EXHIBIT 99.1
EXECUTION COPY
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GREENWICH CAPITAL ACCEPTANCE, INC.,
Depositor
HSBC MORTGAGE CORPORATION (USA),
Seller and Servicer
and
WELLS FARGO BANK MINNESOTA, N.A.,
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 2000
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HSBC Mortgage Loan Trust 2000-HSBC1
Mortgage Pass-Through Certificates, Series 2000-HSBC1
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Table of Contents
Page
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ARTICLE I
DEFINITIONS
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SECTION 1.01. Defined Terms...............................................................................4
SECTION 1.02. Accounting.................................................................................35
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans...............................................................35
SECTION 2.02. Acceptance by Trustee......................................................................38
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by the Seller.................................39
SECTION 2.04. Representations and Warranties of the Seller with Respect to the Mortgage Loans............42
SECTION 2.05. Representations, Warranties and Covenants of the Servicer..................................43
SECTION 2.06. Representations and Warranties of the Depositor............................................43
SECTION 2.07. Issuance of Certificates...................................................................45
SECTION 2.08. Representations and Warranties of the Seller...............................................45
SECTION 2.09. Covenants of the Seller....................................................................47
ARTICLE III
ADMINISTRATION AND SERVICING OF THE MORTGAGE LOANS
SECTION 3.01. Servicer to Act as Servicer................................................................47
SECTION 3.02. Sub-Servicing Agreements Between Servicer and Sub-Servicers................................49
SECTION 3.03. Successor Sub-Servicers....................................................................50
SECTION 3.04. Liability of the Servicer..................................................................50
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and the Trustee or
Certificateholders.........................................................................50
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements by Trustee...........................51
SECTION 3.07. Collection of Certain Mortgage Loan Payments...............................................51
SECTION 3.08. Sub-Servicing Account......................................................................52
SECTION 3.09. Collection of Taxes, Assessments and Similar Items; Servicing Account......................52
SECTION 3.10. Collection Account and Distribution Account................................................53
SECTION 3.11. Withdrawals from the Collection Account and Distribution Account...........................55
SECTION 3.12. Investment of Funds in the Collection Account..............................................57
SECTION 3.13. [Reserved].................................................................................58
SECTION 3.14. Maintenance of Hazard Insurance Polices and Errors and Omissions and Fidelity
Coverage...................................................................................58
SECTION 3.15. Enforcement of Due-on-Sale Clauses; Assumption Agreements..................................60
SECTION 3.16. Realization upon Defaulted Mortgage Loans..................................................61
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files............................................63
SECTION 3.18. Servicing Compensation.....................................................................64
SECTION 3.19. Reports to the Trustee; Collection Account Statements......................................64
SECTION 3.20. Statement as to Compliance.................................................................64
SECTION 3.21. Independent Public Accountant's Servicing Report...........................................65
SECTION 3.22. Access to Certain Documentation; Filing of Reports by Trustee..............................65
SECTION 3.23. Title, Management and Disposition of REO Property..........................................66
SECTION 3.24. Obligations of the Servicer in Respect of Prepayment Interest Shortfalls...................69
SECTION 3.25. [Reserved].................................................................................69
SECTION 3.26. Obligations of the Servicer in Respect of Adjustments......................................69
SECTION 3.27. Solicitations..............................................................................69
ARTICLE IV
FLOW OF FUNDS
SECTION 4.01. Distributions..............................................................................70
SECTION 4.02. [Reserved].................................................................................73
SECTION 4.03. Allocation of Realized Losses..............................................................73
SECTION 4.04. Statements.................................................................................74
SECTION 4.05. Remittance Reports; Advances...............................................................78
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates...........................................................................80
SECTION 5.02. Registration of Transfer and Exchange of Certificates......................................80
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates..........................................86
SECTION 5.04. Persons Deemed Owners......................................................................86
SECTION 5.05. Appointment of Paying Agent................................................................86
ARTICLE VI
THE SELLER, THE SERVICER AND THE DEPOSITOR
SECTION 6.01. Liability of the Seller, the Servicer and the Depositor....................................87
SECTION 6.02. Merger or Consolidation of, or Assumption of the Obligations of, the Seller, the
Servicer or the Depositor..................................................................87
SECTION 6.03. Limitation on Liability of the Servicer and Others.........................................87
SECTION 6.04. Servicer Not to Resign.....................................................................88
SECTION 6.05. Delegation of Duties.......................................................................88
ARTICLE VII
DEFAULT
SECTION 7.01. Servicer Events of Termination.............................................................89
SECTION 7.02. Trustee to Act; Appointment of Successor...................................................90
SECTION 7.03. Waiver of Servicer Events of Termination...................................................91
SECTION 7.04. Notification to Certificateholders.........................................................91
SECTION 7.05. Survivability of Servicer Liabilities......................................................92
ARTICLE VIII
THE TRUSTEE
SECTION 8.01. Duties of Trustee..........................................................................92
SECTION 8.02. Certain Matters Affecting the Trustee......................................................93
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans......................................94
SECTION 8.04. Trustee May Own Certificates...............................................................95
SECTION 8.05. Trustee's Fees and Expenses................................................................95
SECTION 8.06. Eligibility Requirements for Trustee.......................................................96
SECTION 8.07. Resignation or Removal of Trustee..........................................................96
SECTION 8.08. Successor Trustee..........................................................................97
SECTION 8.09. Merger or Consolidation of Trustee.........................................................97
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee..............................................98
SECTION 8.11. Limitation of Liability....................................................................99
SECTION 8.12. Trustee May Enforce Claims Without Possession of Certificates..............................99
SECTION 8.13. Suits for Enforcement.....................................................................100
SECTION 8.14. Waiver of Bond Requirement................................................................100
SECTION 8.15. Waiver of Inventory, Accounting and Appraisal Requirement.................................100
SECTION 8.16. Appointment of Custodians.................................................................100
SECTION 8.17. Put and Call..............................................................................100
ARTICLE IX
REMIC ADMINISTRATION
SECTION 9.01. REMIC Administration......................................................................102
SECTION 9.02. Prohibited Transactions and Activities....................................................104
SECTION 9.03. Indemnification with Respect to Certain Taxes and Loss of REMIC Status....................105
SECTION 9.04. REO Property..............................................................................105
ARTICLE X
TERMINATION
SECTION 10.01. Termination...............................................................................106
SECTION 10.02. Additional Termination Requirements.......................................................107
ARTICLE XI
[RESERVED]
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01. Amendment.................................................................................108
SECTION 12.02. Recordation of Agreement; Counterparts....................................................109
SECTION 12.03. Limitation on Rights of Certificateholders................................................110
SECTION 12.04. Governing Law; Jurisdiction...............................................................110
SECTION 12.05. Notices...................................................................................111
SECTION 12.06. Severability of Provisions................................................................111
SECTION 12.07. Article and Section References............................................................111
SECTION 12.08. Notice to the Rating Agencies.............................................................112
SECTION 12.09. Further Assurances........................................................................112
SECTION 12.10. Benefits of Agreement.....................................................................113
SECTION 12.11. Acts of Certificateholders................................................................113
EXHIBITS AND SCHEDULES:
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Exhibit A Form of Senior Certificates (other than the Class A-R Certificate) ........................A-1
Exhibit B Form of Class A-R Certificate..............................................................B-1
Exhibit C Form of Subordinate Certificates...........................................................C-1
Exhibit D Form of Class X Certificates...............................................................D-1
Exhibit E Form of Reverse of Certificates............................................................E-1
Exhibit F Request for Release........................................................................F-1
Exhibit G-1 Form of Trustee's Initial Certification..................................................G-1-1
Exhibit G-2 Form of Trustee's Final Certification....................................................G-2-1
Exhibit G-3 Form of Receipt of Mortgage Note.........................................................G-3-1
Exhibit H Form of Lost Note Affidavit................................................................H-1
Exhibit I Form of ERISA Representation...............................................................I-1
Exhibit J Form of Investment Letter..................................................................J-1
Exhibit K Form of Transferor Certificate.............................................................K-1
Exhibit L Form of Class A-R Certificate Transfer Affidavit...........................................L-1
Exhibit M Form of Liquidation Report.................................................................M-1
Exhibit N Put Option Notice..........................................................................N-1
Schedule I Mortgage Loan Schedule
Schedule II Representations and Warranties of the Seller
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This Pooling and Servicing Agreement is dated as of November 1, 2000 (the
"Agreement"), among GREENWICH CAPITAL ACCEPTANCE, INC., as depositor (the
"Depositor"), HSBC MORTGAGE CORPORATION (USA), as seller (in such capacity,
the "Seller") and servicer (in such capacity, the "Servicer") and WELLS FARGO
BANK MINNESOTA, N.A., as trustee (the "Trustee").
PRELIMINARY STATEMENT:
The Depositor intends to sell pass-through certificates (collectively,
the "Certificates"), to be issued hereunder in multiple classes, which in the
aggregate will evidence the entire beneficial ownership interest in the Trust
Fund created hereunder. The Certificates will consist of nine classes of
certificates, designated as (i) the Class A-1 Certificates, (ii) the Class A-2
Certificates, (iii) the Class A-3 Certificates, (iv) the Class X Certificates,
(v) the Class A-R Certificate, (vi) the Class B-1 Certificates, (vii) the
Class B-2 Certificates, (viii) the Class B-3 Certificates, (ix) the Class B-4
Certificates, (x) the Class B-5 Certificates and (xi) the Class B-6
Certificates.
For federal income tax purposes, the Trust Fund (exclusive of the Put
Option, the Optional Call and the rights associated therewith) will consist of
two REMICs, the Lower Tier REMIC and the Upper Tier REMIC. The Lower Tier
REMIC will consist of all of the assets constituting the Trust Fund (exclusive
of the Put Option and the Optional Call) and will be evidenced by the Lower
Tier REMIC Regular Interests (which will be uncertificated and will represent
the "regular interests" in the Lower Tier REMIC) and the R-1 Interest as the
single "residual interest" in the Lower Tier REMIC. The Trustee will hold the
Lower Tier REMIC Regular Interests. On each Distribution Date, following the
allocation of Realized Losses and payments of principal, each Lower Tier REMIC
Interest will have a principal balance equal to that of its Master REMIC
Corresponding Class.
The Upper Tier REMIC will consist of the Lower Tier REMIC Regular
Interests and will be evidenced by the Regular Certificates (which will
represent the "regular interests" in the Upper Tier REMIC) and the R-2
Interest as the single "residual interest" in the Upper Tier REMIC. The Class
A-R Certificate will represent beneficial ownership of the R-1 Interest and
the R-2 Interest. All REMIC regular and residual interests created hereby will
be retired on or before the Latest Possible Maturity Date. In addition to
evidencing a REMIC Regular Interest, each of the Class A-1, Class A-2 and
Class A-3 Certificates will represent the related Put Option, related Optional
Call and the rights and obligations associated therewith.
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The following table irrevocably sets forth the designation, the
Uncertificated Lower Tier REMIC Pass-Through Rate, the initial Uncertificated
Balance, the Master REMIC Corresponding Class and, solely for the purpose of
satisfying Treasury regulation Section 1.860G-1(a)(4)(iii), the "latest
possible maturity date" for each of the Lower Tier REMIC Regular Interest.
None of the Lower Tier REMIC Regular Interests will be certificated.
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Initial Uncertificated Latest Possible Master REMIC
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Designation Uncertificated Lower Tier REMIC Maturity Date Corresponding
----------- -------------- ------------------ ------------- -------------
Principal Balance Pass-Through Rate Class
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Class L-A-1 $137,000,000 (1) October 15, 2034 A-1
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Class L-A-2 $99,000,000 (1) October 15, 2034 A-2
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Class L-A-3 $137,493,000 (1) October 15, 2034 A-3
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Class L-B-1 $5,881,000 (1) October 15, 2034 B-1
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Class L-B-2 $3,921,000 (1) October 15, 2034 B-2
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Class L-B-3 $2,940,000 (1) October 15, 2034 B-3
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Class L-B-4 $2,156,000 (1) October 15, 2034 B-4
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Class L-B-5 $1,372,000 (1) October 15, 2034 B-5
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Class L-B-6 $2,356,309.58 (1) October 15, 2034 B-6
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Class L-A-R $100 (1) October 15, 2034 N/A
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(1) Calculated pursuant to the definition of "Net WAC".
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The following table sets forth (or describes) the Upper Tier REMIC Class
designation, Pass-Through Rate, Original Class Certificate Principal Balance
or Original Class Certificate Notional Balance, and Assumed Final Distribution
Date for each Class of Certificates comprising the interests in the Upper Tier
REMIC created hereunder, each of which, except for the Class A-R Certificate,
is hereby designated a REMIC regular interest for federal income tax purposes:
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Original Class
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Certificate Principal Pass-Through Assumed Final
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Class Balance Rate Distribution Date
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Class A-1 $137,000,000 (1) December 15, 2030
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Class A-2 $99,000,000 (1) December 15, 2030
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Class A-3 $137,493,000 (1) December 15, 2030
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Class X (2) (2) December 15, 2030
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Class A-R $100 (1) December 15, 2030
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Class B-1 $5,881,000 (1) December 15, 2030
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Class B-2 $3,921,000 (1) December 15, 2030
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Class B-3 $2,940,000 (1) December 15, 2030
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Class B-4 $2,156,000 (1) December 15, 2030
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Class B-5 $1,372,000 (1) December 15, 2030
----------------------- ------------------------------ --------------------------------- ----------------------------
Class B-6 $2,356,309.58 (1) December 15, 2030
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(1) Calculated pursuant to the definition of "Senior/Subordinated
Certificate Pass-Through Rate".
(2) The Class X Certificates will have no principal balance and will bear
interest calculated pursuant to the definition of "Class X
Certificate Pass-Through Rate" on the Class Certificate Notional
Balance thereof. Each will bear interest at its Class X Certificate
Pass-Through Rate on its Class X Certificate Notional Balance.
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ARTICLE I
DEFINITIONS
SECTION 1.01. Defined Terms.
Whenever used in this Agreement or in the Preliminary Statement, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this Article. All calculations of interest described
herein shall be made on the basis of an assumed 360-day year consisting of
twelve 30-day months.
"1933 Act": The Securities Act of 1933, as amended.
"Account": Either the Collection Account or the Distribution Account.
"Accrual Period": With respect to each Distribution Date and any Class of
Certificates, the calendar month prior to the month of that Distribution Date,
calculated on the basis of an assumed 360-day year consisting of twelve 30-day
months.
"Adjusted Loan Rate": As to any Mortgage Loan and any date, the per annum
rate equal to the related Loan Rate less the Servicing Fee Rate.
"Adjustment Date": With respect to each Mortgage Loan, each adjustment
date on which the related Loan Rate changes pursuant to the related Mortgage
Note. The first Adjustment Date following the Cut-Off Date as to each Mortgage
Loan is set forth in the Mortgage Loan Schedule.
"Advance": As to any Mortgage Loan or REO Property, any advance made by
the Servicer in respect of any Distribution Date pursuant to Section 4.05
hereof.
"Adverse REMIC Event": As defined in Section 9.01(f) hereof.
"Affiliate": With respect to any Person, any other Person controlling,
controlled by or under common control with such Person. For purposes of this
definition, "control" means the power to direct the management and policies of
a Person, directly or indirectly, whether through ownership of voting
securities, by contract or otherwise and "controlling" and "controlled" shall
have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement, as amended,
supplemented and otherwise modified from time to time.
"Aggregate Senior Percentage": As to any Distribution Date, the
percentage equivalent of a fraction the numerator of which is the aggregate of
the Class Certificate Principal Balances of the Classes of Senior Certificates
and the denominator of which is the Aggregate Stated Principal Balance for
such Distribution Date, but in no event greater than 100%.
"Aggregate Stated Principal Balance: As to any Distribution Date, the
aggregate of the Stated Principal Balances of the Mortgage Loans outstanding
on the Due Date in the month preceding the month of such Distribution Date.
"Aggregate Subordinate Percentage": As to any Distribution Date, the
difference between 100% and the Aggregate Senior Percentage for such
Distribution Date, but in no event less than zero.
"Applicable Credit Support Percentage": As defined in Section 4.01(e).
"Applicable Regulations": As to any Mortgage Loan, all federal, state and
local laws, statutes, rules and regulations applicable thereto.
"Assignment": As to any Mortgage, an assignment of mortgage, notice of
transfer or equivalent instrument, in recordable form, which is sufficient
under the laws of the jurisdiction in which the related Mortgaged Property is
located to reflect or record the sale of such Mortgage.
"Assumed Final Distribution Date": As to each Class of Certificates, the
date set forth as such in the Preliminary Statement.
"Available Funds": As to any Distribution Date, an amount equal to (i)
the sum of (a) the aggregate of the Monthly Payments received on or prior to
the related Determination Date (excluding Monthly Payments due in future Due
Periods but received by the related Determination Date), (b) Liquidation
Proceeds, Insurance Proceeds, Principal Prepayments and other unscheduled
recoveries of principal and interest in respect of the Mortgage Loans during
the related Prepayment Period, (c) the aggregate of any amounts received in
respect of a related REO Property withdrawn from any REO Account and deposited
in the Collection Account for such Distribution Date, (d) the amount of
Compensating Interest deposited in the Collection Account by the Servicer for
that Distribution Date, (e) the aggregate of the Purchase Prices and
Substitution Adjustments deposited in the Collection Account during the
related Prepayment Period, (f) the aggregate of any Advances made by the
Servicer for that Distribution Date, (g) the aggregate of any advances made by
the Trustee for that Distribution Date pursuant to Section 7.02 hereof and (h)
the Termination Price on the Distribution Date on which the Trust is
terminated; minus (ii) the sum of (x) amounts reimbursable or payable to the
Servicer pursuant to Section 3.11(a) hereof, (y) the amount payable to the
Trustee pursuant to Section 8.05 and (z) amounts deposited in the Collection
Account or the Distribution Account, as the case may be, in error.
"Bankruptcy Code": The Bankruptcy Reform Act of 1978 (Title 11 of the
United States Code), as amended.
"Bankruptcy Coverage Termination Date": The date on which the Bankruptcy
Loss Coverage Amount is reduced to zero.
"Bankruptcy Loss": With respect to any Mortgage Loan, a Deficient
Valuation or Debt Service Reduction; provided, however, that a Bankruptcy Loss
shall not be deemed a Bankruptcy Loss hereunder so long as the Servicer has
notified the Trustee in writing that the Servicer is pursuing any remedies
that may exist in connection with the related Mortgage Loan and either (A) the
related Mortgage Loan is not in default with regard to payments due thereunder
or (B) delinquent payments of principal and interest under the related
Mortgage Loan and any related escrow payments in respect of the Mortgage Loan
are being advanced on a current basis by the Servicer, in either case without
giving effect to any Debt Service Reduction or Deficient Valuation.
"Bankruptcy Loss Coverage Amount": As of any Determination Date, the
Initial Bankruptcy Coverage Amount as reduced by the aggregate amount of
Bankruptcy Losses allocated to the Certificates since the Cut-Off Date;
provided, however, that the Bankruptcy Loss Coverage Amount may also be
reduced pursuant to a letter from each Rating Agency to the Trustee to the
effect that any such reduction will not result in a downgrading of the then
current ratings assigned by such Rating Agency to the Classes of Senior
Certificates.
"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 5.02 hereof). On the
Closing Date, all Classes of the Certificates other than the Physical
Certificates shall be Book-Entry Certificates.
"Business Day": Any day other than a Saturday, a Sunday or a day on which
banking or savings institutions in the State of Maryland, the State of New
York or in the city in which the Corporate Trust Office of the Trustee is
located are authorized or obligated by law or executive order to be closed.
"Certificate": Any Regular Certificate or Class A-R Certificate.
"Certificateholder" or "Holder": The Person in whose name a Certificate
is registered in the Certificate Register, except that a Disqualified
Organization or non-U.S. Person shall not be a Holder of the Class A-R
Certificate for any purpose hereof.
"Certificate Principal Balance": As to any Distribution Date, with
respect to each Certificate of a given Class other than the Class X
Certificate, the Class Certificate Principal Balance of such Class multiplied
by the applicable Percentage Interest of such Certificate.
"Certificate Notional Balance": With respect to a Class X Certificate and
any date of determination, the product of (i) the Percentage Interest
represented by such Class X Certificate and (ii) the Class Certificate
Notional Balance.
"Certificate Owner": With respect to each Book-Entry Certificate, any
beneficial owner thereof.
"Certificate Register" and "Certificate Registrar": The register
maintained and registrar appointed pursuant to Section 5.02 hereof.
"Class": Collectively, Certificates that have the same priority of
payment and bear the same class designation and the form of which is identical
except for variation in the Percentage Interest evidenced thereby.
"Class A-1 Certificate": Any of the Class A-1 Certificates as designated
on the face thereof executed by the Trustee and authenticated and delivered by
the Certificate Registrar, substantially in the form annexed hereto as Exhibit
A, evidencing the ownership of "regular interests" in the Upper Tier REMIC and
representing the right to distributions as set forth herein and therein.
"Class A-2 Certificate": Any of the Class A-2 Certificates as designated
on the face thereof executed by the Trustee and authenticated and delivered by
the Certificate Registrar, substantially in the form annexed hereto as Exhibit
A, evidencing the ownership of "regular interests" in the Upper Tier REMIC and
representing the right to distributions as set forth herein and therein.
"Class A-3 Certificate": Any of the Class A-3 Certificates as designated
on the face thereof executed by the Trustee and authenticated and delivered by
the Certificate Registrar, substantially in the form annexed hereto as Exhibit
A, evidencing the ownership of "regular interests" in the Upper Tier REMIC and
representing the right to distributions as set forth herein and therein.
"Class A-R Certificate": The Class A-R Certificate as designated on the
face thereof executed by the Trustee, and authenticated and delivered by the
Certificate Registrar, substantially in the form annexed hereto as Exhibit B,
evidencing the ownership of the sole class of "residual interests" in the
Upper Tier REMIC and representing the right to distributions as set forth
herein and therein.
"Class B-1 Certificate": Any of the Class B-1 Certificates as designated
on the face thereof executed by the Trustee and authenticated and delivered by
the Certificate Registrar, substantially in the form annexed hereto as Exhibit
C, evidencing the ownership of "regular interests" in the Upper Tier REMIC and
representing the right to distributions as set forth herein and therein.
"Class B-2 Certificate": Any of the Class B-2 Certificates as designated
on the face thereof executed by the Trustee and authenticated and delivered by
the Certificate Registrar, substantially in the form annexed hereto as Exhibit
C, evidencing the ownership of "regular interests" in the Upper Tier REMIC and
representing the right to distributions as set forth herein and therein.
"Class B-3 Certificate": Any of the Class B-3 Certificates as designated
on the face thereof executed by the Trustee and authenticated and delivered by
the Certificate Registrar, substantially in the form annexed hereto as Exhibit
C, evidencing the ownership of "regular interests" in the Upper Tier REMIC and
representing the right to distributions as set forth herein and therein.
"Class B-4 Certificate": Any of the Class B-4 Certificates as designated
on the face thereof executed by the Trustee and authenticated and delivered by
the Certificate Registrar, substantially in the form annexed hereto as Exhibit
C, evidencing the ownership of "regular interests" in the Upper Tier REMIC and
representing the right to distributions as set forth herein and therein.
"Class B-5 Certificate": Any of the Class B-5 Certificates as designated
on the face thereof executed by the Trustee and authenticated and delivered by
the Certificate Registrar, substantially in the form annexed hereto as Exhibit
C, evidencing the ownership of "regular interests" in the Upper Tier REMIC and
representing the right to distributions as set forth herein and therein.
"Class B-6 Certificate": Any of the Class B-6 Certificates as designated
on the face thereof executed by the Trustee and authenticated and delivered by
the Certificate Registrar, substantially in the form annexed hereto as Exhibit
C, evidencing the ownership of "regular interests" in the Upper Tier REMIC and
representing the right to distributions as set forth herein and therein.
