Seller the related
Mortgage File and the Trustee shall execute and deliver such instruments of
transfer or assignment, without recourse, as shall be necessary to vest in the
Seller or its designee, as the case may be, any Mortgage Loan released pursuant
hereto, and the Trustee shall have no further responsibility with regard to such
Mortgage Loan. It is understood and agreed that the obligation of the Seller to
purchase, cure or substitute any Mortgage Loan as to which a material defect in
or omission of a constituent document exists shall constitute the sole remedy
respecting such defect or omission available to the Trustee on behalf of
Certificateholders. The Trustee shall be under no duty or
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obligation to inspect, review and examine such documents, instruments,
certificates or other papers to determine that they are genuine, enforceable or
appropriate to the represented purpose, or that they have actually been
recorded, or that they are other than what they purport to be on their face. The
Trustee and the Subservicer each shall keep confidential the name of each
Mortgagor and neither the Trustee nor the Subservicer shall solicit any such
Mortgagor for the purpose of refinancing the related Mortgage Loan. Without
limiting the generality of the foregoing, from and after the Closing Date, the
Subservicer agrees that it will not take any action or permit or cause any
action to be taken by the Subservicer, any of its agents or affiliates, or by
any independent contractors on the Subservicer's behalf, to personally, by
telephone or mail, solicit the borrower or Mortgagor under any Mortgage Loan to
refinance the Mortgage Loan, in whole or in part. Notwithstanding the foregoing,
it is understood and agreed that promotions undertaken by the Subservicer or any
affiliate thereof which are directed to the general public at large, including
without limitation, mass mailing based on commercially acquired mailing lists,
newspaper, radio and television advertisements shall not constitute solicitation
under this paragraph, nor is the Subservicer or any affiliate thereof prohibited
from responding to unsolicited requests or inquiries made by a Mortgagor or
agent of a Mortgagor; provided, however that neither the Subservicer nor any
affiliate thereof may respond to any such unsolicited request or inquiry if such
unsolicited request or inquiry (including, without limitation, any verification
of mortgage, payoff request or refinance inquiry) was directed to the
Subservicer in the Subservicer's capacity as servicer of the related Mortgage
Loan. It is understood and agreed that all rights and benefits relating to the
solicitation of any Mortgagors and the attendant rights, title and interest in
and to the list of Mortgagors and data relating to their Mortgages shall be
retained by the Master Servicer.
Within 280 days of the Closing Date, the Trustee shall deliver to the
Depositor and the Master Servicer the Trustee's Certification, substantially in
the form of Exhibit H attached hereto, setting forth the status of the Mortgage
Files as of such date.
SECTION 2.03. Representations, Warranties and Covenants of the
Depositor.
(a) The Depositor hereby represents and warrants to the Subservicer and
the Trustee as follows, as of the date hereof:
(i) The Depositor is duly organized and is validly existing as
a corporation in good standing under the laws of the State of New York
and has full power and authority (corporate and other) necessary to own
or hold its properties and to conduct its business as now conducted by
it and to enter into and perform its obligations under this Agreement.
(ii) The Depositor has the full corporate power and authority
to execute, deliver and perform, and to enter into and consummate the
transactions contemplated by, this Agreement and has duly authorized,
by all necessary corporate action on its part, the execution, delivery
and performance of this Agreement; and this Agreement, assuming
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the due authorization, execution and delivery hereof by the other
parties hereto, constitutes a legal, valid and binding obligation of
the Depositor, enforceable against the Depositor in accordance with its
terms, subject, as to enforceability, to (i) bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and (ii) general principles of equity, regardless of
whether enforcement is sought in a proceeding in equity or at law.
(iii) The execution and delivery of this Agreement by the
Depositor, the consummation of the transactions contemplated by this
Agreement, and the fulfillment of or compliance with the terms hereof
are in the ordinary course of business of the Depositor and will not
(A) result in a material breach of any term or provision of the charter
or by-laws of the Depositor or (B) materially conflict with, result in
a violation or acceleration of, or result in a material default under,
the terms of any other material agreement or instrument to which the
Depositor is a party or by which it may be bound or (C) constitute a
material violation of any statute, order or regulation applicable to
the Depositor of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Depositor; and the
Depositor is not in breach or violation of any material indenture or
other material agreement or instrument, or in violation of any statute,
order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it which breach or
violation may materially impair the Depositor's ability to perform or
meet any of its obligations under this Agreement.
(iv) No litigation is pending, or, to the best of the
Depositor's knowledge, threatened, against the Depositor that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Depositor to
perform its obligations under this Agreement in accordance with the
terms hereof.
(v) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Depositor of, or compliance by the Depositor
with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Depositor has obtained the same. The Depositor
hereby represents and warrants to the Trustee with respect to each
Mortgage Loan as of the Closing Date, and following the transfer of the
Mortgage Loans to it by the Seller, the Depositor had good title to the
Mortgage Loans and the Mortgage Notes were subject to no offsets,
claims, defenses or counterclaims.
(vi) The Depositor hereby represents and warrants to the
Trustee for the benefit of the Certificateholders that on the Closing
Date it has entered into the Sale Agreement with the Seller, that the
Seller has made the following representations and warranties with
respect to each Mortgage Loan in such Sale Agreement as of the Closing
Date, which representations and warranties run to and are for the
benefit of the Depositor
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and the Trustee for the benefit of the Certificateholders, and
as to which the Depositor has assigned to the Trustee for the benefit
of the Certificateholders, pursuant to Section 2.01 hereof, the right
to cause the Seller to repurchase a Mortgage Loan as to which there has
occurred an uncured breach of representations and warranties in
accordance with the provisions of the Sale Agreement.
(1) The Seller is an approved seller of
conventional mortgage loans for FNMA or
FHLMC and is a mortgagee approved by the
Secretary of Housing and Urban Development
pursuant to sections 203 and 211 of the
National Housing Act.
(2) The information set forth on the Mortgage
Loan Schedule is true and correct in all
material respects as of the Closing Date.
(3) The Seller will treat the transfer of the
Mortgage Loans to the Depositor as a sale of
the Mortgage Loans for all accounting and
tax purposes.
(4) No Mortgage Loan is more than 59 days
Delinquent in payment of principal and
interest, and no more than 0.9% of the
Mortgage Loans are 30-59 days Delinquent in
the payment of principal and interest.
(5) No Group I Mortgage Loan had a Loan-to-Value
Ratio at origination in excess of 95.00% and
no Group II Mortgage Loan had a
Loan-to-Value Ratio at origination in excess
of 95.00%.
(6) Each Mortgage is a valid and enforceable
first lien on the Mortgaged Property subject
only to (a) the lien of non-delinquent real
property taxes and assessments not yet due
and payable, (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, specifically referred to in the
lender's title insurance policy referred to
in (14) below or referred to or otherwise
considered in the appraisal made in
connection with the origination of the
related Mortgage Loan, and (c) other matters
to which like properties are commonly
subject that do not materially interfere
with the benefits of the security intended
to be provided by such Mortgage.
(7) Immediately prior to the assignment of the
Mortgage Loans to the Depositor, the Seller
had good title to, and was the sole owner
of,
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each Mortgage Loan free and clear of any
pledge, lien, encumbrance or security
interest and had full right and authority,
subject to no interest or participation of,
or agreement with, any other party, to sell
and assign the same pursuant to this
Agreement.
(8) There is no delinquent tax or assessment
lien against any Mortgaged Property.
(9) There is no valid offset, claim, defense or
counterclaim to any Mortgage Note or
Mortgage, including the obligation of the
Mortgagor to pay the unpaid principal of or
interest on such Mortgage Note.
(10) There are no mechanics' liens or claims for
work, labor or material affecting any
Mortgaged Property that are or may be a lien
prior to, or equal with, the lien of such
Mortgage, except those that are insured
against by the title insurance policy
referred to in item (14) below.
(11) As of the Closing Date, to the best of the
Seller's knowledge, each Mortgaged Property
is undamaged by waste, fire, earthquake or
earth movement, windstorm, flood, tornado or
other casualty so as to affect adversely the
value of the Mortgaged Property as security
for the Mortgage Loan or the use for which
the premises were intended.
(12) Each Mortgage Loan at origination complied
in all material respects with applicable
state and federal laws, including, without
limitation, usury, equal credit opportunity,
real estate settlement procedures,
truth-in-lending and disclosure laws, and
consummation of the transactions
contemplated hereby will not involve the
violation of any such laws.
(13) As of the Closing Date, neither the Seller
nor any prior holder of any Mortgage has
modified the Mortgage in any material
respect (except that a Mortgage Loan may
have been modified by a written instrument
that has been recorded or submitted for
recordation, if necessary, to protect the
interests of the Certificateholders and the
original or a copy of which has been
delivered to the Trustee); satisfied,
canceled or subordinated such Mortgage in
whole or in part; released the related
Mortgaged Property in whole or in part from
the lien of such Mortgage; or executed any
instrument of
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release, cancellation, modification (except
as expressly permitted above) or
satisfaction with respect thereto.
(14) A lender's policy of title insurance
together with a condominium endorsement and
extended coverage endorsement, if applicable
(subject to exceptions acceptable in the
industry, including exceptions with respect
to surveys and endorsements), in an amount
at least equal to the Cut-off Date Principal
Balance of each such Mortgage Loan or a
commitment (binder) to issue the same was
effective on the date of the origination of
each Mortgage Loan, each such policy is
valid and remains in full force and effect,
and each such policy was issued by a title
insurer qualified to do business in the
jurisdiction where the related Mortgaged
Property is located and acceptable to FNMA
or FHLMC and is in a form acceptable to FNMA
or FHLMC, which policy insures the Seller
and successor owners of indebtedness secured
by the related insured Mortgage, as to the
first priority lien, of the related Mortgage
subject to the exceptions set forth in
paragraph (6) above; to the best of the
Seller's knowledge, no claims have been made
under such mortgage title insurance policy
and no prior holder of the related Mortgage,
including the Seller, has done, by act or
omission, anything that would impair the
coverage of such mortgage title insurance
policy.
(15) To the best of the Seller's knowledge, as of
the date of origination all of the
improvements that were included for the
purpose of determining the Appraised Value
of the Mortgaged Property lie wholly within
the boundaries and building restriction
lines of such property, and no improvements
on adjoining properties encroach upon the
Mortgaged Property.
(16) To the best of the Seller's knowledge, as of
the date of origination no improvement
located on or being part of the Mortgaged
Property is in violation of any applicable
zoning law or regulation. To the best of the
Seller's knowledge, as of the date of
origination all inspections, licenses and
certificates required to be made or issued
with respect to all occupied portions of the
Mortgaged Property and, with respect to the
use and occupancy of the same, including but
not limited to certificates of occupancy and
fire underwriting certificates, have been
made or obtained from the appropriate
authorities, unless the lack thereof would
not have a material adverse effect on the
value of such Mortgaged Property, and the
Mortgaged Property is lawfully occupied
under applicable law.
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(17) The Mortgage Note and the related Mortgage
are genuine, and each is the legal, valid
and binding obligation of the maker thereof,
enforceable in accordance with its terms and
under applicable law, except that (a) the
enforceability thereof may be limited by
bankruptcy, insolvency, moratorium,
receivership and other similar laws relating
to creditors' rights generally and (b) the
remedy of specific performance and
injunctive and other forms of equitable
relief may be subject to equitable defenses
and to the discretion of the court before
which any proceeding therefor may be
brought. To the best of the Seller's
knowledge, all parties to the Mortgage Note
and the Mortgage had legal capacity to
execute the Mortgage Note and the Mortgage
and each Mortgage Note and Mortgage have
been duly and properly executed by such
parties.
(18) The proceeds of the Mortgage Loan have been
fully disbursed, there is no requirement for
future advances thereunder and completion of
any on-site or off-site improvements and as
to disbursements of any escrow funds
therefor have been complied with. All costs,
fees and expenses incurred in making, or
closing or recording the Mortgage Loans were
paid.
(19) The related Mortgage contains customary and
enforceable provisions that render the
rights and remedies of the holder thereof
adequate for the realization against the
Mortgaged Property of the benefits of the
security, including, (i) in the case of a
Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by
judicial foreclosure.
(20) With respect to each Mortgage constituting a
deed of trust, a trustee, duly qualified
under applicable law to serve as such, has
been properly designated and currently so
serves and is named in such Mortgage, and no
fees or expenses are or will become payable
by the Certificateholders to the trustee
under the deed of trust, except in
connection with a trustee's sale after
default by the Mortgagor.
(21) There exist no deficiencies with respect to
escrow deposits and payments, if such are
required, for which customary arrangements
for repayment thereof have not been made,
and no escrow deposits or payments of other
charges or payments due the Seller have been
capitalized under the Mortgage or the
related Mortgage Note.
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(22) The origination and underwriting practices
used by the Seller with respect to each
Mortgage Loan have been in all respects
legal and customary in the mortgage lending
business.
(23) There is no pledged account or other
security other than real estate securing the
Mortgagor's obligations.
(24) Each Mortgage Loan contains a customary "due
on sale" clause.
(25) At the Cut-off Date, the improvements upon
each Mortgaged Property are covered by a
valid and existing hazard insurance policy
with a generally acceptable carrier that
provides for fire and extended coverage and
coverage for such other hazards as are
customary in the area where the Mortgaged
Property is located in an amount that is at
least equal to the lesser of (i) the maximum
insurable value of the improvements securing
such Mortgage Loan or (ii) the greater of
(a) the outstanding principal balance of the
Mortgage Loan and (b) an amount such that
the proceeds of such policy shall be
sufficient to prevent the Mortgagor and/or
the mortgagee from becoming a co-insurer. If
the Mortgaged Property is a condominium
unit, it is included under the coverage
afforded by a blanket policy for the
condominium unit. All such individual
insurance policies and all flood policies
referred to in item (26) below contain a
standard mortgagee clause naming the Seller
or the original mortgagee, and its
successors in interest, as mortgagee, and
the Seller has received no notice that any
premiums due and payable thereon have not
been paid; the Mortgage obligates the
Mortgagor thereunder to maintain all such
insurance, including flood insurance, at the
Mortgagor's cost and expense, and upon the
Mortgagor's failure to do so, authorizes the
holder of the Mortgage to obtain and
maintain such insurance at the Mortgagor's
cost and expense and to seek reimbursement
therefor from the Mortgagor.
(26) If the Mortgaged Property is in an area
identified in the Federal Register by the
Federal Emergency Management Agency as
having special flood hazards, a flood
insurance policy in a form meeting the
requirements of the current guidelines of
the Flood Insurance Administration is in
effect with respect to such Mortgaged
Property with a generally acceptable carrier
in an amount representing coverage not less
than the least of (A) the original
outstanding principal balance of the
Mortgage Loan, (B) the minimum amount
required to compensate for damage or loss on
a replacement cost
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basis, or (C) the maximum amount of
insurance that is available under the Flood
Disaster Protection Act of 1973, as amended.
(27) To the best of the Seller's knowledge, there
is no proceeding occurring, pending or
threatened for the total or partial
condemnation of the Mortgaged Property.
(28) There is no material monetary default
existing under any Mortgage or the related
Mortgage Note and, to the best of the
Seller's knowledge, there is no material
event that, with the passage of time or with
notice and the expiration of any grace or
cure period, would constitute a default,
breach, violation or event of acceleration
under the Mortgage or the related Mortgage
Note; and the Seller has not waived any
default, breach, violation or event of
acceleration.
(29) Each Mortgaged Property is of a type
described in the Prospectus Supplement.
(30) Each Mortgage Loan is being serviced by the
Subservicer.
(31) Any future advances made prior to the
Cut-Off date have been consolidated with the
outstanding principal amount secured by the
Mortgage, and the secured principal amount,
as consolidated, bears a single interest
rate and single repayment term. The lien of
the Mortgage securing the consolidated
principal amount is expressly insured as
having first lien priority by a title
insurance policy, an endorsement to the
policy insuring the mortgagee's consolidated
interest or by other title evidence
acceptable to FNMA and FHLMC. The
consolidated principal amount does not
exceed the original principal amount of the
Mortgage Loan.
(32) Prior to the approval of the Mortgage Loan
application, an appraisal of the related
Mortgaged Property was obtained from a
qualified appraiser, duly appointed by the
originator, who had no interest, direct or
indirect, in the Mortgaged Property or in
any loan made on the security thereof, and
whose compensation is not affected by the
approval or disapproval of the Mortgage
Loan; such appraisal is in a form acceptable
to FNMA and FHLMC.
(33) None of the Mortgage Loans is a graduated
payment mortgage loan or a growing equity
mortgage loan, and no Mortgage Loan is
subject to a buydown or similar arrangement.
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(34) The Mortgage Loans were selected from among
the outstanding one-to four-family mortgage
loans in the Seller's portfolio at the
Closing Date as to which the representations
and warranties made as to the Mortgage Loans
set forth in this Section 2.03(a)(vi) can be
made.
(35) The Mortgage Loans, individually and in the
aggregate, conform in all material respects
to the descriptions thereof in the
Prospectus Supplement.
(36) None of the Mortgage Loans are second
mortgage loans.
(37) Each Mortgage Loan represents a "qualified
mortgage" within the meaning of Section
860G(a)(3) of the Code (but without regard
to the rule in Treasury Regulation Section
1.860G-2(f)(2) that treats a defective
obligation as a qualified mortgage, or any
substantially similar successor provision)
and applicable Treasury regulations
promulgated thereunder.
(b) [Reserved]
(c) Upon discovery by any of the parties hereto of a breach of a
representation or warranty set forth in Section 2.03(a) that materially and
adversely affects the interests of the Certificateholders in any Mortgage Loan,
the party discovering such breach shall give prompt notice thereof to the other
parties and to the Seller. Pursuant to the Sale Agreement, the Seller shall
within 90 days of the earlier of the discovery by or receipt of written notice
by the Seller from any party of a breach of any representation or warranty set
forth herein made that materially and adversely affects the interests of the
Certificateholders in any Mortgage Loan, it shall cure such breach in all
material respects and, if such breach is not so cured, shall, (i) if such 90-
day period expires prior to the second anniversary of the Closing Date, remove
such Deleted Mortgage Loan from the Trust Fund and substitute in its place a
Replacement Mortgage Loan, in the manner and subject to the conditions set forth
in this Section; or (ii) repurchase the affected Mortgage Loan or Mortgage Loans
from the Trustee at the Purchase Price in the manner set forth below; provided,
however, that any such substitution pursuant to (i) above shall not be effected
prior to the additional delivery to the Trustee of a Request for Release
substantially in the form of Exhibit M and shall not be affected unless it is
within two years of the Startup Date. The Seller shall promptly reimburse the
Trustee for any expenses reasonably incurred by the Trustee in respect of
enforcing the remedies for such breach. To enable the Subservicer to amend the
Mortgage Loan Schedule, unless it cures such breach in a timely fashion pursuant
to this Section 2.03, the Seller shall promptly notify the Subservicer whether
the Seller intends either to repurchase, or to substitute for, the Mortgage Loan
affected by such breach. With respect to the representations and warranties
described in this Section that are made to the best of the Seller's knowledge,
if it is discovered by any of the Seller, the Subservicer, the Master Servicer
or the
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Trustee that the substance of such representation and warranty is inaccurate and
such inaccuracy materially and adversely affects the value of the related
Mortgage Loan, notwithstanding the Seller's lack of knowledge with respect to
the substance of such representation or warranty, such inaccuracy shall be
deemed a breach of the applicable representation or warranty.
With respect to any Replacement Mortgage Loan or Loans, the Seller
shall deliver to the Trustee for the benefit of the Certificateholders the
related Mortgage Note, Mortgage and assignment of the Mortgage, and such other
documents and agreements as are required by Section 2.01, with the Mortgage Note
endorsed and the Mortgage assigned as required by Section 2.01. No substitution
will be made in any calendar month after the Determination Date for such month.
Scheduled Payments due with respect to Replacement Mortgage Loans in the Due
Period related to the Distribution Date on which such proceeds are to be
distributed shall not be part of the Trust Fund and will be retained by the
Seller on such Distribution Date. For the month of substitution, distributions
to Certificateholders will include the Scheduled Payment due on any Deleted
Mortgage Loan for the related Due Period and thereafter the Seller shall be
entitled to retain all amounts received in respect of such Deleted Mortgage
Loan. The Trustee shall amend the Mortgage Loan Schedule for the benefit of the
Certificateholders to reflect the removal of such Deleted Mortgage Loan and the
substitution of the Replacement Mortgage Loan or Loans. Upon such substitution,
the Replacement Mortgage Loan or Loans shall be subject to the terms of this
Agreement in all respects, and the Seller shall be deemed to have made with
respect to such Replacement Mortgage Loan or Loans, as of the date of
substitution, the representations and warranties set forth in Section 2.03(a)
with respect to such Mortgage Loan. Upon any such substitution and the deposit
to the Collection Account of the amount required to be deposited therein in
connection with such substitution as described in the following paragraph, the
Trustee shall release to the Seller the Mortgage File relating to such Deleted
Mortgage Loan and held for the benefit of the Certificateholders and shall
execute and deliver at the Seller's direction such instruments of transfer or
assignment as have been prepared by the Seller, in each case without recourse,
as shall be necessary to vest in the Seller, or its respective designee, title
to the Trustee's interest in any Deleted Mortgage Loan substituted for pursuant
to this Section 2.03.
For any month in which the Seller substitutes one or more Replacement
Mortgage Loans for one or more Deleted Mortgage Loans, the Master Servicer will
determine the amount (if any) by which the aggregate principal balance of all
such Replacement Mortgage Loans as of the date of substitution is less than the
aggregate Stated Principal Balance (after application of the principal portion
of the Scheduled Payment due in the month of substitution) of all such Deleted
Mortgage Loans. An amount equal to the aggregate of the deficiencies described
in the preceding sentence (such amount, the "Substitution Adjustment Amount")
shall be deposited into the Collection Account by the Seller on the
Determination Date for the Distribution Date relating to the Prepayment Period
during which the related Mortgage Loan became required to be purchased or
replaced hereunder.
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In the event that a Seller shall have repurchased a Mortgage Loan, the
Purchase Price therefor shall be deposited in the Collection Account pursuant to
Section 3.08 on the Determination Date for the Distribution Date in the month
following the month during which the Seller became obligated to repurchase or
replace such Mortgage Loan and upon such deposit of the Purchase Price, the
delivery of the Opinion of Counsel required by Section 2.05, if any, and the
receipt of a Request for Release in the form of Exhibit M hereto, the Trustee
shall release the related Mortgage File held for the benefit of the
Certificateholders to the Seller, and the Trustee shall execute and deliver at
such Person's direction the related instruments of transfer or assignment
prepared by the Seller, in each case without recourse, as shall be necessary to
transfer title from the Trustee for the benefit of the Certificateholders and
transfer the Trustee's interest to the Seller to any Mortgage Loan purchased
pursuant to this Section 2.03. It is understood and agreed that the obligation
under this Agreement of the Seller to cure, repurchase or replace any Mortgage
Loan as to which a breach has occurred and is continuing shall constitute the
sole remedy against the Depositor respecting such breach available to
Certificateholders, the Depositor or the Trustee.
(d) The representations and warranties set forth in Section 2.03 hereof
shall survive delivery of the respective Mortgage Files to the Trustee for the
benefit of the Certificateholders.
SECTION 2.04. Representations and Warranties of the Subservicer.
The Subservicer hereby represents and warrants to the Depositor, the
Master Servicer and the Trustee as follows, as of the date hereof:
(i) The Subservicer is a duly organized corporation and is
validly existing and in good standing under the laws of the state of
its incorporation and is duly authorized and qualified to transact any
and all business contemplated by this Agreement to be conducted by the
Subservicer in any state in which a Mortgaged Property is located or is
otherwise not required under applicable law to effect such
qualification and, in any event, is in compliance with the doing
business laws of any such state, to the extent necessary to ensure its
ability to enforce each Mortgage Loan, to service the Mortgage Loans in
accordance with the terms of this Agreement and to perform any of its
other obligations under this Agreement in accordance with the terms
hereof.
(ii) The Subservicer has the full corporate power and
authority to service each Mortgage Loan, and to execute, deliver and
perform, and to enter into and consummate the transactions contemplated
by this Agreement and has duly authorized by all necessary corporate
action on the part of the Subservicer the execution, delivery and
performance of this Agreement; and this Agreement, assuming the due
authorization, execution and delivery hereof by the other parties
hereto, constitutes a legal, valid and binding obligation of the
Subservicer, enforceable against the Subservicer in accordance
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with its terms, except that (a) the enforceability hereof may
be limited by bankruptcy, insolvency, moratorium, receivership and
other similar laws relating to creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be
brought.
(iii) The execution and delivery of this Agreement by the
Subservicer, the servicing of the Mortgage Loans by the Subservicer
under this Agreement, the consummation of any other of the transactions
contemplated by this Agreement, and the fulfillment of or compliance
with the terms hereof are in the ordinary course of business of the
Subservicer and will not (A) result in a material breach of any term or
provision of the charter or by-laws of the Subservicer or (B)
materially conflict with, result in a material breach, violation or
acceleration of, or result in a material default under, the terms of
any other material agreement or instrument to which the Subservicer is
a party or by which it may be bound, or (C) constitute a material
violation of any statute, order or regulation applicable to the
Subservicer of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Subservicer; and the
Subservicer is not in breach or violation of any material indenture or
other material agreement or instrument, or in violation of any statute,
order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it which breach or
violation may materially impair the Subservicer's ability to perform or
meet any of its obligations under this Agreement.
(iv) The Subservicer is an approved Subservicer of
conventional mortgage loans for FNMA or FHLMC.
(v) No litigation is pending or, to the best of the
Subservicer's knowledge, threatened, against the Subservicer that would
materially and adversely affect the execution, delivery or
enforceability of this Agreement or the ability of the Subservicer to
service the Mortgage Loans or to perform any of its other obligations
under this Agreement in accordance with the terms hereof.
(vi) No consent, approval, authorization or order of any court
or governmental agency or body is required for the execution, delivery
and performance by the Subservicer of, or compliance by the Subservicer
with, this Agreement or the consummation of the transactions
contemplated hereby, or if any such consent, approval, authorization or
order is required, the Subservicer has obtained the same.
(vii) The Subservicer's computer and other systems used in
servicing the Mortgage Loans currently are capable of operating in a
manner so that on and after January 1, 2000 (A) the Subservicer can
service the Mortgage Loans in accordance with the terms of this
Agreement and (B) the Subservicer can operate its business in the same
manner as it is operating on the date hereof.
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SECTION 2.05. Substitutions and Repurchases of Mortgage Loans which
are not "Qualified Mortgages".
Upon discovery by the Depositor, the Subservicer, the Master Servicer
or the Trustee that any Mortgage Loan does not constitute a "qualified mortgage"
within the meaning of section 860G(a)(3) of the Code, the party discovering such
fact shall promptly (and in any event within 5 Business Days of discovery) give
written notice thereof to the other parties. In connection therewith, the
Trustee shall require the Depositor, at the Depositor's option, to either (i)
substitute, if the conditions in Section 2.03(c) with respect to substitutions
are satisfied, a Replacement Mortgage Loan for the affected Mortgage Loan, or
(ii) repurchase the affected Mortgage Loan within 90 days of such discovery in
the same manner as it would a Mortgage Loan for a breach of representation or
warranty contained in Section 2.03. The Trustee shall reconvey to the Depositor
the Mortgage Loan to be released pursuant hereto in the same manner, and on the
same terms and conditions, as it would a Mortgage Loan repurchased for breach of
a representation or warranty contained in Section 2.03.
SECTION 2.06. Authentication and Delivery of Certificates.
The Trustee acknowledges the transfer and assignment to it of the Trust
Fund and, concurrently with such transfer and assignment, has caused to be
authenticated and delivered to or upon the order of the Depositor, in exchange
for the Mortgage Loans, Certificates duly authenticated by the Authenticating
Agent in authorized denominations evidencing ownership of the entire Trust Fund.
The Trustee agrees to hold the Trust Fund and exercise the rights referred to
above for the benefit of all present and future Holders of the Certificates and
to perform the duties set forth in this Agreement to the best of its ability, to
the end that the interests of the Holders of the Certificates may be adequately
and effectively protected.
SECTION 2.07. REMIC Election.