"Class Certificate Principal Balance": As to any Distribution Date, with
respect to any Class of Certificates other than the Class X Certificates, the
Original Class Certificate Principal Balance as reduced by the sum of (x) all
amounts actually distributed in respect of principal of that Class on all
prior Distribution Dates and (y) all Realized Losses, Bankruptcy Losses,
Special Hazard Losses, Fraud Losses and Excess Losses, if any, actually
allocated to that Class on all prior Distribution Dates.
"Class Subordination Percentage": With respect to each Class of
Subordinate Certificates and any Distribution Date, the percentage equivalent
of a fraction the numerator of which is the Class Certificate Principal
Balance of such Class immediately before such Distribution Date and the
denominator of which is the aggregate of the Class Certificate Principal
Balances of all Classes of Certificates immediately before such Distribution
Date.
"Class X Certificate": Any one of the Class X Certificates as designated
on the face thereof substantially in the form annexed hereto as Exhibit B,
executed, authenticated and delivered by the Trustee, evidencing the ownership
of "regular interests" in the Upper Tier REMIC and representing the right to
distributions as set forth herein and therein.
"Class X Certificate Pass-Through Rate": With respect to the Class X
Certificates and any Distribution Date, the Net WAC for such Distribution Date
minus the weighted average of the Pass-Through Rates of all Lower Tier REMIC
Interests (with each such interest subject to a cap equal to the Pass-Through
Rate in respect of its Master REMIC Corresponding Class), weighted on the
basis of their respective principal balances. The Class X Certificate
Pass-Through Rate for the first Distribution Date shall equal 0.15%.
"Class Certificate Notional Balance": As of any Distribution Date and
with respect to the Class X Certificates, an amount equal to Pool Balance
immediately prior to such Distribution Date.
"Close of Business": As used herein, with respect to any Business Day and
location, 5:00 p.m. at such location.
"Closing Date": November 16, 2000.
"Code": The Internal Revenue Code of 1986, as amended.
"Collection Account": The account or accounts created and maintained by
the Servicer pursuant to Section 3.10(a), which shall be entitled "HSBC
Mortgage Corporation (USA), as Servicer for Wells Fargo Bank Minnesota, N.A.,
as Trustee, in trust for registered Holders of HSBC Mortgage Loan Trust
2000-HSBC1, Mortgage Pass-Through Certificates, Series 2000-HSBC1", and which
must be an Eligible Account.
"Commission": The Securities and Exchange Commission.
"Compensating Interest": As defined in Section 3.24 hereof.
"Compensating Interest Cap": For any Due Period, the aggregate of, with
respect to each Mortgage Loan, an amount equal to one month's interest (or in
the event of any payment of interest which accompanies a Principal Prepayment
made by the Mortgagor during such calendar month, interest for the number of
days covered by such payment of interest) at the rate of 0.375% per annum on
the Principal Balance of such Mortgage Loan (or, if applicable, the REO
Property related to such Mortgage Loan) as of the first day of such calendar
month.
"Corporate Trust Office": The principal corporate trust office of the
Trustee at which at any particular time its corporate trust business in
connection with this Agreement shall be administered, which office at the date
of the execution of this instrument is located, for certificate transfer
purposes, at Wells Fargo Center, Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479-0113, Attention: Corporate Trust Services -HSBC
Mortgage Loan Trust 2000-HSBC1 and, for all other purposes, at 11000 Broken
Land Parkway, Columbia, Maryland 21044-3526, Attention: Corporate Trust
Services - HSBC Mortgage Loan Trust 2000-HSBC1, or at such other address as
the Trustee may designate from time to time by notice to the
Certificateholders, the Depositor, the Servicer and the Seller.
"Cut-Off Date": With respect to any Mortgage Loan other than a Qualified
Substitute Mortgage Loan, the Close of Business in New York City on November
1, 2000. With respect to any Qualified Substitute Mortgage Loan, the date
designated as such on the Mortgage Loan Schedule (as amended).
"Cut-Off Date Aggregate Principal Balance": The aggregate of the Cut-Off
Date Principal Balances of the Mortgage Loans.
"Cut-Off Date Principal Balance": With respect to any Mortgage Loan, the
unpaid principal balance thereof as of the Cut-Off Date (or as of the
applicable date of substitution with respect to a Qualified Substitute
Mortgage Loan).
"Debt Service Reduction": With respect to any Mortgage Loan, a reduction
in the scheduled Monthly Payment for that Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, unless the
reduction results from a Deficient Valuation.
"Deficient Valuation": With respect to any Mortgage Loan, a valuation of
the related Mortgaged Property by a court of competent jurisdiction in an
amount less than the then outstanding Principal Balance of the Mortgage Loan,
which valuation results from a proceeding initiated under the Bankruptcy Code.
"Definitive Certificates": Any Certificate evidenced by a Physical
Certificate and any Certificate issued in lieu of a Book-Entry Certificate
pursuant to Section 5.02(c) hereof.
"Deleted Mortgage Loan": A Mortgage Loan replaced or to be replaced by
one or more Qualified Substitute Mortgage Loans.
"Delinquent": Any Mortgage Loan with respect to which the Monthly Payment
due on a Due Date is not made.
"Depositor": Greenwich Capital Acceptance, Inc., a Delaware corporation,
or any successor in interest.
"Depository": The initial Depository shall be The Depository Trust
Company, whose nominee 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.
"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 fifth
Business Day prior to such Distribution Date.
"Directly Operate": With respect to any REO Property, the furnishing or
rendering of services to the tenants thereof, the management or operation of
such REO Property, the holding of such REO Property primarily for sale to
customers, the performance of any construction work thereon or any use of such
REO Property in a trade or business conducted by a REMIC other than through an
Independent Contractor; provided, however, that the Trustee (or the Servicer
on behalf of the Trustee) shall not be considered to Directly Operate an REO
Property solely because the Servicer, on behalf of the Trustee, establishes
rental terms, chooses tenants, enters into or renews leases, deals with taxes
and insurance, or makes decisions as to repairs or capital expenditures with
respect to such REO Property.
"Disqualified Organization": A "disqualified organization" under Section
860E of the Code, which as of the Closing Date is any of:
(i) the United States, any state or political subdivision thereof,
any foreign government, any international organization, or any agency or
instrumentality of any of the foregoing,
(ii) any organization (other than a cooperative described in Section
521 of the Code) which is exempt from the tax imposed by Chapter 1 of the
Code unless such organization is subject to the tax imposed by Section
511 of the Code,
(iii) any organization described in Section 1381(a)(2)(C) of the
Code,
(iv) an "electing large partnership" within the meaning of Section
775 of the Code or
(v) any other Person so designated by the Trustee based upon an
Opinion of Counsel provided to the Trustee by nationally recognized
counsel acceptable to the Trustee that the holding of an ownership
interest in the Class A-R Certificate by such Person may cause the Trust
Fund or any Person having an ownership interest in any Class of
Certificates (other than such Person) to incur liability for any federal
tax imposed under the Code that would not otherwise be imposed but for
the transfer of an ownership interest in the Class A-R Certificate to
such Person.
A corporation will not be treated as an instrumentality of the United
States or of any state or political subdivision thereof, if all of its
activities are subject to tax and, a majority of its board of directors is not
selected by a governmental unit. The term "United States", "state" and
"international organizations" shall have the meanings set forth in Section
7701 of the Code.
"Distribution Account": The trust account or accounts created and
maintained by the Trustee pursuant to Section 3.10(b) hereof which shall be
entitled "Distribution Account, Wells Fargo Bank Minnesota, N.A., as Trustee,
in trust for the registered Certificateholders of HSBC Mortgage Loan Trust
2000-HSBC1, Mortgage Pass-Through Certificates, Series 2000-HSBC1" and which
must be an Eligible Account.
"Distribution Date": The 15th day of each calendar month or, if the 15th
day is not a Business Day, the first Business Day after the 15th day,
commencing in December 2000.
"Distribution Date Statement": As defined in Section 4.04(a) hereof.
"Due Date": With respect to each Mortgage Loan and any Distribution Date,
the first day of the calendar month in which that Distribution Date occurs on
which the Monthly Payment for such Mortgage Loan was due, exclusive of any
days of grace.
"Due Period": With respect to any Distribution Date, the period
commencing on the second day of the month preceding the month in which that
Distribution Date occurs and ending on the first day of the month in which
that Distribution Date occurs.
"Eligible Account": Any of
(i) an account or accounts maintained with a federal or state
chartered depository institution or trust company the short-term
unsecured debt obligations of which (or, in the case of a depository
institution or trust company that is the principal subsidiary of a
holding company, the short-term unsecured debt obligations of such
holding company) are rated A-1 or its equivalent by each of S&P and
Moody's, and F-1 by Fitch, at the time any amounts are held on deposit
therein;
(ii) an account or accounts the deposits in which are fully insured
by the FDIC (to the limits established by it), the uninsured deposits in
which account are otherwise secured such that, as evidenced by an Opinion
of Counsel delivered to the Trustee and to the Rating Agencies, the
Certificateholders will have a claim with respect to the funds in the
account or a perfected first priority security interest against the
collateral (which shall be limited to Permitted Investments) securing
those funds that is superior to claims of any other depositors or
creditors of the depository institution with which such account is
maintained;
(iii) a trust account or accounts maintained with the trust
department of a federal or state chartered depository institution,
national banking association or trust company acting in its fiduciary
capacity; or
(iv) an account otherwise acceptable to the Rating Agencies without
reduction or withdrawal of its then current ratings of the Certificates
as evidenced by a letter from each Rating Agency to the Trustee. Eligible
Accounts may bear interest.
"ERISA": The Employee Retirement Income Security Act of 1974, as amended.
"ERISA-Restricted Certificates": The Private Certificates and the Class
A-R Certificate.
"Escrow Payments": With respect to any Mortgage Loan, the amounts
constituting ground rents, taxes, assessments, water rates, fire and hazard
insurance premiums and other payments required to be escrowed by the related
Mortgagor with the related mortgagee pursuant to such Mortgage Loan.
"Estate in Real Property": A fee simple estate in a parcel of real
property.
"Excess Loss": With respect to the Mortgage Loans, the amount of any (i)
Fraud Loss realized after the Fraud Loss Coverage Termination Date, (ii)
Special Hazard Loss realized after the Special Hazard Coverage Termination
Date or (iii) Bankruptcy Loss realized after the Bankruptcy Coverage
Termination Date.
"Expense Fee Rate": With respect to any Mortgage Loan, the per annum rate
at which the Expense Fee accrues for such Mortgage Loan.
"Expense Fee": With respect to any Mortgage Loan, the sum of (x) the
Servicing Fee for such Mortgage Loan and (y) the Trustee Fee for such Mortgage
Loan.
"FDIC": The Federal Deposit Insurance Corporation or any successor
thereto.
"Fannie Mae": The Federal National Mortgage Association or any successor
thereto.
"Final Recovery Determination": With respect to any defaulted Mortgage
Loan or any REO Property (other than a Mortgage Loan or REO Property purchased
by the Seller or by the Servicer pursuant to or as contemplated by Section
2.03 or 10.01 hereof), a determination made by the Servicer (and with respect
to which written confirmation by a Servicing Officer of the Servicer shall
have been received by the Trustee) that all Insurance Proceeds, Liquidation
Proceeds and other payments or recoveries which the Servicer, in its
reasonable good faith judgment, expects to be finally recoverable in respect
thereof have been so recovered. The Servicer shall maintain records, prepared
by a Servicing Officer of the Servicer, of each Final Recovery Determination
made by the Servicer.
"Fitch": Fitch, Inc. and its successors.
"Foreclosure Price": With respect to any Mortgaged Property, the amount
reasonably expected to be received from the sale of such Mortgaged Property
net of any expenses associated with foreclosure proceedings.
"Fraud Loan": A Liquidated Mortgage Loan as to which a Fraud Loss has
occurred.
"Fraud Losses": Realized Losses on any Mortgage Loans sustained by reason
of a default arising from fraud, dishonesty or misrepresentation in connection
with that Mortgage Loan.
"Fraud Loss Coverage Amount": As of the Closing Date, $7,842,388, subject
to reduction from time to time by the amount of Fraud Losses allocated to the
Certificates. In addition, on each anniversary of the Cut-Off Date, the Fraud
Loss Coverage Amount will be reduced as follows: (a) on the first, second,
third and fourth anniversaries of the Cut-Off Date, to an amount equal to the
lesser of (i) 1.00% of the then current Pool Balance and (ii) the excess of
the Fraud Loss Coverage Amount as of the preceding anniversary of the Cut-Off
Date (or, in the case of the first anniversary, as of the Cut-Off Date) over
the cumulative amount of Fraud Losses allocated to the Certificates since such
preceding anniversary or the Cut-Off Date, as the case may be; and (b) on the
fifth anniversary of the Cut-Off Date, to zero; provided, however, that the
Fraud Loss Coverage Amount may also be reduced pursuant to a letter from each
Rating Agency to the Trustee to the effect that any such reduction will not
result in the downgrading of the then current ratings assigned by such Rating
Agency to the Classes of Senior Certificates.
"Fraud Loss Coverage Termination Date": The date on which the Fraud Loss
Coverage Amount is reduced to zero.
"Freddie Mac": The Federal Home Loan Mortgage Corporation or any
successor thereto.
"Gross Margin": With respect to each Mortgage Loan, the fixed percentage
set forth in the related Mortgage Note that is added to the Index on each
Adjustment Date in accordance with the terms of the related Mortgage Note used
to determine the Loan Rate for such Mortgage Loan.
"HSBC Bank": HSBC Bank USA, a banking corporation organized under the
laws of the State of New York.
"Independent": When used with respect to any specified Person, any such
Person who (a) is in fact independent of the Depositor, the Servicer and their
respective Affiliates, (b) does not have any direct financial interest in or
any material indirect financial interest in the Depositor or the Servicer or
any Affiliate thereof, and (c) is not connected with the Depositor or the
Servicer or any Affiliate thereof as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar
functions; provided, however, that a Person shall not fail to be Independent
of the Depositor or the Servicer or any Affiliate thereof merely because such
Person is the beneficial owner of 1% or less of any class of securities issued
by the Depositor or the Servicer or any Affiliate thereof, as the case may be.
"Independent Contractor": Either (i) any Person (other than the Servicer)
that would be an "independent contractor" with respect to the REMIC within the
meaning of Section 856(d)(3) of the Code if the REMIC were a real estate
investment trust (except that the ownership tests set forth in that section
shall be considered to be met by any Person that owns, directly or indirectly,
35% or more of any Class of Certificates), so long as the REMIC does not
receive or derive any income from such Person and provided that the
relationship between such Person and the REMIC is at arm's length, all within
the meaning of Treasury Regulation Section 1.856-4(b)(5), or (ii) any other
Person (including the Servicer) if the Trustee has received an Opinion of
Counsel to the effect that the taking of any action in respect of any REO
Property by such Person, subject to any conditions therein specified, that is
otherwise herein contemplated to be taken by an Independent Contractor will
not cause such REO Property to cease to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code (determined without
regard to the exception applicable for purposes of Section 860D(a) of the
Code), or cause any income realized in respect of such REO Property to fail to
qualify as Rents from Real Property.
"Index": With respect to each Mortgage Loan and each Adjustment Date, One
Year CMT.
"Initial Bankruptcy Coverage Amount": $200,000.
"Initial Certificate Principal Balance": With respect to any Certificate
other than a Class X Certificate, the amount designated "Initial Certificate
Principal Balance" on the face thereof.
"Initial Certificate Notional Balance": With respect to any Class X
Certificate, the amount designated "Initial Certificate Notional Balance" on
the face thereof.
"Insurance Proceeds": With respect to any Mortgage Loan, proceeds of any
title policy, hazard policy or other insurance policy covering such Mortgage
Loan, to the extent such proceeds are not to be applied to the restoration of
the related Mortgaged Property or released to the related Mortgagor in
accordance with the procedures that the Servicer would follow in servicing
mortgage loans held for its own account, subject to the terms and conditions
of the related Mortgage Note and Mortgage.
"Interest Distributable Amount": With respect to any Distribution Date
and each Class of Certificates, the sum of (i) the Monthly Interest
Distributable Amount for that Class and (ii) the Unpaid Interest Shortfall
Amount for that Class.
"Late Collections": With respect to any Mortgage Loan and any
Distribution Date, all amounts received subsequent to the related
Determination Date immediately following any related Due Period, whether as
late payments of Monthly Payments or as Insurance Proceeds, Liquidation
Proceeds or otherwise, which represent late payments or collections of
principal and/or interest due (without regard to any acceleration of payments
under the related Mortgage and Mortgage Note) but delinquent on a contractual
basis for such Due Period and not previously recovered.
"Latest Possible Maturity Date": As determined as of the Cut-Off Date,
the Distribution Date following the fourth anniversary of the scheduled
maturity date of the Mortgage Loan having the latest scheduled maturity date
as of the Cut-Off Date.
"Liquidated Mortgage Loan": As to any Distribution Date, any Mortgage
Loan in respect of which the Servicer has determined, in accordance with the
servicing procedures specified herein, as of the end of the related Prepayment
Period, that all Liquidation Proceeds that it expects to recover with respect
to the liquidation of such Mortgage Loan or disposition of the related REO
Property have been recovered.
"Liquidation Event": With respect to any Mortgage Loan, any of the
following events: (i) such Mortgage Loan is paid in full; (ii) a Final
Recovery Determination is made as to such Mortgage Loan; or (iii) such
Mortgage Loan is removed from the Trust Fund by reason of its being purchased,
sold or replaced pursuant to or as contemplated by Section 2.03 or Section
10.01. With respect to any REO Property, either of the following events: (i) a
Final Recovery Determination is made as to such REO Property; or (ii) such REO
Property is removed from the Trust Fund by reason of its being sold or
purchased pursuant to Section 3.23 or Section 10.01 hereof.
"Liquidation Proceeds": The amount (other than amounts received in
respect of the rental of any REO Property prior to REO Disposition) received
by the Servicer in connection with (i) the taking of all or a part of a
Mortgaged Property by exercise of the power of eminent domain or condemnation,
(ii) the liquidation of a defaulted Mortgage Loan by means of a trustee's
sale, foreclosure sale or otherwise or (iii) the repurchase, substitution or
sale of a Mortgage Loan or an REO Property pursuant to or as contemplated by
Section 2.03, Section 3.23 or Section 10.01 hereof.
"Liquidation Report": A report to be provided by the Servicer upon
request by the Trustee substantially in the form attached hereto in Exhibit M.
"Loan Rate": With respect to each Mortgage Loan, the annual rate at which
interest accrues on such Mortgage Loan from time to time in accordance with
the provisions of the related Mortgage Note, which rate (A) as of any date of
determination until the first Adjustment Date for such Mortgage Loan following
the Cut-Off Date shall be the rate set forth in the Mortgage Loan Schedule as
the Loan Rate in effect immediately following the Cut-Off Date and (B) as of
any date of determination thereafter shall be the rate as adjusted on the most
recent Adjustment Date, to equal the sum, rounded to the nearest 0.125% (as
provided in the Mortgage Note), of the Index plus the related Gross Margin
subject to the limitations set forth in the related Mortgage Note. With
respect to each Mortgage Loan that becomes an REO Property, as of any date of
determination, the annual rate determined in accordance with the immediately
preceding sentence as of the date such Mortgage Loan became an REO Property.
"Loan-to-Value Ratio": With respect to each Mortgage Loan and any date of
determination, a fraction, expressed as a percentage, the numerator of which
is the Principal Balance of the Mortgage Loan at such date of determination
and the denominator of which is the Value of the related Mortgaged Property.
"Losses": As defined in Section 9.03 hereof.
"Lost Note Affidavit": With respect to any Mortgage Loan as to which the
original Mortgage Note has been permanently lost or destroyed and has not been
replaced, an affidavit from the Seller certifying that the original Mortgage
Note has been lost, misplaced or destroyed (together with a copy of the
related Mortgage Note and indemnifying the Trust against any loss, cost or
liability resulting from the failure to deliver the original Mortgage Note) in
the form of Exhibit H hereto.
"Lower Tier REMIC": As defined in the Preliminary Statement.
"Lower Tier REMIC Regular Interest": As defined in the Preliminary
Statement.
"Majority Certificateholders": The Holders of Certificates evidencing at
least 51% of the Voting Rights.
"Maximum Loan Rate": With respect to any Mortgage Loan, the percentage
set forth in the related Mortgage Note as the maximum Loan Rate thereunder.
"Minimum Loan Rate": With respect to any Mortgage Loan, the percentage
set forth in the related Mortgage Note as the minimum Loan Rate thereunder.
"Monthly Interest Distributable Amount": With respect to each Class of
Certificates and any Distribution Date, the amount of interest accrued during
the related Accrual Period at the related Pass-Through Rate on the Class
Certificate Principal Balance or Class Certificate Notional Balance, as
applicable, of that Class immediately prior to that Distribution Date.
"Monthly Payment": With respect to any Mortgage Loan, the scheduled
monthly payment of principal and interest on such Mortgage Loan that is
payable by the related Mortgagor from time to time under the related Mortgage
Note, determined: (a) after giving effect to (i) any Deficient Valuation
and/or Debt Service Reduction with respect to such Mortgage Loan and (ii) any
reduction in the amount of interest collectible from the related Mortgagor
pursuant to the Relief Act; (b) without giving effect to any extension granted
or agreed to by the Servicer pursuant to Section 3.01 hereof; and (c) on the
assumption that all other amounts, if any, due under such Mortgage Loan are
paid when due.
"Moody's": Moody's Investor Service Inc. and its successors.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first lien on, or first priority security interest in, a Mortgaged Property
securing a Mortgage Note.
"Mortgage File": The mortgage documents listed in Section 2.01 hereof
pertaining to a particular Mortgage Loan and any additional documents required
to be added to the Mortgage File pursuant to this Agreement.
"Mortgage Loan": Each mortgage loan transferred and assigned to the
Trustee pursuant to Section 2.01 or Section 2.03(d) hereof as from time to
time held as a part of the Trust Fund, the Mortgage Loans so held being
identified in the Mortgage Loan Schedule.
"Mortgage Loan Purchase Agreement": The Agreement between the Seller and
the Depositor, dated as of November 1, 2000, regarding the transfer of the
Mortgage Loans by the Seller to or at the direction of the Depositor.
"Mortgage Loan Schedule": As of any date, the list of Mortgage Loans
included in the Trust Fund on such date, attached hereto as Schedule I. The
Mortgage Loan Schedule shall be prepared by the Seller and shall set forth the
following information with respect to each Mortgage Loan:
(i). the Mortgage Loan identifying number;
(ii) the Mortgagor's name;
(iii) the street address of the Mortgaged Property including the
state and five-digit ZIP code;
(iv) a code indicating whether the Mortgaged Property was
represented by the borrower, at the time of origination, as
being owner-occupied;
(v) a code indicating whether the Residential Dwelling
constituting the Mortgaged Property is (a) a detached single
family dwelling, (b) a dwelling in a planned unit
development, (c) a condominium unit, (d) a two- to four-unit
residential property, (e) a townhouse or (f) other type of
Residential Dwelling;
(vi) the original months to maturity;
(vii) the stated remaining months to maturity from the Cut-Off
Date based on the original amortization schedule;
(viii) the Loan-to-Value Ratio at origination;
(ix) the Loan Rate in effect immediately following the Cut-Off
Date;
(x) the date on which the first Monthly Payment is or was due on
the Mortgage Loan;
(xi) the stated maturity date;
(xii) the last Due Date on which a Monthly Payment was actually
applied to the unpaid Stated Principal Balance;
(xiii) the original principal balance of the Mortgage Loan;
(xiv) the Stated Principal Balance of the Mortgage Loan on the
Cut-Off Date and a code indicating the purpose of the
Mortgage Loan (i.e., purchase financing, rate/term
refinancing, cash-out refinancing);
(xv) the Index and Gross Margin specified in the related Mortgage
Note;
(xvi) the next Adjustment Date, if applicable;
(xvii) the Maximum Loan Rate, if applicable;
(xviii) the Minimum Loan Rate, if applicable;
(xix) the Value of the Mortgaged Property; and
(xx) the sale price of the Mortgaged Property, if applicable.
The Mortgage Loan Schedule, as in effect from time to time, shall also
set forth the following information with respect to the Mortgage Loans in the
aggregate as of the Cut-Off Date: (1) the number of Mortgage Loans; (2) the
current Principal Balance of the Mortgage Loans; (3) the weighted average Loan
Rate of the Mortgage Loans; and (4) the weighted average maturity of the
Mortgage Loans. The Mortgage Loan Schedule shall be amended from time to time
by the Seller in accordance with the provisions of this Agreement.
"Mortgage Note": The original executed note or other evidence of
indebtedness evidencing the indebtedness of a Mortgagor under a Mortgage Loan.
"Mortgaged Property": The underlying property securing a Mortgage Loan,
including any REO Property, consisting of an Estate in Real Property improved
by a Residential Dwelling.
"Mortgagor": The obligor on a Mortgage Note.
"Net Liquidation Proceeds": With respect to any Liquidated Mortgage Loan
or any other disposition of related Mortgaged Property (including REO
Property), the related Liquidation Proceeds net of Advances, related Servicing
Advances, related Servicing Fees and any other accrued and unpaid servicing
fees received and retained in connection with the liquidation of such Mortgage
Loan or Mortgaged Property.
"Net Loan Rate": With respect to any Mortgage Loan (or the related REO
Property), as of any date of determination, a per annum rate of interest equal
to the then applicable Loan Rate for such Mortgage Loan minus the Servicing
Fee Rate.
"Net Prepayment Interest Shortfalls": As to any Distribution Date, the
amount by which the aggregate of the Prepayment Interest Shortfalls during the
related Prepayment Period exceeds an amount equal to the Compensating Interest
Cap for such Distribution Date before reduction of the Servicing Fee by the
amount of such Compensating Interest Cap in respect of such Prepayment
Interest Shortfalls.
"Net WAC": With respect to any Distribution Date, the weighted average of
the difference between (x) the Loan Rates of the Mortgage Loans as of the
first day of the month preceding the month of that Distribution Date (or, in
the case of the first Distribution Date, the Cut-Off Date), and (y) the
related Expense Fee Rates, weighted on the basis of the Principal Balances as
of the first day of the month preceding the month in which such Distribution
Date occurs (or, in the case of the first Distribution Date, as of the Cut-Off
Date).
"New Lease": Any lease of REO Property entered into on behalf of the
Trust, including any lease renewed or extended on behalf of the Trust if the
Trust has the right to renegotiate the terms of such lease.
"Nonrecoverable Advance": Any Advance or Servicing Advance previously
made in respect of a Mortgage Loan or REO Property that, in the good faith
business judgment of the Servicer, will not ultimately be recoverable from
Late Collections, Insurance Proceeds or Liquidation Proceeds on such Mortgage
Loan or REO Property as provided herein.
"Officers' Certificate": A certificate signed by the Chairman of the
Board, the Vice Chairman of the Board, the President or a vice president
(however denominated), or by the Treasurer, the Secretary, or one of the
assistant treasurers or assistant secretaries of the Servicer, the Seller or
the Depositor, as applicable.
"One-Year CMT": The weekly average yield on United States Treasury
securities adjusted to a constant maturity of one year as published by the
Federal Reserve Board in Statistical Release H.15(519).
"Opinion of Counsel": A written opinion of counsel, who may, without
limitation, be a salaried counsel for the Depositor or the Servicer,
acceptable to the Trustee, except that any opinion of counsel relating to (a)
the qualification of the Upper Tier REMIC or Lower Tier REMIC as a REMIC or
(b) compliance with the REMIC Provisions, must be an opinion of Independent
counsel.
"Option Period": The five business day period ending at the Close of
Business in New York City on the Distribution Date in May 2004.
"Optional Call": With respect to each Class A-1, Class A-2 and Class A-3
Certificate, the right granted by the Trustee, on behalf of the Holder of such
Certificate, to the Standby Purchaser under the Put and Call Agreement, upon
the exercise by Holders of more than 90% of the aggregate outstanding
Certificate Principal Balance of the Class A-1, Class A-2 and Class A-3
Certificates of the related Put Options, to require each Holder of an Optional
Call Interest, to sell all, but not less than all, of such Optional Call
Interest to the Standby Purchaser on the Put and Call Date.
"Optional Call Interest": Each Class A-1, Class A-2 and Class A-3
Certificate in respect of which the Holder has not exercised the related Put
Option.
"Optional Termination Date": The first Distribution Date on which the
Servicer may opt to terminate this Agreement pursuant to Section 10.01 hereof.
"Original Applicable Credit Support Percentage": With respect to each
Class of Subordinate Certificates, the corresponding percentage set forth
below opposite its Class designation:
Class B-1 3.25%
Class B-2 2.25%
Class B-3 1.50%
Class B-4 0.95%
Class B-5 0.60%
Class B-6 0.00%
"Original Class Certificate Principal Balance": With respect to each
Class of Certificates, other than the Class X Certificates, the corresponding
aggregate amount set forth opposite the Class designation of such Class in the
Preliminary Statement.
"Original Class Certificate Notional Balance" With respect to the Class X
Certificates, $392,119,409.58.
"Original Subordinated Principal Balance": The aggregate of the Original
Class Certificate Principal Balances of the Classes of Subordinate
Certificates.
"Outstanding Mortgage Loan": As of any Due Date, a Mortgage Loan with a
Stated Principal Balance greater than zero, that was not the subject of a
Prepayment in Full prior to such Due Date and that did not become a Liquidated
Mortgage Loan prior to such Due Date.
"Ownership Interest": As to any Certificate, any ownership or security
interest in such Certificate, including any interest in such Certificate as
the Holder thereof and any other interest therein, whether direct or indirect,
legal or beneficial, as owner or as pledgee.
"Pass-Through Rate": With respect to each Class of Certificates and any
Distribution Date, the Senior/Subordinated Certificates Pass-Through Rate or
the Class X Certificate Pass-Through Rate, as applicable.
"Paying Agent": Any paying agent appointed pursuant to Section 5.05
hereof.
"Percentage Interest": With respect to any Certificate other than the
Class A-R Certificate, a fraction, expressed as a percentage, the numerator of
which is the Initial Certificate Principal Balance or Initial Certificate
Notional Balance, as applicable, represented by such Certificate and the
denominator of which is the Original Class Certificate Principal Balance or
Original Class Certificate Notional Balance, as applicable, of the related
Class. With respect to the Class A-R Certificate, 100%.
"Permitted Investments": Any one or more of the following obligations or
securities acquired at a purchase price of not greater than par, regardless of
whether issued or managed by the Depositor, the Servicer, the Seller, the
Trustee or any of their respective Affiliates or for which an Affiliate of the
Trustee serves as an advisor:
(i) direct obligations of, or obligations fully guaranteed as to
timely payment of principal and interest by, the United States or any
agency or instrumentality thereof, provided such obligations are backed
by the full faith and credit of the United States;
(ii) (A) demand and time deposits in, certificates of deposit of,
bankers' acceptances issued by or federal funds sold by any depository
institution or trust company (including the Trustee or its agent acting
in their respective commercial capacities) incorporated under the laws of
the United States of America or any state thereof and subject to
supervision and examination by federal and/or state authorities, so long
as, at the time of such investment or contractual commitment providing
for such investment, such depository institution or trust company or its
ultimate parent has a short-term uninsured debt rating in one of the two
highest available rating categories of each Rating Agency and provided
that each such investment has an original maturity of no more than 365
days and (B) any other demand or time deposit or deposit which is fully
insured by the FDIC;
(iii) repurchase obligations with a term not to exceed 30 days with
respect to any security described in clause (i) above and entered into
with a depository institution or trust company (acting as principal)
rated A or higher by S&P and Fitch, and its equivalent by Moody's;
provided, however, that collateral transferred pursuant to such
repurchase obligation must be of the type described in clause (i) above
and must (A) be valued daily at current market prices plus accrued
interest or (B) pursuant to such valuation, be equal, at all times, to
105% of the cash transferred by the Trustee in exchange for such
collateral and (C), be delivered to the Trustee or, if the Trustee is
supplying the collateral, an agent for the Trustee, in such a manner as
to accomplish perfection of a security interest in the collateral by
possession of certificated securities;
(iv) securities bearing interest or sold at a discount that are
issued by any corporation incorporated under the laws of the United
States of America or any State thereof and that are rated by the Rating
Agencies in its highest long-term unsecured rating categories at the time
of such investment or contractual commitment providing for such
investment;
(v) commercial paper (including both non-interest-bearing discount
obligations and interest-bearing obligations payable on demand or on a
specified date not more than 30 days after the date of acquisition
thereof) that is rated by the Rating Agencies in its highest short-term
unsecured debt rating available at the time of such investment;
(vi) units of money market funds registered under the Investment
Company Act of 1940 including funds managed or advised by the Trustee or
an affiliate thereof having the highest applicable rating from S&P,
Moody's and Fitch (if rated by Fitch); and
(vii) if previously confirmed in writing to the Trustee, any other
demand, money market or time deposit, or any other obligation, security
or investment, as may be acceptable to the Rating Agencies in writing as
a permitted investment of funds backing securities having ratings
equivalent to its highest initial ratings of the Senior Certificates;
provided, however, that no instrument described hereunder shall evidence
either the right to receive (a) only interest with respect to the obligations
underlying such instrument or (b) both principal and interest payments derived
from obligations underlying such instrument and the interest and principal
payments with respect to such instrument provide a yield to maturity at par
greater than 120% of the yield to maturity at par of the underlying
obligations.
"Permitted Transferee": Any Transferee of the Class A-R Certificate other
than a Disqualified Organization or a non-U.S. Person, except for a non-U.S.
Person whose income in respect of such Certificate would be effectively
connected income within the meaning of Treasury regulation ss. 1.860G-3(a)(4).
"Person": Any individual, corporation, partnership, limited liability
company, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Physical Certificates": The Private Certificates and the Class A-R
Certificate.
"Pool Balance": As to any Distribution Date, the aggregate of the
Principal Balances, as of the Due Date in the month preceding the month in
which such Distribution Date occurs, of the Mortgage Loans that were
Outstanding Mortgage Loans on that Due Date.
"Prepayment Assumption": 18% CPR, as defined in the Prospectus
Supplement.
"Prepayment Interest Shortfall": With respect to any Distribution Date,
for each Mortgage Loan that was the subject of a Principal Prepayment during
the related Prepayment Period, an amount equal to the excess of one month's
interest at the applicable Net Loan Rate on the amount of such Principal
Prepayment over the amount of interest (adjusted to the Net Loan Rate)
actually paid by the related Mortgagor with respect to such Prepayment Period.
The obligations of the Servicer in respect of any Prepayment Interest
Shortfall are set forth in Section 3.24.
"Prepayment Period": With respect to any Distribution Date, the calendar
month preceding the month in which such Distribution Date occurs.
"Principal Balance": As to any Mortgage Loan, other than a Liquidated
Mortgage Loan, and any day, the related Cut-Off Date Principal Balance, minus
all collections credited against the Principal Balance of such Mortgage Loan.
For purposes of this definition, a Liquidated Mortgage Loan shall be deemed to
have a Principal Balance equal to the Principal Balance of the related
Mortgage Loan as of the final recovery of related Liquidation Proceeds and a
Principal Balance of zero thereafter. As to any REO Property and any day, the
Principal Balance of the related Mortgage Loan immediately prior to such
Mortgage Loan becoming REO Property minus any REO Principal Amortization
received with respect thereto on or prior to such day.
"Principal Distribution Amount": With respect to any Distribution Date,
the sum of (a) each scheduled payment of principal collected or advanced on
the related Mortgage Loans by the Servicer in respect of the related Due
Period, (b) that portion of the Purchase Price, representing principal of any
repurchased Mortgage Loan, deposited to the Collection Account during the
related Prepayment Period, (c) the principal portion of any related
Substitution Adjustments deposited in the Collection Account during the
related Prepayment Period, (d) the principal portion of all Insurance Proceeds
received during the related Prepayment Period with respect to Mortgage Loans
that are not yet Liquidated Mortgage Loans, (e) the principal portion of all
related Net Liquidation Proceeds received during the related Prepayment Period
with respect to Liquidated Mortgage Loans, (f) the principal portion of all
partial and full principal prepayments of Mortgage Loans applied by the
Servicer during the related Prepayment Period, and (g) on the Distribution
Date on which the Trust is to be terminated pursuant to Section 10.01 hereof,
that portion of the Termination Price in respect of principal.
"Principal Prepayment": Any payment of principal made by the Mortgagor on
a Mortgage Loan that is received in advance of its scheduled Due Date and that
is not accompanied by an amount of interest representing the full amount of
scheduled interest due on any Due Date in any month or months subsequent to
the month of prepayment.
"Private Certificates": The Class B-4, Class B-5 and Class B-6
Certificates.
"Pro Rata Senior Percentage": With respect to any Distribution Date, the
percentage equivalent of a fraction the numerator of which is the aggregate of
the Class Certificate Principal Balances of the Classes of Senior Certificates
immediately prior to such Distribution Date and the denominator of which is
the Aggregate Stated Principal Balance of all Mortgage Loans for such
Distribution Date.
"Pro Rata Share": As to any Distribution Date, the Subordinated Principal
Distribution Amount and any Class of Subordinate Certificates, the portion of
the Subordinated Principal Distribution Amount allocable to such Class, equal
to the product of (a) the Subordinated Principal Distribution Amount on such
date and (b) a fraction, the numerator of which is the related Class
Certificate Principal Balance of that Class and the denominator of which is
the aggregate of the Class Certificate Principal Balances of all the Classes
of Subordinate Certificates.
"Prospectus Supplement": That certain Prospectus Supplement dated
November 13, 2000 relating to the initial sale of the Senior Certificates and
the Class B-1, Class B-2 and Class B-3 Certificates.
"Purchase Price": With respect to any Mortgage Loan or REO Property to be
purchased pursuant to or as contemplated by Section 2.03 or Section 10.01
hereof, and as confirmed by an Officers' Certificate from the Seller or the
Servicer, as applicable, to the Trustee, an amount equal to the sum of (i)
100% of the Principal Balance thereof as of the date of purchase (or such
other price as provided in Section 10.01), plus (ii) in the case of (x) a
Mortgage Loan, accrued interest on such Principal Balance at the applicable
Net Loan Rate from the Due Date as to which interest was last covered by a
payment by the Mortgagor or an Advance by the Servicer, which payment or
Advance had as of the date of purchase been distributed pursuant to Section
4.01 hereof, through the end of the calendar month in which the purchase is to
be effected, and (y) an REO Property, the sum of (1) accrued interest on such
Principal Balance at the applicable Net Loan Rate from the Due Date as to
which interest was last covered by a payment by the Mortgagor or an Advance by
the Servicer through the end of the calendar month immediately preceding the
calendar month in which such REO Property was acquired, plus (2) REO Imputed
Interest for such REO Property for each calendar month commencing with the
calendar month in which such REO Property was acquired and ending with the
calendar month in which such purchase is to be effected, net of the total of
all net rental income, Insurance Proceeds, Liquidation Proceeds and Advances
that as of the date of purchase had been distributed as or to cover REO
Imputed Interest pursuant to Section 4.04 hereof, plus (iii) any unreimbursed
Servicing Advances and Advances and any unpaid Expense Fees allocable to such
Mortgage Loan or REO Property, plus (iv) any amounts previously withdrawn from
the Collection Account in respect of such Mortgage Loan or REO Property
pursuant to Section 3.23 hereof, and plus (v) in the case of a Mortgage Loan
required to be purchased pursuant to Section 2.03 hereof, expenses reasonably
incurred or to be incurred by the Servicer or the Trustee in respect of the
breach or defect giving rise to the purchase obligation.
"Put and Call Agreement": The Put and Call Agreement, dated as of
November 1, 2000, between HSBC Bank and the Trustee.
"Put and Call Date" means the Distribution Date in July 2004.
"Put and Call Purchase Price": With respect to any Class A-1, Class A-2
or Class A-3 Certificate for which the related Certificateholder has exercised
its Put Option, or any Optional Call Interest in respect of which the Standby
Purchaser has exercised the related Optional Call, the sum of (i) 100% of the
outstanding Certificate Principal Balance of such Certificate on the Put and
Call Date (after giving effect to any principal distributions otherwise made
on such date) plus (ii) accrued and unpaid interest thereon at the applicable
Pass-Through Rate due on the Put and Call Date (after giving effect to any
interest distributions otherwise made on such date).
"Put Option": With respect to each Class A-1, Class A-2 and Class A-3
Certificate, the right granted by the Standby Purchaser under the Put and Call
Agreement to the Holder of such Certificate to require the Standby Purchaser
to purchase all or part of such Certificate on the Put and Call Date.
"Put Option Notice": A form of notice in the form of Exhibit N hereto.
"Qualified Insurer": A mortgage guaranty insurance company duly qualified
as such under the laws of the state of its principal place of business and
each state having jurisdiction over such insurer in connection with the
insurance policy issued by such insurer, duly authorized and licensed in such
states to transact a mortgage guaranty insurance business in such states and
to write the insurance provided by the insurance policy issued by it, approved
as a Fannie Mae-approved mortgage insurer and having a claims paying ability
rating of at least "AA" or equivalent rating by a nationally recognized
statistical rating organization. Any replacement insurer with respect to a
Mortgage Loan must have at least as high a claims paying ability rating as the
insurer it replaces had on the Closing Date.
"Qualified Substitute Mortgage Loan": A mortgage loan substituted for a
Deleted Mortgage Loan pursuant to the terms of this Agreement which must, on
the date of such substitution, (i) have an outstanding principal balance,
after application of all scheduled payments of principal and interest due
during or prior to the month of substitution, not in excess of, and not more
than 5% less than, the Principal Balance of the Deleted Mortgage Loan as of
the Due Date in the calendar month during which the substitution occurs, (ii)
have a maximum mortgage loan rate not less than the Maximum Loan Rate of the
Deleted Mortgage Loan, (iii) have a minimum loan rate not less than the
Minimum Loan Rate of the Deleted Mortgage Loan, (iv) have a gross margin equal
to or greater than the Gross Margin of the Deleted Mortgage Loan, (v) have One
Year CMT as its index, (vi) have its next adjustment date not more than two
months after the next Adjustment Date of the Deleted Mortgage Loan, (vii) have
a remaining term to maturity not greater than (and not more than one year less
than) that of the Deleted Mortgage Loan, (viii) be current as of the date of
substitution, (ix) have a loan-to-value ratio as of the date of substitution
equal to or lower than the Loan-to-Value Ratio of the Deleted Mortgage Loan as
of such date, (x) have a risk grading determined by the Seller to be at least
equal to the risk grading assigned on the Deleted Mortgage Loan, (xi) have
been underwritten or re-underwritten by the Seller in accordance with the same
underwriting criteria and guidelines as the Deleted Mortgage Loan and (xii)
conform to each representation and warranty set forth in Section 2.04 hereof
applicable to the Deleted Mortgage Loan. In the event that one or more
mortgage loans are substituted for one or more Deleted Mortgage Loans, the
amounts described in clause (i) hereof shall be determined on the basis of
aggregate principal balances, the terms described in clause (vii) hereof shall
be determined on the basis of weighted average remaining term to maturity, the
loan-to-value ratios described in clause (ix) hereof shall be satisfied as to
each such mortgage loan, the risk gradings described in clause (x) hereof
shall be satisfied as to each such mortgage loan, and, except to the extent
otherwise provided in this sentence, the representations and warranties
described in clause (xii) hereof must be satisfied as to each Qualified
Substitute Mortgage Loan or in the aggregate, as the case may be.
"Rating Agencies": S&P, Moody's and Fitch or their respective successors.
If none of such agencies or their successors shall be in existence, "Rating
Agencies" shall include such nationally recognized statistical rating agency,
or other comparable Person, as shall have been designated by the Depositor,
notice of which designation shall be given to the Trustee and the Servicer.
"Realized Loss": With respect to any Liquidated Mortgage Loan, the amount
of loss realized equal to the portion of the Principal Balance remaining
unpaid after application of all Net Liquidation Proceeds in respect of such
Liquidated Mortgage Loan.
"Record Date": With respect to each Distribution Date and all Classes of
Certificates, the last Business Day of the calendar month preceding the month
in which such Distribution Date occurs.
"Refinancing Mortgage Loan": Any Mortgage Loan originated in connection
with the refinancing of an existing mortgage loan.
"Regular Certificate": Any Certificate other than the Class A-R
Certificate.
"Relief Act": The Soldiers' and Sailors Civil Relief Act of 1940, as
amended.
"Relief Act Reductions": With respect to any Distribution Date and any
Mortgage Loan as to which there has been a reduction in the amount of interest
collectible thereon for the most recently ended Due Period as a result of the
application of the Relief Act, the amount, if any, by which (i) interest
collectible on that Mortgage Loan during such Due Period is less than (ii) one
month's interest on the Principal Balance of such Mortgage Loan at the Loan
Rate for such Mortgage Loan before giving effect to the application of the
Relief Act.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REMIC Provisions": Provisions of the federal income tax law relating to
real estate mortgage investment conduits which appear at Section 860A through
860G of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations and rulings promulgated thereunder, as the foregoing may be in
effect from time to time.
"Remittance Report": A report prepared by the Servicer and delivered to
the Trustee pursuant to Section 4.05 hereof.
"Rents from Real Property": With respect to any REO Property, gross
income of the character described in Section 856(d) of the Code.
"REO Account": The account or accounts maintained by the Servicer in
respect of an REO Property pursuant to Section 3.23 hereof.
"REO Disposition": The sale or other disposition of an REO Property on
behalf of the Trust Fund.
"REO Imputed Interest": As to any REO Property, for any calendar month
during which such REO Property was at any time part of the Trust Fund, one
month's interest at the applicable Net Loan Rate on the Principal Balance of
such REO Property (or, in the case of the first such calendar month, of the
related Mortgage Loan if appropriate) as of the Close of Business on the Due
Date in such calendar month.
"REO Principal Amortization": With respect to any REO Property, for any
calendar month, the excess, if any, of (a) the aggregate of all amounts
received in respect of such REO Property during such calendar month, whether
in the form of rental income, sale proceeds (including, without limitation,
that portion of the Termination Price paid in connection with a purchase of
all of the Mortgage Loans and REO Properties pursuant to Section 10.01 hereof
that is allocable to such REO Property) or otherwise, net of any portion of
such amounts (i) payable pursuant to Section 3.23 hereof in respect of the
proper operation, management and maintenance of such REO Property or (ii)
payable or reimbursable to the Servicer pursuant to Section 3.23 for unpaid
Servicing Fees in respect of the related Mortgage Loan and unreimbursed
Servicing Advances and Advances in respect of such REO Property or the related
Mortgage Loan, over (b) the REO Imputed Interest in respect of such REO
Property for such calendar month.
"REO Property": A Mortgaged Property acquired by the Servicer on behalf
of the Trust Fund through foreclosure or deed-in-lieu of foreclosure, as
described in Section 3.23 hereof.
"Request for Release": A release signed by a Servicing Officer, in the
form of Exhibit F attached hereto.
"Residential Dwelling": Any one of the following: (i) a detached
one-family dwelling, (ii) a detached two- to four-family dwelling, (iii) a
one-family dwelling unit in a condominium project, (iv) a manufactured home or
(v) a detached one-family dwelling in a planned unit development, none of
which is a mobile home.