(a) The Depositor hereby instructs and authorizes the Trustee to make
an appropriate election to treat each of the Master REMIC and the Subsidiary
REMIC as a REMIC. This Agreement shall be construed so as to carry out the
intention of the parties that the Master REMIC and the Subsidiary REMIC each be
treated as a REMIC at all times prior to the date on which the Trust Fund is
terminated.
(b) The Preliminary Statement sets forth the designations and "latest
possible maturity date" for federal income tax purposes of all interests created
hereby. The "Startup Date" for purposes of the REMIC Provisions shall be the
Closing Date. Each REMIC's fiscal year shall be the calendar year.
The Subsidiary REMIC will consist of all of the assets of the Trust
Fund (other than the uncertificated interests issued by such REMIC). The
Subsidiary REMIC will issue two
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interests, Subsidiary REMIC Interest I and Subsidiary REMIC Interest II, that
shall be designated as regular interests of such REMIC and shall issue the SR
Interest that shall be designated as the sole class of residual interest in the
Subsidiary REMIC.
Subsidiary REMIC Interest I shall have an initial principal balance
equal to the principal balance of the Group I Mortgage Loans as of the Cut-off
Date, an interest rate equal to the weighted average Mortgage Rate of the Group
I Mortgage Loans (net of the Servicing Fee Rate and Master Servicer Fee Rate),
and pay on each Distribution Date. All Realized Losses from the Group I Mortgage
Loans shall be allocated to Subsidiary Interest I and all payments of principal
and interest (net of fees and expenses) received from the Group I Mortgage Loans
shall be paid to Subsidiary REMIC Interest I in payment of accrued interest and
principal until the principal balance of such interest is reduced to zero and
any losses allocated to such interest have been reimbursed. Any excess funds
shall first be applied to reimburse prior losses on the Group II Mortgage Loans
and then distributed to the SR Interest.
Subsidiary REMIC Interest II shall have an initial principal balance
equal to the principal balance of the Group II Mortgage Loans as of the Cut-off
Date, an interest rate equal to the weighted average Mortgage Rate (net of the
Servicing Fee Rate and the Master Servicer Fee Rate) of the Group II Mortgage
Loans, and pay on each Distribution Date. All Realized Losses from the Group II
Mortgage Loans shall be allocated to Subsidiary REMIC Interest II and all
payments of principal and interest (net of fees and expenses) received from the
Group II Mortgage Loans shall be paid to Subsidiary REMIC Interest II in payment
of accrued interest and principal until the principal balance of such interest
is reduced to zero and any losses allocated to such interest have been
reimbursed. Any excess funds shall first be applied to reimburse prior losses on
the Group I Mortgage Loans and then distributed to the SR Interest.
The SR Interest shall have no principal balance and shall not bear
interest.
The assets of the Master REMIC shall be Subsidiary REMIC Interest I and
Subsidiary REMIC Interest II. Each Class of Group I Certificates and each Class
of Group II Certificates shall be designated as regular interests in such REMIC
and the MR Interest shall be designated as the sole class of residual interests
in the Master REMIC.
The beneficial ownership of the SR Interest and the MR Interest shall
be represented by the Class R Certificate.
(c) The "tax matters person" with respect to each REMIC for purposes of
the REMIC provisions shall be the beneficial owner of the Class R Certificate;
provided, however, that the Holder of a Class R Certificate, by its acceptance
thereof, irrevocably appoints the Master Servicer as its agent and
attorney-in-fact to act as "tax matters person" with respect to each REMIC for
purposes of the REMIC provisions.
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SECTION 2.08. Covenants of the Subservicer.
The Subservicer hereby covenants to the Depositor, the Master Servicer
and the Trustee as follows:
(a) the Subservicer shall comply in the performance of its obligations
under this Agreement with all reasonable rules and requirements of the insurer
under each Required Insurance Policy; and
(b) no written information, certificate of an officer, statement
furnished in writing or written report delivered to the Depositor, the Master
Servicer or the Trustee, any affiliate of the Depositor, the Master Servicer or
the Trustee and prepared by the Subservicer pursuant to this Agreement will be
inaccurate in any material respect.
SECTION 2.09. Representations of the Master Servicer.
The Master Servicer represents and warrants to, and covenants with, the
Trustee for the benefit of the Certificateholders that as of the Closing Date:
(a) The Master Servicer is a corporation duly chartered and validly
existing in good standing under the laws of the State of New Jersey;
(b) The execution and delivery of this Agreement by the Master Servicer
and its performance and compliance with the terms of this Agreement will not
violate the Master Servicer's corporate charter or by-laws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material contract,
agreement or other instrument to which the Master Servicer is a party or which
may be applicable to the Master Servicer or any of its assets;
(c) This Agreement, assuming due authorization, execution and delivery
by the Trustee, the Subservicer and the Depositor, constitutes a valid, legal
and binding obligation of the Master Servicer, enforceable against it in
accordance with the terms hereof subject to applicable bankruptcy, insolvency,
reorganization, moratorium and other laws affecting the enforcement of
creditors' rights generally and the rights of insured depository institutions
specifically and to general principles of equity, regardless of whether such
enforcement is considered in a proceeding in equity or at law;
(d) The Master Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which default might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the Master Servicer or its properties or might have consequences
that would affect its performance hereunder; and
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(e) No litigation is pending or, to the best of the Master Servicer's
knowledge, threatened against the Master Servicer which would prohibit its
entering into this Agreement or performing its obligations under this Agreement.
It is understood and agreed that the representations and warranties set
forth in this Section 2.09 shall survive the issuance and delivery of the
Certificates and shall be continuing as long as any Certificate shall be
outstanding or this Agreement has been terminated.
ARTICLE III
ADMINISTRATION AND SERVICING
OF MORTGAGE LOANS
SECTION 3.01. Subservicer to Service Mortgage Loans.
For and on behalf of the Certificateholders, the Subservicer shall
service and administer the Mortgage Loans in accordance with Accepted Servicing
Practices. In connection with such servicing and administration, the Subservicer
shall have full power and authority, acting alone and/or through Subservicers as
provided in Section 3.02 hereof, to do or cause to be done any and all things
that it may deem necessary or desirable in connection with such servicing and
administration, including but not limited to, the power and authority, subject
to the terms hereof (i) to execute and deliver, on behalf of the
Certificateholders and the Trustee, customary consents or waivers and other
instruments and documents, (ii) to consent to transfers of any Mortgaged
Property and assumptions of the Mortgage Notes and related Mortgages (but only
in the manner provided in this Agreement), (iii) to collect any Insurance
Proceeds and other Liquidation Proceeds, (iv) subject to Section 3.12(a), to
effectuate foreclosure or other conversion of the ownership of the Mortgaged
Property securing any Mortgage Loan and (v) cooperate with the Master Servicer
in selling, at the Master Servicer's sole option pursuant to Section 3.09, any
Delinquent Mortgage Loan or a Mortgage Loan that is 90 days or more Delinquent
if the Master Servicer determines, in accordance with Accepted Servicing
Practices that such a sale is not inconsistent with or prejudicial to the
interests of the Trust Fund or the Certificateholders; provided that, subject to
Section 6.03, the Subservicer shall take no action that is inconsistent with or
prejudices the interests of the Trust Fund or the Certificateholders in any
Mortgage Loan or the rights and interests of the Depositor, the Master Servicer
and the Trustee under this Agreement. The Subservicer shall represent and
protect the interest of the Trust Fund in the same manner as it currently
protects its own interest in mortgage loans in its own portfolio in any claim,
proceeding or litigation regarding a Mortgage Loan and shall not make or permit
any modification, waiver or amendment of any term of any Mortgage Loan which
would cause the Trust Fund to fail to qualify as a REMIC or result in the
imposition of any tax under Section 860G(a) or 860G(d) of the Code, but in any
case not in any manner that is a lesser standard than that provided in the first
sentence of this Section 3.01. Without limiting the generality of the foregoing,
the Subservicer, in its own name or in the name of the Depositor
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and the Trustee, is hereby authorized and empowered by the Depositor and the
Trustee, when the Subservicer believes it appropriate in its reasonable
judgment, to execute and deliver, on behalf of the Trustee, the Depositor, the
Certificateholders or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the Mortgage Loans, and with respect to
the Mortgaged Properties held for the benefit of the Certificateholders. The
Subservicer shall prepare and deliver to the Depositor and/or the Trustee such
documents requiring execution and delivery by any or all of them as are
necessary or appropriate to enable the Subservicer to service and administer the
Mortgage Loans, including without limitation, any powers of attorney. Upon
receipt of such documents, the Depositor and/or the Trustee shall execute such
documents and deliver them to the Subservicer.
In accordance with the standards of the preceding paragraph, the
Subservicer shall advance or cause to be advanced funds as necessary for the
purpose of effecting the payment of taxes and assessments on the Mortgaged
Properties, which advances shall be reimbursable in the first instance from
related collections from the Mortgagors pursuant to Section 3.06, and further as
provided in Section 3.08. All costs incurred by the Subservicer, if any, in
effecting the timely payments of taxes and assessments on the Mortgaged
Properties and related insurance premiums shall not, for the purpose of
calculating monthly distributions to the Certificateholders, be added to the
Stated Principal Balance under the related Mortgage Loans, notwithstanding that
the terms of such Mortgage Loans so permit.
The Subservicer shall deliver a list of Servicing Officers to the
Trustee and the Master Servicer by the Closing Date.
SECTION 3.02. Subservicing; Enforcement of the Obligations of
Subservicer.
(a) The Subservicer may arrange for the subservicing of any Mortgage
Loan by a subservicer, which may be an affiliate (each, a "subservicer")
pursuant to a subservicing agreement (each, a "Subservicing Agreement");
provided, however, that such subservicing arrangement and the terms of the
related subservicing agreement must provide for the servicing of such Mortgage
Loans in a manner consistent with the servicing arrangements contemplated
hereunder. Notwithstanding the provisions of any subservicing agreement, any of
the provisions of this Agreement relating to agreements or arrangements between
the Subservicer and a subservicer or reference to actions taken through a
subservicer or otherwise, the Subservicer shall remain obligated and liable to
the Depositor, the Trustee and the Certificateholders for the servicing and
administration of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
subservicing agreements or arrangements or by virtue of indemnification from the
subservicer and to the same extent and under the same terms and conditions as if
the Subservicer alone were servicing and administering the Mortgage Loans. Every
subservicing agreement entered into by the Subservicer shall contain a provision
giving the successor Subservicer the option to terminate
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such agreement in the event a successor Subservicer is appointed. All actions of
each subservicer performed pursuant to the related subservicing agreement shall
be performed as an agent of the Subservicer with the same force and effect as if
performed directly by the Subservicer.
(b) For purposes of this Agreement, the Subservicer shall be deemed to
have received any collections, recoveries or payments with respect to the
Mortgage Loans that are received by a subservicer regardless of whether such
payments are remitted by the subservicer to the Subservicer.
SECTION 3.03. Rights of the Depositor, the Master Servicer and the
Trustee in Respect of the Subservicer.
Neither the Trustee, the Master Servicer nor the Depositor shall have
any responsibility or liability for any action or failure to act by the
Subservicer, and none of them is obligated to supervise the performance of the
Subservicer hereunder or otherwise.
SECTION 3.04. Trustee to Act as Subservicer.
In the event that the Subservicer shall for any reason no longer be the
Subservicer hereunder (including by reason of an Event of Default), the Trustee
or its designee shall thereupon assume all of the rights and obligations of the
Subservicer hereunder arising thereafter (except that the Trustee shall not be
(i) liable for losses of the Subservicer pursuant to Section 3.10 hereof or any
acts or omissions of the predecessor Subservicer hereunder, (ii) obligated to
make Advances if it is prohibited from doing so by applicable law, (iii)
obligated to effectuate repurchases or substitutions of Mortgage Loans
hereunder, including pursuant to Section 2.02 or 2.03 hereof, (iv) responsible
for expenses of the Subservicer pursuant to Section 2.03 or (v) deemed to have
made any representations and warranties hereunder, including pursuant to Section
2.03 or the first paragraph of Section 6.02 hereof). If the Subservicer shall
for any reason no longer be the Subservicer (including by reason of any Event of
Default), the Trustee (or any other successor servicer) may, at its option,
succeed to any rights and obligations of the Subservicer under any subservicing
agreement in accordance with the terms thereof; provided, however, that the
Trustee (or any other successor servicer) shall not incur any liability or have
any obligations in its capacity as servicer under a subservicing agreement
arising prior to the date of such succession unless it expressly elects to
succeed to the rights and obligations of the Subservicer thereunder; and the
Subservicer shall not thereby be relieved of any liability or obligations under
the subservicing agreement arising prior to the date of such succession.
The Subservicer shall, upon request of the Trustee, but at the expense
of the Subservicer, deliver to the assuming party all documents and records
relating to each subservicing agreement and the Mortgage Loans then being
serviced and otherwise use its best efforts to effect the orderly and efficient
transfer of the subservicing agreement to the assuming party.
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SECTION 3.05. Collection of Mortgage Loan Payments; Collection Account;
Certificate Account; Distribution Account.
(a) The Subservicer shall make reasonable efforts in accordance with
Accepted Servicing Practices to collect all payments called for under the terms
and provisions of the Mortgage Loans to the extent such procedures shall be
consistent with this Agreement and the terms and provisions of any related
Required Insurance Policy. Consistent with the foregoing, the Subservicer may in
its discretion (i) waive any late payment charge or any prepayment charge or
penalty interest in connection with the prepayment of a Mortgage Loan (provided
that the Subservicer shall not waive any prepayment charge or penalty interest
in connection with the prepayment of a Mortgage Loan without the prior written
consent of the Holder of the Class R Certificate; provided, further, that if the
Holder of the Class R Certificate does not respond within 3 Business Days after
notice from the Subservicer, the Holder of the Class R Certificate shall be
deemed to have consented to any action taken by the Subservicer with respect to
such prepayment charges or penalty interest) and (ii) extend the due dates for
payments due on a Mortgage Note for a period not greater than 270 days. In the
event of any such arrangement, subject to Section 4.01, the Subservicer shall
make any Advances on the related Mortgage Loan during the scheduled period in
accordance with the amortization schedule of such Mortgage Loan without
modification thereof by reason of such arrangements. The Subservicer shall not
be required to institute or join in litigation with respect to collection of any
payment (whether under a Mortgage, Mortgage Note or otherwise or against any
public or governmental authority with respect to a taking or condemnation) if it
reasonably believes that enforcing the provision of the Mortgage or other
instrument pursuant to which such payment is required is prohibited by
applicable law.
(b) The Subservicer shall establish and initially maintain, on behalf
of the Certificateholders, the Collection Account. The Subservicer shall deposit
into the Collection Account daily, within two Business Days of receipt thereof,
in immediately available funds, the following payments and collections received
or made by it on and after the Cut-Off Date with respect to the Mortgage Loans
(to the extent not applied in computing the Cut-off Date Principal Balance or
thereof):
(i) all payments on account of principal, including Principal
Prepayments, on the Mortgage Loans, other than principal due on the
Mortgage Loans on or prior to the Cut-off Date;
(ii) all payments on account of interest on the Mortgage Loans
net of the related Servicing Fee permitted under Section 3.15, other
than interest due on the Mortgage Loans on or prior to the Cut-off
Date;.
(iii) all Liquidation Proceeds, other than proceeds to be
applied to the restoration or repair of the Mortgaged Property or
released to the Mortgagor in accordance with the Subservicer's normal
servicing procedures;
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(iv) all Compensating Interest;
(v) any amount required to be deposited by the Subservicer
pursuant to Section 3.05(e) in connection with any losses on Permitted
Investments;
(vi) any amounts required to be deposited by the Subservicer
pursuant to Section 3.10 hereof;
(vii) the Purchase Price and any Substitution Adjustment
Amount;
(viii) all Advances made by the Subservicer pursuant to
Section 4.01;
(ix) all prepayment penalties and late payment charges; and
(x) any other amounts required to be deposited hereunder.
The foregoing requirements for remittance by the Subservicer into the
Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, payments in the nature of
assumption fees (i.e. fees related to the assumption of a Mortgage Loan upon the
purchase of the related Mortgaged Property) or any fees earned pursuant to the
Subservicing Side Letter Agreement, if collected, need not be remitted by the
Subservicer. In the event that the Subservicer shall remit any amount not
required to be remitted and not otherwise subject to withdrawal pursuant to
Section 3.08 hereof, it may at any time withdraw or direct the Trustee, or such
other institution maintaining the Collection Account, to withdraw such amount
from the Collection Account, any provision herein to the contrary
notwithstanding. Such withdrawal or direction may be accomplished by delivering
written notice thereof to the Trustee, or such other institution maintaining the
Collection Account, that describes the amounts deposited in error in the
Collection Account. The Subservicer shall maintain adequate records with respect
to all withdrawals made pursuant to this Section. All funds deposited in the
Collection Account shall be held in trust for the Certificateholders until
withdrawn in accordance with Section 3.08. In no event shall the Trustee incur
liability for withdrawals from the Collection Account at the direction of the
Subservicer.
(c) The Master Servicer shall establish and maintain, on behalf of the
Certificateholders, the Certificate Account. The Master Servicer shall, promptly
upon receipt, deposit in the Certificate Account and retain therein the
following:
(i) the aggregate amount withdrawn from the Collection Account
and required to be deposited into the Certificate Account pursuant to
the second paragraph of Section 3.08(a); and
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(ii) any amount required to be deposited by the Master
Servicer pursuant to Section 3.05(e) in connection with any losses on
Permitted Investments.
Any amounts received by the Master Servicer prior to 3:00 p.m. New York
City Time (or such earlier deadline for investment in the Permitted Investments
designated by the Master Servicer) which are required to be deposited in the
Certificate Account pursuant to Section 3.08(a) shall be invested in Permitted
Investments on the Business Day on which they were received. The foregoing
requirements for deposit by the Master Servicer into the Certificate Account
shall be exclusive. In the event that the Master Servicer shall remit any amount
not required to be remitted and not otherwise subject to withdrawal pursuant to
Section 3.08 hereof, it may at any time withdraw such amount from the
Certificate Account, any provision herein to the contrary notwithstanding. All
funds deposited in the Certificate Account shall be held by the Trustee in trust
for the Certificateholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 3.08. In no event shall the Trustee incur
liability for withdrawals from the Certificate Account at the direction of the
Master Servicer.
(d) The Master Servicer shall establish and maintain, on behalf of the
Certificateholders, the Distribution Account. The Master Servicer shall,
promptly upon receipt, deposit in the Distribution Account and retain therein
the following:
(i) the aggregate amount withdrawn by the Master Servicer
pursuant to the second paragraph of Section 3.08(b);
(ii) any amount required to be deposited by the Master
Servicer pursuant to Section 3.05(e) in connection with any losses on
Permitted Investments;
(iii) the aggregate amount withdrawn by the Master Servicer
pursuant to Section 4.06(c);
(iv) the aggregate amount withdrawn by the Master Servicer
pursuant to Section 4.07; and
(v) the Repurchase Price paid by the Master Servicer pursuant
to Section 9.01.
The foregoing requirements for remittance by the Master Servicer and
deposit by the Master Servicer into the Distribution Account shall be exclusive.
In the event that the Master Servicer shall remit any amount not required to be
remitted and not otherwise subject to withdrawal pursuant to Section 3.08
hereof, it may at any time withdraw such amount from the Distribution Account,
any provision herein to the contrary notwithstanding. All funds deposited
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in the Distribution Account shall be held by the Trustee in trust for the
Certificateholders until disbursed in accordance with this Agreement or
withdrawn in accordance with Section 3.08. In no event shall the Trustee incur
liability for withdrawals from the Distribution Account at the direction of the
Master Servicer.
(e) Each institution that maintains the Collection Account, the
Certificate Account or the Distribution Account may invest the funds in each
such account, as directed by the Subservicer with respect to the Collection
Account and as directed by the Master Servicer with respect to the Certificate
Account and the Distribution Account, in Permitted Investments, which shall
mature not later than (i) in the case of the Collection Account, the Business
Day preceding the related Servicer Remittance Date (except that if such
Permitted Investment is an obligation of the institution that maintains such
Collection Account or is otherwise immediately available, then such Permitted
Investment shall mature not later than such Servicer Remittance Date), (ii) in
the case of the Certificate Account, the second preceding Business Day preceding
the Distribution Date that follows the date of such investment (except that if
such Permitted Investment is an obligation of the institution that maintains
such Certificate Account or is otherwise immediately available, then such
Permitted Investment shall mature not later than the Business Day immediately
preceding such Distribution Date) and, in each case, shall not be sold or
disposed of prior to its maturity and (iii) in the case of the Distribution
Account, the Business Day immediately preceding the first Distribution Date that
follows the date of such investment (except that if such Permitted Investment is
an obligation of the institution that maintains such Distribution Account or is
otherwise immediately available, then such Permitted Investment shall mature not
later than such Distribution Date) and, in each case, shall not be sold or
disposed of prior to its maturity. All such Permitted Investments shall be made
in the name of the Trustee, for the benefit of the Certificateholders. All
income and gain net of any losses realized from amounts on deposit in the
Collection Account shall be for the benefit of the Subservicer as servicing
compensation and shall be remitted to it monthly as provided herein. The amount
of any losses incurred in the Collection Account in respect of any such
investments shall be deposited by the Subservicer in the Collection Account out
of the Subservicer's own funds immediately as realized. All income and gain net
of any losses realized from amounts on deposit in the Certificate Account and
the Distribution Account shall be for the benefit of the Master Servicer as
compensation and shall be remitted to it monthly as provided herein. The amount
of any losses incurred in the Certificate Account and the Distribution Account
in respect of any such investments shall be deposited by the Master Servicer, or
the Trustee upon receipt from the Master Servicer, in the Certificate Account or
the Distribution Account out of the Master Servicer's own funds immediately as
realized. The Trustee shall not be liable for the amount of any loss incurred in
respect of any investment or lack of investment of funds held in the Collection
Account, the Certificate Account or the Distribution Account and made in
accordance with this Section 3.05.
(f) The party maintaining the Collection Account, the Certificate
Account or the Distribution Account, as the case may be, shall give at least 30
days advance notice to each of the other parties to this Agreement and each
Rating Agency of any proposed change of the
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location of the Collection Account, the Certificate Account or the Distribution
Account prior to any change thereof.
SECTION 3.06. Collection of Taxes, Assessments and Similar Items;
Escrow Accounts.
To the extent required by the related Mortgage Note, the Subservicer
shall establish and maintain one or more accounts (each, an "Escrow Account")
and deposit and retain therein all collections from the Mortgagors (or advances
by the Subservicer) for the payment of taxes, assessments, hazard insurance
premiums or comparable items for the account of the Mortgagors. Nothing herein
shall require the Subservicer to compel a Mortgagor to establish an Escrow
Account in violation of applicable law.
Withdrawals of amounts so collected from the Escrow Accounts may be
made only to effect timely payment of taxes, assessments, hazard insurance
premiums, condominium or PUD association dues, or comparable items, to reimburse
the Subservicer out of related collections for any payments made pursuant to
Sections 3.01 hereof (with respect to taxes and assessments and insurance
premiums) and 3.10 hereof (with respect to hazard insurance), to refund to any
Mortgagors any sums as may be determined to be overages, to pay interest, if
required by law or the terms of the related Mortgage or Mortgage Note, to
Mortgagors on balances in the Escrow Account or to clear and terminate the
Escrow Account at the termination of this Agreement in accordance with Section
9.01 hereof. The Escrow Accounts shall not be a part of the Trust Fund.
SECTION 3.07. Access to Certain Documentation and Information Regarding
the Mortgage Loans.
The Subservicer shall afford the Depositor and the Trustee reasonable
access to all records and documentation regarding the Mortgage Loans and all
accounts, insurance policies and other matters relating to this Agreement, such
access being afforded without charge, but only upon reasonable request and
during normal business hours at the offices of the Subservicer designated by it.
Upon reasonable advance notice in writing if required by federal
regulation, the Subservicer will provide to each Certificateholder that is a
savings and loan association, bank or insurance company certain reports and
reasonable access to information and documentation regarding the Mortgage Loans
sufficient to permit such Certificateholder to comply with applicable
regulations of the OTS or other regulatory authorities with respect to
investment in the Certificates; provided, that the Subservicer shall be entitled
to be reimbursed by each such Certificateholder for actual expenses incurred by
the Subservicer in providing such reports and access.
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SECTION 3.08. Permitted Withdrawals from the Collection Account,
Certificate Account and Distribution Account.
(a) The Subservicer (or the Depositor in the case of clauses (vi) and
(vii) below) may from time to time, make withdrawals from the Collection Account
for the following purposes:
(i) to pay to the Subservicer (to the extent not previously
paid to or withheld by the Subservicer), as servicing compensation in
accordance with Section 3.15, that portion of any payment of interest
that equals the Servicing Fee for the period with respect to which such
interest payment was made, and, as additional servicing compensation,
those other amounts set forth in Section 3.15;
(ii) to reimburse the Subservicer for Advances made by it with
respect to the Mortgage Loans, such right of reimbursement pursuant to
this subclause (ii) being limited to amounts received on particular
Mortgage Loan(s) (including, for this purpose, Liquidation Proceeds)
that represent late recoveries of payments of principal and/or interest
on such particular Mortgage Loan(s) in respect of which any such
Advance was made;
(iii) to reimburse the Subservicer for any Non-Recoverable
Advance previously made and any Non-Recoverable Servicing Advance;
(iv) to reimburse the Subservicer from Insurance Proceeds for
Insured Expenses covered by the related Insurance Policy;
(v) to pay the Subservicer any unpaid Servicing Fees and to
reimburse it for any unreimbursed Servicing Advances, the Subservicer's
right to reimbursement of Servicing Advances pursuant to this subclause
(v) with respect to any Mortgage Loan being limited to amounts received
on particular Mortgage Loan(s)(including, for this purpose, Liquidation
Proceeds and purchase and repurchase proceeds) that represent late
recoveries of the payments for which such advances were made pursuant
to Section 3.01 or Section 3.06;
(vi) to pay to the Depositor or the Master Servicer, as
applicable, with respect to each Mortgage Loan or property acquired in
respect thereof that has been purchased pursuant to Section 2.02, 2.03
or 3.12, all amounts received thereon and not taken into account in
determining the related Stated Principal Balance of such repurchased
Mortgage Loan;
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(vii) to reimburse the Subservicer, the Master Servicer or the
Depositor for expenses incurred by any of them in connection with the
Mortgage Loans or Certificates and reimbursable pursuant to Section
6.03 hereof;
(viii) to withdraw pursuant to Section 3.05 any amount
deposited in the Collection Account and not required to be deposited
therein; and
(ix) to clear and terminate the Collection Account upon
termination of this Agreement pursuant to Section 9.01 hereof.
In addition, no later than 12:00 noon Pacific Standard Time on the
Servicer Remittance Date (or such earlier time on the Servicer Remittance Date
as the Master Servicer requires as specified in writing not later than two
Business Days prior to such Servicer Remittance Date, such earlier time
requirement being due to the operations of the Master Servicer's designated
Permitted Investment closing early on such Servicer Remittance Date), the
Subservicer shall cause to be withdrawn from the Collection Account the Group I
Interest Funds (other than the amounts subtracted from such funds in such
definition), the Group I Principal Funds (other than Non-Recoverable Advances
specified in item (v) of such definition), the Group II Interest Funds (other
than the amounts subtracted from such funds in such definition), the Group II
Principal Funds (other than Non-Recoverable Advances specified in item (v) of
such definition) and the Master Servicer Fee, to the extent on deposit, and such
amount shall be deposited in the Certificate Account.
The Subservicer shall keep and maintain separate accounting, on a
Mortgage Loan by Mortgage Loan basis, for the purpose of justifying any
withdrawal from the Collection Account.
(b) The Master Servicer may, from time to time, make withdrawals from
the Certificate Account for the following purposes:
(i) to pay the Master Servicer the Master Servicer Fee;
(ii) to pay to the Master Servicer, as additional
compensation, earnings on or investment income with respect to funds in
or credited to the Certificate Account;
(iii) to withdraw pursuant to Section 3.05 any amount
deposited in the Certificate Account and not required to be deposited
therein; and
(iv) to clear and terminate the Certificate Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
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In addition, no later than the Business Day preceding the Distribution
Date, the Master Servicer shall cause to be withdrawn from the Certificate
Account the Group I Interest Funds, the Group I Principal Funds, the Group II
Interest Funds and the Group II Principal Funds, to the extent on deposit, and
such amount shall be deposited in the Distribution Account.
(c) The Master Servicer shall withdraw funds from the Distribution
Account for distribution to the Certificateholders in the manner specified in
this Agreement (and to withhold from the amounts so withdrawn, the amount of any
taxes that it is authorized to retain pursuant to the last paragraph of Section
8.11). In addition, the Master Servicer may from time to time make withdrawals
from the Distribution Account for the following purposes:
(i) to pay to the Master Servicer, as additional compensation,
earnings on or investment income with respect to funds in or credited
to the Distribution Account;
(ii) to withdraw pursuant to Section 3.05 any amount deposited
in the Distribution Account and not required to be deposited therein;
and
(iii) to clear and terminate the Distribution Account upon
termination of the Agreement pursuant to Section 9.01 hereof.
SECTION 3.09. Sale by Master Servicer of Delinquent or Charged-off
Mortgage Loans.
The Master Servicer may, at its sole option, elect to sell to a third
party any Mortgage Loan which is 90 days or more Delinquent, including REO
properties, provided that the Master Servicer has determined that such a sale is
not inconsistent with or prejudicial to the interests of the Trust Fund or the
Certificateholders. The Master Servicer shall give notice to the Subservicer and
the Trustee of its intention to effect such a sale, and Subservicer and the
Trustee shall cooperate with the Master Servicer in connection with any such
sale. The proceeds of any such sale shall be promptly remitted by the Master
Servicer to the Subservicer, and the Subservicer shall thereupon promptly
deposit such proceeds into the Collection Account no later than two business
days following receipt thereof. The proceeds of any such sale shall be deemed to
be Liquidation Proceeds, and applied in accordance with Section 3.12 (including
the application of such Liquidation Proceeds to repayment of Subservicer's
reasonable costs and expenses relating to a sale under this Section 3.09).
The Master Servicer shall be responsible for providing any
documentation, including missing documents or recording information, with
respect to the Mortgage Loans sold pursuant to this Section 3.09. Subject to
Section 6.03 hereof, the Master Servicer shall indemnify the Subservicer for any
liability incurred by the Subservicer as a result of its cooperation with the
Master Servicer under this Section 3.09. As provided in Section 3.08, to the
extent Liquidation Proceeds are insufficient to reimburse the Subservicer for
any unreimbursed Advances or
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unreimbursed Servicing Advances, the Subservicer shall be entitled to
reimbursement from any collections prior to distribution to the
Certificateholders.
SECTION 3.10. Maintenance of Hazard Insurance.
The Subservicer shall cause to be maintained, for each Mortgage Loan,
hazard insurance with extended coverage in an amount that is at least equal to
the lesser of (i) the replacement value of the improvements that are part of
such Mortgaged Property and (ii) the greater of (a) the outstanding principal
balance of the Mortgage Loan and (b) an amount such that the proceeds of such
policy shall be sufficient to prevent the related Mortgagor and/or mortgagee
from becoming a co-insurer. Each such policy of standard hazard insurance shall
contain, or have an accompanying endorsement that contains, a standard mortgagee
clause. The Subservicer shall also cause flood insurance to be maintained on
property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan, to the extent described below. Pursuant to Section 3.05 hereof,
any amounts collected by the Subservicer under any such policies (other than the
amounts to be applied to the restoration or repair of the related Mortgaged
Property or property thus acquired or amounts released to the Mortgagor in
accordance with the Subservicer's normal servicing procedures) shall be
deposited in the Collection Account. Any cost incurred by the Subservicer in
maintaining any such insurance shall not, for the purpose of calculating monthly
distributions to the Certificateholders or remittances to the Trustee for their
benefit, be added to the principal balance of the Mortgage Loan, notwithstanding
that the terms of the Mortgage Loan so permit. Such costs shall be recoverable
by the Subservicer out of late payments by the related Mortgagor or out of
Liquidation Proceeds to the extent permitted by Section 3.08 hereof. It is
understood and agreed that no earthquake or other additional insurance is to be
required of any Mortgagor or maintained on property acquired in respect of a
Mortgage other than pursuant to such applicable laws and regulations as shall at
any time be in force and as shall require such additional insurance. If the
Mortgaged Property is located at the time of origination of the Mortgage Loan in
a federally designated special flood hazard area and such area is participating
in the national flood insurance program, the Subservicer shall cause flood
insurance to be maintained with respect to such Mortgage Loan. Such flood
insurance shall be in an amount equal to the lesser of (i) the original
principal balance of the related Mortgage Loan, (ii) the replacement value of
the improvements that are part of such Mortgaged Property, or (iii) the maximum
amount of such insurance available for the related Mortgaged Property under the
Flood Disaster Protection Act of 1973, as amended.
In the event that the Subservicer 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 3.10, it being understood and agreed that such
policy may contain a deductible clause on terms substantially equivalent to
those commercially available and maintained by comparable servicers. If such
policy contains a deductible clause, the Subservicer shall, in the event that
there shall not have been maintained on the related Mortgaged Property a policy
complying with the first sentence of
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this Section 3.10, and there shall have been a loss that would have been covered
by such policy, deposit in the Collection Account the amount not otherwise
payable under the blanket policy because of such deductible clause. In
connection with its activities as servicer of the Mortgage Loans, the
Subservicer agrees to present, on behalf of itself, the Depositor, the Master
Servicer and the Trustee for the benefit of the Certificateholders, claims under
any such blanket policy.
SECTION 3.11. Enforcement of Due-On-Sale Clauses; Assumption
Agreements.
(a) Except as otherwise provided in this Section 3.11(a), when any
property subject to a Mortgage has been or is about to be conveyed by the
Mortgagor, the Subservicer shall to the extent that it has knowledge of such
conveyance, enforce any due-on-sale clause contained in any Mortgage Note or
Mortgage, to the extent permitted under applicable law and governmental
regulations, but only to the extent that such enforcement will not adversely
affect or jeopardize coverage under any Required Insurance Policy.
Notwithstanding the foregoing, the Subservicer is not required to exercise such
rights with respect to a Mortgage Loan if the Person to whom the related
Mortgaged Property has been conveyed or is proposed to be conveyed satisfies the
terms and conditions contained in the Mortgage Note and Mortgage related thereto
and the consent of the mortgagee under such Mortgage Note or Mortgage is not
otherwise so required under such Mortgage Note or Mortgage as a condition to
such transfer. In the event that the Subservicer is prohibited by law from
enforcing any such due-on-sale clause, or if coverage under any Required
Insurance Policy would be adversely affected, or if nonenforcement is otherwise
permitted hereunder, the Subservicer is authorized, subject to Section 3.11(b),
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 Mortgage Note and, unless prohibited
by applicable state law, the Mortgagor remains liable thereon, provided that the
Mortgage Loan shall continue to be covered (if so covered before the Subservicer
enters such agreement) by the applicable Required Insurance Policies. The
Subservicer, subject to Section 3.11(b), is also authorized with the prior
approval of the insurers under any Required Insurance Policies to enter into a
substitution of liability agreement with such Person, pursuant to which the
original Mortgagor is released from liability and such Person is substituted as
Mortgagor and becomes liable under the Mortgage Note. Notwithstanding the
foregoing, the Subservicer shall not be deemed to be in default under this
Section 3.11(a) by reason of any transfer or assumption that the Subservicer
reasonably believes it is restricted by law from preventing.
(b) Subject to the Subservicer's duty to enforce any due-on-sale clause
to the extent set forth in Section 3.11(a) hereof, in any case in which a
Mortgaged Property has been conveyed to a Person by a Mortgagor, and such Person
is to enter into an assumption agreement or modification agreement or supplement
to the Mortgage Note or Mortgage that requires the signature of the Trustee, or
if an instrument of release signed by the Trustee is required releasing the
Mortgagor from liability on the Mortgage Loan, the Subservicer shall prepare and
deliver or cause to be prepared and delivered to the Trustee for signature and
shall direct, in writing, the
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Trustee to execute the assumption agreement with the Person to whom the
Mortgaged Property is to be conveyed and such modification agreement or
supplement to the Mortgage Note or Mortgage or other instruments as are
reasonable or necessary to carry out the terms of the Mortgage Note or Mortgage
or otherwise to comply with any applicable laws regarding assumptions or the
transfer of the Mortgaged Property to such Person. In connection with any such
assumption, no material term of the Mortgage Note (including, but not limited
to, the Mortgage Rate, the amount of the Scheduled Payment, the Maximum Rate,
the Minimum Rate, the Gross Margin, the Periodic Rate Cap, the Adjustment Date
and any other term affecting the amount or timing of payment on the Mortgage
Loan) may be changed. The Subservicer shall notify the Trustee that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee the original of such substitution or assumption agreement, which in the
case of the original shall be added to the related Mortgage File and shall, for
all purposes, be considered a part of such Mortgage File to the same extent as
all other documents and instruments constituting a part thereof. Any fee
collected by the Subservicer for entering into an assumption or substitution of
liability agreement will be retained by the Subservicer as additional servicing
compensation.
SECTION 3.12. Realization Upon Defaulted Mortgage Loans; Determination
of Excess Proceeds; Repurchase of Certain Mortgage Loans.
(a) The Subservicer shall use reasonable efforts 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. In
connection with such foreclosure or other conversion, the Subservicer shall
follow such practices and procedures as it shall deem necessary or advisable and
as shall be normal and usual in its general mortgage servicing activities and
the requirements of the insurer under any Required Insurance Policy; provided,
however, that the Subservicer shall not be required to expend its own funds in
connection with any foreclosure or towards the restoration of any property
unless it shall determine (i) that such restoration and/or foreclosure will
increase the proceeds of liquidation of the Mortgage Loan after reimbursement to
itself of such expenses and (ii) that such expenses will be recoverable to it
through Liquidation Proceeds (respecting which it shall have priority for
purposes of withdrawals from the Collection Account pursuant to Section 3.08
hereof). The Subservicer 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 proceeds of liquidation of the
related Mortgaged Property, as contemplated in Section 3.08 hereof. If the
Subservicer has knowledge that a Mortgaged Property that the Subservicer is
contemplating acquiring in foreclosure or by deed-in-lieu of foreclosure is
located within a one-mile radius of any site with environmental or hazardous
waste risks known to the Subservicer, the Subservicer will, prior to acquiring
the Mortgaged Property, consider such risks and only take action in accordance
with Accepted Servicing Practices.
With respect to any REO Property, the deed or certificate of sale shall
be taken in the name of the Trustee for the benefit of the Certificateholders
(or the Trustee's nominee on
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behalf of the Certificateholders). The Trustee's name shall be placed on the
title to such REO Property solely as the Trustee hereunder and not in its
individual capacity. The Subservicer shall ensure that the title to such REO
Property references this Agreement and the Trustee's capacity thereunder.
Pursuant to its efforts to sell such REO Property, the Subservicer shall either
itself or through an agent selected by the Subservicer protect and conserve such
REO Property in the same manner and to such extent as is customary in the
locality where such REO Property is located and may, incident to its
conservation and protection of the interests of the Certificateholders, rent the
same, or any part thereof, as the Subservicer deems to be in the best interest
of the Subservicer and the Certificateholders for the period prior to the sale
of such REO Property. The Subservicer shall prepare for and deliver to the
Master Servicer a statement with respect to each REO Property that has been
rented showing the aggregate rental income received and all expenses incurred in
connection with the management and maintenance of such REO Property at such
times as is necessary to enable the Master Servicer to comply with the reporting
requirements of the REMIC Provisions. The net monthly rental income, if any,
from such REO Property shall be deposited in the Collection Account no later
than the close of business on each Determination Date. The Subservicer shall
perform the tax reporting and withholding related to foreclosures, abandonments
and cancellation of indebtedness income as specified by Sections 1445, 6050J and
6050P of the Code by preparing and filing such tax and information returns, as
may be required.
In the event that the Trust Fund acquires any Mortgaged Property as
aforesaid or otherwise in connection with a default or imminent default on a
Mortgage Loan, the Subservicer shall dispose of such Mortgaged Property prior to
the expiration of three years from the end of the year of its acquisition by the
Trust Fund or, at the expense of the Trust Fund, request more than 60 days prior
to the day on which such three-year period would otherwise expire, an extension
of the three-year grace period unless the Trustee shall have been supplied with
an Opinion of Counsel (such Opinion of Counsel not to be an expense of the
Trustee) to the effect that the holding by the Trust Fund of such Mortgaged
Property subsequent to such three-year period will not result in the imposition
of taxes on "prohibited transactions" of the Trust Fund as defined in section
860F of the Code or cause the Trust Fund to fail to qualify as a REMIC at any
time that any Certificates are outstanding, in which case the Trust Fund may
continue to hold such Mortgaged Property (subject to any conditions contained in
such Opinion of Counsel). Notwithstanding any other provision of this Agreement,
no Mortgaged Property acquired by the Trust Fund shall be rented (or allowed to
continue to be rented) or otherwise used for the production of income by or on
behalf of the Trust Fund in such a manner or pursuant to any terms that would
(i) cause such Mortgaged Property to fail to qualify as "foreclosure property"
within the meaning of section 860G(a)(8) of the Code or (ii) subject the Trust
Fund to the imposition of any federal, state or local income taxes on the income
earned from such Mortgaged Property under section 860G(c) of the Code or
otherwise, unless the Subservicer, the Master Servicer or the Depositor has
agreed to indemnify and hold harmless the Trust Fund with respect to the
imposition of any such taxes.
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The decision of the Subservicer to foreclose on a defaulted Mortgage
Loan shall be subject to a determination by the Subservicer that the proceeds of
such foreclosure would exceed the costs and expenses of bringing such a
proceeding. The income earned from the management of any Mortgaged Properties
acquired through foreclosure or other judicial proceeding, net of reimbursement
to the Subservicer for expenses incurred (including any property or other taxes)
in connection with such management and net of unreimbursed Servicing Fees,
Advances, Servicing Advances and any management fee paid or to be paid with
respect to the management of such Mortgaged Property, shall be applied to the
payment of principal of, and interest on, the related defaulted Mortgage Loans
(with interest accruing as though such Mortgage Loans were still current) and
all such income shall be deemed, for all purposes in this Agreement, to be
payments on account of principal and interest on the related Mortgage Notes and
shall be deposited into the Collection Account. To the extent the income
received during a Prepayment Period is in excess of the amount attributable to
amortizing principal and accrued interest at the related Mortgage Rate on the
related Mortgage Loan, such excess shall be considered to be a partial Principal
Prepayment for all purposes hereof.
The Liquidation Proceeds from any liquidation of a Mortgage Loan, net
of any payment to the Subservicer as provided above, shall be deposited in the
Collection Account on the next succeeding Determination Date following receipt
thereof for distribution on the related Distribution Date.
The proceeds of any Liquidated Loan, as well as any recovery resulting
from a partial collection of Liquidation Proceeds or any income from an REO
Property, will be applied in the following order of priority: first, to
reimburse the Subservicer for any related unreimbursed Servicing Advances and
Servicing Fees, pursuant to Section 3.08(a)(v) or this Section 3.12; second, to
reimburse the Subservicer for any unreimbursed Advances, pursuant to Section
3.08(a)(ii) or this Section 3.12; third, to accrued and unpaid interest (to the
extent no Advance has been made for such amount) on the Mortgage Loan or related
REO Property, at the Net Mortgage Rate to the Due Date occurring in the month in
which such amounts are required to be distributed; and fourth, as a recovery of
principal of the Mortgage Loan.
(b) On each Determination Date, the Subservicer shall determine the
respective aggregate amounts of Excess Proceeds, if any, that occurred in the
related Prepayment Period.
(c) The Master Servicer, in its sole discretion, shall have the right
to elect (by written notice sent to the Trustee) to purchase for its own account
from the Trust Fund any Mortgage Loan that is 91 days or more Delinquent at a
price equal to the Purchase Price. The Purchase Price for any Mortgage Loan
purchased hereunder shall be delivered to the Trustee for deposit in the
Collection Account and the Trustee, upon receipt of such deposit and a Request
for Release from the Depositor in the form of Exhibit M hereto, shall release or
cause to be released to the purchaser of such Mortgage Loan the related Mortgage
File and shall execute and deliver such instruments of transfer or assignment
prepared by the purchaser of such Mortgage Loan, in
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each case without recourse, as shall be necessary to vest in the purchaser of
such Mortgage Loan any Mortgage Loan released pursuant hereto and the purchaser
of such Mortgage Loan shall succeed to all the Trustee's right, title and
interest in and to such Mortgage Loan and all security and documents related
thereto. Such assignment shall be an assignment outright and not for security.
The purchaser of such Mortgage Loan shall thereupon own such Mortgage Loan, and
all security and documents, free of any further obligation to the Trustee or the
Certificateholders with respect thereto.
In addition, the Master Servicer shall deliver to the Trustee a Request
for Release to cause sales of Mortgage Loans more than 90 days Delinquent
pursuant to Section 3.09.
SECTION 3.13. Trustee to Cooperate; Release of Mortgage Files.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Subservicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Subservicer will promptly notify the Trustee or
its designee by delivering a Request for Release substantially in the form of
Exhibit M. Upon receipt of such request, the Trustee or its designee shall
promptly release the related Mortgage File to the Subservicer, and the Trustee
or its designee shall at the Subservicer's written direction execute and deliver
to the Subservicer the request for reconveyance, deed of reconveyance or release
or satisfaction of mortgage or such instrument releasing the lien of the
Mortgage in each case provided by the Subservicer, together with the Mortgage
Note with written evidence of cancellation thereon. No expenses incurred in
connection with any instrument of satisfaction or deed of reconveyance shall be
chargeable to the Collection Account, the Certificate Account, the Distribution
Account or the related subservicing account. From time to time and as shall be
appropriate for the servicing or foreclosure of any Mortgage Loan, including for
such purpose, collection under any policy of flood insurance, any fidelity bond
or errors or omissions policy, or for the purposes of effecting a partial
release of any Mortgaged Property from the lien of the Mortgage or the making of
any corrections to the Mortgage Note or the Mortgage or any of the other
documents included in the Mortgage File, the Trustee or its designee shall, upon
delivery to the Trustee or its designee of a Request for Release in the form of
Exhibit M signed by a Servicing Officer, release the Mortgage File to the
Subservicer. Subject to the further limitations set forth below, the Subservicer
shall cause the Mortgage File or documents so released to be returned to the
Trustee or its designee when the need therefor by the Subservicer no longer
exists, unless the Mortgage Loan is liquidated and the proceeds thereof are
deposited in the Collection Account, in which case the Trustee or its designee
shall deliver the Request for Release to the Subservicer.
Each Request for Release may be delivered to the Trustee or its
designee (i) via mail or courier, (ii) via facsimile or (iii) by such other
means, including, without limitation, electronic or computer readable medium, as
the Subservicer and the Trustee or its designee shall mutually agree. The
Trustee or its designee shall promptly release the related Mortgage File(s)
within five (5) to seven (7) Business Days of receipt of a properly completed
Request for Release
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pursuant to clauses (i), (ii) or (iii) above. Receipt of a properly completed
Request for Release shall be authorization to the Trustee or its designee to
release such Mortgage Loan Files, provided the Trustee or its designee has
determined that such Request for Release has been executed, with respect to
clauses (i) or (ii) above, or approved, with respect to clause (iii) above, by
an authorized Servicing Officer of the Subservicer, and so long as the Trustee
or its designee complies with its duties and obligations under the agreement. If
the Trustee or its designee is unable to release the Mortgage Files within the
period previously specified, the Trustee or its designee shall immediately
notify the Subservicer indicating the reason for such delay, but in no event
shall such notification be later than five Business Days after receipt of a
Request for Release. If the Subservicer is required to pay penalties or damages
due to the Trustee or its designee's negligent failure to release the related
Mortgage File or the Trustee or its designee's negligent failure to execute and
release documents in a timely manner, the Trustee or its designee, shall be
liable for such penalties or damages respectively caused by it.
On each day that the Subservicer remits to the Trustee or its designee
Requests for Releases pursuant to clauses (ii) or (iii) above, the Subservicer
shall also submit to the Trustee or its designee a summary of the total amount
of such Requests for Releases requested on such day by the same method as
described in such clauses (ii) and (iii) above.
If the Subservicer at any time seeks to initiate a foreclosure
proceeding in respect of any Mortgaged Property as authorized by this Agreement,
the Subservicer shall deliver or cause to be delivered to the Trustee or its
designee, for signature, as appropriate, any court pleadings, requests for
trustee's sale or other documents necessary to effectuate such foreclosure or
any legal action brought to obtain judgment against the Mortgagor on the
Mortgage Note or the Mortgage or to obtain a deficiency judgment or to enforce
any other remedies or rights provided by the Mortgage Note or the Mortgage or
otherwise available at law or in equity. Notwithstanding the foregoing, the
Subservicer shall cause possession of any Mortgage File or of the documents
therein that shall have been released by the Trustee or its designee to be
returned to the Custodian promptly after possession thereof shall have been
released by the Trustee or its designee unless (i) the Mortgage Loan has been
liquidated and the Liquidation Proceeds relating to the Mortgage Loan have been
deposited in the Collection Account, and the Subservicer shall have delivered to
the Trustee or its designee a Request for Release in the form of Exhibit M or
(ii) the Mortgage File or document shall have been delivered to an attorney or
to a public trustee or other public official as required by law for purposes of
initiating or pursuing legal action or other proceedings for the foreclosure of
the Mortgaged Property and the Subservicer shall have delivered to the Trustee
or its designee an Officer's Certificate of a Servicing Officer certifying as to
the name and address of the Person to which the Mortgage File or the documents
therein were delivered and the purpose or purposes of such delivery.
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SECTION 3.14. Documents, Records and Funds in Possession of Subservicer
to be Held for the Trustee.
All Mortgage Files and funds collected or held by, or under the control
of, the Subservicer in respect of any Mortgage Loans, whether from the
collection of principal and interest payments or from Liquidation Proceeds,
including but not limited to, any funds on deposit in the Collection Account,
shall be held by the Subservicer for and on behalf of the Trustee and shall be
and remain the sole and exclusive property of the Trustee, subject to the
applicable provisions of this Agreement. The Subservicer also agrees that it
shall not create, incur or subject any Mortgage File or any funds that are
deposited in the Collection Account, the Certificate Account or Distribution
Account or in any Escrow Account (as defined in Section 3.06), or any funds that
otherwise are or may become due or payable to the Trustee for the benefit of the
Certificateholders, to any claim, lien, security interest, judgment, levy, writ
of attachment or other encumbrance, or assert by legal action or otherwise any
claim or right of set off against any Mortgage File or any funds collected on,
or in connection with, a Mortgage Loan, except, however, that the Subservicer
shall be entitled to set off against and deduct from any such funds any amounts
that are properly due and payable to the Subservicer under this Agreement.
SECTION 3.15. Servicing Compensation.
As compensation for its activities hereunder, the Subservicer shall be
entitled to retain or withdraw from the Collection Account out of each payment
of interest on a Mortgage Loan included in the Trust Fund an amount equal to
interest at the applicable Servicing Fee Rate on the Stated Principal Balance of
the related Mortgage Loan as of the immediately preceding Distribution Date,
plus any sums dues to the Subservicer pursuant to clause (ii) of the definition
of "Servicing Fee."
Additional servicing compensation in the form of any Excess Proceeds,
assumption fees (i.e. fees related to the assumption of a Mortgage Loan upon the
purchase of the related Mortgaged Property), fees earned pursuant to the
Subservicing Side Letter Agreement and other similar charges, and all income and
gain net of any losses realized from Permitted Investments in the Collection
Account shall be retained by the Subservicer to the extent not required to be
deposited in the Collection Account pursuant to Sections 3.05, 3.09 or 3.12(a)
hereof. The Subservicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder (including payment of any
premiums for hazard insurance, as required by Section 3.10 hereof and
maintenance of the other forms of insurance coverage required by Section 3.10
hereof) and shall not be entitled to reimbursement therefor except as
specifically provided in Sections 3.08 and 3.12 hereof.
SECTION 3.16. Access to Certain Documentation.
The Subservicer shall provide to the OTS and the FDIC and to comparable
regulatory authorities supervising Holders of the Certificates and the examiners
and supervisory
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agents of the OTS, the FDIC and such other authorities, access to the
documentation regarding the Mortgage Loans required by applicable regulations of
the OTS and the FDIC. Such access shall be afforded without charge, but only
upon reasonable and prior written request and during normal business hours at
the offices of the Subservicer designated by it. Nothing in this Section shall
limit the obligation of the Subservicer to observe any applicable law
prohibiting disclosure of information regarding the Mortgagors and the failure
of the Subservicer to provide access as provided in this Section as a result of
such obligation shall not constitute a breach of this Section.
SECTION 3.17. Annual Statement as to Compliance.
The Subservicer shall deliver to the Depositor and the Trustee on or
before April 15 of each year, an Officer's Certificate stating, as to the signer
thereof, that (i) a review of the activities of the Subservicer during the
preceding calendar year and of the performance of the Subservicer under this
Agreement has been made under such officer's supervision and (ii) to the best of
such officer's knowledge, based on such review, the Subservicer has fulfilled
all its obligations under this Agreement throughout such year, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof and (iii) to the
best of such officer's knowledge, each subservicer has fulfilled all its
obligations under its Subservicing Agreement throughout such year, or, if there
has been a default in the fulfillment of any such obligation specifying each
such default known to such officer and the nature and status thereof. The
Trustee shall forward a copy of each such statement to each Rating Agency.
Copies of such statement shall be provided by the Trustee to any
Certificateholder upon request at the Certificateholder's expense, provided such
statement is delivered by the Subservicer to the Trustee.
SECTION 3.18. Annual Independent Public Accountants' Servicing
Statement; Financial Statements.
On or before the later of (i) April 15 of each year or (ii) within 30
days of the issuance of the annual audited financial statements beginning with
the audit for the period ending in [YEAR], the Subservicer at its expense shall
cause a nationally recognized firm of independent public accountants (who may
also render other services to the Subservicer or any affiliate thereof) that is
a member of the American Institute of Certified Public Accountants to furnish a
report to the Trustee and the Depositor in compliance with the Uniform Single
Attestation Program for Mortgage Bankers. Copies of such report shall be
provided by the Trustee to any Certificateholder upon request at the
Certificateholder's expense, provided such report is delivered by the
Subservicer to the Trustee. Upon written request, the Subservicer shall provide
to the Certificateholders its publicly available annual financial statements
(or, for so long as [Advanta Mortgage Corp. USA] is the Subservicer hereunder,
the Subservicer's parent company's publicly available annual financial
statements), if any, promptly after they become available.
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ARTICLE IV
DISTRIBUTIONS;
ADVANCES BY THE SUBSERVICER
SECTION 4.01. Advances.
Subject to the conditions of this Article IV, the Subservicer, as
required below, shall make an Advance and deposit such Advance in the Collection
Account. Each such Advance shall be remitted to the Collection Account no later
than 1:00 p.m. California time on the Servicer Advance Date in immediately
available funds. The Subservicer shall be obligated to make any such Advance
only to the extent that such advance would not be a Non-Recoverable Advance. If
the Subservicer shall have determined that it has made a Non-Recoverable Advance
or that a proposed Advance or a lesser portion of such Advance would constitute
a Non-Recoverable Advance, the Subservicer shall deliver (i) to the Trustee for
the benefit of the Certificateholders funds constituting the remaining portion
of such Advance, if applicable, and (ii) to the Depositor, the Master Servicer,
each Rating Agency and the Trustee an Officer's Certificate setting forth the
basis for such determination. The Subservicer may, in its sole discretion, make
an Advance with respect to the principal portion of the final Scheduled Payment
on a Balloon Loan, but the Subservicer is under no obligation to do so;
provided, however, that nothing in this sentence shall affect the Subservicer's
obligation under this Section 4.01 to Advance the interest portion of the final
Scheduled Payment with respect to a Balloon Loan as if such Balloon Loan were a
fully amortizing Mortgage Loan. If a Mortgagor does not pay its final Scheduled
Payment on a Balloon Loan when due, the Subservicer shall Advance (unless it
determines in its good faith judgment that such amounts would constitute a
Non-Recoverable Advance) a full month of interest (net of the Servicing Fee) on
the Stated Principal Balance thereof each month until its Stated Principal
Balance is reduced to zero.