"Responsible Officer": When used with respect to the Trustee, the
Chairman or Vice Chairman of the Board of Directors or Trustees, the Chairman
or Vice Chairman of the Executive or Standing Committee of the Board of
Directors or Trustees, the President, any vice president, any assistant vice
president, the Secretary, any assistant secretary, the Treasurer, any
assistant treasurer, the Cashier, any assistant cashier, any trust officer or
assistant trust officer, the Controller and any assistant controller or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and, with respect to a
particular matter, to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
"Restricted Classes": As defined in Section 4.01(e).
"S&P": Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., and its successors.
"Seller": HSBC Mortgage Corporation (USA), a Delaware corporation, and
its successors in interest, in its capacity as seller under this Agreement.
"Senior Certificate": Any one of the Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class X Certificates or the Class A-R
Certificate.
"Senior Certificateholder": Any Holder of a Senior Certificate.
"Senior Percentage": Except as described below, with respect to any
Distribution Date before December 2010, 100%. The Senior Percentage for any
Distribution Date occurring (i) before December 2010 but in or after November
2003 on which the Two Times Test is satisfied, or (ii) in or after December
2010, is the Pro Rata Senior Percentage. If the Two Times Test is satisfied
prior to November 2003, the Senior Percentage is the Pro Rata Senior
Percentage plus 50% of an amount equal to 100% minus the related Pro Rata
Senior Percentage.
"Senior Prepayment Percentage": With respect to any Distribution Date
during the ten years beginning on the first Distribution Date, 100%. Except as
provided herein, the Senior Prepayment Percentage for any Distribution Date
occurring on or after the tenth anniversary of the first Distribution Date
will be as follows: (i) from December 2010 through November 2011, the related
Senior Percentage plus 70% of the related Subordinate Percentage for that
Distribution Date; (ii) from December 2011 through November 2012, the related
Senior Percentage plus 60% of the related Subordinate Percentage for that
Distribution Date; (iii) from December 2012 through November 2013, the related
Senior Percentage plus 40% of the related Subordinate Percentage for that
Distribution Date; (iv) from December 2013 through November 2014, the related
Senior Percentage plus 20% of the related Subordinate Percentage for that
Distribution Date; and (v) from and after December 2014, the related Senior
Percentage for that Distribution Date; provided, however, that there shall be
no reduction in the Senior Prepayment Percentage unless both Step Down
Conditions are satisfied; and provided, further, that if on any Distribution
Date the Senior Percentage exceeds the initial Pro Rata Senior Percentage, the
Senior Prepayment Percentage for that Distribution Date will again equal 100%.
Notwithstanding the above, if on any Distribution Date the Two Times Test
is satisfied, the Senior Prepayment Percentage will equal the related Senior
Percentage.
"Senior Principal Distribution Amount": With respect to any Distribution
Date, the sum of:
(1) the Senior Percentage of all amounts described in clauses (a)
through (d) and (g) of the definition of "Principal Distribution Amount"
for that Distribution Date;
(2) with respect to each Mortgage Loan which became a Liquidated
Mortgage Loan during the related Prepayment Period, the lesser of
(x) the related Senior Percentage of the Stated Principal
Balance of that Mortgage Loan and
either
(y) the related Senior Prepayment Percentage of the amount of
the Net Liquidation Proceeds allocable to principal
received with respect to that Mortgage Loan
or
(z) if an Excess Loss was sustained with respect to such
Liquidated Mortgage Loan during such related Prepayment
Period, the related Senior Percentage of the amount of Net
Liquidation Proceeds allocable to principal received with
respect to that Mortgage Loan; and
(3) the related Senior Prepayment Percentage of the amounts
described in clause (f) of the definition of "Principal Distribution
Amount" for that Distribution Date;
provided, however, that if a Bankruptcy Loss that is an Excess Loss is
sustained with respect to any Mortgage Loan that is not a Liquidated Mortgage
Loan, such Senior Principal Distribution Amount will be reduced on such
Distribution Date by the related Senior Percentage of the principal portion of
such Bankruptcy Loss.
"Senior/Subordinated Certificates Pass-Through Rate": For any Class of
Certificates other than the Class X Certificates, with respect to (i) any
Distribution Date on or prior to the Distribution Date in July 2004, the
lesser of (a) 7.11% and (b) the Net WAC for such Distribution Date and (ii)
with respect to each Distribution Date thereafter, the lesser of (A) the
weighted average of (x) the Loan Rates of any Mortgage Loans with respect to
which an initial fixed-rate period is continuing, minus the sum of the Trustee
Fee Rate and Servicing Fee Rate and (y) the Index of all Mortgage Loans other
than those referenced in clause (a) above plus 2.25% and (B) the Net WAC for
such Distribution Date.
"Servicer": HSBC Mortgage Corporation (USA), or any successor servicer
appointed as herein provided.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer or which is 50% or more owned by the Servicer
and (ii) which is qualified to service residential mortgage loans.
"Servicer Event of Termination": One or more of the events described in
Section 7.01 hereof.
"Servicer Remittance Date": With respect to any Distribution Date, the
day prior to such Distribution Date or, if such day is not a business day, the
first business day prior to such day, commencing in December 2000.
"Servicing Account": The account or accounts created and maintained by
the Servicer pursuant to Section 3.09 hereof.
"Servicing Advances": With respect to a Mortgage Loan, all customary,
reasonable and necessary "out of pocket" costs and expenses (including
reasonable attorneys' fees and expenses) incurred by the Servicer in the
performance of its servicing obligations, including, but not limited to, the
cost of (i) the preservation, restoration, inspection and protection of the
related Mortgaged Property, (ii) any enforcement or judicial proceedings,
including foreclosures, (iii) the management and liquidation of the related
REO Property and (iv) compliance with the obligations under Sections 3.01,
3.09, 3.16, and 3.23 hereof.
"Servicing Fee": With respect to each Mortgage Loan for any calendar
month, an amount equal to one month's interest (or in the event of any payment
of interest which accompanies a Principal Prepayment made by the Mortgagor
during such calendar month, interest for the number of days covered by such
payment of interest) at the Servicing Fee Rate on the Principal Balance of
such Mortgage Loan (or, if applicable, the REO Property related to such
Mortgage Loan) as of the first day of such calendar month. The Servicing Fee
for the Servicer may be retained by any Sub-Servicer as its servicing
compensation.
"Servicing Fee Rate": 0.60% per annum.
"Servicing Officer": Any officer of the Servicer involved in, or
responsible for, the administration and servicing of Mortgage Loans, whose
name and specimen signature appear on a list of servicing officers furnished
by the Servicer to the Trustee and the Depositor on the Closing Date, as such
list may from time to time be amended.
"Servicing Standard": The standards set forth in Section 3.01 hereof.
"Special Hazard Coverage Termination Date": The date on which the Special
Hazard Loss Coverage Amount is reduced to zero.
"Special Hazard Loss": Any Realized Loss suffered by a Mortgaged Property
on account of direct physical loss but not including (i) any loss of a type
covered by a hazard insurance policy or a flood insurance policy required to
be maintained with respect to such Mortgaged Property pursuant to Section 3.14
hereof to the extent of the amount of such loss covered thereby, or (ii) any
loss caused by or resulting from:
(a) normal wear and tear;
(b) fraud, conversion or other dishonest act on the part of the Trustee,
the Servicer or any of their agents or employees (without regard to any
portion of the loss not covered by any errors and omissions policy);
(c) errors in design, faulty workmanship or faulty materials, unless the
collapse of the property or a part thereof ensues and then only for the
ensuing loss;
(d) nuclear or chemical reaction or nuclear radiation or radioactive or
chemical contamination, all whether controlled or uncontrolled, and whether
such loss be direct or indirect, proximate or remote or be in whole or in part
caused by, contributed to or aggravated by a peril covered by the definition
of the term "Special Hazard Loss";
(e) hostile or warlike action in time of peace and war, including action
in hindering, combating or defending against an actual, impending or expected
attack:
1. by any government or sovereign power, de jure or de facto, or by
any authority maintaining or using military, naval or air forces; or
2. by military, naval or air forces; or
3. by an agent of any such government, power, authority or forces;
(f) any weapon of war employing nuclear fission, fusion or other
radioactive force, whether in time of peace or war; or
(g) insurrection, rebellion, revolution, civil war, usurped power or
action taken by governmental authority in hindering, combating or defending
against such an occurrence, seizure or destruction under quarantine or customs
regulations, confiscation by order of any government or public authority or
risks of contraband or illegal transportation or trade.
"Special Hazard Loss Coverage Amount": With respect to the first
Distribution Date, $6,733,281. With respect to any Distribution Date after the
first Distribution Date, the lesser of (a) the greatest of (i) 1% of the
aggregate of the Principal Balances of the Mortgage Loans, (ii) twice the
Principal Balance of the largest Mortgage Loan and (iii) the aggregate of the
Principal Balances of the Mortgage Loans secured by Mortgaged Properties
located in the single five-digit ZIP code area in the State of California
having the highest aggregate Principal Balance of any such ZIP code area and
(b) the Special Hazard Loss Coverage Amount as of the Closing Date less the
amount, if any, of Special Hazard Losses allocated to the Certificates since
the Closing Date; provided, however, that the Special Hazard Loss Coverage
Amount may also be reduced pursuant to a letter from each Rating Agency to the
Trustee to the effect that any such reduction will not result in the
downgrading of the then current ratings assigned by such Rating Agency to the
Classes of Senior Certificates. All Principal Balances for the purpose of this
definition will be calculated as of the first day of the calendar month
preceding the month of such Distribution Date after giving effect to scheduled
payments on the Mortgage Loans then due, whether or not paid.
"Special Hazard Mortgage Loan": A Liquidated Mortgage Loan as to which a
Special Hazard Loss has occurred.
"Standby Purchaser": HSBC Bank, or its permitted or assigns pursuant to
the Put and Call Agreement.
"Startup Day": As defined in Section 9.01(b) hereof.
"Stated Principal Balance": With respect to any Mortgage Loan: (a) as of
the Distribution Date in December 2000, the outstanding Principal Balance of
such Mortgage Loan as of the Cut-Off Date, (b) thereafter as of any date of
determination up to and including the Distribution Date on which the proceeds,
if any, of a Liquidation Event with respect to such Mortgage Loan would be
distributed, the outstanding principal balance of such Mortgage Loan as of the
Cut-Off Date, as shown in the Mortgage Loan Schedule, minus, in the case of
each Mortgage Loan, the sum of (i) the principal portion of each Monthly
Payment due on a Due Date subsequent to the Cut-Off Date, to the extent
received from the Mortgagor or advanced by the Servicer and distributed
pursuant to Section 4.01 hereof before such date of determination, (ii) all
Principal Prepayments received after the Cut-Off Date, to the extent
distributed pursuant to Section 4.01 before such date of determination, (iii)
all Liquidation Proceeds and Insurance Proceeds applied by the Servicer as
recoveries of principal in accordance with the provisions of Section 3.16
hereof, to the extent distributed pursuant to Section 4.01 before such date of
determination, and (iv) any Realized Loss incurred with respect thereto as a
result of a Deficient Valuation made during or prior to the Due Period for the
most recent Distribution Date preceding such date of determination; and (c) as
of any date of determination subsequent to the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such Mortgage Loan
would be distributed, zero. With respect to any REO Property: (x) as of any
date of determination up to and including the Distribution Date on which the
proceeds, if any, of a Liquidation Event with respect to such REO Property
would be distributed, an amount (not less than zero) equal to the Stated
Principal Balance of the related Mortgage Loan as of the date on which such
REO Property was acquired on behalf of the Trust Fund, minus the aggregate
amount of REO Principal Amortization in respect of such REO Property for all
previously ended calendar months, to the extent distributed pursuant to
Section 4.01 before such date of determination; and (y) as of any date of
determination subsequent to the Distribution Date on which the proceeds, if
any, of a Liquidation Event with respect to such REO Property would be
distributed, zero. For purposes of calculating the Servicing Fee for any
Mortgage Loan, the Stated Principal Balance shall not be reduced by item
(b)(iv) above.
"Step Down Conditions": As of the first Distribution Date as to which any
decrease in any Senior Prepayment Percentage applies, (i) the outstanding
Principal Balance of all Mortgage Loans 60 days or more Delinquent, including
Mortgage Loans in respect of REO Properties (averaged over the preceding six
month period), as a percentage of the aggregate of the Class Certificate
Principal Balances of the Classes of Subordinate Certificates on such
Distribution Date, does not equal or exceed 50% and (ii) cumulative Realized
Losses with respect to the Mortgage Loans do not exceed (a) with respect to
each Distribution Date from December 2010 through November 2011, 30% of the
Original Subordinated Principal Balance, (b) with respect to each Distribution
Date from December 2011 through November 2012, 35% of the Original
Subordinated Principal Balance, (c) with respect to each Distribution Date
from December 2012 through November 2013, 40% of the Original Subordinated
Principal Balance, (d) with respect to each Distribution Date from December
2013 through November 2014, 45% of the Original Subordinated Principal Balance
and (e) with respect to each Distribution Date from and after December 2014,
50% of the Original Subordinated Principal Balance.
"Subordinate Certificate": Any one of the Class B-1 Certificates, Class
B-2 Certificates, Class B-3 Certificates, Class B-4 Certificates, Class B-5
Certificates or Class B-6 Certificates.
"Subordinate Percentage": With respect to any Distribution Date, the
difference between 100% and the Senior Percentage for such Distribution Date.
"Subordinate Prepayment Percentage": With respect to any Distribution
Date, the difference between 100% and the related Senior Prepayment Percentage
for that Distribution Date.
"Subordinated Principal Distribution Amount": With respect to any
Distribution Date, an amount equal to the sum of:
(1) the related Subordinate Percentage of all amounts described in
clauses (a) through (d) and (g) of the definition of "Principal
Distribution Amount" for that Distribution Date;
(2) with respect to each Mortgage Loan that became a Liquidated
Mortgage Loan during the related Prepayment Period, the amount of the Net
Liquidation Proceeds allocated to principal received with respect thereto
remaining after application thereof pursuant to clause (2) of the
definition of "Senior Principal Distribution Amount" for that
Distribution Date, up to the related Subordinate Percentage of the Stated
Principal Balance of such Mortgage Loan; and
(3) the related Subordinated Prepayment Percentage of all amounts
described in clause (f) of the definition of "Principal Distribution
Amount" for that Distribution Date;
provided, however, that if a Bankruptcy Loss that is an Excess Loss is
sustained with respect to any Mortgage Loan that is not a Liquidated Mortgage
Loan, such Subordinated Principal Distribution Amount will be reduced on such
Distribution Date by the related Subordinate Percentage of the principal
portion of such Bankruptcy Loss.
"Sub-Servicer": Any Person with which the Servicer has entered into a
Sub-Servicing Agreement and which meets the qualifications of a Sub-Servicer
pursuant to Section 3.02.
"Sub-Servicing Account": An account established by a Sub-Servicer that
meets the requirements set forth in Section 3.08 and is otherwise acceptable
to the Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer and
a Sub-Servicer relating to servicing and administration of certain Mortgage
Loans as provided in Section 3.02.
"Substitution Adjustment": As defined in Section 2.03(d) hereof.
"Tax Matters Person": The tax matters person appointed pursuant to
Section 9.01(e) hereof.
"Tax Returns": The federal income tax return on Internal Revenue Service
Form 1066, U.S. Real Estate Mortgage Investment Conduit Income Tax Return,
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
the REMIC Taxable Income or Net Loss Allocation, or any successor forms, to be
filed on behalf of each of the Upper Tier REMIC and Lower Tier REMIC under the
REMIC Provisions, together with any and all other information reports or
returns that may be required to be furnished to the Certificateholders or
filed with the Internal Revenue Service or any other governmental taxing
authority under any applicable provisions of federal, state or local tax laws.
"Termination Price": As defined in Section 10.01(a) hereof.
"Transfer": Any direct or indirect transfer or sale of any Ownership
Interest in the Class A-R Certificate.
"Transfer Affidavit": As defined in Section 5.02(e)(ii) hereof.
"Trust": HSBC Mortgage Loan Trust 2000-HSBC1, the trust created
hereunder.
"Trust Fund": The segregated pool of assets subject hereto, constituting
the primary trust created hereby and to be administered hereunder, with
respect to which a REMIC election is to be made, such Trust Fund consisting
of: (i) such Mortgage Loans as from time to time are subject to this
Agreement, together with the Mortgage Files relating thereto, and together
with all collections thereon and proceeds thereof, (ii) any REO Property,
together with all collections thereon and proceeds thereof, (iii) the
Trustee's rights with respect to the Mortgage Loans under all insurance
policies required to be maintained pursuant to this Agreement and any proceeds
thereof, (iv) the Depositor's rights under the Mortgage Loan Purchase
Agreement (including any security interest created thereby) and (v) the
Collection Account, the Distribution Account (subject to the last sentence of
this definition), any REO Account and such assets that are deposited therein
from time to time and any investments thereof, together with any and all
income, proceeds and payments with respect thereto. Notwithstanding the
foregoing, however, the Trust Fund specifically excludes (1) all payments and
other collections of interest due on the Mortgage Loans on or before the
Cut-Off Date and principal received before the Cut-Off Date (except any
principal collected as part of a payment due on or after the Cut-Off Date) and
(2) all income and gain realized from Permitted Investments of funds on
deposit in the Collection Account and the Distribution Account.
"Trustee": Wells Fargo Bank Minnesota, N.A., a national banking
association, or any successor trustee appointed as herein provided.
"Trustee Fee": As to any Distribution Date, an amount equal to
one-twelfth of the Trustee Fee Rate multiplied by the aggregate of the Stated
Principal Balances of all the Mortgage Loans as of the beginning of the
related Due Period.
"Trustee Fee Rate": 0.005% per annum.
"Two Times Test": As to any Distribution Date, (i) the Aggregate
Subordinate Percentage is at least two times the Aggregate Subordinate
Percentage as of the Closing Date; (ii) the aggregate of the Principal
Balances of all Mortgage Loans 60 days or more Delinquent, including Mortgage
Loans in respect of REO Properties (averaged over the preceding six-month
period), as a percentage of the aggregate of the Class Certificate Principal
Balances of the Subordinate Certificates, does not equal or exceed 50%; and
(iii) cumulative Realized Losses do not exceed 30% of the Original
Subordinated Principal Balance.
"Uninsured Cause": Any cause of damage to a Mortgaged Property such that
the complete restoration of such property is not fully reimbursable by the
hazard insurance policies required to be maintained pursuant to Section 3.14
hereof.
"United States Person" or "U.S. Person": A citizen or resident of the
United States, a corporation, partnership or other entity treated as a
corporation or partnership for federal income tax purposes (other than a
partnership that is not treated as a U.S. Person pursuant to any applicable
Treasury regulations) created or organized in, or under the laws of, the
United States, any state thereof or the District of Columbia (provided that,
for purposes solely of the restrictions on the transfer of the Class A-R
Certificate, no partnership or other entity treated as a partnership for
United States federal income tax purposes shall be treated as a United States
Person) or an estate the income of which from sources without the United
States is includible in gross income for United States federal income tax
purposes regardless of its connection with the conduct of a trade or business
within the United States, 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. The term "United States" shall have the meaning set
forth in Section 7701 of the Code or successor provisions.
"Unpaid Interest Shortfall Amount": With respect to each Class of
Certificates and (i) the first Distribution Date, zero, and (ii) any
Distribution Date after the first Distribution Date, the amount, if any, by
which (a) the sum of (1) the Monthly Interest Distributable Amount for that
Class for the immediately preceding Distribution Date and (2) the outstanding
Unpaid Interest Shortfall Amount, if any, for that Class for such preceding
Distribution Date exceeds (b) the aggregate amount distributed on that Class
in respect of interest pursuant to clause (a) of this definition on the
preceding Distribution Date.
"Upper Tier REMIC": As defined in the Preliminary Statement.
"Upper Tier REMIC Regular Interest": As defined in the Preliminary
Statement.
"Value": With respect to any Mortgage Loan and the related Mortgaged
Property, the lesser of:
(i) the value of such Mortgaged Property as determined by an
appraisal made for the originator of the Mortgage Loan at the time of
origination of the Mortgage Loan by an appraiser who met the minimum
requirements of Fannie Mae and Freddie Mac; and
(ii) the purchase price paid for the related Mortgaged Property by
the Mortgagor with the proceeds of the Mortgage Loan;
provided, however, that in the case of a Refinancing Mortgage Loan, such value
of the Mortgaged Property is based solely upon the value determined by an
appraisal made for the originator of such Refinancing Mortgaged Loan at the
time of origination by an appraiser who met the minimum requirements of Fannie
Mae and Freddie Mac.
"Voting Rights": The portion of the voting rights of all of the
Certificates which is allocated to any Certificate. For so long as the Class X
Certificates are outstanding, 1% of the voting rights shall be allocated to
the Class X Certificates (such Voting Rights to be allocated among the Holders
of Class X Certificates in accordance with their respective Percentage
Interests) and the remainder of the voting rights (or 100% thereof when the
Class X Certificates are no longer outstanding) shall be allocated among the
Classes of Certificates other than the Class X Certificates, pro rata, based
on a fraction, expressed as a percentage, the numerator of which is the Class
Certificate Principal Balance of such Class and the denominator of which is
the aggregate of the Class Certificate Principal Balances then outstanding;
provided, however, that the Class A-R Certificate and the Subordinate
Certificates shall not be entitled to any voting rights for so long as any
Senior Certificates (other than the Class A-R Certificate) remain outstanding;
and, provided further, that when none of the Regular Certificates is
outstanding, 100% of the voting rights shall be allocated to the Holder of the
Class A-R Certificate. The voting rights allocated to a Class of Certificates
shall be allocated among all Holders of such Class, pro rata, based on a
fraction the numerator of which is the Certificate Principal Balance or
Certificate Notional Balance of each Certificate of such Class and the
denominator of which is the Class Certificate Principal Balance or Class
Certificate Notional Balance of such Class; provided, however, that any
Certificate registered in the name of the Servicer, the Depositor or the
Trustee or any of their respective affiliates shall not be included in the
calculation of Voting Rights.
SECTION 1.02. Accounting.
Unless otherwise specified herein, for the purpose of any definition or
calculation, whenever amounts are required to be netted, subtracted or added
or any distributions are taken into account such definition or calculation and
any related definitions or calculations shall be determined without
duplication of such functions.
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS;
ORIGINAL ISSUANCE OF CERTIFICATES
SECTION 2.01. Conveyance of Mortgage Loans.
The Depositor, concurrently with the execution and delivery hereof, does
hereby transfer, assign, set over and otherwise convey to the Trustee without
recourse for the benefit of the Certificateholders all the right, title and
interest of the Depositor, including any security interest therein for the
benefit of the Depositor, in and to (i) each Mortgage Loan identified on the
Mortgage Loan Schedule, including the related Cut-Off Date Principal Balance,
all interest due thereon after the Cut-Off Date and all collections in respect
of interest and principal due after the Cut-Off Date; (ii) any real property
that secured each such Mortgage Loan and that has been acquired by foreclosure
or deed in lieu of foreclosure; (iii) the Depositor's interest in any
insurance policies in respect of the Mortgage Loans; (iv) all proceeds of any
of the foregoing; and (v) all other assets included or to be included in the
Trust Fund. Such assignment includes all interest and principal due to the
Depositor or the Servicer after the Cut-Off Date with respect to the Mortgage
Loans.