In lieu of making all or a portion of such Advance from its own funds,
the Subservicer may (i) cause to be made an appropriate entry in its records
relating to the Collection Account that any Amount Held for Future Distributions
has been used by the Subservicer in discharge of its obligation to make any such
Advance and (ii) transfer such funds from the Collection Account to the
Certificate Account. Any funds so applied and transferred shall be replaced by
the Subservicer by deposit in the Collection Account no later than the close of
business on the Servicer Advance Date on which such funds are required to be
distributed pursuant to this Agreement. The Subservicer shall be entitled to be
reimbursed from the Collection Account for all Advances of its own funds made
pursuant to this Section as provided in Section 3.08. The obligation to make
Advances with respect to any Mortgage Loan shall continue until such Mortgage
Loan is paid in full or the related Mortgaged Property or related REO Property
has been liquidated or until the purchase or repurchase thereof (or substitution
therefor) from the Trust Fund pursuant to any applicable provision of this
Agreement, except as otherwise provided in this Section 4.01.
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SECTION 4.02. Reduction of Servicing Compensation in Connection with
Prepayment Interest Shortfalls.
In the event that any Mortgage Loan is the subject of a Prepayment
Interest Shortfall, the Subservicer shall, from amounts in respect of the
Servicing Fee for such Distribution Date, deposit into the Collection Account,
as a reduction of the Servicing Fee for such Distribution Date, no later than
the Servicer Advance Date immediately preceding such Distribution Date, an
amount up to the Prepayment Interest Shortfall; provided, however, that with
respect to any Distribution Date, the Subservicer's obligation to deposit any
such amount is limited to an amount equal to the product of (i) one-twelfth of
[ ]% and (ii) the aggregate Stated Principal Balance of the Mortgage loans with
respect to such Distribution Date; and in case of such deposit, the Subservicer
shall not be entitled to any recovery or reimbursement from the Depositor, the
Master Servicer, the Trustee, the Trust Fund or the Certificateholders. With
respect to any Distribution Date, to the extent that the Prepayment Interest
Shortfall exceeds Compensating Interest (such excess, a "Non-Supported Interest
Shortfall"), such Non-Supported Interest Shortfall shall reduce the Current
Interest with respect to each Class of Group I Certificates and Group II
Certificates, pro rata based upon the amount of interest each such Class would
otherwise be entitled to receive on such Distribution Date.
SECTION 4.03. Distributions on the Subsidiary REMIC.
On each Distribution Date, amounts on deposit in the Distribution
Account shall be applied to distributions on the Subsidiary REMIC Regular
Interests, in each case in an amount sufficient to make the distributions on the
respective Corresponding Classes of Certificates on such Distribution Date in
accordance with the provisions of Section 4.04.
SECTION 4.04. Distributions.
(a) On each Distribution Date, the Paying Agent shall make the
following distributions from the Distribution Account of an amount equal to the
Group I Interest Funds in the following order of priority:
(i) to the Class R Certificates, an amount equal to any
prepayment penalties and late payment charges collected on the Group I
Mortgage Loans during the related Due Period;
(ii) to each Class of Group I Class A Certificates, the
Current Interest and any Interest Carryforward Amount with respect to
such Class; provided, however, if such amount is not sufficient to make
a full distribution of the Current Interest and any Interest
Carryforward Amount with respect to all the Group I Class A
Certificates, such amount will be distributed pro rata among each Class
of the Group I Class A Certificates based on the ratio of (x) the
Current Interest and Interest Carryforward Amount for each Class of the
Group I Class A Certificates to (y) the total
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amount of Current Interest and any Interest Carryforward
Amount for the Group I Class A Certificates;
(iii) to the Class IM-1 Certificates, the Class IM-1 Current
Interest and any Class IM-1 Interest Carryforward Amount;
(iv) to the Class IM-2 Certificates, the Class IM-2 Current
Interest and any Class IM-2 Interest Carryforward Amount;
(v) to the Class IB Certificates, the Class IB Current
Interest and any Class IB Interest Carryforward Amount; and
(vi) any remainder pursuant to Section 4.04(e) hereof.
(b) On each Distribution Date, the Paying Agent shall make the
following distributions from the Distribution Account of an amount equal to the
Group II Interest Funds in the following order of priority:
(i) to the Class R Certificates, an amount equal to any
prepayment penalties and late payment charges collected on the Group II
Mortgage Loans during the related Due Period;
(ii) to the Class IIA-1 Certificates, the Current Interest and
any Interest Carryforward Amount with respect to such Class;
(iii) to the Class IIM-1 Certificates, the Class IIM-1 Current
Interest and any Class IIM-1 Interest Carryforward Amount;
(iv) to the Class IIM-2 Certificates, the Class IIM-2 Current
Interest and any Class IIM-2 Interest Carryforward Amount;
(v) to the Class IIB Certificates, the Class IIB Current
Interest and any Class IIB Interest Carryforward Amount; and
(vi) any remainder pursuant to Section 4.04(f) hereof.
(c) On each Distribution Date, the Paying Agent shall make the
following distributions from the Distribution Account of an amount equal to the
Group I Principal Distribution Amount in the following order of priority, and
each such distribution shall be made only after all distributions pursuant to
Section 4.04(a) above shall have been made until such amount shall have been
fully distributed for such Distribution Date:
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(i) to the Group I Class A Certificates, the Group I Class A
Principal Distribution Amount to be distributed first, to the Class
IA-6 Certificates, the Class IA-6 Principal Distribution Amount, and
then the remainder sequentially to the Class IA-1, Class IA-2, Class
IA-3, Class IA-4, Class IA-5 and Class IA-6 Certificates, until the
Certificate Principal Balances thereof have been reduced to zero;
provided, however, that, on any Distribution Date on which the Group I
Class A Certificate Principal Balance is equal to or greater than the
Stated Principal Balances of Group I Mortgage Loans, the Group I Class
A Principal Distribution Amount will be distributed pro rata based upon
the Certificate Principal Balance of each such Class and not
sequentially;
(ii) to the Class IM-1 Certificates, the Class IM-1 Principal
Distribution Amount;
(iii) to the Class IM-2 Certificates, the Class IM-2 Principal
Distribution Amount;
(iv) to the Class IB Certificates, the Class IB Principal
Distribution Amount; and
(v) any remainder pursuant to Section 4.04(e) hereof.
(d) On each Distribution Date, the Paying Agent shall make the
following distributions from the Distribution Account of an amount equal to the
Group II Principal Distribution Amount in the following order of priority, and
each such distribution shall be made only after all distributions pursuant to
Section 4.04(b) above shall have been made until such amount shall have been
fully distributed for such Distribution Date:
(i) to the Class IIA-1 Certificates, the Group II Class A
Principal Distribution Amount, until the Certificate Principal Balance
of such Class has been reduced to zero;
(ii) to the Class IIM-1 Certificates, the Class IIM-1
Principal Distribution Amount;
(iii) to the Class IIM-2 Certificates, the Class IIM-2
Principal Distribution Amount;
(iv) to the Class IIB Certificates, the Class IIB Principal
Distribution Amount; and
(v) any remainder pursuant to Section 4.04(f) hereof.
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(e) On each Distribution Date, the Paying Agent shall make the
following distributions up to the following amounts from the Distribution
Account of the remainders pursuant to Section 4.04(a)(vi) and (c)(v) and, to the
extent required to make the distributions set forth below in clauses (i) through
(iv) of this Section 4.04(e), Section 4.04(f)(v) hereof in the following order
of priority, and each such distribution shall be made only after all
distributions pursuant to Sections 4.04(a) and (c) above shall have been made
until such remainders shall have been fully distributed for such Distribution
Date; provided, however, that no Optional Termination Amounts for Loan Group I
shall be used to make the distributions described in clause (v) of this Section
4.04(e):
(i) for distribution as part of the Group I Principal
Distribution Amount, the Group I Extra Principal Distribution Amount;
(ii) to the Class IM-1 Certificates, the Class IM-1 Unpaid
Realized Loss Amount;
(iii) to the Class IM-2 Certificates, the Class IM-2 Unpaid
Realized Loss Amount;
(iv) to the Class IB Certificates, the Class IB Unpaid
Realized Loss Amount;
(v) to the extent required to make the allocations set forth
below, in the following order of priority:
(A) to the Class IIA-1 Certificates, the Class
IIA-1 Current Interest and the Class IIA-1 Interest
Carryforward Amount;
(B) for distribution as part of the Group II
Principal Distribution Amount, the Group II Extra Principal
Distribution Amount;
(C) to the Class IIM-1 Certificates, the Class IIM-1
Current Interest, the Class IIM-1 Interest Carryforward Amount
and the Class IIM-1 Unpaid Realized Loss Amount;
(D) to the Class IIM-2 Certificates, the Class IIM-2
Current Interest, the Class IIM-2 Interest Carryforward Amount
and the Class IIM-2 Unpaid Realized Loss Amount;
(E) to the Class IIB Certificates, the Class IIB
Current Interest, the Class IIB Interest Carryforward Amount
and the Class IIB Unpaid Realized Loss Amount;
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(vi) the remainder pursuant to Section 4.04(g) hereof.
(f) On each Distribution Date, the Paying Agent shall make the
following distributions up to the following amounts from the Distribution
Account of the remainders pursuant to Section 4.04(b)(vi) and (d)(v) hereof and,
to the extent required to make the distributions set forth below in clauses (i)
through (iv) of this Section 4.04(f), Section 4.04(e)(v) hereof in the following
order of priority, and each such distribution shall be made only after all
distributions pursuant to Sections 4.04(b) and (d) above shall have been made
until such remainders shall have been fully distributed for such Distribution
Date; provided, however, that no Optional Termination Amounts for Loan Group II
shall be used to make the distributions described in clause (v) of this Section
4.04(f):
(i) for distribution as part of the Group II Principal
Distribution Amount, the Group II Extra Principal Distribution Amount;
(ii) to the Class IIM-1 Certificates, the Class IIM-1 Unpaid
Realized Loss Amount;
(iii) to the Class IIM-2 Certificates, the Class IIM-2 Unpaid
Realized Loss Amount;
(iv) to the Class IIB Certificates, the Class IIB Unpaid
Realized Loss Amount;
(v) to the extent required to make the allocations set forth
below, in the following order of priority (provided, however, that to
the extent the amounts to be allocated pursuant to clauses (A) through
(F) are insufficient to make all payments of Current Interest and
Interest Carryforward Amounts for such Class IA Certificates, the
distributions made pursuant to clauses (A) through (F) shall be made on
a pro rata basis and not sequentially):
(A) to the Class IA-1 Certificates, the Class IA-1
Current Interest and the Class IA-1 Interest Carryforward
Amount;
(B) to the Class IA-2 Certificates, the Class IA-2
Current Interest and the Class IA-2 Interest Carryforward
Amount;
(C) to the Class IA-3 Certificates, the Class IA-3
Current Interest and the Class IA-3 Interest Carryforward
Amount;
(D) to the Class IA-4 Certificates, the Class IA-4
Current Interest and the Class IA-4 Interest Carryforward
Amount;
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(E) to the Class IA-5 Certificates, the Class IA-5
Current Interest and the Class IA-5 Interest Carryforward
Amount;
(F) to the Class IA-6 Certificates, the Class IA-6
Current Interest and the Class IA-6 Interest Carryforward
Amount;
(G) for distribution as part of the Group I Principal
Distribution Amount, the Group I Extra Principal Distribution
Amount;
(H) to the Class IM-1 Certificates, the Class IM-1
Current Interest, the Class IM-1 Interest Carryforward Amount
and the Class IM-1 Unpaid Realized Loss Amount;
(I) to the Class IM-2 Certificates, the Class IM-2
Current Interest, the Class IM-2 Interest Carryforward Amount
and the Class IM-2 Unpaid Realized Loss Amount;
(J) to the Class IB Certificates, the Class IB
Current Interest, the Class IB Interest Carryforward Amount
and the Class IB Unpaid Realized Loss Amount;
(vi) to the (i) Class IIA-1 Certificates, the Interest
Carryover Amount for the Class IIA-1 Certificates, (ii) Class IIM-1
Certificates, the Class IIM-1 Certificate Interest Carryover Amount,
(iii) Class IIM-2 Certificates, the Class IIM-2 Certificate Interest
Carryover Amount, and (iv) Class IIB Certificates, the Class IIB
Certificate Interest Carryover Amount, on a pro rata basis based upon
the amount of unreimbursed Certificate Interest Carryover Amount for
each Class; and
(vii) the remainder pursuant to Section 4.04(g) hereof.
(g) On each Distribution Date, the Paying Agent shall allocate the
remainders pursuant to Section 4.04(e)(vi) and (f)(vii) hereof, to the Class R
Certificates, in respect of the Residual Interest, any remaining funds, and such
distribution shall be made only after all preceding distributions shall have
been made until such remainders shall have been fully distributed.
(h) On each Distribution Date, the Paying Agent shall allocate the
Applied Realized Loss Amount for the Group I Certificates to reduce the
Certificate Principal Balances of the Group I Subordinated Certificates in the
following order of priority:
(i) to the Class IB Certificates until the Class IB
Certificate Principal Balance is reduced to zero;
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(ii) to the Class IM-2 Certificates until the Class IM-2
Certificate Principal Balance is reduced to zero; and
(iii) to the Class IM-1 Certificates until the Class IM-1
Certificate Principal Balance is reduced to zero.
(i) On each Distribution Date, the Paying Agent shall allocate the
Applied Realized Loss Amount for the Group II Certificates to reduce the
Certificate Principal Balances of the Group II Subordinated Certificates in the
following order of priority:
(i) to the Class IIB Certificates until the Class IIB
Certificate Principal Balance is reduced to zero;
(ii) to the Class IIM-2 Certificates until the Class IIM-2
Certificate Principal Balance is reduced to zero; and
(iii) to the Class IIM-1 Certificates until the Class IIM-1
Certificate Principal Balance is reduced to zero.
(j) Subject to Section 9.02 hereof respecting the final distribution,
on each Distribution Date the Paying Agent shall make distributions to each
Certificateholder of record on the preceding Record Date either by wire transfer
in immediately available funds to the account of such holder at a bank or other
entity having appropriate facilities therefor, if (i) such Holder has so
notified the Trustee at least 5 Business Days prior to the related Record Date
and (ii) such Holder shall hold 100% of a Class of Regular Certificates or
Certificates with an aggregate Initial Certificate Balance of $1,000,000 or
more, or, if not, by check mailed by first Class mail to such Certificateholder
at the address of such holder appearing in the Certificate Register.
Notwithstanding the foregoing, but subject to Section 9.02 hereof respecting the
final distribution, distributions with respect to Certificates registered in the
name of a Depository shall be made to such Depository in immediately available
funds.
On or before 5:00 p.m. California Time on the second Business Day
following each Determination Date, the Subservicer shall deliver a report to the
Master Servicer in the form of a computer readable magnetic tape (or by such
other means as the Subservicer and the Master Servicer may agree from time to
time) containing such data and information as agreed to by the Subservicer and
the Master Servicer such as to permit the Master Servicer to prepare the Monthly
Statement to Certificateholders and make the required distributions for the
related Distribution Date (the "Remittance Report").
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SECTION 4.05. Monthly Statements to Certificateholders.
(a) Not later than each Distribution Date, the Master Servicer shall
prepare and cause to be forwarded by first Class mail to each Holder of a Class
of Certificates of the Trust Fund, the Subservicer and the Depositor a statement
setting forth for the Certificates:
(i) the amount of the related distribution to Holders of each
Class allocable to principal, separately identifying (A) the aggregate
amount of any Principal Prepayments included therein and(B) the
aggregate of all scheduled payments of principal included therein and
(C) the Extra Principal Distribution Amount, if any;
(ii) the amount of such distribution to Holders of each Class
allocable to interest;
(iii) any Interest Carryforward Amount;
(iv) the Class Certificate Principal Balance of each Class
after giving effect (i) to all distributions allocable to principal on
such Distribution Date and (ii) the allocation of any Applied Realized
Loss Amounts for such Distribution Date;
(v) the Pool Stated Principal Balance for such Distribution
Date;
(vi) the related amount of the Servicing Fee paid to or
retained by the Subservicer;
(vii) the related amount of the Master Servicer Fee paid to or
retained by the Master Servicer;
(viii) the Pass-Through Rate for each Class of Certificates
for such Distribution Date;
(ix) the Net Mortgage Rates for each of the Group I Mortgage
Loans and the Group II Mortgage Loans;
(x) the amount of Advances for each Certificate Group included
in the distribution on such Distribution Date;
(xi) the cumulative amount of (A) Realized Losses and (B)
Applied Realized Loss Amounts for each Certificate Group to date;
(xii) the amount of (A) Realized Losses and (B) Applied
Realized Loss Amounts for each Certificate Group with respect to such
Distribution Date;
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(xiii) the number and aggregate principal amounts of Mortgage
Loans in each Loan Group (A) Delinquent (exclusive of Mortgage Loans in
foreclosure) (1) 31 to 60 days, (2) 61 to 90 days and (3) 91 or more
days, and (B) in foreclosure and Delinquent (1) 31 to 60 days, (2) 61
to 90 days and (3) 91 or more days, in each case as of the close of
business on the last day of the calendar month preceding such
Distribution Date;
(xiv) with respect to any Mortgage Loan that became an REO
Property during the preceding calendar month in each Loan Group, the
loan number and Stated Principal Balance of such Mortgage Loan as of
the close of business on the Determination Date preceding such
Distribution Date and the date of acquisition thereof;
(xv) the total number and principal balance of any REO
Properties in each Loan Group as of the close of business on the
Determination Date preceding such Distribution Date;
(xvi) the aggregate Stated Principal Balance of all Liquidated
Loans in each Loan Group as of the preceding Distribution Date;
(xvii) with respect to any Liquidated Loan in each Loan Group,
the loan number and Stated Principal Balance relating thereto as of the
preceding Distribution Date;
(xviii) with respect to each Loan Group, whether a Group I
Trigger Event or a Group II Trigger Event has occurred;
(xix) with respect to the Group II Mortgage Loans, whether a
Group II Stepup Trigger Event has occurred and is continuing;
(xx) with respect to each Class of Certificates, any Interest
Carryforward Amount with respect to such Distribution Date for each
such Class, any Interest Carryforward Amount paid for each such Class
and any remaining Interest Carryforward Amount for each such Class;
(xxi) with respect to each Class of Group II Certificates any
Interest Carryover Amount with respect to such Distribution Date for
each such Class, any Interest Carryover Amount paid for each such Class
and any remaining Interest Carryover Amount for each such Class;
(xxii) the number and Stated Principal Balance (as of the
preceding Distribution Date) of any Mortgage Loans with respect to each
Loan Group which were purchased or repurchased during the preceding Due
Period and since the Cut-off Date;
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(xxiii) the aggregate number of Mortgage Loans (a) which have
been modified, (b) which are subject to a deed-in-lieu of foreclosure
and (c) for which a short-payoff has occurred; and
(xxiv) the year-to-date numbers for 4.05(a)(xxii)(a), (b) and
(c) above, by number of loans and aggregate fees paid to Subservicer
under the Subservicing Side Letter Agreement.
(b) The Master Servicer's responsibility for disbursing the above
information to the Certificateholders is limited to the availability, timeliness
and accuracy of the information derived from the Subservicer. The Master
Servicer will send a copy of each statement provided pursuant to this Section
4.05 to each Rating Agency.
(c) Within a reasonable period of time after the end of each calendar
year, the Master Servicer shall cause to be furnished to each Person who at any
time during the calendar year was a Certificateholder, a statement containing
the information set forth in clauses (a)(i) and (a)(ii) of this Section 4.05
aggregated for such calendar year or applicable portion thereof during which
such Person was a Certificateholder. Such obligation of the Master Servicer
shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Master Servicer pursuant to any
requirements of the Code as from time to time in effect.
(d) Upon filing with the Internal Revenue Service, the Master Servicer
shall furnish to the Holders of the Class R Certificates the Form 1066 and each
Form 1066Q and shall respond promptly to written requests made not more
frequently than quarterly by any Holder of Class R Certificates with respect to
the following matters:
(i) The original projected principal and interest cash flows
on the Closing Date on each Class of regular and residual interests
created hereunder and on the Mortgage Loans, based on the Prepayment
Assumption;
(ii) The projected remaining principal and interest cash flows
as of the end of any calendar quarter with respect to each Class of
regular and residual interests created hereunder and the Mortgage
Loans, based on the Prepayment Assumption;
(iii) The Prepayment Assumption and any interest rate
assumptions used in determining the projected principal and interest
cash flows described above;
(iv) The original issue discount (or, in the case of the
Mortgage Loans, market discount) or premium accrued or amortized
through the end of such calendar quarter with respect to each Class of
regular or residual interests created
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hereunder and to the Mortgage Loans, together with each
constant yield to maturity used in computing the same;
(v) The treatment of losses realized with respect to the
Mortgage Loans or the regular interests created hereunder, including
the timing and amount of any cancellation of indebtedness income of the
REMIC with respect to such regular interests or bad debt deductions
claimed with respect to the Mortgage Loans;
(vi) The amount and timing of any non-interest expenses of the
REMIC; and
(vii) Any taxes (including penalties and interest) imposed on
the REMIC, including, without limitation, taxes on "prohibited
transactions," "contributions" or "net income from foreclosure
property" or state or local income or franchise taxes.
The information pursuant to clauses (i), (ii), (iii) and (iv) above
shall be provided by the Depositor pursuant to Section 8.11.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
The Certificates shall be substantially in the forms attached hereto as
exhibits. The Certificates shall be issuable in registered form, in the minimum
dollar denominations, integral dollar multiples in excess thereof (except that
one Certificate in of each Class may be issued in a different amount which must
be in excess of the applicable minimum dollar denomination) and aggregate dollar
denominations as set forth in the following table:
<TABLE>
<CAPTION>
Minimum Integral Multiples in Original Certificate
Class Denomination Excess of Minimum Principal Balance
----- ------------ ----------------- -----------------
<S> <C> <C> <C>
IA-1 $25,000.00 $1,000.00 $[ ]
IA-2 $25,000.00 $1,000.00 $[ ]
IA-3 $25,000.00 $1,000.00 $[ ]
IA-4 $25,000.00 $1,000.00 $[ ]
IA-5 $25,000.00 $1,000.00 $[ ]
IA-6 $25,000.00 $1,000.00 $[ ]
IM-1 $25,000.00 $1,000.00 $[ ]
IM-2 $25,000.00 $1,000.00 $[ ]
IB $25,000.00 $1,000.00 $[ ]
</TABLE>
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<TABLE>
<CAPTION>
Minimum Integral Multiples in Original Certificate
Class Denomination Excess of Minimum Principal Balance
----- ------------ ----------------- -----------------
<S> <C> <C> <C>
IIA-1 $25,000.00 $1,000.00 $[ ]
IIM-1 $25,000.00 $1,000.00 $[ ]
IIM-2 $25,000.00 $1,000.00 $[ ]
IIB $25,000.00 $1,000.00 $[ ]
R 100% N/A N/A
</TABLE>
The Certificates shall be executed by manual or facsimile signature on
behalf of the Depositor by an authorized officer. 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 the Depositor shall
bind the Depositor, 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 authentication and
delivery. 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 as attached
hereto executed by the Authenticating Agent by manual signature, and such
certificate of authentication 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. On the Closing Date, the Authenticating Agent shall authenticate
the Certificates to be issued at the written direction of the Depositor, or any
affiliate thereof.
SECTION 5.02. Certificate Register; Registration of Transfer and
Exchange of Certificates.
(a) The Master Servicer shall maintain, or cause to be maintained in
accordance with the provisions of Section 5.09 hereof, a Certificate Register
for the Trust Fund in which, subject to the provisions of subsections (b) and
(c) below and to such reasonable regulations as it may prescribe, the Master
Servicer 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, the Authenticating Agent shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates of the same Class and of like aggregate Percentage Interest.
At the option of a Certificateholder, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations and evidencing
the same aggregate Percentage Interest upon surrender of the Certificates to be
exchanged at the office or agency of the Master Servicer. Whenever any
Certificates are so surrendered for exchange, the Depositor shall execute and
the Authenticating Agent shall authenticate and deliver the Certificates that
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
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instrument of Transfer in form satisfactory to the Master Servicer duly executed
by the holder thereof or his attorney duly authorized in writing.
No service charge to the Certificateholders shall be made for any
registration of Transfer or exchange of Certificates, but 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 may be required. All
Certificates surrendered for registration of Transfer or exchange shall be
canceled and subsequently destroyed by the Master Servicer in accordance with
the Master Servicer's customary procedures.
(b) No Transfer of a Class R Certificate shall be made unless such
Transfer is made pursuant to an effective registration statement under the
Securities Act and any applicable state securities laws or is exempt from the
registration requirements under the Securities Act and such state securities
laws. In the event that a Transfer is to be made in reliance upon an exemption
from the Securities Act and such laws, in order to assure compliance with the
Securities Act and such laws, the Certificateholder desiring to effect such
Transfer and such Certificateholder's prospective transferee shall each certify
to the Master Servicer in writing the facts surrounding the Transfer in
substantially the forms set forth in Exhibit J (the "Transferor Certificate")
and (i) deliver a letter in substantially the form of either Exhibit K (the
"Investment Letter") or Exhibit L (the "Rule 144A Letter") or (ii) there shall
be delivered to the Master Servicer an Opinion of Counsel that such Transfer may
be made pursuant to an exemption from the Securities Act, which Opinion of
Counsel shall not be an expense of the Depositor, the Master Servicer, the
Subservicer or the Trustee. The Depositor shall provide to any Holder of a Class
R Certificate and any prospective transferee designated by any such Holder,
information regarding the related Certificates and the Mortgage Loans and such
other information as shall be necessary to satisfy the condition to eligibility
set forth in Rule 144A(d)(4) for Transfer of any such Certificate without
registration thereof under the Securities Act pursuant to the registration
exemption provided by Rule 144A. The Master Servicer shall cooperate with the
Depositor in providing the Rule 144A information referenced in the preceding
sentence, including providing to the Depositor such information regarding the
Certificates, the Mortgage Loans and other matters regarding the Trust Fund as
the Depositor shall reasonably request to meet its obligation under the
preceding sentence. Each Holder of a Private Certificate desiring to effect such
Transfer shall, and does hereby agree to, indemnify the Trustee, the Depositor,
the Master Servicer and the Subservicer against any liability that may result if
the Transfer is not so exempt or is not made in accordance with such federal and
state laws.
No Transfer of an ERISA Restricted Certificate shall be made unless the
Master Servicer shall have received either (i) a representation from the
transferee of such Certificate acceptable to and in form and substance
satisfactory to the Master Servicer, to the effect that such transferee is not
an employee benefit plan subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code, or a Person acting on behalf of any such plan or using
the assets of any such plan (except pursuant to clause (ii) below), (ii) if such
purchaser is an insurance company, a representation that the purchaser is an
insurance company that is purchasing such Certificates
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with funds contained in an "insurance company general account" (as such term is
defined in Section V(e) of Prohibited Transaction Class Exemption 95-60, 60 Fed.
Reg. 35925 (July 12, 1995) ("PTCE 95-60")) and that the purchase and holding of
such Certificates are covered under PTCE 95-60, or (iii) in the case of any such
ERISA Restricted Certificate presented for registration in the name of an
employee benefit plan subject to ERISA, or a plan subject to Section 4975 of the
Code (or comparable provisions of any subsequent enactments), or a trustee of
any such plan or any other person acting on behalf of any such plan, an Opinion
of Counsel satisfactory to the Master Servicer and the Subservicer to the effect
that the purchase or holding of such ERISA Restricted Certificate will not
result in a prohibited transaction under ERISA or the Code and will not subject
the Master Servicer or the Subservicer to any obligation in addition to those
expressly undertaken in this Agreement, which Opinion of Counsel shall not be an
expense of the Master Servicer or the Subservicer. For purposes of clause (i) of
the preceding sentence, such representation shall be deemed to have been made to
the Master Servicer by the transferee's acceptance of an ERISA Restricted
Certificate (or the acceptance by a Certificate Owner of the beneficial interest
in any such Class of ERISA Restricted Certificates) unless the Master Servicer
shall have received from the transferee an alternative representation acceptable
in form and substance to the Subservicer and the Master Servicer.
Notwithstanding anything else to the contrary herein, any purported transfer of
an ERISA Restricted Certificate to or on behalf of an employee benefit plan
subject to Section 406 of ERISA or a plan subject to Section 4975 of the Code
without the delivery to the Master Servicer and the Subservicer of an Opinion of
Counsel satisfactory to the Master Servicer and the Subservicer as described
above shall be void and of no effect; provided, however, that the restriction
set forth in this sentence shall not be applicable if there has been delivered
to the Master Servicer and the Subservicer an Opinion of Counsel satisfactory to
the Master Servicer and the Subservicer to the effect that the purchase or
holding of an ERISA Restricted Certificate will not result in a prohibited
transaction under ERISA or the Code and will not subject the Master Servicer or
the Subservicer to any obligation in addition to those expressly undertaken in
this Agreement. The Master Servicer shall be under no liability to any Person
for any registration of transfer of any ERISA Restricted Certificate that is in
fact not permitted by this Section 5.02(b) or for making any payments due on
such Certificate to the Holder thereof or taking any other action with respect
to such Holder under the provisions of this Agreement so long as the transfer
was registered by the Master Servicer in accordance with the foregoing
requirements. The Master Servicer shall be entitled, but not obligated, to
recover from any Holder of any ERISA Restricted Certificate that was in fact an
employee benefit plan subject to Section 406 of ERISA or a plan subject to
Section 4975 of the Code or a Person acting on behalf of any such plan at the
time it became a Holder or, at such subsequent time as it became such a plan or
Person acting on behalf of such a plan, all payments made on such ERISA
Restricted Certificate at and after either such time. Any such payments so
recovered by the Master Servicer shall be paid and delivered by the Master
Servicer to the last preceding Holder of such Certificate that is not such a
plan or Person acting on behalf of a plan.
(c) Each Person who has or who acquires any Ownership Interest in a
Class R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have
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agreed to be bound by the following provisions, and the rights of each Person
acquiring any Ownership Interest in a Class R Certificate are expressly subject
to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in
a Class R Certificate shall be a Permitted Transferee and shall
promptly notify the Master Servicer of any change or impending change
in its status as a Permitted Transferee.
(ii) No Ownership Interest in a Class R Certificate may be
registered on the Closing Date or thereafter transferred, and the
Master Servicer shall not register the Transfer of any Class R
Certificate unless, in addition to the certificates required to be
delivered to the Master Servicer under subparagraph (b) above, the
Master Servicer shall have been furnished with an affidavit (a
"Transfer Affidavit") of the initial owner or the proposed transferee
in the form attached hereto as Exhibit I.
(iii) Each Person holding or acquiring any Ownership Interest
in a Class R Certificate shall agree (A) to obtain a Transfer Affidavit
from any other Person to whom such Person attempts to Transfer its
Ownership Interest in a Class R Certificate, (B) to obtain a Transfer
Affidavit from any Person for whom such Person is acting as nominee,
trustee or agent in connection with any Transfer of a Class R
Certificate and (C) not to Transfer its Ownership Interest in a Class R
Certificate or to cause the Transfer of an Ownership Interest in a
Class R Certificate to any other Person if it has actual knowledge that
such Person is not a Permitted Transferee.
(iv) Any attempted or purported Transfer of any Ownership
Interest in a Class R Certificate in violation of the provisions of
this Section 5.02(c) shall be absolutely null and void and shall vest
no rights in the purported Transferee. If any purported transferee
shall become a Holder of a Class R Certificate in violation of the
provisions of this Section 5.02(c), then the last preceding Permitted
Transferee shall be restored to all rights as Holder thereof
retroactive to the date of registration of Transfer of such Class R
Certificate. The Master Servicer shall be under no liability to any
Person for any registration of Transfer of a Class R Certificate that
is in fact not permitted by Section 5.02(b) and this Section 5.02(c) or
for making any payments due on such Certificate to the Holder thereof
or taking any other action with respect to such Holder under the
provisions of this Agreement so long as the Transfer was registered
after receipt of the related Transfer Affidavit, Transferor Certificate
and either the Rule 144A Letter or the Investment Letter. The Master
Servicer shall be entitled but not obligated to recover from any Holder
of a Class R Certificate that was in fact not a Permitted Transferee at
the time it became a Holder or, at such subsequent time as it became
other than a Permitted Transferee, all payments made on such Class R
Certificate at and after either such time. Any such payments so
recovered by the Master Servicer shall be paid and delivered by the
Master Servicer to the last preceding Permitted Transferee of such
Certificate.
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(v) The Subservicer shall use its best efforts to make
available, upon receipt of written request from the Master Servicer,
all information necessary to compute any tax imposed under Section
860E(e) of the Code as a result of a Transfer of an Ownership Interest
in a Class R Certificate to any Holder who is not a Permitted
Transferee.
(vi) At the option of the Holder of the Class R Certificate,
the SR Interest and the MR Interest may be severed and represented by
separate certificates; provided, however, that such separate
certification may not occur until the Trustee receives an Opinion of
Counsel to the effect that separate certification in the form and
manner proposed would not result in the imposition of federal tax upon
either REMIC Pool or cause either REMIC Pool to fail to qualify as a
REMIC; and provided further, that the provisions of Sections 5.02(b)
and (c) will apply to each such separate certificate as if the separate
certificate were a Class R Certificate. If, as evidenced by an Opinion
of Counsel, it is necessary to preserve the REMIC status of either
REMIC Pool, the SR Interest and the MR Interest shall be severed and
represented by separate Certificates.
The restrictions on Transfers of a Class R Certificate set forth in
this Section 5.02(c) shall cease to apply (and the applicable portions of the
legend on a Class R Certificate may be deleted) with respect to Transfers
occurring after delivery to the Master Servicer of an Opinion of Counsel, which
Opinion of Counsel shall not be an expense of the Master Servicer, the Depositor
or the Subservicer to the effect that the elimination of such restrictions will
not cause the Trust Fund to fail to qualify as a REMIC at any time that the
Certificates are outstanding or result in the imposition of any tax on the Trust
Fund, a Certificateholder or another Person. Each Person holding or acquiring
any Ownership Interest in a Class R Certificate hereby consents to any amendment
of this Agreement that, based on an Opinion of Counsel furnished to the Master
Servicer, is reasonably necessary (a) to ensure that the record ownership of, or
any beneficial interest in, a Class R Certificate is not transferred, directly
or indirectly, to a Person that is not a Permitted Transferee and (b) to provide
for a means to compel the Transfer of a Class R Certificate that is held by a
Person that is not a Permitted Transferee to a Holder that is a Permitted
Transferee.
(d) The transferor of the Class R Certificate shall notify the
Subservicer in writing upon the transfer of the Class R Certificate.
(e) The preparation and delivery of all certificates, opinions and
other writings referred to above in this Section 5.02 shall not be an expense of
the Trust Fund, the Master Servicer, the Depositor, the Trustee or the
Subservicer.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Master Servicer,
or the Master Servicer receives evidence to its satisfaction of the destruction,
loss or theft of any
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Certificate and of the ownership thereof and (b) there is delivered to Master
Servicer such security or indemnity as may be required by them to save each of
them harmless, then, in the absence of notice to the Master Servicer that such
Certificate has been acquired by a bona fide purchaser, the Master Servicer
shall execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
Class, tenor and Percentage Interest. In connection with the issuance of any new
Certificate under this Section 5.03, the Master Servicer 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 Master Servicer) connected therewith. Any replacement
Certificate issued pursuant to this Section 5.03 shall constitute complete and
indefeasible evidence of ownership in the Trust Fund, as if originally issued,
whether or not the lost, stolen or destroyed Certificate shall be found at any
time. All Certificates surrendered to the Master Servicer under the terms of
this Section 5.03 shall be canceled and destroyed by the Master Servicer in
accordance with its standard procedures without liability on its part.
SECTION 5.04. Persons Deemed Owners.
The Subservicer, the Master Servicer and any agent of the Subservicer
or the Master Servicer may treat the person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
distributions as provided in this Agreement and for all other purposes
whatsoever, and neither the Subservicer, the Master Servicer nor any agent of
the Subservicer or the Master Servicer shall be affected by any notice to the
contrary.
SECTION 5.05. Access to List of Certificateholders' Names and
Addresses.
If three or more Certificateholders (a) request such information in
writing from the Master Servicer, (b) state that such Certificateholders desire
to communicate with other Certificateholders with respect to their rights under
this Agreement or under the Certificates, and (c) provide a copy of the
communication that such Certificateholders propose to transmit or if the
Depositor or Subservicer shall request such information in writing from the
Master Servicer, then the Master Servicer shall, within ten Business Days after
the receipt of such request, provide the Depositor, the Subservicer or such
Certificateholders at such recipients' expense the most recent list of the
Certificateholders of the Trust Fund held by the Master Servicer, if any. The
Depositor and every Certificateholder, by receiving and holding a Certificate,
agree that the Master Servicer shall not 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.
SECTION 5.06. Book-Entry Certificates.
The Regular Certificates, upon original issuance, shall be issued in
the form of one or more typewritten Certificates representing the Book- Entry
Certificates, to be delivered to the Depository by or on behalf of the
Depositor. Such Certificates shall initially be registered on
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the Certificate Register in the name of the Depository or its nominee, and no
Certificate Owner will receive a definitive certificate representing such
Certificate Owner's interest in such Certificates, except as provided in Section
5.08. Unless and until definitive, fully registered Certificates ("Definitive
Certificates") have been issued to the Certificate Owners of such Certificates
pursuant to Section 5.08:
(a) the provisions of this Section shall be in full force and effect;
(b) the Depositor, the Subservicer, the Trustee and the Master Servicer
may deal with the Depository and the Depository Participants for all purposes
(including the making of distributions) as the authorized representative of the
respective Certificate Owners of such Certificates;
(c) registration of the Book-Entry Certificates may not be transferred
by the Master Servicer except to another Depository;
(d) the rights of the respective Certificate Owners of such
Certificates shall be exercised only through the Depository and the Depository
Participants and shall be limited to those established by law and agreements
between the Owners of such Certificates and the Depository and/or the Depository
Participants. Pursuant to the Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 5.08, the Depository will make
book-entry transfers among the Depository Participants and receive and transmit
distributions of principal and interest on the related Certificates to such
Depository Participants;
(e) the Depository may collect its usual and customary fees, charges
and expenses from its Depository Participants;
(f) the Master Servicer may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to its
Depository Participants; and
(g) to the extent that the provisions of this Section conflict with any
other provisions of this Agreement, the provisions of this Section shall
control.
For purposes of any provision of this Agreement requiring or permitting
actions with the consent of, or at the direction of, Certificateholders
evidencing a specified percentage of the aggregate unpaid principal amount of
any Class of Certificates, such direction or consent may be given by Certificate
Owners (acting through the Depository and the Depository Participants) owning
Book-Entry Certificates evidencing the requisite percentage of principal amount
of such Class of Certificates.
SECTION 5.07. Notices to Depository.
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Whenever any notice or other communication is required to be given to
Certificateholders of the Class with respect to which Book-Entry Certificates
have been issued, unless and until Definitive Certificates shall have been
issued to the related Certificate Owners, the Master Servicer and the Trustee
shall give all such notices and communications to the Depository.
SECTION 5.08. Definitive Certificates.
If, after Book-Entry Certificates have been issued with respect to any
Certificates, (a) the Depositor advises the Master Servicer that the Depository
is no longer willing or able to discharge properly its responsibilities under
the Depository Agreement with respect to such Certificates and the Master
Servicer or the Depositor is unable to locate a qualified successor, (b) the
Depositor, at its sole option, advises the Master Servicer that it elects to
terminate the book-entry system with respect to such Certificates through the
Depository or (c) after the occurrence and continuation of an Event of Default,
Certificate Owners of such Book-Entry Certificates having not less than 51% of
the Voting Rights evidenced by any Class of Book-Entry Certificates advise the
Master Servicer and the Depository in writing through the Depository
Participants that the continuation of a book-entry system with respect to
Certificates of such Class through the Depository (or its successor) is no
longer in the best interests of the Certificate Owners of such Class, then the
Master Servicer shall notify all Certificate Owners of such Certificates,
through the Depository, of the occurrence of any such event and of the
availability of Definitive Certificates to Certificate Owners of such Class
requesting the same. The Depositor shall provide the Master Servicer with an
adequate inventory of certificates to facilitate the issuance and transfer of
Definitive Certificates. Upon surrender to the Master Servicer or the Master
Servicer of any such Certificates by the Depository, accompanied by registration
instructions from the Depository for registration, the Authenticating Agent
shall authenticate and the Master Servicer shall deliver such Definitive
Certificates. Neither the Depositor nor the Master Servicer shall be liable for
any delay in delivery of such instructions and each may conclusively rely on,
and shall be protected in relying on, such instructions. Upon the issuance of
such Definitive Certificates, all references herein to obligations imposed upon
or to be performed by the Depository shall be deemed to be imposed upon and
performed by the Master Servicer, to the extent applicable with respect to such
Definitive Certificates and the Master Servicer shall recognize the Holders of
such Definitive Certificates as Certificateholders hereunder.
SECTION 5.09. Maintenance of Office or Agency.
The Master Servicer will maintain or cause to be maintained at its
expense an office or offices or agency or agencies in New York City where
Certificates may be surrendered for registration of transfer or exchange. The
Master Servicer initially designates its offices at c/o The Chase Manhattan
Bank, 450 West 33rd Street, New York, New York 10001, as offices for such
purposes. The Master Servicer will give prompt written notice to the
Certificateholders of any change in such location of any such office or agency.
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SECTION 5.10. Authenticating Agents. (a) The Trustee may appoint one or
more Authenticating Agents (each, an "Authenticating Agent") which shall be
authorized to act on behalf of the Trustee in authenticating the Certificates.
Wherever reference is made in this Agreement to the authentication of
Certificates by the Trustee or the Trustee's certificate of authentication, such
reference shall be deemed to include authentication on behalf of the Trustee by
an Authenticating Agent and a certificate of authentication executed on behalf
of the Trustee by an Authenticating Agent. Each Authenticating Agent must be an
entity organized and doing business under the laws of the United States of
America or of any state, having a combined capital and surplus of at least
$15,000,000, authorized under such laws to do a trust business and subject to
supervision or examination by federal or state authorities. If the
Authenticating Agent is a party other than the Trustee, the Trustee shall have
no liability in connection with the performance or failure of performance of the
Authenticating Agent. The Trustee hereby appoints The Chase Manhattan Bank as
the initial Authenticating Agent. The Trustee shall be the Authenticating Agent
during any such time as no other Authenticating Agent has been appointed.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which any Authenticating Agent shall be a
party, or any Person succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the Authenticating Agent without the
execution or filing of any paper or any further act on the part of the Trustee
or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least
30 days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance within the provisions of this Section 5.10, the Trustee may appoint a
successor Authenticating Agent, shall give written notice of such appointment to
the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section 5.10. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee. Any Authenticating Agent shall be
entitled to reasonable compensation for its services and any such compensation
shall be payable solely by the Trustee, without any right of reimbursement from
the Depositor, the Subservicer or the Trust Fund.
SECTION 5.11. Appointment of Paying Agent. The Master Servicer may
appoint a Paying Agent hereunder (the "Paying Agent"). In the event of any such
appointment, the Master Servicer shall cause the Paying Agent to perform each of
the obligations of the Paying Agent set forth herein and shall be liable to the
Trustee and the Certificateholders for failure of
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the Paying Agent to perform such obligations. If the Paying Agent is a party
other than the Trustee, the Trustee shall have no liability in connection with
the performance or failure of performance of the Paying Agent. The Master
Servicer designates the Corporate Trust Department of The Chase Manhattan Bank
as the initial Paying Agent.
The Master Servicer shall cause each Paying Agent other than the
Trustee to execute and deliver to the Master Servicer and the Trustee on the
Closing Date or, if subsequently appointed, on the date of appointment, a
written instrument executed by an officer of the Paying Agent in which such
Paying Agent shall agree with the Master Servicer and the Trustee that such
Paying Agent will hold all sums held by it for the payment to Certificateholders
in trust for the benefit of the Certificateholders entitled thereto until such
sums shall be paid to such Certificateholders.
ARTICLE VI
THE DEPOSITOR, THE SUBSERVICER AND
THE MASTER SERVICER
SECTION 6.01. Respective Liabilities of the Depositor, the Subservicer
and the Master Servicer.
The Depositor, the Subservicer and the Master Servicer shall each be
liable in accordance herewith only to the extent of the obligations specifically
and respectively imposed upon and undertaken by them herein.
SECTION 6.02. Merger or Consolidation of the Depositor, the Subservicer
or the Master Servicer.
The Depositor, the Subservicer and the Master Servicer will each keep
in full effect its existence, rights and franchises as a corporation under the
laws of the United States or under the laws of one of the States thereof and
will each obtain and preserve its qualification to do business as a foreign
corporation in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, or any
of the Mortgage Loans and to perform its respective duties under this Agreement.
Any Person into which the Depositor, the Subservicer or the Master
Servicer may be merged or consolidated, or any Person resulting from any merger
or consolidation to which the Depositor, the Subservicer or the Master Servicer
shall be a party, or any person succeeding to the business of the Depositor, the
Subservicer or the Master Servicer, shall be the successor of the Depositor, the
Subservicer or the Master Servicer, as the case may be, hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided,
however, that the successor or
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surviving Person to the Subservicer shall be qualified to sell mortgage loans
to, and to service mortgage loans on behalf of, FNMA or FHLMC.
SECTION 6.03. Limitation on Liability of the Depositor, the Master
Servicer, the Subservicer and Others.
None of the Depositor, the Master Servicer, the Subservicer nor any of
the directors, officers, employees or agents of the Depositor, the Master
Servicer or the Subservicer 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 in good faith pursuant to this Agreement, or for errors in judgment;
provided, however, that this provision shall not protect the Depositor, the
Master Servicer, the Subservicer or any such Person against any breach of
representations or warranties made by it herein or protect the Depositor, the
Master Servicer, the Subservicer or any such Person from any liability that
would otherwise be imposed by reasons of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Depositor, the Master Servicer, the
Subservicer and any director, officer, employee or agent of the Depositor, the
Master Servicer or the Subservicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Depositor, the Master Servicer, the Subservicer
and any director, officer, employee or agent of the Depositor, the Master
Servicer or the Subservicer shall be indemnified by the Trust Fund and held
harmless against any loss, liability or expense incurred in connection with any
audit, controversy or judicial proceeding relating to a governmental taxing
authority or any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense related to any specific Mortgage Loan
or Mortgage Loans (except as any such loss, liability or expense shall be
otherwise reimbursable pursuant to this Agreement) and any loss, liability or
expense incurred by reason of willful misfeasance, bad faith or gross negligence
in the performance of duties hereunder or by reason of reckless disregard of
obligations and duties hereunder. None of the Depositor, the Master Servicer nor
the Subservicer shall be under any obligation to appear in, prosecute or defend
any legal action that is not incidental to its respective duties hereunder and
that in its opinion may involve it in any expense or liability; provided,
however, that any of the Depositor, the Master Servicer or the Subservicer may,
in its discretion undertake any such action that it may deem necessary or
desirable in respect of this Agreement and the rights and duties of the parties
hereto and interests of the Trustee and the Certificateholders hereunder. In
such event, the legal expenses and costs of such action and any liability
resulting therefrom shall be, expenses, costs and liabilities of the Trust Fund,
and the Depositor, the Master Servicer and the Subservicer shall be entitled to
be reimbursed therefor out of the Collection Account as provided by Section 3.08
hereof.
SECTION 6.04. Limitation on Resignation of Subservicer.
The Subservicer shall not resign from the obligations and duties hereby
imposed on it except upon determination that its duties hereunder are no longer
permissible under
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applicable law. Any such determination permitting the resignation of the
Subservicer shall be evidenced by an Opinion of Counsel to such effect delivered
to the Trustee. No such resignation shall become effective until the Trustee or
a successor servicer to such appointment shall have assumed the Subservicer's
responsibilities, duties, liabilities and obligations hereunder.
SECTION 6.05. Errors and Omissions Insurance; Fidelity Bonds.
The Subservicer shall, for so long as it acts as servicer under this
Agreement, obtain and maintain in force (a) a policy or policies of insurance
covering errors and omissions in the performance of its obligations as servicer
hereunder, and (b) 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 FNMA or FHLMC. In the event that any such policy
or bond ceases to be in effect, the Subservicer shall use its reasonable best
efforts to obtain a comparable replacement policy or bond from an insurer or
issuer, meeting the requirements set forth above as of the date of such
replacement.
SECTION 6.06. Compensation to the Master Servicer. The Master Servicer
shall be entitled to receive the Master Servicer Fee as compensation for
services rendered by the Master Servicer under this Agreement. The Master
Servicer shall pay itself such Master Servicer Fee monthly from amounts on
deposit in the Certificate Account. The Master Servicer shall also be entitled
to all income and gain net of any losses realized from Permitted Investments in
the Certificate Account and the Distribution Account.
ARTICLE VII
DEFAULT; TERMINATION OF SUBSERVICER
SECTION 7.01. Events of Default.
"Event of Default," wherever used herein, means any one of the
following events:
(i) any failure by the Subservicer to deposit in the
Collection Account or the Certificate Account or remit to the Trustee
or any Paying Agent any payment (excluding a payment required to be
made under Section 4.01 hereof) required to be made under the terms of
this Agreement, which failure shall continue unremedied for five
calendar days and, with respect to a payment required to be made under
Section 4.01 hereof, for one calendar day, after the date on which
written notice of such failure shall have been given to the Subservicer
by the Trustee or the Depositor, or to the Trustee and the Subservicer
by the Holders of Certificates evidencing not less than 25% of the
Voting Rights evidenced by the Certificates; or
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(ii) any failure by the Subservicer to observe or perform in
any material respect any other of the covenants or agreements on the
part of the Subservicer contained in this Agreement or any
representation or warranty shall prove to be untrue, which failure or
breach shall continue unremedied for a period of 60 days after the date
on which written notice of such failure shall have been given to the
Subservicer by the Trustee or the Depositor, or to the Trustee by the
Holders of Certificates evidencing not less than 25% of the Voting
Rights evidenced by the Certificates; or
(iii) a decree or order of a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered
against the Subservicer and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 consecutive days; or
(iv) consent by the Subservicer to the appointment of a
receiver or liquidator in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings of or
relating to the Subservicer or all or substantially all of the property
of the Subservicer;
(v) admission by the Subservicer in writing of its inability
to pay its debts generally as they become due, file a petition to take
advantage of, or commence a voluntary case under, any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, or voluntarily suspend payment of its
obligations; or
(vi) If either of the following events shall occur:
(A) With respect to the Group I Mortgage Loans, the
sum (without duplication) of:
(1) the aggregate Stated Principal Balance
of the Group I Mortgage Loans that are 30 days
Delinquent multiplied by [ ]%;
(2) the aggregate Stated Principal Balance
of the Group I Mortgage Loans that are 60 days
Delinquent multiplied by [ ]%;
(3) the aggregate Stated Principal Balance
of the Group I Mortgage Loans that are at least 90
days Delinquent (including Group I Mortgage Loans
that are in foreclosure and REO Properties)
multiplied by [ ]%; and
(4) the cumulative Realized Losses on the
Mortgage Pool;
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exceeds the product of (a) (i) on any date on or
prior to [DATE], [ ]% and (ii) on any date after
[DATE], [ ]% and (b) the aggregate Cut-Off Date
Principal Balance with respect to the Group I
Mortgage Loans; or
(B) With respect to the Group II Mortgage Loans,
the sum (without duplication) of:
(1) the aggregate Stated Principal Balance
of the Group II Mortgage Loans that are 30 days
Delinquent multiplied by [ ]%;
(2) the aggregate Stated Principal Balance
of the Group II Mortgage Loans that are 60 days
Delinquent multiplied by [ ]%;
(3) the aggregate Stated Principal Balance
of the Group II Mortgage Loans that are at least 90
days Delinquent (including Mortgage Loans that are in
foreclosures and REO Properties) multiplied by [ ]%;
and
(4) the cumulative Realized Losses on the
Mortgage Pool;
exceeds the product of (a) (i) on any date on or prior to [DATE], [ ]% and (ii)
on any date after [DATE], [ ]% and (b) the aggregate Cut-Off Date Principal
Balance with respect to the Group II Mortgage Loans.
If an Event of Default shall occur, then, and in each and every such
case, so long as such Event of Default shall not have been remedied, the Trustee
may, or at the direction of the Holders of Certificates evidencing not less than
25% (or 51%, in the case of the Event of Default specified in (vi) above) of the
Voting Rights evidenced by the Certificates, shall, by notice in writing to the
Subservicer (with a copy to each Rating Agency), terminate all of the rights and
obligations of the Subservicer under this Agreement and in and to the Mortgage
Loans and the proceeds thereof, other than its rights as a Certificateholder
hereunder. On or after the receipt by the Subservicer of such written notice,
all authority and power of the Subservicer hereunder, whether with respect to
the Mortgage Loans or otherwise, shall pass to and be vested in the Trustee. The
Trustee shall thereupon make any Advance described in Section 4.01 hereof
subject to Section 3.04 hereof. The Trustee is hereby authorized and empowered
to execute and deliver, on behalf of the Subservicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement or
assignment of the Mortgage Loans and related documents, or otherwise. Unless
expressly provided in such written notice, no such termination shall affect any
obligation of the Subservicer to pay amounts owed pursuant to Article VIII. The
Subservicer agrees to cooperate with the Trustee in effecting the termination of
the Subservicer's responsibilities and rights hereunder, including, without
limitation, the transfer to the Trustee of all cash amounts which shall at the
time be credited to the Collection Account, or thereafter be received with
respect to
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the Mortgage Loans. The Trustee shall promptly notify the Rating Agencies of the
occurrence of an Event of Default.
Notwithstanding any termination of the activities of a Subservicer
hereunder, such Subservicer shall be entitled to receive, out of any late
collection of a Scheduled Payment on a Mortgage Loan that was due prior to the
notice terminating such Subservicer's rights and obligations as Subservicer
hereunder and received after such notice, that portion thereof to which such
Subservicer would have been entitled pursuant to Sections 3.08(a)(i) through
(viii), and any other amounts payable to such Subservicer hereunder the
entitlement to which arose prior to the termination of its activities hereunder.
SECTION 7.02. Trustee to Act; Appointment of Successor.
On and after the time the Subservicer receives a notice of termination
pursuant to Section 7.01 hereof, the Trustee shall, to the extent provided in
Section 3.04, be the successor to the Subservicer in its capacity as servicer
under this Agreement and the transactions set forth or provided for herein and
shall be subject to all the responsibilities, duties and liabilities relating
thereto placed on the Subservicer by the terms and provisions hereof and
applicable law including the obligation to make advances pursuant to Section
4.01. As compensation therefor, the Trustee shall be entitled to all fees, costs
and expenses relating to the Mortgage Loans that the Subservicer would have been
entitled to if the Subservicer had continued to act hereunder. Notwithstanding
the foregoing, if the Trustee has become the successor to the Subservicer in
accordance with Section 7.01 hereof, the Trustee may, if it shall be unwilling
to so act, or shall, if it is prohibited by applicable law from making Advances
pursuant to Section 4.01 hereof or if it is otherwise unable to so act, appoint,
or petition a court of competent jurisdiction to appoint, any established
mortgage loan servicing institution the appointment of which does not adversely
affect the then current rating of the Certificates by each Rating Agency as the
successor to the Subservicer hereunder in the assumption of all or any part of
the responsibilities, duties or liabilities of the Subservicer hereunder. Any
successor Subservicer shall be an institution that is a FNMA and FHLMC approved
seller/servicer in good standing, that has a net worth of at least $15,000,000,
and that is willing to service the Mortgage Loans and executes and delivers to
the Depositor and the Trustee an agreement accepting such delegation and
assignment, that contains an assumption by such Person of the rights, powers,
duties, responsibilities, obligations and liabilities of the Subservicer (other
than liabilities of the Subservicer under Section 6.03 hereof incurred prior to
termination of the Subservicer under Section 7.01), with like effect as if
originally named as a party to this Agreement; and provided further that each
Rating Agency acknowledges that its rating of the Certificates in effect
immediately prior to such assignment and delegation will not be qualified or
reduced as a result of such assignment and delegation. No appointment of a
successor to the Subservicer hereunder shall be effective until the Trustee
shall have consented thereto, and written notice of such proposed appointment
shall have been provided by the Trustee to each Certificateholder. The Trustee
shall not resign as servicer until a successor servicer has been appointed and
has accepted such appointment. Pending appointment of a successor to the
Subservicer hereunder, the Trustee, unless the Trustee is prohibited by law
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from so acting, shall, subject to Section 3.04 hereof, act in such capacity as
hereinabove provided. In connection with such appointment and assumption, the
Trustee may make such arrangements for the compensation of such successor out of
payments on Mortgage Loans as it and such successor shall agree; provided,
however, that no such compensation shall be in excess of that permitted the
Subservicer hereunder. The Trustee and such successor shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. Neither the Trustee nor any other successor servicer shall be deemed
to be in default hereunder by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof or any failure to
perform, or any delay in performing, any duties or responsibilities hereunder,
in either case caused by the failure of the Subservicer to deliver or provide,
or any delay in delivering or providing, any cash, information, documents or
records to it.