In connection with such transfer and assignment, the Seller, on behalf of
the Depositor, does hereby deliver on the Closing Date, unless otherwise
specified in this Section 2.01, to, and deposit with the Trustee the following
documents or instruments with respect to each Mortgage Loan (a "Mortgage
File") so transferred and assigned:
(i) the original Mortgage Note, endorsed either on its face or by
allonge attached thereto in the following form: "Pay to the order
of Wells Fargo Bank Minnesota, N.A., as Trustee under the Pooling
and Servicing Agreement, dated as of November 1, 2000, HSBC
Mortgage Loan Trust 2000-HSBC1, Mortgage Pass-Through Certificates,
Series 2000-HSBC1, without recourse" or, with respect to any lost
Mortgage Note, an original Lost Note Affidavit stating that the
original mortgage note was lost, misplaced or destroyed, together
with a copy of the related mortgage note;
(ii) the original Mortgage, with evidence of recording thereon, and the
original recorded power of attorney, if the Mortgage was executed
pursuant to a power of attorney, with evidence of recording thereon
or, if such Mortgage or power of attorney has been submitted for
recording but has not been returned from the applicable public
recording office, has been lost or is not otherwise available, a
copy of such Mortgage or power of attorney, as the case may be,
certified to be a true and complete copy of the original submitted
for recording;
(iii) if the related Mortgaged Property is located in the State of
Maryland, a copy (certified by the Seller to be a true and complete
copy of the original) of an original Assignment of Mortgage
completed to "Wells Fargo Bank Minnesota, N.A., as Trustee" and, if
the related Mortgaged Property is located in any other
jurisdiction, an original Assignment of Mortgage in blank, in each
case otherwise in form and substance acceptable for recording;
(iv) an original copy of any intervening Assignment of Mortgage showing
a complete chain of assignments;
(v) the original or a certified copy of lender's title insurance
policy; and
(vi) the original or copies of each assumption, modification, written
assurance or substitution agreement, if any.
The Seller shall deliver the required documents to the Trustee prior to
the Closing Date.
The Trustee agrees to execute and deliver to the Depositor on or prior to
the Closing Date an acknowledgment of receipt of the original Mortgage Note
(with any exceptions noted), substantially in the form attached as Exhibit G-3
hereto.
If, as of the Closing Date, any of the documents referred to in Section
2.01(ii) above has been submitted for recording but either (x) has not been
returned from the applicable public recording office or (y) has been lost or
such public recording office has retained the original of such document, the
obligations of the Seller to deliver such documents shall be deemed to be
satisfied upon (1) delivery to the Trustee, no later than the Closing Date, of
a copy of each such document certified by the Seller in the case of (x) above
or the applicable public recording office in the case of (y) above to be a
true and complete copy of the original that was submitted for recording and
(2) if such copy is certified by the Seller, delivery to the Trustee, promptly
upon receipt thereof, of either the original or a copy of such document
certified by the applicable public recording office to be a true and complete
copy of the original. If the original lender's title insurance policy, or a
certified copy thereof, was not delivered pursuant to Section 2.01(v) above,
the Seller shall deliver or cause to be delivered to the Trustee the original
or a copy of a written commitment or interim binder or preliminary report of
title issued by the title insurance or escrow company, with the original or a
certified copy thereof to be delivered to the Trustee, promptly upon receipt
thereof. The Seller shall deliver or cause to be delivered to the Trustee,
promptly upon receipt thereof, any other documents constituting a part of a
Mortgage File received with respect to any Mortgage Loan sold to the Depositor
by the Seller, including, but not limited to, any original documents
evidencing an assumption or modification of any Mortgage Loan.
The Seller shall cause each Assignment of Mortgage referred to in Section
2.01(iii) hereof and, to the extent necessary, in Section 2.01(iv) hereof to
be recorded; provided, however, that the Seller need not cause to be recorded
any Assignment which relates to a Mortgage Loan in any jurisdiction under the
laws of which, as evidenced by an Opinion of Counsel delivered by the Seller
to the Trustee and the Rating Agencies, the recordation of such Assignment is
not necessary to protect the Trustee's interest in the related Mortgage Loan.
The Seller shall be required to deliver such Assignments for recording within
60 days of the Closing Date. The Seller shall furnish the Trustee, or its
designated agent, with a copy of each Assignment of Mortgage submitted for
recording. In the event that any such Assignment is lost or returned
unrecorded because of a defect therein, the Seller shall promptly have a
substitute Assignment prepared or have such defect cured, as the case may be,
and thereafter cause each such Assignment to be duly recorded.
Upon discovery or receipt of notice of any materially defective document
in, or that a document is missing from, a Mortgage File, the Seller shall have
90 days to cure such defect or deliver such missing document to the Trustee.
If the Seller does not cure such defect or deliver such missing document
within such time period, the Seller shall either repurchase or substitute for
such Mortgage Loan in accordance with Section 2.03 hereof.
The Depositor herewith delivers to the Trustee an executed copy of the
Mortgage Loan Purchase Agreement.
The Servicer shall, with respect to each Mortgage Loan, forward to the
Trustee original documents evidencing an assumption, modification,
consolidation or extension of such Mortgage Loan entered into in accordance
with this Agreement within two weeks of their execution; provided, however,
that the Servicer shall provide the Trustee with a certified true copy of any
such document submitted for recordation within two weeks of its execution, and
shall provide the original of any document submitted for recordation or a copy
of such document certified by the appropriate public recording office to be a
true and complete copy of the original within 270 days of its submission for
recordation (or, if a delay is caused by the public recording office, promptly
upon the Servicer's receipt of such document). In the event that the Servicer
cannot provide a copy of such document certified by the public recording
office within such 270 day period, the Servicer shall deliver to the Trustee,
within such 270 day period, an Officers' Certificate of the Servicer which
shall (A) identify the recorded document, (B) state that the recorded document
has not been delivered to the Trustee due solely to a delay caused by the
public recording office, (C) state the amount of time generally required by
the applicable recording office to record and return a document submitted for
recordation, if known, and (D) specify the date the applicable recorded
document is expected to be delivered to the Trustee, if known, and, upon
receipt of a copy of such document certified by the public recording office,
the Servicer shall immediately deliver such document to the Trustee. In the
event that the appropriate public recording office will not certify as to the
accuracy of such document, the Servicer shall deliver a copy of such document
certified by an officer of the Servicer to be a true and complete copy of the
original to the Trustee.
SECTION 2.02. Acceptance by Trustee.
The Trustee acknowledges the receipt, subject to the provisions of
Section 2.01 and subject to the review described below and any exceptions
noted on the exception report described in the next paragraph below, of the
documents referred to in Section 2.01 above and all other assets included in
the definition of "Trust Fund" and declares that it holds and will hold such
documents and the other documents delivered to it constituting a Mortgage
File, and that it holds or will hold all such assets and such other assets
included in the definition of "Trust Fund" in trust for the exclusive use and
benefit of all present and future Certificateholders.
The Trustee further agrees, for the benefit of the Certificateholders, to
review each Mortgage File delivered to it and to certify and deliver to the
Depositor, the Servicer and each Rating Agency in substantially the form
attached hereto as Exhibit G-1, within 45 days after the Closing Date (or,
with respect to any document delivered after the Startup Day, within 45 days
of receipt and, with respect to any Qualified Substitute Mortgage, within 45
days after the assignment thereof) that, as to each Mortgage Loan listed in
the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or any
Mortgage Loan specifically identified in the exception report annexed thereto
as not being covered by such certification), (i) all documents required to be
delivered to it pursuant Section 2.01 of this Agreement are in its possession,
(ii) such documents have been reviewed by it and have not been mutilated,
damaged or torn and relate to such Mortgage Loan and (iii) based on its
examination and only as to the foregoing, the information set forth in the
Mortgage Loan Schedule that corresponds to the information set forth in items
(i), (ii), (iii), (x), (xi) and (xiii) of the definition of the "Mortgage Loan
Schedule" accurately reflects information set forth in the Mortgage File. It
is herein acknowledged that, in conducting such review, the Trustee is under
no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they have
actually been recorded or that they are other than what they purport to be on
their face.
Prior to the first anniversary date of this Agreement, the Trustee shall
deliver to the Depositor and the Servicer a final certification in the form
annexed hereto as Exhibit G-2 evidencing the completeness of the Mortgage
Files, with any applicable exceptions noted thereon.
If, in the process of reviewing the Mortgage Files and making or
preparing, as the case may be, the certifications referred to above, the
Trustee finds any document or documents constituting a part of a Mortgage File
to be missing or defective in any material respect, at the conclusion of its
review the Trustee shall so notify the Seller, the Depositor and the Servicer.
In addition, upon the discovery by the Seller, the Depositor or the Servicer
(or upon receipt by the Trustee of written notification of such breach) of a
breach of any of the representations and warranties made by the Seller in the
Mortgage Loan Purchase Agreement in respect of any Mortgage Loan that
materially adversely affects such Mortgage Loan or the interests of the
related Certificateholders in such Mortgage Loan, the party discovering such
breach shall give prompt written notice to the other parties to this
Agreement.
The Depositor and the Trustee intend that the assignment and transfer
herein contemplated constitute a sale of the Mortgage Loans, the related
Mortgage Notes and the related documents, conveying good title thereto free
and clear of any liens and encumbrances, from the Depositor to the Trustee and
that such property not be part of the Depositor's estate or property of the
Depositor in the event of any insolvency by the Depositor. In the event that
such conveyance is deemed to be, or to be made as security for, a loan, the
parties intend that the Depositor shall be deemed to have granted and does
hereby grant to the Trustee a first priority perfected security interest in
all of the Depositor's right, title and interest in and to the Mortgage Loans,
the related Mortgage Notes and the related documents, and that this Agreement
shall constitute a security agreement under applicable law.
SECTION 2.03. Repurchase or Substitution of Mortgage Loans by the Seller.
(a) Upon discovery or receipt of written notice of any materially
defective document in, or that a document is missing from, a Mortgage File or
of the breach by the Seller of any representation, warranty or covenant under
the Mortgage Loan Purchase Agreement or in Section 2.04 or Section 2.08 hereof
in respect of any Mortgage Loan which materially adversely affects the value
of that Mortgage Loan or the interest therein of the Certificateholders, the
Trustee shall promptly notify the Seller and the Servicer of such defect,
missing document or breach, and request that the Seller deliver such missing
document or cure such defect or breach within 90 days from the date that the
Seller was notified of such missing document, defect or breach, and, if the
Seller does not deliver such missing document or cure such defect or breach in
all material respects during such period, the Trustee shall enforce the
Seller's obligation under the Mortgage Loan Purchase Agreement and cause the
Seller to repurchase that Mortgage Loan from the Trust Fund at the Purchase
Price on or prior to the Determination Date following the expiration of such
90 day period (subject to Section 2.03(e) below); provided, however, that, in
connection with any such breach that could not reasonably have been cured
within such 90 day period, if the Seller shall have commenced to cure such
breach within such 90 day period, the Seller shall be permitted to proceed
thereafter diligently and expeditiously to cure the same within the additional
period provided under the Mortgage Loan Purchase Agreement; and, provided
further, that, in the case of the breach of any representation, warranty or
covenant made by the Seller in Section 3.01 of the Mortgage Loan Purchase
Agreement, the Seller shall be obligated to cure such breach or purchase the
affected Mortgage Loans. The Purchase Price for the repurchased Mortgage Loan
shall be deposited in the Collection Account, and the Trustee, upon receipt of
written certification from the Servicer of such deposit, shall release to the
Seller the related Mortgage File and shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as the
Seller shall furnish to it and as shall be necessary to vest in the Seller any
Mortgage Loan released pursuant hereto and the Trustee shall have no further
responsibility with regard to such Mortgage File (it being understood that the
Trustee shall have no responsibility for determining the sufficiency of such
assignment for its intended purpose). In lieu of repurchasing any such
Mortgage Loan as provided above, the Seller may cause such Mortgage Loan to be
removed from the Trust Fund (in which case it shall become a Deleted Mortgage
Loan) and substitute one or more Qualified Substitute Mortgage Loans in the
manner and subject to the limitations set forth in Section 2.03(d) below. It
is understood and agreed that the obligation of the Seller to cure or to
repurchase (or to substitute for) any Mortgage Loan as to which a document is
missing, a material defect in a constituent document exists or as to which
such a breach has occurred and is continuing shall constitute the sole remedy
against the Seller respecting such omission, defect or breach available to the
Trustee on behalf of the Certificateholders.
The Trustee shall enforce the obligations of the Seller under the
Mortgage Loan Purchase Agreement including, without limitation, any obligation
of the Seller to purchase a Mortgage Loan on account of missing or defective
documentation or on account of a breach of a representation, warranty or
covenant as described in this Section 2.03(a).
(b) [Reserved].
(c) Within 90 days of the earlier of discovery by the Servicer or receipt
of notice by the Servicer of the breach of any representation, warranty or
covenant of the Servicer set forth in Section 2.05 that materially and
adversely affects the interests of the Certificateholders in any Mortgage
Loan, the Servicer shall cure such breach in all material respects.
(d) Any substitution of Qualified Substitute Mortgage Loans for Deleted
Mortgage Loans made pursuant to Section 2.03(a) above must be effected prior
to the last Business Day that is within two years after the Closing Date. As
to any Deleted Mortgage Loan for which the Seller substitutes a Qualified
Substitute Mortgage Loan or Loans, such substitution shall be effected by the
Seller delivering to the Trustee, for such Qualified Substitute Mortgage Loan
or Loans, the Mortgage Note, the Mortgage, the Assignment to the Trustee, and
such other documents and agreements, with all necessary endorsements thereon,
as are required by Section 2.01 hereof, together with an Officers' Certificate
stating that each such Qualified Substitute Mortgage Loan satisfies the
definition thereof and specifying the Substitution Adjustment (as described
below), if any, in connection with such substitution. The Trustee shall
acknowledge receipt for such Qualified Substitute Mortgage Loan or Loans and,
within 45 days thereafter, shall review such documents as specified in Section
2.02 hereof and deliver to the Servicer, with respect to such Qualified
Substitute Mortgage Loan or Loans, a certification substantially in the form
attached hereto as Exhibit G-1, with any exceptions noted thereon. Within one
year of the date of substitution, the Trustee shall deliver to the Servicer a
certification substantially in the form of Exhibit G-2 hereto with respect to
such Qualified Substitute Mortgage Loan or Loans, with any exceptions noted
thereon. Monthly Payments due with respect to Qualified Substitute Mortgage
Loans in the month of substitution are not part of the Trust Fund and will be
retained by the Seller. For the month of substitution, distributions to
Certificateholders will reflect the collections and recoveries in respect of
such Deleted Mortgage Loan in the Due Period preceding the month of
substitution and the Depositor or the Seller, as the case may be, shall
thereafter be entitled to retain all amounts subsequently received in respect
of such Deleted Mortgage Loan. The Seller shall give or cause to be given
written notice to the Certificateholders that such substitution has taken
place, shall amend the Mortgage Loan Schedule to reflect the removal of such
Deleted Mortgage Loan from the terms of this Agreement and the substitution of
the Qualified Substitute Mortgage Loan or Loans and shall deliver a copy of
such amended Mortgage Loan Schedule to the Trustee. Upon such substitution,
such Qualified Substitute Mortgage Loan or Loans shall constitute part of the
Trust Fund and shall be subject in all respects to the terms of this Agreement
and, in the case of a substitution effected by the Seller, the Mortgage Loan
Purchase Agreement, including, in the case of a substitution effected by the
Seller all representations and warranties thereof included in the Mortgage
Loan Purchase Agreement and all representations and warranties thereof set
forth in Section 2.04 hereof, in each case as of the date of substitution.
For any month in which the Seller substitutes one or more Qualified
Substitute Mortgage Loans for one or more Deleted Mortgage Loans, the Servicer
shall determine the amount (each, a "Substitution Adjustment"), if any, by
which the aggregate Purchase Price of all such Deleted Mortgage Loans exceeds
the aggregate, as to each such Qualified Substitute Mortgage Loan, of the
principal balance thereof as of the date of substitution, together with one
month's interest on such principal balance at the applicable Net Loan Rate. On
the date of such substitution, the Seller will deliver or cause to be
delivered to the Servicer for deposit in the Collection Account an amount
equal to the related Substitution Adjustment, if any, and the Trustee, upon
receipt of the related Qualified Substitute Mortgage Loan or Loans and
certification by the Servicer of such deposit, shall release to the Seller the
related Mortgage File or Files and shall execute and deliver such instruments
of transfer or assignment, in each case without recourse, as the Seller shall
deliver to it and as shall be necessary to vest therein any Deleted Mortgage
Loan released pursuant hereto.
In addition, the Seller shall obtain at its own expense and deliver to
the Trustee an Opinion of Counsel to the effect that such substitution (either
specifically or as a class of transactions) will not cause (a) any federal tax
to be imposed on the Trust Fund, including without limitation, any federal tax
imposed on "prohibited transactions" under Section 860F(a)(l) of the Code or
on "contributions after the startup date" under Section 860G(d)(l) of the
Code, or (b) the Upper Tier REMIC or the Lower Tier REMIC to fail to qualify
as a REMIC at any time that any Certificate is outstanding. If such Opinion of
Counsel can not be delivered, then such substitution may only be effected at
such time as the required Opinion of Counsel can be given.
(e) Upon discovery by the Seller, the Servicer or the Trustee that any
Mortgage Loan does not constitute a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code, the party discovering such fact shall within
two Business Days give written notice thereof to the other parties. In
connection therewith, the Seller shall repurchase or, subject to the
limitations set forth in Section 2.03(d), substitute one or more Qualified
Substitute Mortgage Loans for the affected Mortgage Loan within 90 days of the
earlier of discovery or receipt of such notice with respect to such affected
Mortgage Loan. Any such repurchase or substitution shall be made in the same
manner as set forth in Section 2.03(a) above, if made by the Seller. The
Trustee shall reconvey to the Seller the Mortgage Loan to be released pursuant
hereto in the same manner, and on the same terms and conditions, as it would a
Mortgage Loan repurchased for breach of a representation or warranty.
SECTION 2.04. Representations and Warranties of the Seller with Respect
to the Mortgage Loans.
The Seller hereby represents and warrants to the Trustee for the benefit
of the Certificateholders that, as of the Closing Date or as of such other
date specifically provided herein, the representations and warranties made by
the Seller pursuant to Section 3.01 of the Mortgage Loan Purchase Agreement
are hereby being made to the Trustee and are true and correct as of the
Closing Date.
With respect to the representations and warranties incorporated in this
Section 2.04 that are made to the best of the Seller's knowledge or as to
which the Seller has no knowledge, if it is discovered by the Depositor, the
Seller, the Servicer or the 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 or the interest therein of the
Certificateholders then, notwithstanding the Seller's lack of knowledge with
respect to the substance of such representation and warranty being inaccurate
at the time the representation or warranty was made, such inaccuracy shall be
deemed a breach of the applicable representation or warranty.
Within 90 days of its discovery or its receipt of notice of any such
missing or materially defective documentation or any such breach of a
representation or warranty, the Seller shall promptly deliver such missing
document or cure such defect or breach in all material respects or, in the
event such defect or breach cannot be cured, the Seller shall repurchase the
affected Mortgage Loan or cause the removal of such Mortgage Loan from the
Trust Fund and substitute for it one or more Qualified Substitute Mortgage
Loans, in either case, in accordance with Section 2.03 hereof.
It is understood and agreed that the representations and warranties
incorporated in this Section 2.04 shall survive delivery of the Mortgage Files
to the Trustee and shall inure to the benefit of the Certificateholders
notwithstanding any restrictive or qualified endorsement or assignment. Upon
discovery by any of the Depositor, the Servicer, the Seller or the Trustee of
a breach of any of the foregoing representations and warranties which
materially and adversely affects the value of any Mortgage Loan or the
interests therein of the Certificateholders, the party discovering such breach
shall give prompt written notice to the other parties, and in no event later
than two Business Days from the date of such discovery. It is understood and
agreed that the obligations of the Seller set forth in Section 2.03(a) hereof
to cure, substitute for or repurchase a related Mortgage Loan pursuant to the
Mortgage Loan Purchase Agreement constitute the sole remedies available to the
Certificateholders or to the Trustee on their behalf respecting a breach of
the representations and warranties incorporated in this Section 2.04.
SECTION 2.05. Representations, Warranties and Covenants of the Servicer.
(a) The Servicer, hereby makes the representations and warranties set
forth in Schedule II hereto, and by this reference incorporated herein, to the
Depositor and the Trustee, as of the Closing Date or as of such date
specifically provided therein.
(b) The Servicer hereby covenants to the Depositor and the Trustee as
follows:
(i) the Servicer shall comply in the performance of its obligations
under this Agreement in all material respects with all reasonable rules
and requirements of the insurer under each insurance policy in respect of
each Mortgage Loan; and
(ii) neither this Agreement nor any written information, certificate
of an officer, statement furnished in writing or written report delivered
to the Depositor, any affiliate of the Depositor or the Trustee and
prepared by the Servicer pursuant to this Agreement contains any untrue
statement of a material fact.
(c) It is understood and agreed that the representations, warranties and
covenants set forth in this Section 2.05 shall survive delivery of the
Mortgage Files to the Trustee and shall inure to the benefit of the Trustee,
the Depositor and the Certificateholders. Upon discovery by any of the
Depositor, the Servicer, the Seller or the Trustee of a breach of any of the
foregoing representations, warranties and covenants which materially and
adversely affects the value of any Mortgage Loan or the interests therein of
the Certificateholders, the party discovering such breach shall give prompt
written notice (but in no event later than two Business Days following such
discovery) to the Depositor, the Servicer, the Seller and the Trustee.
SECTION 2.06. Representations and Warranties of the Depositor.
The Depositor represents and warrants to the Trust and the Trustee on
behalf of the Certificateholders as follows:
(i) this agreement constitutes a legal, valid and binding obligation
of the Depositor, enforceable against the Depositor in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect affecting the enforcement of creditors' rights
in general an except as such enforceability may be limited by general
principles of equity (whether considered in a proceeding at law or in
equity);
(ii) immediately prior to the sale and assignment by the Depositor
to the Trustee on behalf of the Trust of each Mortgage Loan, the
Depositor had good and marketable title to each Mortgage Loan (insofar as
such title was conveyed to it by the Seller) subject to no prior lien,
claim, participation interest, mortgage, security interest, pledge,
charge or other encumbrance or other interest of any nature;
(iii) as of the Closing Date, the Depositor has transferred all
right, title and interest in the Mortgage Loans to the Trustee on behalf
of the Trust;
(iv) the Depositor has not transferred the Mortgage Loans to the
Trustee on behalf of the Trust with any intent to hinder, delay or
defraud any of its creditors;
(v) the Depositor has been duly incorporated and is validly existing
as a corporation in good standing under the laws of Delaware, with full
corporate power and authority to own its assets and conduct its business
as presently being conducted;
(vi) the Depositor is not in violation of its certificate of
incorporation or by-laws or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained in
any contract, indenture, mortgage, loan agreement, note, lease or other
instrument to which the Depositor is a party or by which it or its
properties may be bound, which default might result in any material
adverse changes in the financial condition, earnings, affairs or business
of the Depositor or which might materially and adversely affect the
properties or assets, taken as a whole, of the Depositor;
(vii) the execution, delivery and performance of this Agreement by
the Depositor, and the consummation of the transactions contemplated
thereby, do not and will not result in a material breach or violation of
any of the terms or provisions of, or, to the knowledge of the Depositor,
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Depositor is a
party or by which the Depositor is bound or to which any of the property
or assets of the Depositor is subject, nor will such actions result in
any violation of the provisions of the certificate of incorporation or
by-laws of the Depositor or, to the best of the Depositor's knowledge
without independent investigation, any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Depositor or any of its properties or assets
(except for such conflicts, breaches, violations and defaults as would
not have a material adverse effect on the ability of the Depositor to
perform its obligations under this Agreement);
(viii) to the best of the Depositor's knowledge without any
independent investigation, no consent, approval, authorization, order,
registration or qualification of or with any court or governmental agency
or body of the United States or any other jurisdiction is required for
the issuance of the Certificates, or the consummation by the Depositor of
the other transactions contemplated by this Agreement, except such
consents, approvals, authorizations, registrations or qualifications as
(a) may be required under State securities or "blue sky" laws, (b) have
been previously obtained or (c) the failure of which to obtain would not
have a material adverse effect on the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement;
and
(ix) there are no actions, proceedings or investigations pending
before or, to the Depositor's knowledge, threatened by any court,
administrative agency or other tribunal to which the Depositor is a party
or of which any of its properties is the subject: (a) which if determined
adversely to the Depositor would have a material adverse effect on the
business, results of operations or financial condition of the Depositor;
(b) asserting the invalidity of this Agreement or the Certificates; (c)
seeking to prevent the issuance of the Certificates or the consummation
by the Depositor of any of the transactions contemplated by this
Agreement, as the case may be; or (d) which might materially and
adversely affect the performance by the Depositor of its obligations
under, or the validity or enforceability of, this Agreement.