Any successor to the Subservicer as servicer shall give notice to the
Mortgagors of such change of servicer and shall, during the term of its service
as servicer maintain in force the policy or policies that the Subservicer is
required to maintain pursuant to Section 6.05.
SECTION 7.03. Notification to Certificateholders.
(a) Upon any termination of or appointment of a successor to the
Subservicer, the Trustee shall give prompt written notice thereof to
Certificateholders and to each Rating Agency.
(b) Within 60 days after the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Certificateholders notice of each such
Event of Default hereunder known to the Trustee, unless such Event of Default
shall have been cured or waived.
ARTICLE VIII
CONCERNING THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of an Event of Default and after
the curing of all Events of Default that may have occurred, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. In case an Event of Default has occurred and remains uncured, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically
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required to be furnished pursuant to any provision of this Agreement shall
examine them to determine whether they conform to the requirements of this
Agreement. If any such instrument is found not to conform to the requirements of
this Agreement in a material manner, the Trustee shall take action as it deems
appropriate to have the instrument corrected.
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, its negligent failure to perform its obligations
in compliance with this Agreement, or any liability that would be imposed by
reason of its willful misfeasance or bad faith; provided, however, that:
(i) prior to the occurrence of an Event of Default,
and after the curing of all such Events of Default that 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, individually or as Trustee, 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 the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement that it
reasonably believed in good faith to be genuine and to have been duly
executed by the proper authorities respecting any matters arising
hereunder;
(ii) the Trustee shall not be liable, individually or
as Trustee, for an error of judgment made in good faith by a
Responsible Officer or Responsible Officers of the Trustee, unless the
Trustee was negligent or acted in bad faith or with willful
misfeasance; and
(iii) the Trustee shall not be liable, individually
or as Trustee, with respect to any action taken, suffered or omitted to
be taken by it in good faith in accordance with the direction of
Holders of each Class of Certificates evidencing not less than 25% of
the Voting Rights of such Class relating to the time, method and place
of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee under this
Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 8.01:
(i) the Trustee may request and rely upon and shall
be protected in acting or refraining from acting upon any resolution,
Officer's Certificate, certificate of auditors or any other
certificate, statement, instrument, 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;
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(ii) the Trustee may consult with counsel of its
choice and any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered
or omitted by it hereunder in good faith and in accordance with such
Opinion of Counsel;
(iii) the Trustee shall not be liable, individually
or as Trustee, 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;
(iv) prior to the occurrence of an Event of Default
hereunder and after the curing of all Events of Default that may have
occurred, the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing so to do
by Holders of each Class of Certificates evidencing not less than 25%
of the Voting Rights of such Class;
(v) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, accountants or attorneys;
(vi) the Trustee shall not be required to expend its
own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such liability is not assured to it;
(vii) the Trustee shall not be liable, individually
or as Trustee, for any loss on any investment of funds pursuant to this
Agreement (other than as issuer of the investment security);
(viii) the Trustee shall not be deemed to have
knowledge of an Event of Default until a Responsible Officer of the
Trustee shall have received written notice thereof;
(ix) the Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this Agreement or
to make any investigation of matters arising hereunder or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the 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 that may be incurred
therein or thereby; and
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(x) if requested by the Master Servicer, the Trustee
may appoint the Master Servicer as the trustee's attorney-in-fact in
order to carry out and perform certain activities that are necessary or
appropriate for the servicing and administration of the Mortgage Loans
pursuant to this Agreement. Such appointment shall be evidenced by a
power of attorney in such form as may be agreed to by the Trustee and
the Master Servicer.
(b) All rights of action under this Agreement or under any of the
Certificates, enforceable by the Trustee, may be enforced by the Trustee without
the possession of any of the Certificates, or the production thereof at the
trial or other proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of the Certificates, subject to the provisions of
this Agreement.
SECTION 8.03. Trustee Not Liable for Mortgage Loans.
The recitals contained herein shall be taken as the statements of the
Depositor or the Subservicer, as the case may be, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Agreement or of any Mortgage Loan or related
document other than with respect to the Trustee's execution and authentication
of the Certificates. The Trustee shall not be accountable for the use or
application by the Depositor or the Subservicer of any funds paid to the
Depositor or the Subservicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account, Certificate Account or Distribution
Account by the Depositor or the Subservicer.
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Trustee.
SECTION 8.05. Master Servicer to Pay Trustee's Fees and Expenses.
The Master Servicer covenants and agrees (i) to pay to the Trustee from
time to time, and the Trustee shall be entitled to, such compensation as shall
be agreed in writing by the Master Servicer and the Trustee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by it in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee and (ii) to pay or reimburse the Trustee, upon
its request, for all reasonable expenses, disbursements and advances incurred or
made by the Trustee on behalf of the Trust Fund in accordance with any of the
provisions of this Agreement (including, without limitation: (A) the reasonable
compensation and the expenses and disbursements of its counsel, but only for
representation of the Trustee acting in its capacity as Trustee hereunder and
(B) to the extent that the Trustee must engage persons not regularly in its
employ to perform acts or
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services on behalf of the Trust Fund, which acts or services are not in the
ordinary course of the duties of a trustee, paying agent or certificate
registrar, in the absence of a breach or default by any party hereto, the
reasonable compensation, expenses and disbursements of such persons, except any
such expense, disbursement or advance as may arise from its negligence, bad
faith or willful misconduct). The Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Master Servicer and held
harmless against any loss, liability or expense (i) incurred in connection with
any legal action relating to this Agreement or the Certificates, or in
connection with the performance of any of the Trustee's duties hereunder, other
than any loss, liability or expense incurred by reason of willful misfeasance,
bad faith or negligence in the performance of any of the Trustee's duties
hereunder or by reason of reckless disregard of the Trustee's obligations and
duties hereunder and (ii) resulting from any error in any tax or information
return prepared by the Master Servicer. Such indemnity shall survive the
termination of this Agreement or the resignation or removal of the Trustee
hereunder.
SECTION 8.06. Eligibility Requirements for Trustee.
The Trustee hereunder shall, at all times, be a corporation or
association organized and doing business under the laws of a state or the United
States of America, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least $50,000,000, subject
to supervision or examination by federal or state authority and with a credit
rating that would not cause any of the Rating Agencies to reduce their
respective ratings of any Class of Certificates below the ratings issued on the
Closing Date (or having provided such security from time to time as is
sufficient to avoid such reduction). If such corporation or 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 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 hereof. The corporation or
national banking association serving as Trustee may have normal banking and
trust relationships with the Depositor, the Master Servicer and the Subservicer
and their respective affiliates; provided, however, that such corporation cannot
be an affiliate of the Subservicer other than the Trustee in its role as
successor to the Subservicer.
SECTION 8.07. Resignation and Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by (1) giving written notice of resignation to the Depositor and
the Subservicer and by mailing notice of resignation by first Class mail,
postage prepaid, to the Certificateholders at their addresses appearing on the
Certificate Register and each Rating Agency, not less than 60 days before the
date specified in such notice when, subject to Section 8.08, such resignation is
to take effect, and (2) acceptance of appointment by a successor trustee in
accordance with Section
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8.08 and meeting the qualifications set forth in Section 8.06. If no successor
trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice or resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
trustee.
If at any time (i) the Trustee shall cease to be eligible in accordance
with the provisions of Section 8.06 hereof and shall fail to resign after
written request thereto by the Depositor, (ii) the Trustee shall become
incapable of acting, or shall be adjudged as bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, or
(iii)(A) a tax is imposed with respect to the Trust Fund by any state in which
the Trustee or the Trust Fund is located, (B) the imposition of such tax would
be avoided by the appointment of a different trustee and (C) the Trustee fails
to indemnify the Trust Fund against such tax, then the Depositor may remove the
Trustee and appoint a successor trustee by written instrument, in triplicate,
one copy of which instrument shall be delivered to the Trustee, one copy of
which shall be delivered to the Subservicer and one copy of which shall be
delivered to the successor trustee.
The Holders evidencing at least 51% of the Voting Rights of each Class
of Certificates may at any time remove the Trustee and appoint a successor
trustee by written instrument or instruments, in triplicate, signed by such
Holders or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered by the successor Trustee to the Subservicer, one
complete set to the Trustee so removed and one complete set to the successor so
appointed. Notice of any removal of the Trustee shall be given to each Rating
Agency by the Successor Trustee.
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
become effective upon acceptance of appointment by the successor trustee as
provided in Section 8.08 hereof.
SECTION 8.08. Successor Trustee.
Any successor trustee appointed as provided in Section 8.07 hereof
shall execute, acknowledge and deliver to the Depositor and to its predecessor
trustee and the Subservicer an instrument accepting such appointment hereunder
and thereupon the resignation or removal of the predecessor trustee shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein.
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 hereof and its appointment
shall not adversely affect the then current rating of the Certificates.
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Upon acceptance of appointment by a successor trustee as provided in
this Section 8.08, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates. If the Depositor fails to mail
such notice within ten days after acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Depositor.
SECTION 8.09. Merger or Consolidation of Trustee.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to substantially all of the corporate trust business of
the Trustee, shall be the successor of the Trustee hereunder, provided that such
corporation shall be eligible under the provisions of Section 8.06 hereof
without the execution or filing of any paper or 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, the Subservicer 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, whichever is applicable, and, subject to the other provisions of this
Section 8.10, such powers, duties, obligations, rights and trusts as the
Subservicer and the Trustee may consider necessary or desirable. The Trustee
shall be ultimately liable for the actions of any co-trustee. If the Subservicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request to do so, 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 under Section 8.06 and no
notice to 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, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations
conferred or imposed upon the Trustee, except for the obligation of the
Trustee under this Agreement to advance funds on behalf of the
Subservicer, 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
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separately without the Trustee joining in 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 the Subservicer 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;
(ii) No trustee hereunder shall be held personally
liable by reason of any act or omission of any other trustee hereunder;
and
(iii) The Trustee 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 the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Subservicer and the Depositor.
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 Matters.
It is intended that each of the Master REMIC and Subsidiary REMIC shall
constitute, and that the affairs of the Trust Fund shall be conducted so as to
qualify as, a "real estate mortgage investment conduit" as defined in and in
accordance with the REMIC Provisions. In furtherance of such intention, the
Master Servicer covenants and agrees that it shall act as agent (and the Master
Servicer is hereby appointed to act as agent) on behalf of each of the Master
REMIC and Subsidiary REMIC and that in such capacity it shall: (a) prepare and
file, or cause to be prepared and filed, in a timely manner, a U.S. Real Estate
Mortgage Investment Conduit Income Tax Return (Form 1066 or any successor form
adopted by the Internal Revenue Service) and prepare and file or cause to be
prepared and filed with the Internal
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Revenue Service and applicable state or local tax authorities income tax or
information returns for each taxable year with respect to each of the Master
REMIC and Subsidiary 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 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; (b) within thirty days of the Closing
Date, furnish or cause to be furnished to the Internal Revenue Service, on Forms
8811 or as otherwise may be required by the Code, the name, title, address, and
telephone number of the person that the holders of the Certificates may contact
for tax information relating thereto, together with such additional information
as may be required by such Form, and update such information at the time or
times in the manner required by the Code for each of the Master REMIC and
Subsidiary REMIC; (c) make or cause to be made elections, on behalf of each of
the Master REMIC and Subsidiary REMIC to be treated as a REMIC on the federal
tax return of each of the Master REMIC and Subsidiary REMIC for its first
taxable year (and, if necessary, under applicable state law); (d) prepare and
forward, or cause to be prepared and forwarded, to the Certificateholders and to
the Internal Revenue Service and, if necessary, state tax authorities, all
information returns and reports as and when required to be provided to them in
accordance with the REMIC Provisions, including without limitation, the
calculation of any original issue discount using the Prepayment Assumption; (e)
provide information necessary for the computation of tax imposed on the transfer
of a Class R Certificate to a Person that is not a Permitted Transferee, or an
agent (including a broker, nominee or other middleman) of a Non-Permitted
Transferee, or a pass-through entity in which a Non-Permitted Transferee is the
record holder of an interest (the reasonable cost of computing and furnishing
such information may be charged to the Person liable for such tax); (f) to the
extent that they are under its control conduct the affairs of each of the Master
REMIC and Subsidiary REMIC at all times that any Certificates are outstanding so
as to maintain the status of each of the Master REMIC and Subsidiary REMIC as a
REMIC under the REMIC Provisions; (g) not knowingly or intentionally take any
action or omit to take any action that would cause the termination of the REMIC
status of each of the Master REMIC and Subsidiary REMIC; (h) pay, from the
sources specified in the last paragraph of this Section 8.11, the amount of any
federal, state and local taxes, including prohibited transaction taxes as
described below, imposed on each of the Master REMIC and Subsidiary REMIC prior
to the termination of the Trust Fund when and as the same shall be due and
payable (but such obligation shall not prevent the Trustee or any other
appropriate Person from contesting any such tax in appropriate proceedings and
shall not prevent the Trustee from withholding payment of such tax, if permitted
by law, pending the outcome of such proceedings); (i) sign or cause to be signed
federal, state or local income tax or information returns; (j) maintain records
relating to each of the Master REMIC and Subsidiary REMIC, including but not
limited to the income, expenses, assets and liabilities of each of the Master
REMIC and Subsidiary REMIC, and the fair market value and adjusted basis of the
Trust Fund property determined at such intervals as may be required by the Code,
as may be necessary to prepare the foregoing returns, schedules, statements or
information; and (k) as and when necessary and appropriate, represent each of
the Master REMIC and Subsidiary REMIC in any administrative or judicial
proceedings relating to an examination or audit by any governmental taxing
authority, request an administrative
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adjustment as to any taxable year of each of the Master REMIC and Subsidiary
REMIC, enter into settlement agreements with any governmental taxing agency,
extend any statute of limitations relating to any tax item of either the
Subsidiary REMIC or the Master REMIC, and otherwise act on behalf of either the
Subsidiary REMIC or the Master REMIC in relation to any tax matter involving
either the Subsidiary REMIC or the Master REMIC or controversy involving the
Trust Fund.
In order to enable the Master Servicer to perform its duties as set
forth herein, the Depositor shall provide, or cause to be provided, to the
Master Servicer within 10 days after the Closing Date all information or data
that the Master Servicer requests in writing and determines to be relevant for
tax purposes to the valuations and offering prices of the Certificates,
including, without limitation, the price, yield, prepayment assumption and
projected cash flows of the Certificates and the Mortgage Loans. Thereafter, the
Depositor shall provide to the Master Servicer promptly upon written request
therefor, any such additional information or data that the Master Servicer may,
from time to time, request in order to enable the Master Servicer to perform its
duties as set forth herein. The Depositor hereby agrees to indemnify the Master
Servicer for any losses, liabilities, damages, claims or expenses of the Master
Servicer arising from any errors or miscalculations of the Master Servicer that
result from any failure of the Depositor to provide, or to cause to be provided,
accurate information or data to the Master Servicer on a timely basis.
In the event that any tax is imposed on "prohibited transactions" of
either the Subsidiary REMIC or the Master REMIC as defined in Section 860F(a)(2)
of the Code, on the "net income from foreclosure property" of the Trust Fund as
defined in Section 860G(c) of the Code, on any contribution to the Trust Fund
after the Startup Day pursuant to Section 860G(d) of the Code, or any other tax
is imposed, if not paid as otherwise provided for herein, such tax shall be paid
by (i) the Master Servicer, if any such other tax arises out of or results from
a breach by the Master Servicer of any of its obligations under this Agreement,
(ii) (x) the Subservicer, in the case of any such minimum tax, and (y) any party
hereto (other than the Master Servicer) to the extent any such other tax arises
out of or results from a breach by such other party of any of its obligations
under this Agreement or (iii) in all other cases, or in the event that any
liable party here fails to honor its obligations under the preceding clauses (i)
or (ii), any such tax will be paid first with amounts otherwise to be
distributed to the Class R Certificateholders (pro rata), and second with
amounts otherwise to be distributed to all other Certificateholders in the
following order of priority: first, to the Class IB and Class IIB Certificates
(pro rata), second, to the Class IM-2 and IIM-2 Certificates (pro rata), third,
to the Class IM-1 and IIM-1 Certificates (pro rata), and fourth, to the Group I
Class A Certificates and the Group II Class A Certificates (pro rata).
Notwithstanding anything to the contrary contained herein, to the extent that
such tax is payable by the Class R Certificates, the Master Servicer is hereby
authorized to instruct the Trustee or Paying Agent, as applicable and the
Trustee or Paying Agent, as applicable is hereby authorized pursuant to such
instruction to retain on any Distribution Date, from the Holders of the Class R
Certificates (and, if necessary, second, from the Holders of the all other
Certificates in the priority specified in the preceding sentence), funds
otherwise distributable to such Holders in an
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amount sufficient to pay such tax. The Master Servicer agrees to promptly notify
in writing the party liable for any such tax of the amount thereof and the due
date for the payment thereof.
ARTICLE IX
TERMINATION
SECTION 9.01. Termination upon Liquidation or Repurchase of all
Mortgage Loans.
Subject to Section 9.03, the obligations and responsibilities of the
Depositor, the Subservicer, the Master Servicer and the Trustee created hereby
with respect to the Trust Fund shall terminate upon the earlier of (a) the
repurchase by the Master Servicer of all of the Mortgage Loans (and REO
Properties) remaining in each Loan Group at the price (the "Repurchase Price")
equal to the sum of (i) 100% of the Stated Principal Balance of each Mortgage
Loan in such Loan Group (other than in respect of REO Property), (ii) accrued
interest thereon at the applicable Mortgage Rate, (iii) the appraised value of
any REO Property in such Loan Group (up to the Stated Principal Balance of the
related Mortgage Loan), such appraisal to be conducted by an appraiser mutually
agreed upon by the Depositor and the Trustee and (iv) any unreimbursed Servicing
Fees, Advances and Servicing Advances with respect to the Mortgage Loans in such
Loan Group prior to the exercise of such repurchase, together with any
unreimbursed Master Servicing Fees; and (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 REO Property and
(ii) the distribution to Certificateholders of all amounts required to be
distributed to them pursuant to this Agreement, as applicable. In no event shall
the trusts created hereby continue beyond the earlier of (i) the expiration of
21 years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late Ambassador of the United States to the Court of St. James's,
living on the date hereof and (ii) the Latest Possible Maturity Date.
The right to repurchase all Mortgage Loans and REO Properties in a Loan
Group pursuant to clause (a) above shall be conditioned upon the aggregate
Stated Principal Balance of the Mortgage Loans in such Loan Group, at the time
of any such repurchase, aggregating ten percent or less of the aggregate Initial
Certificate Principal Balance of the Certificates in such Loan Group.
SECTION 9.02. Final Distribution on the Certificates.
If on any Determination Date, (i) the Master Servicer determines that
there are no Outstanding Mortgage Loans and no other funds or assets in the
Trust Fund other than the funds in the Collection Account, the Trustee shall
send a final distribution notice promptly to each Certificateholder or (ii) the
Master Servicer determines that a Class of Certificates shall be retired after a
final distribution on such Class, the Trustee shall notify the
Certificateholders within
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seven (7) Business Days after such Determination Date that the final
distribution in retirement of such Class of Certificates is scheduled to be made
on the immediately following Distribution Date. Any final distribution made
pursuant to the immediately preceding sentence will be made only upon
presentation and surrender of the related Certificates at the office of the
Master Servicer. If the Master Servicer elects to terminate the Trust Fund
pursuant to clause (a) of Section 9.01, at least 10 days prior to the date
notice is to be mailed to the affected Certificateholders, the Master Servicer
shall notify the Depositor, the Subservicer and the Trustee of the date such
electing party intends to terminate the Trust Fund and of the applicable
repurchase price of the Mortgage Loans and REO Properties.
Notice of any termination of the Trust Fund, specifying the
Distribution Date on which Certificateholders may surrender their Certificates
for payment of the final distribution and cancellation, shall be given promptly
by the Trustee by letter to Certificateholders mailed not earlier than the 10th
day and no later than the 15th day of the month immediately preceding the month
of such final distribution. Any such notice shall specify (a) the Distribution
Date upon which final distribution on the Certificates will be made upon
presentation and surrender of Certificates at the office therein designated, (b)
the location of the office or agency at which such presentation and surrender
must be made, and (c) that the Record Date otherwise applicable to such
Distribution Date is not applicable, distributions being made only upon
presentation and surrender of the Certificates at the office therein specified.
The Master Servicer will give such notice to each Rating Agency at the time such
notice is given to Certificateholders.
In the event such notice is given, the Master Servicer shall cause all
funds in the Collection Account and the Certificate Account to be deposited in
the Distribution Account on the Business Day prior to the applicable
Distribution Date in an amount equal to the final distribution in respect of the
Certificates. Upon such final deposit with respect to the Trust Fund and the
receipt by the Trustee of a Request for Release therefor, the Trustee shall
promptly release to the Master Servicer the Mortgage Files for the Mortgage
Loans.
Upon presentation and surrender of the Certificates, the Trustee shall
cause to be distributed to Certificateholders of each Class the amounts
allocable to such Certificates held in the Distribution Account in the order and
priority set forth in Section 4.04 hereof on the final Distribution Date and in
proportion to their respective Percentage Interests.
In the event that any affected Certificateholders shall not surrender
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
six months after the second notice all the applicable 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 that remain a part of
the Trust Fund. If within one year after the second notice all Certificates
shall not have been surrendered
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for cancellation, the Class R Certificateholders shall be entitled to all
unclaimed funds and other assets of the Trust Fund that remain subject hereto.
Upon payment to the Class R Certificateholders of such funds and assets, the
Trustee shall have no further duties or obligations with respect thereto.
SECTION 9.03. Additional Termination Requirements.
(a) In the event the Master Servicer exercises its purchase option on
both of the Group I Mortgage Loans and the Group II Mortgage Loans as provided
in Section 9.01, the Trust Fund shall be terminated in accordance with the
following additional requirements, unless the Trustee has been supplied with an
Opinion of Counsel, at the expense of the Master Servicer, to the effect that
the failure of the Trust Fund to comply with the requirements of this Section
9.03 will not (i) result in the imposition of taxes on "prohibited transactions"
of the Trust Fund as defined in section 860F of the Code, or (ii) cause the
Trust Fund to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(i) The Depositor shall establish a 90-day liquidation period
and notify the Trustee thereof, which shall in turn specify the first
day of such period in a statement attached to the Trust Fund's final
Tax Return pursuant to Treasury Regulation Section 1.860F-1. The
Depositor shall satisfy all the requirements of a qualified liquidation
under Section 860F of the Code and any regulations thereunder, as
evidenced by an Opinion of Counsel obtained at the expense of the
Subservicer;
(ii) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Depositor
as agent of the Trustee shall sell all of the assets of the Trust Fund
for cash; and
(iii) At the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Class R Certificateholders all cash on
hand (other than cash retained to meet outstanding claims known to the
Trustee), and the Trust Fund shall terminate at that time, whereupon
the Trustee shall have no further duties or obligations with respect to
sums distributed or credited to the Class R Certificateholders.
(b) By their acceptance of the Certificates, the Holders thereof hereby
authorize the Depositor to specify the 90-day liquidation period for the Trust
Fund, which authorization shall be binding upon all successor
Certificateholders.
(c) The Master Servicer as agent for each REMIC hereby agrees to adopt
and sign such a plan of complete liquidation upon the written request of the
Depositor, and the receipt of the Opinion of Counsel referred to in Section
9.03(a)(1) and to take such other action in connection therewith as may be
reasonably requested by the Depositor.
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ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.01. Amendment.
This Agreement may be amended from time to time by the Depositor, the
Subservicer, the Master Servicer and the Trustee, without the consent of any of
the Certificateholders to cure any ambiguity, to correct or supplement any
provisions herein, or to make such other provisions with respect to matters or
questions arising under this Agreement, as shall not be inconsistent with any
other provisions herein if such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder; provided, however, that any such amendment shall be deemed
not to adversely affect in any material respect the interests of the
Certificateholders and no such Opinion of Counsel shall be required if the
Person requesting such amendment obtains a letter from each Rating Agency
stating that such amendment would not result in the downgrading or withdrawal of
the respective ratings then assigned to the Certificates, it being understood
and agreed that any such letter in and of itself will not represent a
determination as to the materiality of any such amendment and will represent a
determination only as to the credit issues affecting any such rating.
Notwithstanding the foregoing, without the consent of the
Certificateholders, the Trustee, the Depositor, the Subservicer and the Master
Servicer may at any time and from time to time amend this Agreement to modify,
eliminate or add to any of its provisions to such extent as shall be necessary
or appropriate to maintain the qualification of the Subsidiary REMIC and the
Master REMIC as REMICs under the Code or to avoid or minimize the risk of the
imposition of any tax on the Trust Fund pursuant to the Code that would be a
claim against the Trust Fund at any time prior to the final redemption of the
Certificates, provided that the Trustee have been provided an Opinion of
Counsel, which opinion shall be an expense of the party requesting such opinion
but in any case shall not be an expense of the Trustee, to the effect that such
action is necessary or appropriate to maintain such qualification or to avoid or
minimize the risk of the imposition of such a tax.
This Agreement may also be amended from time to time by the Depositor,
the Subservicer, the Master Servicer and the Trustee and the Holders of each
Class of Certificates affected thereby evidencing not less than 66 2/3% of the
Voting Rights of such Class for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Holders of Certificates; provided,
however, that no such amendment shall (i) reduce in any manner the amount of, or
delay the timing of, payments required to be distributed on any Certificate
without the consent of the Holder of such Certificate, (ii) adversely affect in
any material respect the interests of the Holders of any Class of Certificates
in a manner other than as described in (i), without the consent of the Holders
of Certificates of such Class evidencing 66 2/3% or more of
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the Voting Rights of such Class or (iii) reduce the aforesaid percentages of
Certificates the Holders of which are required to consent to any such amendment
without the consent of the Holders of all such Certificates then outstanding.
Notwithstanding any contrary provision of this Agreement, the Trustee
shall not consent to any amendment to this Agreement unless it shall have first
received an Opinion of Counsel, which opinion shall be an expense of the party
requesting such amendment but in any case shall not be an expense of the
Trustee, to the effect that such amendment will not cause the imposition of any
tax on the Trust Fund or the Certificateholders or cause the Trust Fund to fail
to qualify as a REMIC at any time that any Certificates are outstanding.
Promptly after the execution of any amendment to this Agreement
requiring the consent of Certificateholders, the Trustee shall furnish written
notification of the substance of such amendment to each Certificateholder and
each Rating Agency.
It shall not be necessary for the consent of Certificateholders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe.
Nothing in this Agreement shall require the Trustee to enter into an
amendment without receiving an Opinion of Counsel, satisfactory to the Trustee
that (i) such amendment is permitted and is not prohibited by this Agreement and
that all requirements for amending this Agreement have been complied with; and
(ii) either (A) the amendment does not adversely affect in any material respect
the interests of any Certificateholder or (B) the conclusion set forth in the
immediately preceding clause (A) is not required to be reached pursuant to this
Section 10.01.
SECTION 10.02 Counterparts. 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 Governing Law.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND
TO BE PERFORMED IN THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO AND THE CERTIFICATEHOLDERS SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
THEREOF.
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SECTION 10.04 Intention of Parties.
It is the express intent of the parties hereto that the conveyance of
the Mortgage Notes, Mortgages, assignments of Mortgages, title insurance
policies and any modifications, extensions and/or assumption agreements and
private mortgage insurance policies relating to the Mortgage Loans by the
Depositor to the Trustee be, and be construed as, an absolute sale thereof to
the Trustee. It is, further, not the intention of the parties that such
conveyance be deemed a pledge thereof by the Depositor to the Trustee. However,
in the event that, notwithstanding the intent of the parties, such assets are
held to be the property of the Depositor, or if for any other reason this
Agreement is held or deemed to create a security interest in such assets, then
(i) this Agreement shall be deemed to be a security agreement within the meaning
of the Uniform Commercial Code of the State of New York and (ii) the conveyance
provided for in this Agreement shall be deemed to be an assignment and a grant
by the Depositor to the Trustee, for the benefit of the Certificateholders, of a
security interest in all of the assets that constitute the Trust Fund, whether
now owned or hereafter acquired.
The Depositor for the benefit of the Certificateholders shall, to the
extent consistent with this Agreement, take such actions as may be necessary to
ensure that, if this Agreement were deemed to create a security interest in the
assets of the Trust Fund, such security interest would be deemed to be a
perfected security interest of first priority under applicable law and will be
maintained as such throughout the term of the Agreement. The Depositor shall
arrange for filing any Uniform Commercial Code continuation statements in
connection with any security interest granted or assigned to the Trustee for the
benefit of the Certificateholders.
SECTION 10.05 Notices.
(a) The Master Servicer shall use its best efforts to promptly provide
notice to each Rating Agency with respect to each of the following of which it
has actual knowledge:
(i) Any material change or amendment to this Agreement;
(ii) The occurrence of any Event of Default that has not been
cured;
(iii) The resignation or termination of the Master Servicer,
the Subservicer or the Trustee and the appointment of any successor;
(iv) The repurchase or substitution of Mortgage Loans pursuant
to Sections 2.02, 2.03 and 3.12; and
(v) The final payment to Certificateholders.
126
<PAGE>
The Master Servicer shall promptly furnish to each Rating Agency copies
of the following:
(i) Each report to Certificateholders described in Section
4.04;
(ii) Each annual statement as to compliance described in
Section 3.17; and
(iii) Each annual independent public accountants' servicing
report described in Section 3.18.
(b) All directions, demands and notices hereunder shall be in writing
and shall be deemed to have been duly given when delivered to (a) in the case of
the Depositor, Chase Funding, Inc., 300 Tice Boulevard, 3rd Floor North,
Woodcliff Lake, New Jersey 07675, Attention: Structured Finance; (b) in the case
of the Subservicer, [Advanta Mortgage Corp. USA, 10790 Rancho Bernardo Road, San
Diego, California 92127, Attention: Senior Vice President, Loan Servicing]; (c)
in the case of the Trustee, [Citibank, N.A., 111 Wall Street, 5th Floor, Zone 1,
New York, New York 10043, Attention: Structured Finance Department]; (d) in the
case of the Master Servicer, 343 Thornall Street, Edison, New Jersey 08837,
Attention: Structured Finance (with a copy to The Chase Manhattan Bank, 450 West
33rd Street, New York, New York 10001, Attention: Structured Finance Services);
(e) in the case of the Rating Agencies, (i) [Moody's Investors Service, 99
Church Street, 8th Floor, New York, New York, 10007, Attention ABS Monitoring
Department]; (ii) [Fitch IBCA, Inc., One State Street Plaza, New York, New York
10004]; and (f) in the case of any of the foregoing persons, such other
addresses as may hereafter be furnished by any such persons to the other parties
to this Agreement. Notices to Certificateholders shall be deemed given when
mailed, first class postage prepaid, to their respective addresses appearing in
the Certificate Register.
SECTION 10.06 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be for any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall
in no way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 10.07 Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided pursuant to Section 6.02, this Agreement may not be assigned by the
Subservicer without the prior written consent of the Trustee and Depositor.
SECTION 10.08 Limitation on Rights of Certificateholders.
127
<PAGE>
The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust Fund, nor entitle such
Certificateholder's legal representative or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a petition or
winding up of the Trust Fund, or 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
herein) or in any manner otherwise control the operation and management of the
Trust Fund, or the obligations of the parties hereto, nor shall anything herein
set forth or contained in the terms of the Certificates be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
party 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 an Event of Default and of the continuance thereof, as hereinbefore provided,
the Holders of Certificates evidencing not less than 25% of the Voting Rights
evidenced by the Certificates shall also have made written request to 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
common benefit of all Certificateholders. For the protection and enforcement of
the provisions of this Section 10.08, each and every Certificateholder and the
Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 10.09 Inspection and Audit Rights.
The Subservicer agrees that, on reasonable prior notice, it will permit
any representative of the Depositor or the Trustee during the Subservicer's
normal business hours, to examine all the books of account, records, reports and
other papers of the Subservicer relating to the Mortgage Loans, to make copies
and extracts therefrom, to cause such books to be audited by independent
certified public accountants selected by the Depositor or the Trustee and to
discuss its affairs, finances and accounts relating to the Mortgage Loans with
its officers, employees and independent public accountants (and by this
provision the Subservicer hereby authorizes such
128
<PAGE>
accountants to discuss with such representative such affairs, finances and
accounts), all at such reasonable times and as often as may be reasonably
requested. Any out-of-pocket expense incident to the exercise by the Depositor
or the Trustee of any right under this Section 10.09 shall be borne by the party
requesting such inspection; all other such expenses shall be borne by the
Subservicer.
SECTION 10.10 Certificates Nonassessable and Fully Paid.
It is the intention of the Depositor that Certificateholders shall not
be personally liable for obligations of the Trust Fund, that the interests in
the Trust Fund represented by the Certificates shall be nonassessable for any
reason whatsoever, and that the Certificates, upon due authentication thereof by
the Authenticating Agent pursuant to this Agreement, are and shall be deemed
fully paid.
* * *
129
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Subservicer, the Master Servicer
and the Trustee have caused their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year first above written.
CHASE FUNDING, INC.,
as Depositor
By:
-------------------------------------
Name: Eileen A. Lindblom
Title: Vice President
[ADVANTA MORTGAGE CORP. USA],
as Subservicer
By:
-------------------------------------
Name: H. John Berens
Title: Senior Vice President
CHASE MANHATTAN MORTGAGE CORPORATION,
as Master Servicer
By:
-------------------------------------
Name: Eileen A. Lindblom
Title: Vice President
[CITIBANK, N.A.],
not in its individual capacity,
but solely as Trustee
By:
-------------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR INTEREST"
IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
FUNDING, INC. ("CHASE FUNDING"), THE MASTER SERVICER, THE SUBSERVICER OR THE
TRUSTEE REFERRED TO BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE,
THE REMIC REGULAR INTEREST REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS
ARE GUARANTEED OR INSURED BY CHASE FUNDING, CHASE MANHATTAN MORTGAGE
CORPORATION, [ADVANTA MORTGAGE CORP. USA], THE TRUSTEE OR BY ANY OF THEIR
AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE MAY BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN BELOW.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE MASTER SERVICER.
CLASS IA-1 CERTIFICATE
Number [ ]-IA-1-1 Original Denomination
$[ ]
Cut-off Date: [DATE] Last Scheduled
Distribution Date: [DATE]
First Distribution Date: Aggregate Initial Certificate
[DATE] Balance of all Class IA-1
Certificates: $[ ]
Pass-Through Rate: Variable CUSIP:
A-1
<PAGE>
MORTGAGE LOAN ASSET-BACKED CERTIFICATE
Series [ ]
evidencing an ownership interest in distributions allocable to the Class IA-1
Certificates with respect to a pool of conventional, sub-prime mortgage loans
formed and sold by
CHASE FUNDING, INC.
Unless this Certificate is presented by an authorized representative of
the Depository Trust Company, a New York corporation ("DTC"), to the Master
Servicer for registration of transfer, exchange or payment, and any certificate
issued is registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co. has an interest herein.
This certifies that CEDE & CO. is the registered owner of the ownership
interest (the "Ownership Interest") evidenced by this Certificate (obtained by
dividing the Original Denomination of this Certificate by the aggregate Initial
Certificate Balance of all Class IA-1 Certificates) in certain distributions
with respect to a pool of conventional, sub-prime mortgage loans (the "Mortgage
Loans") formed and sold by Chase Funding, Inc. (hereinafter called the
"Depositor"), and certain other property held in trust for the benefit of
Certificateholders (collectively, the "Trust Fund"). The Mortgage Loans are
serviced by [Advanta Mortgage Corp. USA] (the "Subservicer") and are secured by
first mortgages on Mortgaged Properties. The Trust Fund was created pursuant to
a Pooling and Servicing Agreement (the "Agreement"), dated as of [DATE] among
the Depositor, the Subservicer, Chase Manhattan Mortgage Corporation (the
"Master Servicer") and [Citibank, N.A.], as trustee (the "Trustee"), a summary
of certain of the pertinent provisions of which is set forth hereafter. To the
extent not defined herein, the capitalized terms used herein have the meanings
assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Mortgage Loan Asset-Backed Certificates, Series [ ], Class IA-1
(the "Class IA-1 Certificates") and is issued under and is subject to the terms,
provisions and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the acceptance hereof assents and by which
Agreement such Holder is bound. Also issued under the Agreement are Certificates
designated as Mortgage Loan Asset-Backed Certificates, Series [ ], Class IA-2,
Class IA-3, Class IA-4, Class IA-5 and Class IA-6 Certificates (collectively,
with the Class IA-1 Certificates, the "Group I Class A Certificates") and the
Class IIA-1 Certificates (the "Group II Class A Certificates"), Class IM-1 and
Class IM-2 Certificates (together, the "Mezzanine Group I Certificates"), Class
IIM-1 and Class IIM-2 Certificates (together the "Mezzanine Group II
Certificates"), Class IB Certificates (the "Class IB Certificates"), Class IIB
Certificates (the "Class IIB Certificates") and the Class R Certificate (the
"Class R Certificate"or the "Residual Certificate").
A-2
<PAGE>
The Group I Class A Certificates, the Group II Class A Certificates,
the Mezzanine Group I Certificates, the Mezzanine Group II Certificates, the
Class IB Certificates, the Class IIB Certificates and the Class R Certificate
are collectively referred to herein as the "Certificates."
Pursuant to the terms of the Agreement, the Paying Agent will
distribute from funds in the Distribution Account the amounts described in the
Pooling and Servicing Agreement on the 25th day of each month or, if such 25th
day is not a Business Day, the Business Day immediately following (the
"Distribution Date"), commencing on [DATE]. Such distributions will be made to
the Person in whose name this Certificate is registered at the close of business
on the last Business Day of the month preceding the month in which such payment
is made, or if such last day is not a Business Day, the Business Day immediately
preceding such last day.
Distributions on this Certificate will be made either by check mailed
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, or by wire transfer in immediately available
funds to the account of such Holder at a bank or other financial or depository
institution having appropriate facilities therefor, if such Holder has so
notified the Master Servicer in writing at least 5 Business Days prior to the
first Distribution Date for which distribution by wire transfer is to be made,
and such Holder's Certificates evidence an aggregate original principal balance
of not less than $1,000,000 or such Holder holds a 100% Percentage Interest of
such Class. Notwithstanding the above, the final distribution on this
Certificate will be made after due notice by the Master Servicer, of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office of the Master Servicer or at such other office as may
be designated by such notice of final distribution.
The Master Servicer will maintain or cause to be maintained a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Master Servicer will provide for the registration of Certificates
and of transfers and exchanges of Certificates. Upon surrender for registration
of transfer of any Certificate at any office or agency of the Master Servicer,
or, if an Authenticating Agent has been appointed under the Agreement, the
Authenticating Agent, maintained for such purpose, the Master Servicer, or, if
an Authenticating Agent has been appointed under the Agreement, the
Authenticating Agent, will, subject to the limitations set forth in the
Agreement, authenticate and deliver, in the name of the designated transferee or
transferees, a Certificate of a like class and dated the date of authentication
by the Authenticating Agent. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Master Servicer, of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Master Servicer, for that
purpose and specified in such notice of final distribution.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
A-3
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be
duly executed.
Dated: [DATE] CHASE FUNDING, INC.
By:____________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class IA-1
Certificates referred to in the
within-mentioned Agreement.
THE CHASE MANHATTAN BANK
as Authenticating Agent
By:___________________________________
Authorized Signatory
A-4
<PAGE>
REVERSE OF CERTIFICATE
MORTGAGE LOAN ASSET-BACKED CERTIFICATE
SERIES [ ]
This Certificate is one of a duly authorized issue of Certificates,
designated as Chase Funding Mortgage Loan Asset-Backed Certificates, Series [ ],
issued in six Classes of Group I Class A Certificates, one Class of Group II
Class A Certificates, two Classes of Mezzanine Group I Certificates, two Classes
of Mezzanine Group II Certificates, one Class of Class IB Certificates, one
Class of Class IIB Certificates and one Class R Certificate, each evidencing an
interest in certain distributions with respect to a pool of conventional,
sub-prime Mortgage Loans formed and sold by the Depositor and certain other
property conveyed by the Depositor to the Trustee.
Following the initial issuance of the Certificates, the principal
balance of this Certificate will be different from the Original Denomination
shown above. Anyone acquiring this Certificate may ascertain its current
principal balance by inquiry of the Master Servicer.
The Holder, by its acceptance of this Certificate, agrees that it will
look solely to the Trust Fund and certain amounts resulting from credit
enhancements for payment hereunder and that the Trustee is not liable to the
Holders for any amount payable under this Certificate or the Agreement or,
except as expressly provided in the Agreement, subject to any liability under
the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
No service charge will be made to the Holder for any transfer or
exchange of the Certificate, but the Master Servicer 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 the Certificate. Prior to due
presentation of a Certificate for registration of transfer, the Depositor, the
Subservicer, the Master Servicer and the Trustee may treat the person in whose
name any Certificate is registered as the owner of such Certificate and the
Percentage Interest in the Trust Fund evidenced thereby for the purpose of
receiving distributions pursuant to the Agreement and for all other purposes
whatsoever, and neither the Depositor, the Subservicer, the Master Servicer nor
the Trustee will be affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Subservicer, the Master Servicer and the Trustee, without the consent of any of
the Certificateholders, to cure any ambiguity, to correct or supplement any
provisions therein which may be inconsistent with the other provisions therein,
to ensure continuing treatment of the Trust Fund as a REMIC, or to make any
other provisions with respect to matters or questions arising under the
Agreement which are not materially inconsistent with the provisions of the
Agreement, provided that such action does not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder.
A-5
<PAGE>
The Agreement may also be amended from time to time by the Depositor,
the Subservicer, the Master Servicer and the Trustee with the consent of the
Holders of Certificates evidencing in the aggregate not less than 66 2/3% of the
Percentage Interests of each Class of Certificates affected thereby for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Agreement or of modifying in any manner the rights of
the Holders of Certificates of such Class; provided, however, that no such
amendment may (i) reduce in any manner the amount of, or delay the timing of,
payments received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, (ii)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates in a manner other than as described in (i), without the
consent of the Holders of Certificates of such Class evidencing 66 2/3% or more
of the Voting Rights of such Class or (iii) change the percentage specified in
clause (ii) of the third paragraph of Section 10.01 of the Agreement, without
the consent of the Holders of all Certificates of such Class then outstanding.
For federal income tax purposes, the Trust Fund includes two segregated
asset pools. The Depositor intends to make an election to treat each as a "real
estate mortgage investment conduit" (a "REMIC"). The Certificates, other than
the Residual Certificate, will constitute "regular interests" in the Master
REMIC. The Residual Certificate will represent the sole class of "residual
interests" in both the Master REMIC and the Subsidiary REMIC.
The respective obligations and responsibilities of the Depositor, the
Subservicer, the Master Servicer and the Trustee under the Agreement will
terminate upon (i) the later of the final payment or other liquidation (or any
Advance with respect thereto) of the last Mortgage Loan or the disposition of
all property acquired upon the foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and the remittance of all funds due thereunder; or (ii) at the
option of the Master Servicer, on any Distribution Date on which the aggregate
Stated Principal Balances of the Mortgage Loans in such Loan Group is equal to
or less than 10% of the aggregate initial Certificate Principal Balance of the
Certificates in such Mortgage Loan Group as of the Cut-Off Date, so long as the
Master Servicer deposits or causes to be deposited in the Distribution Account
during the Principal Prepayment Period related to such Distribution Date an
amount equal to the sum of (i) 100% of the Stated Principal Balance of each
Mortgage Loan in such Loan Group (other than in respect of REO Property), (ii)
accrued interest thereon at the applicable Mortgage Rate, (iii) the appraised
value of any REO Property in such Loan Group (up to the Stated Principal Balance
of the related Mortgage Loan), such appraisal to be conducted by an appraiser
mutually agreed upon by the Depositor and the Trustee and (iv) any unreimbursed
Servicing Fees, Advances and Servicing Advances, and the principal portion of
any unreimbursed Advances, made on the Mortgage Loans in such Loan Group prior
to such termination; provided, however, that in no event shall the trust created
hereby continue beyond the earlier of (i) 32 years after the Closing Date and
(ii) the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James's, living on the date hereof.
A-6
<PAGE>
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
__________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of Assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
_________________________________________________Attorney to transfer the within
Certificate on the books kept for the registration thereof, with full power of
substitution in the premises.
Dated:
(Signature guaranty) ___________________________________
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the within Certificate in every
particular, without alteration or
enlargement or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
A-7
<PAGE>
EXHIBIT B
[RESERVED]
B-1
<PAGE>
EXHIBIT C
[RESERVED]
C-1
<PAGE>
EXHIBIT D
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN EACH OF TWO "REAL ESTATE MORTGAGE INVESTMENT CONDUITS," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
FUNDING, INC. ("CHASE FUNDING"), THE SERVICER OR THE TRUSTEE REFERRED TO BELOW
OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR INTEREST
REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED
BY CHASE FUNDING, CHASE MANHATTAN MORTGAGE CORPORATION, [ADVANTA MORTGAGE CORP.
USA], THE TRUSTEE OR BY ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
THIS CLASS R CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE RESOLD OR TRANSFERRED UNLESS IT IS SOLD OR TRANSFERRED IN TRANSACTIONS
WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT OR UNDER APPLICABLE STATE LAW
AND IS TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 5.02 OF THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE EITHER (A) IS NOT AN EMPLOYEE
BENEFIT PLAN (A "PLAN") WITHIN THE MEANING OF SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), AND IS NOT
DIRECTLY OR INDIRECTLY PURCHASING ANY CERTIFICATE ON BEHALF OF, AS INVESTMENT
MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF OR WITH ASSETS OF A PLAN OR, IN
THE CASE OF AN INSURANCE COMPANY, THE ASSETS OF ANY SEPARATE ACCOUNTS TO EFFECT
SUCH ACQUISITION OR (B) THE SOURCE OF FUNDS FOR THE PURCHASE OF THE CERTIFICATES
IS AN "INSURANCE COMPANY GENERAL ACCOUNT" WITHIN THE MEANING OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"), 60 FED. REG. 35925 (JULY 12,
1995), AND THE CONDITIONS SET FORTH IN SECTION I AND SECTION III OF PTCE 95-60
ARE SATISFIED WITH RESPECT TO THE PURCHASE AND HOLDING OF THE CERTIFICATES, OR
(ii) IF THIS CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A PLAN
SUBJECT TO TITLE I OF ERISA, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE") (OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT
ENACTMENTS), OR A TRUSTEE OF ANY SUCH PLAN, OR ANY OTHER PERSON WHO IS USING THE
ASSETS OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION, AN OPINION OF COUNSEL TO THE
EFFECT THAT THE PURCHASE OR HOLDING OF THIS CERTIFICATE WILL NOT RESULT IN THE
ASSETS OF
D-1
<PAGE>
THE TRUST FUND BEING DEEMED TO BE "PLAN ASSETS" PURSUANT TO THE DEPARTMENT OF
LABOR PLAN ASSET REGULATIONS SET FORTH IN 29 C.F.R. ss.2510.3- 101 AND TO BE
SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR THE PROHIBITED
TRANSACTION PROVISIONS OF THE CODE, WILL NOT CONSTITUTE OR RESULT IN A
PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION 406 OR SECTION 407 OF ERISA
OR SECTION 4975 OF THE CODE, AND WILL NOT SUBJECT THE TRUSTEE, THE SERVICER, THE
COMPANY OR ANY OF THEIR AFFILIATES TO ANY OBLIGATION OR LIABILITY (INCLUDING
OBLIGATIONS OR LIABILITIES UNDER ERISA OR SECTION 4975 OF THE CODE) RELATING TO
THE CERTIFICATES. FOR PURPOSES OF CLAUSE (i)(A) ABOVE, SUCH REPRESENTATION SHALL
BE DEEMED TO HAVE BEEN MADE TO THE MASTER SERVICER BY THE TRANSFEREE'S
ACCEPTANCE OF THIS CERTIFICATE OR A BENEFICIAL INTEREST HEREIN UNLESS THE MASTER
SERVICER SHALL HAVE RECEIVED FROM THE TRANSFEREE AN ALTERNATIVE REPRESENTATION
ACCEPTABLE IN FORM AND SUBSTANCE TO THE SUBSERVICER AND THE MASTER SERVICER.
CLASS R CERTIFICATE
Number [ ]-R-1 Percentage Interest: 100%
Cut-off Date: [DATE] Pass-Through Rate: Variable
First Distribution Date: [DATE]
D-2
<PAGE>
MORTGAGE LOAN ASSET-BACKED CERTIFICATE
Series [ ]
evidencing an ownership interest in distributions allocable to the Class R
Certificates with respect to a pool of conventional one- to four-family mortgage
loans formed and sold by
CHASE FUNDING, INC.
This certifies that CHASE HOME MORTGAGE CORPORATION OF THE SOUTHEAST is
the registered owner of the ownership interest (the "Ownership Interest")
evidenced by this Certificate (indicated by the Percentage Interest set forth on
the face of this Certificate) in certain distributions with respect to a pool of
conventional, sub-prime mortgage loans (the "Mortgage Loans") formed and sold by
Chase Funding, Inc. (hereinafter called the "Depositor"), and certain other
property held in trust for the benefit of Certificateholders (collectively, the
"Trust Fund"). The Mortgage Loans are serviced by Chase Manhattan Mortgage
Corporation (the "Master Servicer") and are secured by first mortgages on
Mortgaged Properties. The Trust Fund was created pursuant to a Pooling and
Servicing Agreement (the "Agreement"), dated as of [DATE] among the Depositor,
[Advanta Mortgage Corp. USA], as Subservicer (the "Subservicer"), the Master
Servicer and [Citibank, N.A.], as trustee (the "Trustee"), a summary of certain
of the pertinent provisions of which is set forth hereafter. To the extent not
defined herein, the capitalized terms used herein have the meanings assigned in
the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Chase Funding Mortgage Loan Asset-Backed Certificates, Series [ ],
Class R (the "Class R Certificates") and is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Certificate by virtue of the acceptance hereof assents and by which
Agreement such Holder is bound. Also issued under the Agreement are Certificates
designated as Mortgage Loan Asset-Backed Certificates, Series [ ], Class IA-1,
Class IA-2, Class IA-3, Class IA-4, Class IA-5 and Class IA-6 Certificates
(collectively, the "Group I Class A Certificates") and the Class IIA-1
Certificates (the Group II Class A Certificates"), Class IM-1 and Class IM-2
Certificates (together, the "Mezzanine Group I Certificates"), Class IIM-1 and
Class IIM-2 Certificates (together, the "Mezzanine Group II Certificates"),
Class IB Certificates (the "Class IB Certificates") and Class IIB Certificates
(the "Class IIB Certificates").
The Group I Class A Certificates, Group II Class A Certificates,
Mezzanine Group I Certificates, Mezzanine Group II Certificates, Class IB
Certificates, Class IIB Certificates and the Class R Certificate are
collectively referred to herein as the "Certificates").
Pursuant to the terms of the Agreement, the Paying Agent will
distribute from funds in the Distribution Account the amounts described in the
Pooling and Servicing Agreement on the 25th day of each month or, if such 25th
day is not a Business Day, the Business Day immediately following (the
"Distribution Date"), commencing on [DATE]. Such distributions will be made to
the Person in whose name this Certificate is registered at the close of business
on the last Business Day of the
D-3
<PAGE>
month preceding the month in which such payment is made, or if such last day is
not a Business Day, the Business Day immediately preceding such last day.
Distributions on this Certificate will be made either by check mailed
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, or by wire transfer in immediately available
funds to the account of such Holder at a bank or other financial or depository
institution having appropriate facilities therefor, if such Holder has so
notified the Paying Agent in writing at least 5 Business Days prior to the first
Distribution Date for which distribution by wire transfer is to be made, and
such Holder's Certificates evidence an aggregate original principal balance of
not less than $1,000,000 or such Holder holds a 100% Percentage Interest of such
Class. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Master Servicer of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office of the Master Servicer or at such other office as may be designated by
such notice of final distribution.
The Master Servicer will maintain or cause to be maintained a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Master Servicer will provide for the registration of Certificates
and of transfers and exchanges of Certificates. Upon surrender for registration
of transfer of any Certificate at any office or agency of the Master Servicer,
or, if an Authenticating has been appointed under the Agreement, the
Authenticating Agent, maintained for such purpose, the Master Servicer, or, if
an Authenticating Agent has been appointed under the Agreement, the
Authenticating Agent, will, subject to the limitations set forth in the
Agreement, authenticate and deliver, in the name of the designated transferee or
transferees, a Certificate of a like class and dated the date of authentication
by the Authenticating Agent. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Master Servicer of the
pendency of such distribution and only upon presentation and surrender of this
Certificate at the office or agency appointed by the Master Servicer, for that
purpose and specified in such notice of final distribution.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by the
Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
D-4
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be
duly executed.
Dated: [DATE] CHASE FUNDING, INC.
By:
-------------------------------------
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class R Certificates referred to in the within-mentioned
Agreement.
THE CHASE MANHATTAN BANK
as Authenticating Agent
By:
-----------------------------------
Authorized Signatory
D-5
<PAGE>
REVERSE OF CERTIFICATE
MORTGAGE LOAN ASSET-BACKED CERTIFICATE
SERIES [ ]
This Certificate is one of a duly authorized issue of Certificates,
designated as Chase Funding Mortgage Loan Asset-Backed Certificates, Series [ ],
issued in six Classes of Group I Class A Certificates, one Class of Group II
Class A Certificates, two Classes of Mezzanine Group I Certificates, two Classes
of Mezzanine Group II Certificates, one Class of Class IB Certificates, one
Class of Class IIB Certificates and one Class R Certificate, each evidencing an
interest in certain Distributions with respect to a pool of conventional,
sub-prime Mortgage Loans formed and sold by the Depositor and certain other
property conveyed by the Depositor to the Trustee.
The Holder, by its acceptance of this Certificate, agrees that it will
look solely to the Trust Fund and certain amounts resulting from credit
enhancements for payment hereunder and that the Trustee is not liable to the
Holders for any amount payable under this Certificate or the Agreement or,
except as expressly provided in the Agreement, subject to any liability under
the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
No service charge will be made to the Holder for any transfer or
exchange of the Certificate, but the Trustee, or, or, if an Authenticating Agent
has been appointed under the Agreement, the Authenticating Agent, 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 the Certificate. Prior to
due presentation of a Certificate for registration of transfer, the Depositor,
the Servicer and the Trustee may treat the person in whose name any Certificate
is registered as the owner of such Certificate and the Percentage Interest in
the Trust Fund evidenced thereby for the purpose of receiving distributions
pursuant to the Agreement and for all other purposes whatsoever, and neither the
Depositor, the Master Servicer, the Subservicer, the Authenticating Agent nor
the Trustee will be affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor, the
Master Servicer, the Subservicer and the Trustee, without the consent of any of
the Certificateholders, to cure any ambiguity, to correct or supplement any
provisions therein which may be inconsistent with the other provisions therein,
to ensure continuing treatment of the Trust Fund as a REMIC, or to make any
other provisions with respect to matters or questions arising under the
Agreement which are not materially inconsistent with the provisions of the
Agreement, provided that such action does not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder.
D-6
<PAGE>
The Agreement may also be amended from time to time by the Depositor,
the Master Servicer, the Subservicer and the Trustee with the consent of the
Holders of Certificates evidencing in the aggregate not less than 662/3% of the
Percentage Interests of each Class of Certificates affected thereby for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Agreement or of modifying in any manner the rights of
the Holders of Certificates of such Class; provided, however, that no such
amendment may (i) reduce in any manner the amount of, or delay the timing of,
payments received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, (ii)
adversely affect in any material respect the interests of the Holders of any
Class of Certificates in a manner other than as described in (i), without the
consent of the Holders of Certificates of such Class evidencing 66 2/3% or more
of the Voting Rights of such Class or (iii) change the percentage specified in
clause (ii) of the first paragraph of Section 10.01 of the Agreement, without
the consent of the Holders of all Certificates of such Class then outstanding.