SECTION 2.07. Issuance of Certificates.
The Trustee acknowledges the assignment to it of the Mortgage Loans and
the delivery to it of the Mortgage Files, subject to the provisions of
Sections 2.01 and 2.02 hereof, together with the assignment to it of all other
assets included in the Trust Fund, receipt of which is hereby acknowledged.
Concurrently with such assignment and delivery and in exchange therefor, the
Trustee, pursuant to the written request of the Depositor executed by an
officer of the Depositor, has executed, authenticated and delivered to or upon
the order of the Depositor, the Certificates in authorized denominations. The
interests evidenced by the Certificates constitute the entire beneficial
ownership interest in the Trust Fund.
SECTION 2.08. Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Trust and the Trustee on
behalf of the Certificateholders that as of the Closing Date or as of such
date specifically provided herein:
(i) The Seller is duly organized, validly existing and in good
standing and has the power and authority to own its assets and to
transact the business in which it is currently engaged. The Seller is
duly qualified to do business and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in which
the failure to so qualify would have a material adverse effect on (a) its
business, properties, assets or condition (financial or other), (b) the
performance of its obligations under this Agreement, or (c) the value or
marketability of the Mortgage Loans.
(ii) The Seller has the power and authority to make, execute,
deliver and perform this Agreement and to consummate all of the
transactions contemplated hereunder and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement which
is part of its official records. When executed and delivered, this
Agreement will constitute the Seller's legal, valid and binding
obligations enforceable in accordance with its terms, except as
enforcement of such terms may be limited by (1) bankruptcy, insolvency,
reorganization, receivership, moratorium or similar laws affecting the
enforcement of creditors' rights generally and the rights of creditors of
federally insured financial institutions and by the availability of
equitable remedies, (2) general equity principles (regardless of whether
such enforcement is considered in a proceeding in equity or at law) or
(3) public policy considerations underlying the securities laws, to the
extent that such policy considerations limit the enforceability of the
provisions of this Agreement which purport to provide indemnification
from securities laws liabilities.
(iii) The Seller holds all necessary licenses, certificates and
permits from all governmental authorities necessary for conducting its
business as it is currently conducted. It is not required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of this Agreement, except for
such consents, licenses, approvals or authorizations, or registrations or
declarations as shall have been obtained or filed, as the case may be,
prior to the Closing Date.
(iv) The execution, delivery and performance of this Agreement by
the Seller will not conflict with or result in a breach of, or constitute
a default under, any provision of any existing law or regulation or any
order or decree of any court applicable to the Seller or any of its
properties or any provision of its articles of incorporation, charter or
by-laws, or constitute a material breach of, or result in the creation or
imposition of any lien, charge or encumbrance upon any of its properties
pursuant to any mortgage, indenture, contract or other agreement to which
it is a party or by which it may be bound.
(v) No certificate of an officer, written statement or written
report delivered pursuant to the terms hereof of the Seller contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(vi) The transactions contemplated by this Agreement are in the
ordinary course of the Seller's business.
(vii) The Seller is not insolvent, nor will the Seller be made
insolvent by the transfer of the Mortgage Loans to the Depositor, nor is
the Seller aware of any pending insolvency of the Seller.
(viii) The Seller is not in violation of, and the execution and
delivery of this Agreement by the Seller and its performance and
compliance with the terms of this Agreement will not constitute a
violation with respect to, any order or decree of any court, or any order
or regulation of any federal, state, municipal or governmental agency
having jurisdiction, which violation would materially and adversely
affect the Seller's financial condition (financial or otherwise) or
operations, or materially and adversely affect the performance of any of
its duties hereunder.
(ix) There are no actions or proceedings against the Seller, or
pending or, to its knowledge, threatened, before any court,
administrative agency or other tribunal; nor, to the Seller's knowledge,
are there any investigations (i) that, if determined adversely, would
prohibit the Seller from entering into this Agreement, (ii) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement or (iii) that, if determined adversely, would prohibit or
materially and adversely affect the Seller's ability to perform any of
its respective obligations under, or the validity or enforceability of,
this Agreement.
(x) The Seller did not transfer the Mortgage Loans to the Depositor
with any intent to hinder, delay or defraud any of its creditors.
(xi) The Seller acquired title to the Mortgage Loans in good faith,
without notice of any adverse claims.
(xii) The transfer, assignment and conveyance of the Mortgage Notes
and the Mortgages by the Seller to the Depositor are not subject to the
bulk transfer laws or any similar statutory provisions in effect in any
applicable jurisdiction.
SECTION 2.09. Covenants of the Seller. The Seller hereby covenants that,
except for the transfer hereunder, the Seller will not sell, pledge, assign or
transfer to any other Person, or grant, create, incur, assume or suffer to
exist any lien on any Mortgage Loan, or any interest therein; the Seller will
notify the Trustee, as assignee of the Depositor, and the Servicer of the
existence of any lien on any Mortgage Loan immediately upon discovery thereof,
and the Seller will defend the right, title and interest of the Trust, as
assignee of the Depositor, in, to and under the Mortgage Loans, against all
claims of third parties claiming through or under the Seller; provided,
however, that nothing in this Section 2.09 shall prevent or be deemed to
prohibit the Seller from suffering to exist upon any of the Mortgage Loans any
liens for municipal or other local taxes and other governmental charges if
such taxes or governmental charges shall not at the time be due and payable or
if the Seller shall currently be contesting the validity thereof in good faith
by appropriate proceedings and shall have set aside on its books adequate
reserves with respect thereto.
ARTICLE III
ADMINISTRATION AND SERVICING
OF THE MORTGAGE LOANS
SECTION 3.01. Servicer to Act as Servicer.
The Servicer shall service and administer each Mortgage Loan on behalf of
the Trustee and in the best interests of and for the benefit of the
Certificateholders (as determined by the Servicer in its reasonable judgment)
in accordance with the terms of this Agreement and such Mortgage Loan and, to
the extent consistent with such terms, in the same manner in which it services
and administers similar mortgage loans for its own portfolio, giving due
consideration to customary and usual standards of practice of mortgage lenders
and loan servicers administering similar mortgage loans but without regard to:
(i) any relationship that the Servicer, any Sub-Servicer, any
Servicer Affiliate or any Affiliate of any Sub-Servicer may have with the
related Mortgagor;
(ii) the ownership or non-ownership of any Certificate by the
Servicer or any Servicer Affiliate;
(iii) the Servicer's obligation to make Advances or Servicing
Advances; or
(iv) the Servicer's or any Sub-Servicer's right to receive
compensation for its services hereunder or with respect to any particular
transaction.
To the extent consistent with the foregoing, the Servicer shall seek to
maximize the timely and complete recovery of principal and interest on the
Mortgage Notes. Subject only to the above-described servicing standards and
the terms of this Agreement and of the Mortgage Loans, the Servicer shall have
full power and authority, acting alone or through Sub-Servicers as provided in
Section 3.02 hereof, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary
or desirable. Without limiting the generality of the foregoing, the Servicer
in its own name or in the name of a Sub-Servicer is hereby authorized and
empowered by the Trustee, when the Servicer believes it appropriate in its
best judgment in accordance with the servicing standards set forth above, to
execute and deliver, on behalf of the Certificateholders and the Trustee, and
upon notice to the Trustee, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Mortgage Loans and the related
Mortgaged Properties and to institute foreclosure proceedings or obtain a
deed-in-lieu of foreclosure so as to convert the ownership of such properties,
and to hold or cause to be held title to such properties, on behalf of the
Trustee and Certificateholders. The Servicer shall service and administer the
Mortgage Loans in accordance with applicable state and federal law and shall
provide to the Mortgagors any reports required to be provided to them thereby.
The Servicer shall also comply in the performance of this Agreement with all
reasonable rules and requirements of each insurer under any standard hazard
insurance policy. Subject to Section 3.17 hereof, the Trustee shall execute,
at the written request of the Servicer, and furnish to the Servicer and any
Sub-Servicer any special or limited powers of attorney and other documents
prepared by the Servicer and necessary or appropriate to enable the Servicer
or any Sub-Servicer to carry out their servicing and administrative duties
hereunder; provided, however, such limited powers of attorney or other
documents shall be prepared by the Servicer and submitted to the Trustee for
execution. The Trustee shall not be liable for the actions of the Servicer or
any Sub-Servicer under such powers of attorney.
Subject to Section 3.09 hereof, in accordance with the standards of the
preceding paragraph, the Servicer shall advance or cause to be advanced funds
as necessary for the purpose of effecting the timely payment of taxes and
assessments on the Mortgaged Properties, which advances shall be Servicing
Advances reimbursable in the first instance from collections from the
Mortgagors pursuant to Section 3.09, and further as provided in Section 3.11
hereof. Any cost incurred by the Servicer or by any Sub-Servicer in effecting
the timely payment of taxes and assessments on a Mortgaged Property shall not,
for the purpose of calculating distributions to Certificateholders, be added
to the unpaid Principal Balance of the related Mortgage Loan, notwithstanding
that the terms of such Mortgage Loan so permit.
Notwithstanding anything in this Agreement to the contrary, Servicer may
not make any future advances with respect to a Mortgage Loan and shall not (i)
permit any modification with respect to any Mortgage Loan that would change
the Loan Rate, reduce or increase the Principal Balance (except for reductions
resulting from actual payments of principal) or change the final maturity date
on such Mortgage Loan (unless, as provided in Section 3.07 hereof, the
Mortgagor is in default with respect to the Mortgage Loan or such default is,
in the judgment of the Servicer, reasonably foreseeable) or (ii) permit any
modification, waiver or amendment of any term of any Mortgage Loan that would
both (A) effect an exchange or reissuance of such Mortgage Loan under Section
1001 of the Code (or Treasury regulations promulgated thereunder) and (B)
cause the Upper Tier REMIC or the Lower Tier REMIC to fail to qualify as a
REMIC under the Code or the imposition of any tax on "prohibited transactions"
or "contributions after the startup date" under the REMIC Provisions.
The Servicer may delegate its responsibilities under this Agreement;
provided, however, that no such delegation shall release the Servicer from the
responsibilities or liabilities arising under this Agreement.
SECTION 3.02. Sub-Servicing Agreements Between Servicer and
Sub-Servicers.
(a) The Servicer may enter into Sub-Servicing Agreements with
Sub-Servicers for the servicing and administration of the Mortgage Loans;
provided, however, that such agreements would not result in a withdrawal or a
downgrading by the Rating Agencies of the rating on any Class of Certificates.
Each Sub-Servicer shall be (i) authorized to transact business in the
state or states where the Mortgaged Properties it is to service are situated,
if and to the extent required by applicable law to enable the Sub-Servicer to
perform its obligations hereunder and under the Sub-Servicing Agreement and
(ii) a mortgage servicer approved by Fannie Mae or Freddie Mac. Each
Sub-Servicing Agreement must impose on the Sub-Servicer requirements
conforming to the provisions set forth in Section 3.08 hereof and provide for
servicing of the Mortgage Loans consistent with the terms of this Agreement.
The Servicer will examine each Sub-Servicing Agreement and will be familiar
with the terms thereof. The terms of any Sub-Servicing Agreement will not be
inconsistent with any of the provisions of this Agreement. The Servicer and
the Sub-Servicers may enter into and make amendments to the related
Sub-Servicing Agreements or enter into different forms of Sub-Servicing
Agreements; provided, however, that any such amendments or different forms
shall be consistent with and not violate the provisions of this Agreement, and
that no such amendment or different form shall be made or entered into which
could be reasonably expected to be materially adverse to the interests of the
Certificateholders without the consent of the Holders of Certificates entitled
to at least 66% of the Voting Rights; provided, further, that the consent of
the Holders of Certificates entitled to at least 66% of the Voting Rights
shall not be required (i) to cure any ambiguity or defect in a Sub-Servicing
Agreement, (ii) to correct, modify or supplement any provisions of a
Sub-Servicing Agreement, or (iii) to make any other provisions with respect to
matters or questions arising under a Sub-Servicing Agreement, which, in each
case, shall not be inconsistent with the provisions of this Agreement. Any
variation without the consent of the Holders of Certificates entitled to at
least 66% of the Voting Rights from the provisions set forth in Section 3.08
hereof relating to insurance or priority requirements of the Sub-Servicing
Account, or credits and charges to the Sub-Servicing Account or the timing and
amount of remittances by a Sub-Servicer to the Servicer, are conclusively
deemed to be inconsistent with this Agreement and therefore prohibited. The
Servicer shall deliver to the Trustee copies of all of its Sub-Servicing
Agreements, and any amendments or modifications thereof, promptly upon the
Servicer's execution and delivery of such instruments.
(b) As part of its servicing activities hereunder, the Servicer, for the
benefit of the Trustee and the Certificateholders, shall enforce the
obligations of each Sub-Servicer under the Sub-Servicing Agreement including,
without limitation, any obligation to make advances in respect of delinquent
payments as required by a Sub-Servicing Agreement. Such enforcement,
including, without limitation, the legal prosecution of claims, termination of
Sub-Servicing Agreements, and the pursuit of other appropriate remedies, shall
be in such form and carried out to such an extent and at such time as the
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. The Servicer shall pay the costs of such
enforcement at its own expense, and shall be reimbursed therefor only (i) from
a general recovery resulting from such enforcement, to the extent, if any,
that such recovery exceeds all amounts due in respect of the related Mortgage
Loans, or (ii) from a specific recovery of costs, expenses or attorneys' fees
against the party against whom such enforcement is directed.
SECTION 3.03. Successor Sub-Servicers.
The Servicer shall be entitled to terminate any of the Sub-Servicing
Agreements and the rights and obligations of any Sub-Servicer pursuant to any
of the Sub-Servicing Agreements in accordance with the terms and conditions of
such Sub-Servicing Agreement. In the event of termination of any Sub-Servicer,
all servicing obligations of such Sub-Servicer shall be assumed simultaneously
by the Servicer without any act or deed on the part of such Sub-Servicer or
the Servicer, and the Servicer either shall service directly the related
Mortgage Loans or shall enter into a Sub-Servicing Agreement with a successor
Sub-Servicer which qualifies under Section 3.02 hereof.
Any Sub-Servicing Agreement shall include the provision that such
agreement may be immediately terminated by the Servicer or the Trustee (if the
Trustee is acting as successor Servicer to the Servicer) without fee, in
accordance with the terms of this Agreement, in the event that the Servicer
(or the Trustee, if such party is then acting as successor Servicer to the
Servicer) shall, for any reason, no longer be a Servicer (including
termination due to a Servicer Event of Termination).
SECTION 3.04. Liability of the Servicer.
Notwithstanding any Sub-Servicing Agreement or the provisions of this
Agreement relating to agreements or arrangements between the Servicer and a
Sub-Servicer or reference to actions taken through a Sub-Servicer or
otherwise, the Servicer shall remain obligated and primarily liable to the
Trustee and the Certificateholders for the servicing and administering of the
Mortgage Loans in accordance with the provisions of Section 3.01 hereof,
without diminution of such obligation or liability by virtue of any such
Sub-Servicing Agreements or arrangements or by virtue of indemnification from
the Sub-Servicer, and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the
Mortgage Loans. The Servicer shall be entitled to enter into any agreement
with a Sub-Servicer for indemnification of the Servicer by such Sub-Servicer
and nothing contained in this Agreement shall be deemed to limit or modify
such indemnification.
SECTION 3.05. No Contractual Relationship Between Sub-Servicers and the
Trustee or Certificateholders.
Any Sub-Servicing Agreement that may be entered into and any transactions
or services relating to any Mortgage Loans involving a Sub-Servicer in its
capacity as such shall be deemed to be between the Sub-Servicer and the
Servicer alone, and the Trustee and the Certificateholders shall not be deemed
parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to the Sub-Servicer except as set forth in Section
3.06 hereof. The Servicer shall be solely liable for all fees owed by it to
any of its Sub-Servicers, irrespective of whether the Servicer's compensation
pursuant to this Agreement is sufficient to pay such fees.
SECTION 3.06. Assumption or Termination of Sub-Servicing Agreements by
Trustee.
In the event that the Servicer shall for any reason no longer be the
Servicer (including by reason of the occurrence of a Servicer Event of
Termination), the Trustee shall thereupon assume all of the rights and
obligations of the Servicer under each Sub-Servicing Agreement into which the
Servicer may have entered, unless the Trustee elects to terminate any such
Sub-Servicing Agreement in accordance with its terms as provided in Section
3.03 hereof. Upon such assumption, the Trustee (or the successor Servicer to
the departing Servicer appointed pursuant to Section 7.02 hereof) shall be
deemed, subject to Section 3.03, to have assumed all of the departing
Servicer's interest therein and to have replaced the departing Servicer as a
party to each related Sub-Servicing Agreement to the same extent as if each
such Sub-Servicing Agreement had been assigned to the assuming party, except
that (i) the departing Servicer shall not thereby be relieved of any liability
or obligations under any related Sub-Servicing Agreement that arose before it
ceased to be the Servicer and (ii) neither the Trustee nor any successor
Servicer shall be deemed to have assumed any liability or obligation of the
departing Servicer that arose before it ceased to be the Servicer.
The Servicer at its expense shall deliver to the assuming party all
documents and records relating to each of its Sub-Servicing Agreements and the
related Mortgage Loans then being serviced and an accounting of amounts
collected and held by or on behalf of it, and otherwise use its best efforts
to effect the orderly and efficient transfer of such Sub-Servicing Agreements
to the assuming party.
SECTION 3.07. Collection of Certain Mortgage Loan Payments.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the related Mortgage Loans, and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable insurance policies, follow such
collection procedures as it would follow with respect to mortgage loans
comparable to the Mortgage Loans and held for its own account. Consistent with
the foregoing, the Servicer may in its discretion (i) waive any late payment
charge or, if applicable, any penalty interest, or (ii) extend the due dates
for the Monthly Payments due on a Mortgage Note for a period of not greater
than 180 days; provided, however, that any extension pursuant to clause (ii)
above shall not affect the amortization schedule of any Mortgage Loan for
purposes of any computation hereunder, except as provided below. In the event
of any such arrangement pursuant to clause (ii) above, the Servicer shall make
timely advances on such Mortgage Loan during such extension pursuant to
Section 4.04 hereof and in accordance with the amortization schedule of such
Mortgage Loan without modification thereof by reason of such arrangement.
Notwithstanding the foregoing, in the event that any Mortgage Loan is in
default or, in the judgment of the Servicer, such default is reasonably
foreseeable, the Servicer, consistent with the standards set forth in Section
3.01 hereof, may also waive, modify or vary any term of such Mortgage Loan
(including modifications that would change the Loan Rate, forgive the payment
of principal or interest or extend the final maturity date of such Mortgage
Loan), accept payment from the related Mortgagor of an amount less than the
Stated Principal Balance in final satisfaction of such Mortgage Loan, or
consent to the postponement of strict compliance with any such term or
otherwise grant indulgence to any Mortgagor (any and all such waivers,
modifications, variances, forgiveness of principal or interest, postponements,
or indulgences collectively referred to herein as "forbearance"); provided,
however, that in no event shall the Servicer grant any such forbearance (other
than as permitted by the second sentence of this Section) with respect to any
one Mortgage Loan more than once in any 12-month period or more than three
times over the life of such Mortgage Loan. The Servicer's analysis supporting
any forbearance and the conclusion that any forbearance meets the standards of
Section 3.01 hereof (including the standard that such forbearance will
maximize the timely and complete recovery of principal and interest on the
Mortgage Notes) shall be reflected in writing in the related Mortgage File.
SECTION 3.08. Sub-Servicing Account.
In those cases where a Sub-Servicer is servicing a Mortgage Loan pursuant
to a Sub-Servicing Agreement, the Sub-Servicer will be required to establish
and maintain one or more accounts (collectively, the "Sub-Servicing Account").
The Sub-Servicing Account shall be an Eligible Account and shall comply with
all requirements of this Agreement relating to the Collection Account. The
Sub-Servicer shall deposit in the clearing account in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Sub-Servicer's receipt thereof, all proceeds of
Mortgage Loans received by the Sub-Servicer less its servicing compensation to
the extent permitted by the Sub-Servicing Agreement, and shall thereafter
deposit such amounts in the Sub-Servicing Account, in no event more than two
Business Days after the receipt of such amounts. The Sub-Servicer shall
thereafter deposit such proceeds in the Collection Account or remit such
proceeds to the Servicer for deposit in the Collection Account not later than
two Business Days after the deposit of such amounts in the Sub-Servicing
Account. For purposes of this Agreement, the Servicer shall be deemed to have
received payments on the related Mortgage Loans when its Sub-Servicer receives
such payments.
SECTION 3.09. Collection of Taxes, Assessments and Similar Items;
Servicing Account.
The Servicer shall establish and maintain, or cause to be established and
maintained, one or more accounts (collectively, the "Servicing Account"), into
which all Escrow Payments collected on account of the Mortgage Loans shall be
deposited and retained. The Servicing Account shall be an Eligible Account.
The Servicer shall deposit in the clearing account in which it customarily
deposits payments and collections on mortgage loans in connection with its
mortgage loan servicing activities on a daily basis, and in no event more than
one Business Day after the Servicer's receipt thereof, all Escrow Payments
collected on account of the Mortgage Loans and shall thereafter deposit such
Escrow Payments in the Servicing Account, in no event more than two Business
Days after the receipt of such Escrow Payments, all Escrow Payments collected
on account of the Mortgage Loans for the purpose of effecting the timely
payment of any such items as required under the terms of this Agreement.
Withdrawals of amounts from a Servicing Account may be made only to (i) effect
payment of taxes, assessments, hazard insurance premiums, and comparable items
in a manner and at a time that assures that the lien priority of the Mortgage
is not jeopardized (or, with respect to the payment of taxes, in a manner and
at a time that avoids the loss of the Mortgaged Property due to a tax sale or
the foreclosure as a result of a tax lien); (ii) reimburse the Servicer (or a
Sub-Servicer to the extent provided in the related Sub-Servicing Agreement)
out of related collections for any Servicing Advances made pursuant to Section
3.01 hereof (with respect to taxes and assessments) and Section 3.14 hereof
(with respect to hazard insurance); (iii) refund to Mortgagors any sums as may
be determined to be overages; (iv) pay interest, if required and as described
below, to Mortgagors on balances in the Servicing Account; or (v) clear and
terminate the Servicing Account at the termination of the Servicer's
obligations and responsibilities in respect of the Mortgage Loans under this
Agreement in accordance with Article X hereof. The Servicer will be
responsible for the administration of the Servicing Account and will be
obligated to make Servicing Advances to such accounts when and as necessary to
avoid the lapse of insurance coverage on the Mortgaged Property, or which the
Servicer knows, or in the exercise of the required standard of care of the
Servicer hereunder should know, is necessary to avoid the loss of the
Mortgaged Property due to a tax sale or the foreclosure as a result of a tax
lien. If any such payment has not been made and the Servicer receives notice
of a tax lien with respect to the Mortgage being imposed, the Servicer will,
within ten business days of such notice, advance or cause to be advanced funds
necessary to discharge such lien on the Mortgaged Property. As part of its
servicing duties, the Servicer or any Sub-Servicers shall pay to the
Mortgagors interest on funds in the related Servicing Account, to the extent
required by law and, to the extent that interest earned on funds in such
Servicing Account is insufficient, to pay such interest from its or their own
funds, without any reimbursement therefor.