For federal income tax purposes, the Trust Fund includes two segregated
asset pools. The Depositor intends to make an election to treat each as a "real
estate mortgage investment conduit" (a "REMIC"). The Certificates, other than
the Residual Certificate, will constitute "regular interests" in the Master
REMIC. The Residual Certificate will represent the sole class of "residual
interests" in both the Master REMIC and the Subsidiary REMIC.
The respective obligations and responsibilities of the Depositor, the
Subservicer, the Master Servicer and the Trustee under the Agreement will
terminate upon (i) the later of the final payment or other liquidation (or any
Advance with respect thereto) of the last Mortgage Loan or the disposition of
all property acquired upon the foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and the remittance of all funds due thereunder; or (ii) at the
option of the Master Servicer, on any Distribution Date on which the aggregate
Stated Principal Balances of the Mortgage Loans in such Loan Group is equal to
or less than 10% of the aggregate initial Certificate Principal Balance of the
Certificates in such Mortgage Loan Group as of the Cut-Off Date, so long as the
Master Servicer deposits or causes to be deposited in the Distribution Account
during the Principal Prepayment Period related to such Distribution Date an
amount equal to the sum of (i) 100% of the Stated Principal Balance of each
Mortgage Loan in such Loan Group (other than in respect of REO Property), (ii)
accrued interest thereon at the applicable Mortgage Rate, (iii) the appraised
value of any REO Property in such Loan Group (up to the Stated Principal Balance
of the related Mortgage Loan), such appraisal to be conducted by an appraiser
mutually agreed upon by the Depositor and the Trustee and (iv) any unreimbursed
Servicing Fees, Advances and Servicing Advances, and the principal portion of
any unreimbursed Advances, made on the Mortgage Loans in such Loan Group prior
to such termination; provided, however, that in no event shall the trust created
hereby continue beyond the earlier of (i) the expiration of 21 years from the
death of the last survivor of the descendants of Joseph P. Kennedy, the late
ambassador of the United States to the Court of St. James's, living on the date
hereof and (ii) the Latest Possible Maturity Date.
D-7
<PAGE>
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF
ASSIGNEE)
______________________________________
________________________________________________________________________________
(Please Print or Type Name and Address of Assignee)
________________________________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
________________________________________________Attorney to transfer the within
Certificate on the books kept for the registration thereof, with full power of
substitution in the premises.
Dated:
(Signature guaranty) ___________________________________
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the within Certificate in every
particular, without alteration or
enlargement or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
D-8
<PAGE>
EXHIBIT E
[RESERVED]
E-1
<PAGE>
EXHIBIT F
SCHEDULE OF MORTGAGE LOANS
See Item 28
F-1
<PAGE>
EXHIBIT G
FORM OF POWER OF ATTORNEY
G-1
<PAGE>
EXHIBIT H
FORM OF TRUSTEE CERTIFICATION
[DATE]
Chase Funding, Inc.
300 Tice Boulevard, 3rd Floor North
Woodcliff Lake, New Jersey 07675
Re: Pooling and Servicing Agreement dated as of [DATE] among Chase
Funding, Inc. as depositor, [Advanta Mortgage Corp. USA], as
subservicer, Chase Manhattan Mortgage Corporation, as master
servicer and [Citibank, N.A.], as trustee, Chase Funding,
Inc., Chase Funding Mortgage Loan Asset-Backed Certificates,
Series [ ]
--------------------------------------------------------------
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that [,
except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that:
(i) All documents in the Mortgage File required to be delivered to the
Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement are in
its possession;
(ii) In connection with each Mortgage Loan or Assignment thereof as to
which documentary evidence of recording was not received on the Closing Date, it
has received evidence of such recording; and
(iii) Such documents have been reviewed by it and such documents do not
contain any material omissions or defects within the meaning of Section 2.01 or
2.02.
The Trustee further certifies that as to each Mortgage Loan, the
Trustee holds the Mortgage Note without any Responsible Officer of the Trustee
having received written notice (a) of any adverse claims, liens or encumbrances,
(b) that any Mortgage Note was overdue or has been dishonored, (c) of evidence
on the face of any Mortgage Note or Mortgage of any security interest therein,
or (d) of any defense against or claim to the Mortgage Note by any other party.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond confirming (i) that the Mortgage Loan
number and the name of the
H-1
<PAGE>
Mortgagor in each Mortgage File conform to the respective Mortgage Loan number
and name listed on the Mortgage Loan Schedule and (ii) the existence in each
Mortgage File of each of the documents listed in subparagraphs (i)(A) through
(G), inclusive, of Section 2.01 in the Agreement. The Trustee makes no
representations or warranties as to the validity, legality, sufficiency,
enforceability or genuineness of any of the documents contained in each Mortgage
Loan or the collectibility, insurability, effectiveness or suitability of any
such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
[CITIBANK, N.A.],
as Trustee
By: ____________________________________
Name:___________________________________
Title:__________________________________
H-2
<PAGE>
EXHIBIT I
FORM OF TRANSFEREE'S LETTER
CHASE FUNDING, INC., CHASE FUNDING MORTGAGE LOAN
ASSET-BACKED CERTIFICATES, SERIES [ ]
[DATE]
Chase Funding, Inc.
300 Tice Boulevard, 3rd Floor North
Woodcliff Lake, New Jersey 07675
Ladies and Gentlemen:
We propose to purchase Chase Funding, Inc., Chase Funding Mortgage Loan
Asset-Backed Certificates, Series [ ], Class R, described in the Prospectus
Supplement, dated [DATE], and Prospectus, dated [DATE].
1. We certify that (a) we are not a disqualified organization and (b)
we are not purchasing such Class R Certificates on behalf of a disqualified
organization; for this purpose the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.
2. We certify that (a) we have historically paid our debts as they
became due, (b) we intend, and believe that we will be able, to continue to pay
our debts as they become due in the future, (c) we understand that, as
beneficial owner of the Class R Certificates, we may incur tax liabilities in
excess of any cash flows generated by the Class R Certificates, and (d) we
intend to pay any taxes associated with holding the Class R Certificates as they
become due.
I-1
<PAGE>
3. We acknowledge that we will be the beneficial owner of the Class R
Certificates and:(1)
______ The Class R Certificates will be registered in our name.
______ The Class R Certificates will be held in the name of our
nominee, _________________, which is not a disqualified
organization.
4. Unless Chase Funding, Inc. ("Chase Funding") has consented to the
transfer to us by executing the form of Consent affixed hereto as Appendix B, we
certify that we are a U.S. person; for this purpose the term "U.S. person" means
a citizen or resident of the United States, a corporation, or partnership
(unless, in the case of a partnership, Treasury regulations are adopted that
provide otherwise) created or organized in or under the laws of the United
States, any State thereof or the District of Columbia, including an entity
treated as a corporation or partnership for federal income tax purposes, an
estate whose income is subject to United States federal income tax regardless of
the source of its income, or a trust if a court within the United States is able
to exercise primary supervision over the administration of the trust and one or
more such U.S. persons have the authority to control all substantial decisions
of the 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. We agree that any breach by us of this certification
shall render the transfer of any interest in the Class R Certificates to us
absolutely null and void and shall cause no rights in the Class R Certificates
to vest in us.
5. We agree that in the event that at some future time we wish to
transfer any interest in the Class R Certificates, we will transfer such
interest in the Class R Certificates only (a) to a transferee that (i) is not a
disqualified organization and is not purchasing such interest in the Class R
Certificates on behalf of a disqualified organization, (ii) is a U.S. person and
(iii) has delivered to Chase Funding a letter in the form of this letter
(including the affidavit appended hereto) and, if requested by Chase Funding, an
opinion of counsel (in a form acceptable to Chase Funding) that the proposed
transfer will not cause the interest in the Class R Certificates to be held by a
disqualified organization or a person who is not a U.S. person or (b) with the
written consent of Chase Funding.
--------------------
(1) Check appropriate box and if necessary fill in the name of the
Transferee's nominee.
I-2
<PAGE>
6. We hereby designate Chase Manhattan Mortgage Corporation as our
fiduciary to act as the tax matters person for the Chase Funding, Inc., Chase
Funding Mortgage Loan Asset-Backed Certificates, Series [ ] REMIC.
Very truly yours,
[PURCHASER]
By: _________________________________
Name:
Title:
Accepted as of __________ __, 2000
CHASE FUNDING, INC.
By: _________________________________
Name:
Title:
I-3
<PAGE>
APPENDIX A
Affidavit pursuant to (i) Section 860E(e)(4) of the Internal Revenue Code of
1986, as amended, and (ii) certain provisions of the Pooling and Servicing
Agreement
Under penalties of perjury, the undersigned declares that the following is true:
(1) He or she is an officer of _________________________ (the
"Transferee"),
(2) the Transferee's Employer Identification number is __________,
(3) the Transferee is not a "disqualified organization" (as defined below),
has no plan or intention of becoming a disqualified organization, and
is not acquiring any of its interest in the Chase Funding, Inc., Chase
Funding Mortgage Loan Asset-Backed Certificates, Series [ ], Class R on
behalf of a disqualified organization or any other entity,
(4) unless Chase Funding, Inc. ("Chase Funding") has consented to the
transfer to the Transferee by executing the form of Consent affixed as
Appendix B to the Transferee's Letter to which this Certificate is
affixed as Appendix A, the Transferee is a "U.S. person" (as defined
below),
(5) that no purpose of the transfer is to avoid or impede the assessment or
collection of tax,
(6) the Transferee has historically paid its debts as they became due,
(7) the Transferee intends, and believes that it will be able, to continue
to pay its debts as they become due in the future,
(8) the Transferee understands that, as beneficial owner of the Class R
Certificates, it may incur tax liabilities in excess of any cash flows
generated by the Class R Certificates,
(9) the Transferee intends to pay any taxes associated with holding the
Class R Certificates as they become due, and
(10) the Transferee consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by Chase Funding (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the
Class R Certificates will not be owned directly or indirectly by a
disqualified organization;
I-4
<PAGE>
For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. Person" means a citizen or resident of the United States, a corporation or
partnership (unless, in the case of a partnership, Treasury regulations are
adopted that provide otherwise) created or organized in or under the laws of the
United States, any state thereof or the District of Columbia, including an
entity treated as a corporation or partnership for federal income tax purposes,
an estate whose income is subject to Unites States federal income tax regardless
of its source, or a trust if a court within the United States is able to
exercise primary supervision over the administration of 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).
__________________________________________
By: ______________________________________
__________________________________________
Address of Investor for receipt of distribution:
Address of Investor for receipt of tax information:
(Corporate Seal)
Attest:
___________________________________________
___________________________________________ , Secretary
I-5
<PAGE>
Personally appeared before me the above-named ______________, known or
proved to me to be the same person who executed the foregoing
instrument and to be the _______ of the Investor, and acknowledged to
me that he executed the same as his free act and deed and the free act
and deed of the Investor.
Subscribed and sworn before me this _______ day of _________
________, 200_ .
______________________
Notary Public
County of ______
State of _______
My commission expires the ________ day of______________
By: __________________________
Name: ___________________
Title: ___________________
Dated: _____________
I-6
<PAGE>
APPENDIX B
CONSENT
_________________________ (Transferee)
_________________________
_________________________
Ladies and Gentlemen:
Chase Funding, Inc. ("Chase Funding") hereby consents to the transfer
to, and registration in the name of, the Transferee (or, if applicable,
registration in the name of such Transferee's nominee of the Chase Funding Inc.,
Chase Funding Mortgage Loan Asset-Backed Certificates, Series [ ], Class R
described in the Transferee's Letter to which this Consent is appended,
notwithstanding Chase Funding's knowledge that the Transferee is not a U.S.
person (as defined in such Transferee's Letter).
CHASE FUNDING, INC.
Dated:____________________________ By: _____________________________________
I-7
<PAGE>
EXHIBIT J
FORM OF TRANSFEROR CERTIFICATE FOR
CLASS R CERTIFICATES
Chase Funding, Inc.
300 Tice Boulevard
Woodcliff Lake, NJ 07675
[Citibank, N.A.], as Trustee
111 Wall Street
5th Floor, Zone 1
New York, NY 10043
RE: Chase Funding, Inc., Chase Funding Mortgage Loan Asset-Backed
Certificates, Series [ ]
Ladies and Gentlemen:
In connection with our disposition of the Class R Certificates, we
certify that (a) we understand that the Certificates have not been registered
under the Securities Act of 1933, as amended (the "Act"), and are being disposed
by us in a transaction that is exempt from the registration requirements of the
Act, (b) we have not offered or sold any Certificates to, or solicited offers to
buy any Certificates from, any person, or otherwise approached or negotiated
with any person with respect thereto, in a manner that would be deemed, or taken
any other action that would result in, a violation of Section 5 of the Act and
(c) if we are disposing of a Class R Certificate, we have no knowledge the
Transferee is not a Permitted Transferee. All capitalized terms used herein but
not defined herein shall have the meanings assigned to them in the Pooling and
Servicing Agreement dated as of [DATE], among Chase Funding, Inc., as Depositor,
[Advanta Mortgage Corp. USA] as Subservicer, Chase Manhattan Mortgage
Corporation as Master Servicer and [Citibank, N.A.], as Trustee.
Very truly yours,
____________________________________
Name of Transferor
By: ________________________________
Name:
Title
J-1
<PAGE>
EXHIBIT K
FORM OF INVESTMENT LETTER
(Accredited Investor)
[DATE]
Chase Funding, Inc.
300 Tice Boulevard, 3rd Floor North
Woodcliff Lake, New Jersey 07675
Re: Pooling and Servicing Agreement dated as of [DATE] among Chase Funding,
Inc. as depositor, [Advanta Mortgage Corp. USA], as subservicer, Chase
Manhattan Mortgage Corporation, as master servicer and [Citibank,
N.A.], as trustee, Chase Funding, Inc., Chase Funding Mortgage Loan
Asset-Backed Certificates, Series [ ] [Class R-]
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from
________________ (the "Transferor") $_______ by original principal balance (the
"Transferred Certificates") of Mortgage Loan Asset-Backed Certificates, Series
[ ], [Class R-] (the "Certificates"), issued pursuant to a pooling and
servicing agreement, dated as of [DATE] (the "Pooling and Servicing Agreement"),
among Chase Funding, Inc. as depositor (the "Depositor"), [Advanta Mortgage
Corp. USA] as subservicer (the "Subservicer"), Chase Manhattan Mortgage
Corporation, as master servicer (the "Master Servicer") and [Citibank, N.A.], as
trustee (the "Trustee"). [The Purchaser intends to register the Transferred
Certificate in the name of ____________________, as nominee for _____________.]
All terms used and not otherwise defined herein shall have the meanings set
forth in the Pooling and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchaser certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (i) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.
2. The Certificates will bear a legend to the following effect:
K-1
<PAGE>
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (THE "1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS,
AND MAY NOT, DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED,
OR OFFERED FOR SALE, UNLESS SUCH TRANSFER IS NOT SUBJECT TO
REGISTRATION UNDER THE ACT, THE 1940 ACT AND ANY APPLICABLE STATE
SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER
PROVISIONS OF SECTION 5.02 OF THE POOLING AND SERVICING AGREEMENT. NO
TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE MASTER SERVICER
SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE MASTER
SERVICER (A) AN INVESTMENT LETTER FROM THE PROSPECTIVE INVESTOR; AND
(B) REPRESENTATIONS FROM THE TRANSFEROR REGARDING THE OFFERING AND SALE
OF THE CERTIFICATES.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE DEPOSITOR
SHALL HAVE RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE
TRANSFEREE OF THIS CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE
EITHER (A) IS NOT AN EMPLOYEE BENEFIT PLAN (A "PLAN") WITHIN THE
MEANING OF SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT
OF 1974, AS AMENDED ("ERISA"), AND IS NOT DIRECTLY OR INDIRECTLY
PURCHASING ANY CERTIFICATE ON BEHALF OF, AS INVESTMENT MANAGER OF, AS
NAMED FIDUCIARY OF, AS TRUSTEE OF OR WITH ASSETS OF A PLAN OR, IN THE
CASE OF AN INSURANCE COMPANY, THE ASSETS OF ANY SEPARATE ACCOUNTS TO
EFFECT SUCH ACQUISITION OR (B) THE SOURCE OF FUNDS FOR THE PURCHASE OF
THE CERTIFICATES IS AN "INSURANCE COMPANY GENERAL ACCOUNT" WITHIN THE
MEANING OF PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"),
60 FED. REG. 35925 (JULY 12, 1995), AND THE CONDITIONS SET FORTH IN
SECTION I AND SECTION III OF PTCE 95-60 ARE SATISFIED WITH RESPECT TO
THE PURCHASE AND HOLDING OF THE CERTIFICATES, OR (ii) IF THIS
CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A PLAN SUBJECT
TO TITLE I OF ERISA, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE") (OR COMPARABLE PROVISIONS OF ANY
SUBSEQUENT ENACTMENTS), OR A TRUSTEE OF ANY SUCH PLAN, OR ANY OTHER
PERSON WHO IS USING THE ASSETS OF ANY SUCH PLAN TO EFFECT SUCH
ACQUISITION, AN OPINION OF COUNSEL TO THE EFFECT THAT THE PURCHASE OR
HOLDING OF THIS CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE TRUST
FUND BEING DEEMED TO BE "PLAN ASSETS"
K-2
<PAGE>
PURSUANT TO THE DEPARTMENT OF LABOR PLAN ASSET REGULATIONS SET FORTH IN
29 CFR ss.2510.3-101 AND TO BE SUBJECT TO THE FIDUCIARY RESPONSIBILITY
PROVISIONS OF ERISA OR THE PROHIBITED TRANSACTION PROVISIONS OF THE
CODE, WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN
THE MEANING OF SECTION 406 OR SECTION 407 OF ERISA OR SECTION 4975 OF
THE CODE, AND WILL NOT SUBJECT THE TRUSTEE, THE SUBSERVICER, THE MASTER
SERVICER, THE DEPOSITOR OR ANY OF THEIR AFFILIATES TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA OR SECTION
4975 OF THE CODE) RELATING TO THE CERTIFICATES.
3. The Purchaser is acquiring the Transferred Certificates for its own
account [for investment only]** and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.
4. The Purchaser (a) is a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business matters,
and in particular in such matters related to securities similar to the
Certificates, such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) is able to bear the economic risks of such
an investment and (c) is an "accredited investor" within the meaning of Rule
501(a) promulgated pursuant to the Securities Act.
5. The Purchaser will not nor has it authorized nor will it authorize
any person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that would constitute a distribution of
any Certificate under the Securities Act or the Investment Company Act of 1940,
as amended (the "1940 Act"), that would render the disposition of any
Certificate a violation of Section 5 of the Securities Act or any state
securities law, or that would require registration or qualification pursuant
thereto. Neither the Purchaser nor anyone acting on its behalf has offered the
Certificates for sale or made any general solicitation by means of general
advertising or in any other manner with respect to the Certificates. The
Purchaser will not sell or otherwise transfer any of the Certificates, except in
compliance with the provisions of the Pooling and Servicing Agreement.
--------------------
** Not required of a broker/dealer purchaser.
K-3
<PAGE>
6. [This paragraph may be deleted if the Purchaser provides the Opinion
of Counsel referred to in clause (ii) of Section 5.02(b) of the Pooling and
Servicing Agreement.] The Purchaser either (A) is not an employee benefit plan
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or a plan within the meaning of Section 4975
of the Internal Revenue Code of 1986, as amended (the "Code") (each, a "Plan"),
and is not directly or indirectly purchasing any Certificate on behalf of, as
investment manager of, as named fiduciary of, as trustee of or with assets of a
Plan or directly or indirectly purchasing any certificates with the assets of
any insurance company separate account or of any Plan or (B) is an insurance
company and the source of funds for the purchase of the certificates is an
"insurance company general account" within the meaning of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60"), 60 Fed. Reg. 35925 (July 12, 1995), and
the conditions set forth in Section I and III of PTCE 95-60 are satisfied with
respect to the purchase and holding of the Certificates.
7. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit L to the Pooling and Servicing Agreement.
8. The Purchaser agrees to indemnify the Trustee, the Master Servicer,
the Subservicer and the Depositor against any liability that may result from any
misrepresentation made herein.
Very truly yours,
[PURCHASER]
By: ___________________________________
Name:
Title:
K-4
<PAGE>
EXHIBIT L
FORM OF RULE 144A INVESTMENT LETTER
(Qualified Institutional Buyer)
[DATE]
Chase Funding, Inc.
300 Tice Boulevard, 3rd Floor North
Woodcliff Lake, New Jersey 07675
Chase Manhattan Mortgage Corporation
c/o The Chase Manhattan Bank
Global Trust Services
450 West 33rd Street, 15th Floor
New York, New York 10001
Re: Pooling and Servicing Agreement dated as of [DATE] among Chase Funding,
Inc. as depositor, Advanta Mortgage Corp., USA, as subservicer, Chase
Manhattan Mortgage Corporation, as master servicer and [Citibank,
N.A.], as trustee, Chase Funding, Inc., Chase Funding Mortgage Loan
Asset-Backed Certificates, Series [ ] [Class R-]
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from
________________ (the "Transferor") $_______ by original principal balance (the
"Transferred Certificates") of Asset-Backed Certificates, Series [ ], [Class R-]
(the "Certificates"), issued pursuant to a pooling and servicing agreement,
dated as of [DATE] (the "Pooling and Servicing Agreement"), among Chase Funding,
Inc. as depositor (the "Depositor"), Advanta Mortgage Corp., USA, as subservicer
(the "Subservicer"), Chase Manhattan Mortgage Corporation, as master servicer
(AMaster Servicer@), and [Citibank, N.A.], as trustee (the "Trustee"). [The
Purchaser intends to register the Transferred Certificate in the name of
____________________, as nominee for __________________.] All terms used and not
otherwise defined herein shall have the meanings set forth in the Trust
Agreement.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchaser certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:
In connection with our acquisition of the above Transferred
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a
L-1
<PAGE>
transaction that is exempt from the registration requirements of the Act and any
such laws, (b) we have such knowledge and experience in financial and business
matters that we are capable of evaluating the merits and risks of investments in
the Certificates, (c) we have had the opportunity to ask questions of and
receive answers from the Depositor concerning the purchase of the Transferred
Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Transferred Certificates, (d)
we are not an employee benefit plan within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, or a plan within
the meaning of Section 4975 of the Internal Revenue Code of 1986, as amended
(each, a "Plan"), nor are we directly or indirectly purchasing any Certificate
on behalf of, as investment manager of, as named fiduciary of, as trustee of or
with assets of a Plan or directly or indirectly purchasing any certificates with
the assets of any insurance company separate account or of any Plan [or
alternatively, in the case of an insurance company, is an insurance company and
the source of funds for the purchase of the certificates] is an "insurance
company general account" within the meaning of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60"), 50 Fed. Reg. 35925 (July 12, 1995), and the
conditions set forth in Section I and Section III of PTCE 95-60 are satisfied
with respect to the purchase and holding of the Certificates, (e) we have not,
nor has anyone acting on our behalf offered, transferred, pledged, sold or
otherwise disposed of the Certificates, any interest in the Certificates or any
other similar security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates or
any other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto, nor will act, nor has authorized or will authorize any person to act,
in such manner with respect to the Certificates, (f) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act and have completed one of the forms of certification to that effect attached
hereto as Annex 1 or Annex 2. We are aware that the sale of the Transferred
Certificates to us is being made in reliance on Rule 144A. We are acquiring the
Transferred Certificates for our own account or for resale pursuant to Rule 144A
and further understand that such Certificates may be resold, pledged or
transferred only (i) to a person reasonably believed by us, based upon
certifications of such purchaser or information we have in our possession, to be
a qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act.
L-2
<PAGE>
We agree to indemnify the Trustee, the Master Servicer, the Subservicer
and the Depositor against any liability that may result from any
misrepresentation made herein.
Very truly yours,
[PURCHASER]
By: ___________________________________
Name:
Title:
L-3
<PAGE>
ANNEX 1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with the purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $____________* in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Buyer satisfies the criteria in the category marked below.
____ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
____ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by Federal, State or
territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
--------------------
* Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
L-4
<PAGE>
____ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over such institution or is a foreign savings and
loan association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as demonstrated in
its latest annual financial statements, a copy of which is
attached hereto.
____ Broker-dealer. The Buyer is a dealer registere pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended.
____ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of the State,
territory or the District of Columbia.
____ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
____ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security
Act of 1974, as amended.
____ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940, as
amended.
____ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958, as amended.
____ Business Development Company. Buyer is a business development
company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940, as amended.
3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii)
L-5
<PAGE>
securities owned but subject to a repurchase agreement and (viii) currency,
interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i) where the Buyer reports its
securities holdings in its financial statements on the basis of their market
value, and (ii) no current information with respect to the cost of those
securities has been published. If clause (ii) in the preceding sentence applies,
the securities may be valued at market. Further, in determining such aggregate
amount, the Buyer may have included securities owned by subsidiaries of the
Buyer, but only if such subsidiaries are consolidated with the Buyer in its
financial statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under the
Buyer's direction. However, such securities were not included if the Buyer is a
majority-owned, consolidated subsidiary of another enterprise and the Buyer is
not itself a reporting company under the Securities Exchange Act of 1934, as
amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
By: ___________________________________
Name:
Title:
Date: ___________________________________
L-6
<PAGE>
ANNEX 2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A"), because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a "qualified
institutional buyer" as defined in Rule 144A because (i) the Buyer is an
investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
____ The Buyer owned $___________ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $__________ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordanc with Rule 144A).
3. The term "Family of Investment Companies" as used herein means two
or more registered investment companies (or series thereof) that have the same
investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
L-7
<PAGE>
4. The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Buyer or are part of the Buyer's Family
of Investment Companies, (ii) securities issued or guaranteed by the U.S. or any
instrumentality thereof, (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned but
subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the undersigned will
notify the parties listed in the Rule 144A Transferee Certificate to which this
certification relates of any changes in the information and conclusions herein.
Until such notice is given, the Buyer's purchase of the Certificates will
constitute a reaffirmation of this certification by the undersigned as of the
date of such purchase.
By: ______________________________________
Name:
Title:
IF AN ADVISER:
__________________________________________
Print Name of Buyer
Date: ____________________________________
L-8
<PAGE>
EXHIBIT M
REQUEST FOR RELEASE OF DOCUMENTS
To: [Citibank, N.A.]
111 Wall Street
5th Floor, Zone 1
New York, NY 10043 [Citibank, N.A.]
[and/or its designee]
Re:
In connection with the administration of the Mortgage Loans held by
you, as Trustee, pursuant to the above-captioned Pooling and Servicing
Agreement, we request the release, and hereby acknowledge receipt, of the
Mortgage File for the Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
_______ 1. Mortgage Loan Paid in Full (Subservicer hereby certifies that all
amounts received in connection therewith have been credited to the
Collection Account)
_______ 2. Mortgage Loan Liquidated (Subservicer hereby certifies that all
proceeds of foreclosure, insurance or other liquidation have been
received and credited to the Collection Account
_______ 3. Mortgage Loan Repurchased pursuant to Section 2.03(c) of the Pooling
and Servicing Agreement
_______ 4. Mortgage Loan in Foreclosure
_______ 5. Mortgage Loan Repurchased or Substituted pursuant to the terms of
the Pooling and Servicing Agreement (Subservicer hereby certifies
that the Purchase Price or Substitution Adjustment Amount has
credited to the Collection Account)
_______ 6. Sale of Mortgage Loan by Master Servicer pursuant to Section 3.09 of
the Pooling and Servicing Agreement
_______ 7. Other
Reason: __________________________________
By: ______________________________________
(authorized signer)
Address: _________________________________
M-1
<PAGE>
Date: ____________________________________
If box 1 or 2 above is checked, and if all or part of the Mortgage File was
previously released to us, please release to us our previous receipt on file
with you, as well as any additional documents in your possession relating to the
above specified Mortgage Loan.
If box 3, 4, 5 or 6 above is checked, upon our return of all of the above
documents to you as Trustee [or Trustee's designee], please acknowledge your
receipt by signing in the space indicated below, and returning this form.
Trustee
-------
[Citibank, N.A.]
Please acknowledge the execution of the above request by your signature and date
below:
__________________________________ __________________________________________
Signature Date
Documents returned to Trustee:
__________________________________ __________________________________________
Trustee Date
M-2