SECTION 3.10. Collection Account and Distribution Account.
(a) On behalf of the Trust Fund, the Servicer shall establish and
maintain, or cause to be established and maintained, one or more accounts
(collectively, the "Collection Account"), held in trust for the benefit of the
Trustee and the Certificateholders. The Servicer shall deposit into the
Collection Account, no later than two Business Days following the Closing
Date, any amounts representing payments of principal due in respect of the
Mortgage Loans after the Cut-Off Date and received by the Servicer prior to
the Closing Date and any amounts representing payments of interest due in
respect of the Mortgage Loans after the Cut-Off Date and received by the
Servicer prior to the Closing Date. Thereafter, on behalf of the Trust Fund,
the Servicer shall deposit or cause to be deposited in the clearing account in
which it customarily deposits payments and collections on mortgage loans in
connection with its mortgage loan servicing activities on a daily basis, and
in no event more than one Business Day after the Servicer's receipt thereof,
and shall thereafter deposit in the Collection Account, in no event more than
two Business Days after the Servicer's receipt thereof, as and when received
or as otherwise required hereunder, the following payments and collections
received or made by it subsequent to the Cut-Off Date (other than in respect
of principal or interest on the Mortgage Loans due on or before the Cut-Off
Date) or payments (other than Principal Prepayments) received by it on or
prior to the Cut-Off Date but allocable to a Due Period subsequent thereto:
(i) all payments on account of principal, including Principal
Prepayments on the Mortgage Loans;
(ii) all payments on account of interest (net of the related
Servicing Fee) on each Mortgage Loan;
(iii) all Insurance Proceeds and Liquidation Proceeds (other than
proceeds collected in respect of any particular REO Property and amounts
paid in connection with a purchase of Mortgage Loans and REO Properties
pursuant to Section 10.01 hereof);
(iv) any amounts required to be deposited pursuant to Section 3.12
hereof in connection with any losses realized on Permitted Investments
with respect to funds held in the Collection Account;
(v) any amounts required to be deposited by the Servicer pursuant to
the second paragraph of Section 3.14(a) hereof in respect of any blanket
policy deductibles;
(vi) all proceeds of any Mortgage Loan repurchased or purchased in
accordance with Section 2.03 or Section 10.01 hereof;
(vii) all amounts required to be deposited in connection with
Substitution Adjustments pursuant to Section 2.03 hereof;
(viii) any Advances in respect of Mortgage Loans, as required
pursuant to Section 4.05 hereof; and
(ix) any amounts to be paid in connection with a purchase of
Mortgage Loans and REO Properties pursuant to Section 3.16(c) hereof.
The foregoing requirements for deposit in the Collection Account shall be
exclusive, it being understood and agreed that, without limiting the
generality of the foregoing, payments in the nature of late payment charges,
assumption fees, insufficient funds charges, prepayment premiums or other
ancillary income, with respect to any Mortgage Loan, need not be deposited by
the Servicer in the Collection Account and may be retained by the Servicer as
additional compensation. In the event that the Servicer shall deposit in the
Collection Account any amount not required to be deposited therein, it may at
any time withdraw such amount from the Collection Account, any provision
herein to the contrary notwithstanding.
(b) On behalf of the Trust Fund, the Trustee shall establish and maintain
one or more accounts (collectively, the "Distribution Account"), held in trust
for the benefit of the Trustee and the Certificateholders. On behalf of the
Trust Fund, the Servicer shall deliver to the Trustee in immediately available
funds for deposit in the Distribution Account on or before the Close of
Business in the City of New York on the Servicer Remittance Date, that portion
of the Available Funds (calculated without regard to the references in the
definition thereof to amounts that may be withdrawn from the Distribution
Account) for the related Distribution Date then on deposit in the Collection
Account; provided that if the Servicer fails timely to make such remittances
to the Distribution Account or timely to remit any Advance to the Distribution
Account (in each case, without regard to any cure period), the Servicer shall
pay the Trustee for the account of the Trustee interest on any amount not
timely remitted at the Prime Rate (as published in the "Money Rates" section
of The Wall Street Journal as such prime rate may change from time to time;
provided that if The Wall Street Journal ceases to publish the "prime rate",
then the Trustee shall select an equivalent publication that publishes such
"prime rate") from and including the applicable required remittance date to
but not including the date such remittance is actually made.
(c) Funds in the Collection Account may be invested in Permitted
Investments in accordance with the provisions set forth in Section 3.12
hereof. The Servicer shall give notice to the Trustee of the location of the
Collection Account when established and prior to any change thereof. The
Trustee shall give notice to the Servicer and the Depositor of the location of
the Distribution Account when established and prior to any change thereof.
(d) Funds held in the Collection Account at any time may be delivered by
the Servicer to the Trustee for deposit in an account (which may be the
Distribution Account and must satisfy the standards for the Distribution
Account as set forth in the definition thereof) and for all purposes of this
Agreement shall be deemed to be a part of the Collection Account; provided,
however, that the Trustee shall have the sole authority to withdraw any funds
held in the Distribution Account pursuant to this subsection (d). In the event
that the Servicer shall deliver to the Trustee for deposit in the Distribution
Account any amount not required to be deposited therein, it may at any time
request that the Trustee withdraw such amount from the Distribution Account
and remit to the Servicer any such amount, any provision herein to the
contrary notwithstanding. In addition, the Servicer, with respect to items (i)
through (iii) below, shall deliver to the Trustee from time to time for
deposit, and the Trustee, with respect to items (i) through (iii) below, shall
so deposit, in the Distribution Account:
(i) any amounts required to be deposited pursuant to Section 3.23(d)
or (f) hereof in connection with any REO Property;
(ii) any amounts to be paid in connection with a purchase of
Mortgage Loans and REO Properties pursuant to Section 10.01 hereof; and
(iii) any Compensating Interest to be deposited pursuant to Section
3.24 hereof in connection with any Prepayment Interest Shortfall in
respect of any Mortgage Loans.
(e) [Reserved].
(f) The Servicer shall deposit in the Collection Account any amounts
required to be deposited pursuant to Section 3.12(b) hereof in connection with
losses realized on Permitted Investments with respect to funds held in the
Collection Account.
SECTION 3.11. Withdrawals from the Collection Account and Distribution
Account.
(a) The Servicer shall, from time to time, make withdrawals from the
Collection Account for any of the following purposes or as described in
Section 4.05 hereof:
(i) to remit to the Trustee for deposit in the Distribution Account
the amounts required to be so remitted pursuant to Section 3.10(b) hereof
or permitted to be so remitted pursuant to the first sentence of Section
3.10(d) hereof;
(ii) subject to Section 3.16(d) hereof, to reimburse the Servicer
for Advances, but only to the extent of amounts received which represent
Late Collections (net of the Servicing Fees) of Monthly Payments,
Liquidation Proceeds and Insurance Proceeds on Mortgage Loans with
respect to which such Advances were made in accordance with the
provisions of Section 4.05;
(iii) subject to Section 3.16(d), to pay the Servicer or any
Sub-Servicer (a) any unpaid Servicing Fees, (b) any unreimbursed
Servicing Advances with respect to each Mortgage Loan, but only to the
extent of any Late Collections, Liquidation Proceeds and Insurance
Proceeds received with respect to such Mortgage Loan, and (c) any
Servicing Advances prior to the final liquidation of a Mortgage Loan that
are Nonrecoverable Advances, but only to the extent that Late
Collections, Liquidation Proceeds and Insurance Proceeds received with
respect to such Mortgage Loan are insufficient to reimburse the Servicer
or any Sub-Servicer for Servicing Advances;
(iv) to pay to the Servicer as servicing compensation (in addition
to the Servicing Fee) on the Servicer Remittance Date any interest or
investment income earned on funds deposited in the Collection Account;
(v) to pay to the Servicer or the Seller, as applicable, with
respect to each Mortgage Loan that has previously been purchased or
replaced pursuant to Section 2.03 or Section 3.16(c) hereof all amounts
received thereon subsequent to the date of purchase or substitution, as
the case may be;
(vi) to reimburse the Servicer for any Advance previously made by it
which the Servicer has determined to be a Nonrecoverable Advance in
accordance with the provisions of Section 4.05;
(vii) to pay or to reimburse the Servicer for Servicing Advances
made by it in respect of expenses incurred in connection with any
Mortgage Loan pursuant to Section 3.16(b) hereof;
(viii) to pay or reimburse the Seller and the Trustee pursuant to
Section 9.01(c) and 9.01(f), respectively, and
(ix) to clear and terminate the Collection Account pursuant to
Section 10.01 hereof.
The Servicer shall keep and maintain separate accounting, on a Mortgage
Loan by Mortgage Loan basis, for the purpose of justifying any withdrawal from
the Collection Account, to the extent held by or on behalf of it, pursuant to
subclauses (ii), (iii), (iv), (v), (vi) and (vii) above. The Servicer shall
provide written notification to the Trustee, on or prior to the next
succeeding Servicer Remittance Date, upon making any withdrawals from the
Collection Account pursuant to subclause (vi) above; provided, however, that
an Officers' Certificate in the form described under Section 4.05(d) shall
suffice for such written notification to the Trustee in respect hereof.
(b) The Trustee shall, from time to time, make withdrawals from the
Distribution Account, for any of the following purposes, without priority:
(i) to make distributions in accordance with Sections 4.01 and 8.05
hereof;
(ii) to pay any amounts in respect of taxes pursuant to Section
9.01(g) hereof; and
(iii) to clear and terminate the Distribution Account pursuant to
Section 10.01 hereof.
SECTION 3.12. Investment of Funds in the Collection Account.
(a) The Servicer may direct any depository institution maintaining the
Collection Account (each, for purposes of this Section 3.12, an "Investment
Account"), to invest the funds in each Investment Account in one or more
Permitted Investments bearing interest or sold at a discount, and maturing,
unless payable on demand, no later than the Business Day immediately preceding
the date on which such funds are required to be withdrawn from such account
pursuant to this Agreement, unless such funds are invested in Permitted
Investments managed or advised by the Trustee or one of its Affiliates, in
which case such Permitted Investments may mature on the date on which such
funds are required to be withdrawn from such account pursuant to this
Agreement. Funds in the Distribution Account may be held uninvested. All such
Permitted Investments shall be held to maturity, unless payable on demand. Any
investment of funds in an Investment Account shall be made in the name of the
Trustee (in its capacity as such), or in the name of a nominee of the Trustee.
The Trustee may be entitled to sole possession or control (except with respect
to investment direction of funds held in the Collection Account and any income
and gain realized thereon) over each such investment, and any certificate,
securities entitlement or other instrument evidencing any such investment
shall be delivered directly to the Trustee or its agent, together with any
document of transfer necessary to transfer title to such investment to the
Trustee or its nominee. In the event amounts on deposit in an Investment
Account are at any time invested in a Permitted Investment payable on demand,
the Servicer shall:
(i) consistent with any notice required to be given thereunder,
demand that payment thereon be made on the last day such Permitted
Investment may otherwise mature hereunder in an amount equal to the
lesser of (A) all amounts then payable thereunder and (B) the amount
required to be withdrawn on such date; and
(ii) demand payment of all amounts due thereunder promptly upon
determination by a Responsible Officer of the Trustee that such Permitted
Investment would not constitute a Permitted Investment in respect of
funds thereafter on deposit in the Investment Account.
(b) All income and gain realized from the investment of funds deposited
in the Collection Account and any REO Account held by or on behalf of the
Servicer shall be for the benefit of the Servicer and shall be subject to its
withdrawal in accordance with Section 3.11 or Section 3.23 hereof, as
applicable. The Servicer shall deposit in the Collection Account or any REO
Account, as applicable, the amount of any loss of principal incurred in
respect of any such Permitted Investment made with funds in such accounts
immediately upon realization of such loss.
(c) All benefit derived from funds deposited in the Distribution Account
shall be for the benefit of the Trustee.
(d) Except as otherwise expressly provided in this Agreement, if any
default occurs in the making of a payment due under any Permitted Investment,
or if a default occurs in any other performance required under any Permitted
Investment, the Trustee may and, subject to Section 8.01 and Section 8.02(e),
upon the request of the Holders of Certificates representing more than 50% of
the Voting Rights allocated to any Class of Certificates, shall take such
action as may be appropriate to enforce such payment or performance, including
the institution and prosecution of appropriate proceedings.
SECTION 3.13. [Reserved].
SECTION 3.14. Maintenance of Hazard Insurance Polices and Errors and
Omissions and Fidelity Coverage.
(a) The Servicer shall cause to be maintained, for each Mortgage Loan,
fire insurance with extended coverage on all buildings upon the Mortgaged
Property in an amount which is at least equal to the lesser of the current
Principal Balance of such Mortgage Loan and the amount necessary to fully
compensate for any damage or loss to the improvements that are a part of such
property on a replacement cost basis, in each case in an amount not less than
such amount as is necessary to avoid the application of any coinsurance clause
contained in the related hazard insurance policy. The Servicer shall also
cause to be maintained fire insurance with extended coverage on each REO
Property in an amount which is at least equal to the lesser of (i) the maximum
insurable value of the improvements which are a part of such property and (ii)
the outstanding Principal Balance of the related Mortgage Loan at the time it
became an REO Property. The Servicer will comply in the performance of this
Agreement with all reasonable rules and requirements of each insurer under any
such hazard policies. Any amounts to be collected by the Servicer under any
such policies (other than amounts to be applied to the restoration or repair
of the property subject to the related Mortgage or amounts to be released to
the Mortgagor in accordance with the procedures that the Servicer would follow
in servicing loans held for its own account, subject to the terms and
conditions of the related Mortgage and Mortgage Note) shall be deposited in
the Collection Account, subject to withdrawal pursuant to Section 3.11 hereof,
if received in respect of a Mortgage Loan, or in the related REO Account,
subject to withdrawal pursuant to Section 3.23 hereof, if received in respect
of an REO Property. Any cost incurred by the Servicer in maintaining any such
insurance in respect of a Mortgage Loan shall not, for the purpose of
calculating distributions to Certificateholders, be added to the unpaid
Principal Balance of such Mortgage Loan, notwithstanding that the terms of
such Mortgage Loan so permit. It is understood and agreed that no earthquake
or other additional insurance is to be required of any Mortgagor other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. If the Mortgaged
Property or REO Property is at any time in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards and flood insurance has been made available, the Servicer will cause
to be maintained a flood insurance policy in respect thereof. Such flood
insurance shall be in an amount equal to the lesser of (i) the unpaid
Principal Balance of the related Mortgage Loan and (ii) the maximum amount of
such insurance available for the related Mortgaged Property under the national
flood insurance program (assuming that the area in which such Mortgaged
Property is located is participating in such program).
If a Mortgage is secured by a unit in a condominium, the Servicer shall
have received a certificate of insurance evidencing a master policy held by
the owner's association and naming the Servicer as loss payee. All policies
required hereunder shall name the Servicer as loss payee and shall be endorsed
with standard mortgage clauses, which shall provide for at least 30 days'
prior written notice of any cancellation, reduction in amount or material
change in coverage. The Servicer shall not interfere with a Mortgagor's
freedom of choice in selecting an insurance carrier or agent; provided,
however, that Servicer shall not accept any such insurance policies from
insurance companies unless such companies satisfy the requirements of FNMA or
FHLMC and are licensed to do business in the jurisdiction in which the related
Mortgaged Property is located. Any amounts collected by the Servicer under any
such policies (other than the amounts to be deposited in the Escrow Account
and to be applied to the restoration or repair of the related Mortgaged
Property) or property acquired in liquidation of the Mortgage Loan, or amounts
released to the Mortgagor in accordance with the Servicer's normal servicing
procedures) shall be deposited in the Collection Account. Any cost incurred by
the Servicer in maintaining any such insurance in respect of a Mortgage Loan
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 such Mortgage Loan, notwithstanding that the terms
of such Mortgage Loan so permit. Such costs shall be recoverable by the
Servicer out of late payments by the related Mortgagor or out of Liquidation
Proceeds to the extent permitted by Section 3.10 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.
In the event that the Servicer shall obtain and maintain a blanket policy
with an insurer having a General Policy Rating of A+ or better in Best's Key
Rating Guide (or such other rating that is comparable to such rating) insuring
against hazard losses on all of the Mortgage Loans, the Servicer shall
conclusively be deemed to have satisfied its obligations as set forth in the
first two sentences of the first two paragraphs of this Section 3.14, it being
understood and agreed that such policy may contain a deductible clause, in
which case the Servicer shall, in the event that there shall not have been
maintained on the Mortgaged Properties or REO Properties a policy complying
with the first two sentences of this Section 3.14, and there shall have been
one or more losses which would have been covered by such policy, deposit to
the Collection Account from its own funds the amount not otherwise payable
under the blanket policy because of such deductible clause. In connection with
its activities as administrator and servicer of the Mortgage Loans, the
Servicer agrees to prepare and present, on behalf of itself, the Trustee and
the Certificateholders, claims under any such blanket policy in a timely
fashion in accordance with the terms of such policy.
(b) [Reserved.]
(c) [Reserved.]
(d) The Servicer shall keep in force during the term of this Agreement a
policy or policies of insurance covering errors and omissions for failure in
the performance of the Servicer's obligations under this Agreement, which
policy or policies shall be in such form and amount that would meet the
requirements of Fannie Mae or Freddie Mac if it were the purchaser of the
Mortgage Loans, unless the Servicer has obtained a waiver of such requirements
from Fannie Mae or Freddie Mac. The Servicer shall also maintain a fidelity
bond in the form and amount that would meet the requirements of Fannie Mae or
Freddie Mac, unless the Servicer has obtained a waiver of such requirements
from Fannie Mae or Freddie Mac. The Servicer shall be deemed to have complied
with this provision if a Servicer Affiliate has such errors and omissions and
fidelity bond coverage and, by the terms of such insurance policy or fidelity
bond, the coverage afforded thereunder extends to the Servicer. Any such
errors and omissions policy and fidelity bond shall by its terms not be
cancelable without thirty days' prior written notice to the Trustee. The
Servicer shall also cause each Sub-Servicer to maintain a policy of insurance
covering errors and omissions and a fidelity bond which would meet such
requirements.
SECTION 3.15. Enforcement of Due-on-Sale Clauses; Assumption Agreements.
The Servicer will, to the extent it has knowledge of any conveyance or
prospective conveyance of any Mortgaged Property by any Mortgagor (whether by
absolute conveyance or by contract of sale, and whether or not the Mortgagor
remains or is to remain liable under the Mortgage Note and/or the Mortgage),
exercise its rights to accelerate the maturity of such Mortgage Loan under the
"due-on-sale" clause, if any, applicable thereto; provided, however, that the
Servicer shall not be required to take such action if in its sole business
judgment the Servicer believes it is not in the best interests of the Trust
Fund and shall not exercise any such rights if prohibited by law from doing
so. If the Servicer reasonably believes it is unable under applicable law to
enforce such "due-on-sale" clause, or if any of the other conditions set forth
in the proviso to the preceding sentence apply, the Servicer will enter into
an assumption and modification agreement from or with the person to whom such
property has been conveyed or is proposed to be conveyed, pursuant to which
such person becomes liable under the Mortgage Note and, to the extent
permitted by applicable state law, the Mortgagor remains liable thereon. The
Servicer is also authorized to enter into a substitution of liability
agreement with such person, pursuant to which the original Mortgagor is
released from liability and such person is substituted as the Mortgagor and
becomes liable under the Mortgage Note, provided that no such substitution
shall be effective unless such person satisfies the underwriting criteria of
the Servicer and has a credit risk rating at least equal to that of the
original Mortgagor. In connection with any assumption or substitution, the
Servicer shall apply such underwriting standards and follow such practices and
procedures as shall be normal and usual in its general mortgage servicing
activities and as it applies to other mortgage loans owned solely by it. The
Servicer shall not take or enter into any assumption and modification
agreement, however, unless (to the extent practicable in the circumstances) it
shall have received confirmation, in writing, of the continued effectiveness
of any applicable hazard insurance policy. Any fee collected by the Servicer
in respect of an assumption, modification or substitution of liability
agreement shall be retained by the Servicer as additional servicing
compensation. In connection with any such assumption, no material term of the
Mortgage Note (including but not limited to the related Loan Rate and the
amount of the Monthly Payment) may be amended or modified, except as otherwise
required pursuant to the terms thereof. The Servicer shall notify the Trustee
that any such substitution, modification or assumption agreement has been
completed by forwarding to the Trustee the executed original of such
substitution, modification or assumption agreement, which document shall be
added to the related Mortgage File and shall, for all purposes, be considered
a part of such Mortgage File to the same extent as all other documents and
instruments constituting a part thereof.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or by the terms of the related Mortgage Note
or any assumption which the Servicer may be restricted by law from preventing,
for any reason whatever. For purposes of this Section 3.15, the term
"assumption" is deemed to also include a sale (of the Mortgaged Property)
subject to the Mortgage that is not accompanied by an assumption or
substitution of liability agreement.
SECTION 3.16. Realization upon Defaulted Mortgage Loans.
(a) The Servicer shall use its best efforts, consistent with the
Servicing Standard, to foreclose upon or otherwise comparably convert the
ownership of properties securing such of the Mortgage Loans (including selling
any such Mortgage Loans other than converting the ownership of the related
properties) as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 3.07 hereof. The Servicer shall be responsible for all
costs and expenses incurred by it in any such proceedings; provided, however,
that such costs and expenses will be recoverable as Servicing Advances as
contemplated in Section 3.11 and Section 3.23 hereof. The foregoing is subject
to the provision that, in any case in which Mortgaged Property shall have
suffered damage from an Uninsured Cause, the Servicer shall not be required to
expend its own funds toward the restoration of such property unless it shall
determine in its discretion that such restoration will increase the proceeds
of liquidation of the related Mortgage Loan after reimbursement to itself for
such expenses.
(b) Notwithstanding the foregoing provisions of this Section 3.16 or any
other provision of this Agreement, with respect to any Mortgage Loan as to
which the Servicer has received actual notice of, or has actual knowledge of,
the presence of any toxic or hazardous substance on the related Mortgaged
Property, the Servicer shall not, on behalf of the Trustee, either (i) obtain
title to such Mortgaged Property as a result of or in lieu of foreclosure or
otherwise, or (ii) otherwise acquire possession of, or take any other action
with respect to, such Mortgaged Property, if, as a result of any such action,
the Trustee, the Trust Fund or the Certificateholders would be considered to
hold title to, to be a "mortgagee-in-possession" of, or to be an "owner" or
"operator" of such Mortgaged Property within the meaning of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended
from time to time, or any comparable law, unless the Servicer has also
previously determined, based on its reasonable judgment and a report prepared
by a Person who regularly conducts environmental audits using customary
industry standards, that:
(1) such Mortgaged Property is in compliance with applicable
environmental laws or, if not, that it would be in the best economic
interest of the Trust Fund to take such actions as are necessary to bring
the Mortgaged Property into compliance therewith; and
(2) there are no circumstances present at such Mortgaged Property
relating to the use, management or disposal of any hazardous substances,
hazardous materials, hazardous wastes, or petroleum-based materials for
which investigation, testing, monitoring, containment, clean-up or
remediation could be required under any federal, state or local law or
regulation, or that if any such materials are present for which such
action could be required, that it would be in the best economic interest
of the Trust Fund to take such actions with respect to the affected
Mortgaged Property.
The cost of the environmental audit report contemplated by this Section
3.16 shall be advanced by the Servicer, subject to the Servicer's right to be
reimbursed therefor from the Collection Account as provided in Section
3.11(a)(vii) above, such right of reimbursement being prior to the rights of
Certificateholders to receive any amount in the Collection Account received in
respect of the affected Mortgage Loan or other Mortgage Loans.
If the Servicer determines, as described above, that it is in the best
economic interest of the Trust Fund to take such actions as are necessary to
bring any such Mortgaged Property into compliance with applicable
environmental laws, or to take such action with respect to the containment,
clean-up or remediation of hazardous substances, hazardous materials,
hazardous wastes or petroleum-based materials affecting any such Mortgaged
Property, then the Servicer shall take such action as it deems to be in the
best economic interest of the Trust Fund; provided that any amounts disbursed
by the Servicer pursuant to this Section 3.16(b) shall constitute Servicing
Advances, subject to Section 4.05(d) hereof. The cost of any such compliance,
containment, cleanup or remediation shall be advanced by the Servicer, subject
to the Servicer's right to be reimbursed therefor from the Collection Account
as provided in Section 3.11(a)(iii) and (a)(vii) hereof, such right of
reimbursement being prior to the rights of Certificateholders to receive any
amount in the Collection Account received in respect of the affected Mortgage
Loan or other Mortgage Loans.
(c) The Servicer may, at its option, purchase any Mortgage Loan or
related REO Property that is 90 days or more Delinquent, which the Servicer
determines in good faith will otherwise become subject to foreclosure
proceedings (evidence of such determination to be delivered in writing to the
Trustee prior to purchase), at a price equal to the Purchase Price. The
Purchase Price for any Mortgage Loan or related REO Property purchased
hereunder shall be deposited in the Collection Account. The Trustee, upon
receipt of such deposit, shall release or cause to be released to the Servicer
the related Mortgage File and shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as the Servicer shall
furnish and as shall be necessary to vest in it title to any Mortgage Loan or
related REO Property released pursuant hereto.
(d) Proceeds received in connection with any Final Recovery
Determination, as well as any recovery resulting from a partial collection of
Insurance Proceeds or Liquidation Proceeds, in respect of any Mortgage Loan,
will be applied in the following order of priority: first, to reimburse the
Servicer or any Sub-Servicer for any unreimbursed Servicing Advances and
Advances, pursuant to Section 3.11(a)(ii) or (a)(iii) hereof; second, to
accrued and unpaid interest on the Mortgage Loan, to the date of the Final
Recovery Determination, or to the Due Date prior to the Distribution Date on
which such amounts are to be distributed if not in connection with a Final
Recovery Determination; and third, as a recovery of principal of the Mortgage
Loan. If the amount of the recovery so allocated to interest is less than the
full amount of accrued and unpaid interest due on such Mortgage Loan, the
amount of such recovery will be allocated by the Servicer as follows: first,
to unpaid Servicing Fees; and second, to the balance of the interest then due
and owing. The portion of the recovery so allocated to unpaid Servicing Fees
shall be reimbursed to the Servicer or any Sub-Servicer pursuant to Section
3.11(a)(iii).
SECTION 3.17. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full shall be escrowed in a manner
customary for such purposes, the Servicer shall deliver to the Trustee two
executed copies of a Request for Release in the form of Exhibit F (which shall
include a certification to the effect that all amounts received or to be
received in connection with such payment which are required to be deposited in
the Collection Account pursuant to Section 3.10 hereof have been or will be so
deposited) of a Servicing Officer and shall request delivery to it of the
Mortgage File. Upon receipt of such certification and request, the Trustee
shall, within five Business Days, release and send the related Mortgage File
to the Servicer by overnight mail, at the expense of the Servicer. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account or the Distribution
Account.
(b) From time to time and as appropriate for the servicing or foreclosure
of any Mortgage Loan, including, for this purpose, collection under any
insurance policy relating to the Mortgage Loans, the Trustee shall, upon any
request made by or on behalf of the Servicer and delivery to the Trustee of
two copies of a Request for Release in the form of Exhibit F, release the
related Mortgage File to the Servicer, and the Trustee shall, at the direction
of the Servicer, execute such documents as shall be necessary to the
prosecution of any such proceedings. Such Request for Release shall obligate
the Servicer to return each and every document previously requested from the
Mortgage File to the Trustee, when the need therefor by the Servicer no longer
exists, unless the Mortgage Loan has been liquidated and the Liquidation
Proceeds relating to the Mortgage Loan have been deposited in the Collection
Account or the Mortgage File or such document has been delivered to an
attorney, or to a public trustee or other public official as required by law,
for purposes of initiating or pursuing legal action or other proceedings for
the foreclosure of the Mortgaged Property either judicially or non-judicially,
and the Servicer has delivered, or caused to be delivered, to the Trustee two
copies of an additional Request for Release certifying as to such liquidation
or action or proceedings. Upon the request of the Trustee, the Servicer shall
provide notice to the Trustee of the name and address of the Person to which
such Mortgage File or such document was delivered and the purpose or purposes
of such delivery. Upon receipt of a certificate of a Servicing Officer stating
that such Mortgage Loan was liquidated and that all amounts received or to be
received in connection with such liquidation that are required to be deposited
into the Collection Account have been so deposited, or that such Mortgage Loan
has become an REO Property, any outstanding Requests for Release with respect
to such Mortgage Loan shall be released by the Trustee to the Servicer or its
designee.
(c) Upon written certification of a Servicing Officer, the Trustee shall
execute and deliver to the Servicer or any Sub-Servicer, as the case may be,
copies of, any court pleadings, requests for trustee's sale or other documents
prepared by the Servicer and necessary to the foreclosure or trustee's sale in
respect of a Mortgaged Property or to any legal action brought to obtain
judgment against any Mortgagor on the Mortgage Note or Mortgage or to obtain a
deficiency judgment, or to enforce any other remedies or rights provided by
the Mortgage Note or Mortgage or otherwise available at law or in equity. Each
such certification shall include a request that such pleadings or documents be
executed by the Trustee and a statement as to the reason such documents or
pleadings are required and that the execution and delivery thereof by the
Trustee will not invalidate or otherwise affect the lien of the Mortgage,
except for the termination of such a lien upon completion of the foreclosure
or trustee's sale.
(d) Each Request for Release delivered to the Trustee hereunder shall be
signed by a Servicing Officer or shall be delivered in a mutually agreed upon
electronic format which will, in lieu of a signature on its face, originate
from a Servicing Officer.
SECTION 3.18. Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to the Servicing Fee with respect to each Mortgage Loan payable
solely from payments of interest in respect of the Mortgage Loans; provided,
however, that the Servicing Fee shall be reduced with respect to each
Distribution Date, by an amount equal generally to the aggregate of the
Prepayment Interest Shortfalls, if any, with respect to the Mortgage Loans
serviced by the Servicer and such Distribution Date, but the aggregate
reductions shall not exceed an amount equal to the Compensating Interest Cap
for such Distribution Date before reduction thereof in respect of such
Prepayment Interest Shortfalls as further set forth in Section 3.24 hereof.
Additional servicing compensation in the form of late payment charges,
assumption fees, insufficient funds charges, prepayment premiums or other
ancillary income shall be retained by the Servicer only to the extent such
fees or charges are received by the Servicer. The Servicer shall also be
entitled pursuant to Section 3.11(a)(iv) hereof to withdraw from the
Collection Account and, pursuant to Section 3.23(b) hereof, to withdraw from
any REO Account, as additional servicing compensation, interest or other
income earned on deposits therein, subject to Section 3.12 and Section 3.24
hereof. The Servicer shall be required to pay all expenses incurred by it in
connection with its servicing activities hereunder and shall not be entitled
to reimbursement therefor except as specifically provided herein.
SECTION 3.19. Reports to the Trustee; Collection Account Statements.
Within two Business Days following its receipt thereof, the Servicer
shall forward to the Trustee and the Depositor, upon request, the most current
available bank statement for the Collection Account. Copies of such statement
shall be provided by the Trustee to any Certificateholder and to any Person
identified to the Trustee as a prospective transferee of a Certificate, upon
request at the expense of the requesting party, provided such statement is
delivered by the Servicer to the Trustee.
SECTION 3.20. Statement as to Compliance.
The Servicer shall deliver to the Trustee and the Depositor not later
than 90 days following the end of the fiscal year of the Servicer, commencing
with the fiscal year that begins in 2000, an Officers' Certificate stating, as
to each signatory thereof, that (i) a review of the activities of the Servicer
during the preceding year and of performance under this Agreement has been
made under such officers' supervision and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all of its
obligations under this Agreement throughout such year, or, if there has been a
default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof. Copies of any
such statement shall be provided by the Trustee to any Certificateholder and
to any Person identified to the Trustee as a prospective transferee of a
Certificate, upon request at the expense of the requesting party, provided
such statement is delivered by the Servicer to the Trustee.
SECTION 3.21. Independent Public Accountant's Servicing Report.
Not later than 90 days following the end of each fiscal year of the
Servicer, commencing with the fiscal year that begins in 2000, the Servicer at
its own expense shall cause a nationally recognized firm of Independent
certified public accountants to furnish to the Servicer a report stating that
(i) it has obtained a letter of representation regarding certain matters from
the management of the Servicer that includes an assertion that the Servicer
has complied with certain minimum residential mortgage loan servicing
standards, identified in the Uniform Single Attestation Program for Mortgage
Bankers established by the Mortgage Bankers Association of America, with
respect to the servicing of residential mortgage loans during the most
recently completed fiscal year and (ii) on the basis of an examination
conducted by such firm in accordance with standards established by the
American Institute of Certified Public Accountants, such representation is
fairly stated in all material respects, subject to such exceptions and other
qualifications that may be appropriate. In rendering its report such firm may
rely, as to matters relating to the direct servicing of residential mortgage
loans by Sub-Servicers, upon comparable reports of firms of independent
certified public accountants rendered on the basis of examinations conducted
in accordance with the same standards (rendered within one year of such
report) with respect to those Sub-Servicers. Copies of such statement shall be
provided by the Trustee to any Certificateholder upon request at the expense
of the Servicer provided that such statement is delivered by the Servicer to
the Trustee.
SECTION 3.22. Access to Certain Documentation; Filing of Reports by
Trustee.
(a) The Servicer shall provide to the Office of Thrift Supervision, the
FDIC, and any other federal or state banking or insurance regulatory authority
that may exercise authority over any Certificateholder, access to the
documentation regarding the Mortgage Loans required by applicable laws and
regulations. Such access shall be afforded without charge, but only upon
reasonable request and during normal business hours at the offices of the
Servicer designated by it. In addition, access to the documentation regarding
the Mortgage Loans will be provided to any Certificateholder, the Trustee and
to any Person identified to the Servicer as a prospective transferee of a
Certificate, upon reasonable request during normal business hours at the
offices of the Servicer designated by it at the expense of the Person
requesting such access; provided that, in the case of a Certificateholder or a
Person identified to the Servicer as a prospective transferee of a
Certificate, the Servicer may, as a condition to making any such information
available, require that such Certificateholder or Person execute a
confidentiality agreement in a form acceptable to the Servicer.
(b) Within 15 days after each Distribution Date, the Trustee shall, in
accordance with industry standards, file with the Commission, via the
Electronic Data Gathering and Retrieval System (EDGAR), a Form 8-K with a copy
of the statement to the Certificateholders for such Distribution Date as an
exhibit thereto. Prior to January 30, 2001, the Trustee shall, in accordance
with industry standards, file a Form 15 Suspension Notification with respect
to the Trust Fund, if applicable. Prior to March 30, 2001, the Trustee shall
file a Form 10-K, in substance conforming to industry standards, with respect
to the Trust Fund. The Depositor hereby grants to the Trustee a limited power
of attorney to execute and file each such document on behalf of the Depositor.
Such power of attorney shall continue until either the earlier of (i) receipt
by the Trustee from the Depositor of written termination of such power of
attorney and (ii) the termination of the Trust Fund. The Depositor and the
Servicer agree to furnish to the Trustee promptly, from time to time upon
request, such further information, reports, and financial statements within
its control related to this Agreement and the Mortgage Loans as the Trustee
reasonably deems appropriate to prepare and file all necessary reports with
the Commission. The Trustee shall have no responsibility to file any items
other than those specified in this section.
SECTION 3.23. Title, Management and Disposition of REO Property.
(a) The deed or certificate of sale of any REO Property shall be taken in
the name of the Trustee, or its nominee, in trust for the benefit of the
Certificateholders. The Servicer, on behalf of the Lower Tier REMIC, shall
either sell any REO Property by the end of the third full taxable year after
the taxable year in which the REMIC acquires ownership of such REO Property
for purposes of Section 860G(a)(8) of the Code or request from the Internal
Revenue Service, no later than 61 days before the day on which the three-year
grace period would otherwise expire, an extension of such three-year period,
unless the Servicer shall have delivered to the Trustee an Opinion of Counsel,
addressed to the Trustee and the Depositor, to the effect that the holding by
the REMIC of such REO Property subsequent to three years after its acquisition
will not result in the imposition on the Lower Tier REMIC of taxes on
"prohibited transactions" thereof, as defined in Section 860F of the Code, or
cause the Lower Tier REMIC to fail to qualify as a REMIC under Federal law at
any time that any Certificates are outstanding. The Servicer shall manage,
conserve, protect and operate each REO Property for the Certificateholders
solely for the purpose of its prompt disposition and sale in a manner which
does not cause such REO Property to fail to qualify as "foreclosure property"
within the meaning of Section 860G(a)(8) of the Code or result in the receipt
by the REMIC of any "income from non-permitted assets" within the meaning of
Section 860F(a)(2)(B) of the Code, or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions.
(b) The Servicer shall separately account for all funds collected and
received by it in connection with the operation of any REO Property and shall
establish and maintain, or cause to be established and maintained, with
respect to REO Properties an account held in trust for the Trustee for the
benefit of the Certificateholders (each such account, an "REO Account"), which
shall be an Eligible Account. The Servicer shall be permitted to allow the
Collection Account to serve as the REO Account, subject to separate ledgers
for each REO Property. The Servicer shall be entitled to retain or withdraw
any interest income paid on funds deposited in the REO Account.
(c) The Servicer shall have full power and authority, subject only to the
specific requirements and prohibitions of this Agreement, to do any and all
things in connection with any REO Property as are consistent with the manner
in which the Servicer manages and operates similar property owned by the
Servicer or any Servicer Affiliates, all on such terms and for such period as
the Servicer deems to be in the best interests of Certificateholders. In
connection therewith, the Servicer shall deposit, or cause to be deposited in
the clearing account in which it customarily deposits payments and collections
on mortgage loans in connection with its mortgage loan servicing activities on
a daily basis, and in no event more than one Business Day after the Servicer's
receipt thereof, and shall thereafter deposit in the REO Account, in no event
more than two Business Days after the Servicer's receipt thereof, all revenues
received by it with respect to an REO Property and shall withdraw therefrom
funds necessary for the proper operation, management and maintenance of such
REO Property including, without limitation:
(i) all insurance premiums due and payable in respect of such REO
Property;
(ii) all real estate taxes and assessments in respect of such REO
Property that may result in the imposition of a lien thereon; and
(iii) all costs and expenses necessary to maintain such REO
Property.
To the extent that amounts on deposit in the REO Account with respect to an
REO Property are insufficient for the purposes set forth in clauses (i)
through (iii) above with respect to such REO Property, the Servicer shall
advance from its own funds such amount as is necessary for such purposes if,
but only if, the Servicer would make such advances if the Servicer owned such
REO Property and if, in the Servicer's judgment, the payment of such amounts
will be recoverable from the rental or sale of such REO Property.
Notwithstanding the foregoing, Servicer shall not:
(i) authorize the Trust Fund to enter into, renew or extend any New
Lease with respect to any REO Property, if the New Lease by its terms
will give rise to any income that does not constitute Rents from Real
Property;
(ii) authorize any amount to be received or accrued under any New
Lease other than amounts that will constitute Rents from Real Property;
(iii) authorize any construction on any REO Property, other than the
completion of a building or other improvement thereon, and then only if
more than ten percent of the construction of such building or other
improvement was completed before default on the related Mortgage Loan
became imminent, all within the meaning of Section 856(e)(4)(B) of the
Code; or
(iv) authorize any Person to Directly Operate any REO Property on
any date more than 90 days after its date of acquisition by the Trust
Fund;
unless, in any such case, the Servicer has obtained an Opinion of Counsel,
provided to the Trustee, to the effect that such action will not cause such
REO Property to fail to qualify as "foreclosure property" within the meaning
of Section 860G(a)(8) of the Code at any time that it is held by the Lower
Tier REMIC, in which case the Servicer may take such actions as are specified
in such Opinion of Counsel.
The Servicer may contract with any Independent Contractor for the
operation and management of any REO Property, provided that:
(i) the terms and conditions of any such contract shall not be
inconsistent herewith;
(ii) any such contract shall require, or shall be administered to
require, that the Independent Contractor pay all costs and expenses
incurred in connection with the operation and management of such REO
Property, including those listed above and remit all related revenues
(net of such costs and expenses) to the Servicer as soon as practicable,
but in no event later than thirty days following the receipt thereof by
such Independent Contractor;
(iii) none of the provisions of this Section 3.23(c) relating to any
such contract or to actions taken through any such Independent Contractor
shall be deemed to relieve the Servicer of any of its duties and
obligations to the Trustee on behalf of the Certificateholders with
respect to the operation and management of any such REO Property; and
(iv) the Servicer shall be obligated with respect thereto to the
same extent as if it alone were performing all duties and obligations in
connection with the operation and management of such REO Property.
The Servicer shall be entitled to enter into any agreement with any
Independent Contractor performing services for it related to its duties and
obligations hereunder for indemnification of the Servicer by such Independent
Contractor, and nothing in this Agreement shall be deemed to limit or modify
such indemnification. The Servicer shall be solely liable for all fees owed by
it to any such Independent Contractor, irrespective of whether the Servicer's
compensation pursuant to Section 3.18 hereof is sufficient to pay such fees;
provided, however, that to the extent that any payments made by such
Independent Contractor would constitute Servicing Advances if made by the
Servicer, such amounts shall be reimbursable as Servicing Advances.
(d) In addition to the withdrawals permitted under Section 3.23(c)
hereof, the Servicer may from time to time make withdrawals from the
applicable REO Account for any REO Property: (i) to pay itself or any
Sub-Servicers unpaid Servicing Fees in respect of the related Mortgage Loan;
and (ii) to reimburse itself or any Sub-Servicers for unreimbursed Servicing
Advances and Advances made in respect of such REO Property or the related
Mortgage Loan. On the Servicer Remittance Date, the Servicer shall withdraw
from each REO Account and deposit into the Distribution Account in accordance
with Section 3.10(d)(i) hereof, for distribution on the related Distribution
Date in accordance with Section 4.01 hereof, the income from the related REO
Property received during the prior calendar month, net of any withdrawals made
pursuant to Section 3.23(c) hereof or this Section 3.23(d).
(e) Subject to the time constraints set forth in Section 3.23(a) hereof,
each REO Disposition shall be carried out by the Servicer at such price and
upon such terms and conditions as the Servicer shall deem necessary or
advisable, as shall be normal and usual in its Servicing Standard.
(f) The proceeds from the REO Disposition, net of any amount required by
law to be remitted to the Mortgagor under the related Mortgage Loan and net of
any payment or reimbursement to the Servicer or any Sub-Servicer as provided
above, shall be deposited in the Distribution Account in accordance with
Section 3.10(d)(i) hereof on the Servicer Remittance Date in the month
following the receipt thereof for distribution on the related Distribution
Date in accordance with Section 4.01 hereof. Any REO Disposition shall be for
cash only (unless changes in the REMIC Provisions made subsequent to the
Startup Day allow a sale for other consideration).
(g) The Servicer shall file information returns with respect to the
receipt of mortgage interest received in a trade or business, reports of
foreclosures and abandonments of any Mortgaged Property and cancellation of
indebtedness income with respect to any Mortgaged Property as required by
Sections 6050H, 6050J and 6050P of the Code, respectively. Such reports shall
be in form and substance sufficient to meet the reporting requirements imposed
by such Sections 6050H, 6050J and 6050P of the Code.
SECTION 3.24. Obligations of the Servicer in Respect of Prepayment
Interest Shortfalls.
No later than the Close of Business on each Servicer Remittance Date, the
Servicer shall remit to the Collection Account an amount ("Compensating
Interest") equal to the lesser of (i) the aggregate of the Prepayment Interest
Shortfalls for the related Distribution Date and (ii) the Compensating
Interest Cap for the related Due Period.
The Servicer shall not have the right to reimbursement for any amounts
remitted to the Trustee in respect of Compensating Interest. Such amounts so
remitted shall be included in Available Funds and distributed therewith on the
next Distribution Date. The Servicer shall not be obligated to pay
Compensating Interest with respect to Relief Act Interest Shortfalls.
SECTION 3.25. [Reserved]
SECTION 3.26. Obligations of the Servicer in Respect of Adjustments.
In the event that a shortfall in any collection on or liability with
respect to the Mortgage Loans in the aggregate results from or is attributable
to adjustments to Stated Principal Balances that were made by the Servicer in
a manner not consistent with the terms of the related Mortgage Notes and this
Agreement, the Servicer, upon discovery or receipt of notice thereof,
immediately shall deliver to the Trustee for deposit in the Distribution
Account from its own funds the amount of any such shortfall and shall
indemnify and hold harmless the Trust Fund, the Trustee, the Depositor and any
successor servicer in respect of any such liability. Such indemnities shall
survive the termination or discharge of the Servicer or this Agreement.
Notwithstanding the foregoing, this Section 3.26 shall not limit the ability
of the Servicer to seek recovery of any such amounts from the related
Mortgagor under the terms of the related Mortgage Note, as permitted by law.
SECTION 3.27. Solicitations.
From and after the Closing Date, the Servicer agrees that it will not
take any action or permit or cause any action to be taken by any of its agents
and any Servicer Affiliates, or by any independent contractors or independent
mortgage brokerage companies on the Servicer's behalf, to personally, by
telephone or mail, solicit the Mortgagor under any Mortgage Loan for the
purpose of refinancing such Mortgage Loan; provided, however, that the
Servicer may solicit any Mortgagor for whom the Servicer has received a
request for verification of mortgage, a request for demand for payoff, a
mortgagor initiated written or verbal communication indicating a desire to
prepay the related Mortgage Loan, or the mortgagor initiates a title search;
and provided, further, it is understood and agreed that promotions undertaken
by a Servicer or any Servicer Affiliates that (i) concern optional insurance
products or other additional products or (ii) are generally directed to the
customers of the Servicer or the Servicer Affiliates (including customers
meeting certain defined parameters), including, without limitation, mass
mailings based on commercially acquired mailing lists, newspaper, radio and
television advertisements shall not constitute solicitation under this
Section, nor is the Servicer prohibited from responding to unsolicited
requests or inquiries made by a Mortgagor or an agent of a Mortgagor.
ARTICLE IV
FLOW OF FUNDS
SECTION 4.01. Distributions.
(a) On each Distribution Date, the Trustee shall withdraw funds on
deposit in the Distribution Account to the extent of the Available Funds for
such Distribution Date and make the following disbursements and transfers in
the order of priority set forth below and to the extent of such funds, based
upon information provided to the Trustee pursuant to Section 4.04(a) hereof:
(i) to the Holder of the Class A-R Certificate, the related Interest
Distributable Amount for that date;
(ii) to the Holders of the Class A-1, Class A-2, Class A-3 and Class
X Certificates, the related Interest Distributable Amounts for that date,
pro rata (based on the Interest Distributable Amount to which each such
Class is entitled);
(iii) from the Principal Distribution Amount for such Distribution
Date, an amount equal to the Senior Principal Distribution Amount for
that date, as follows:
(A) first, to the Holder of Class A-R Certificate, until the
Class Certificate Principal Balance of such Class is
reduced to zero;
(B) second, to the Holders of the Class A-1 Certificates,
until the Class Certificate Principal Balance of such
Class is reduced to zero;
(C) third, to the Holders of the Class A-2 Certificates,
until the Class Certificate Principal Balance of such
Class is reduced to zero; and
(D) fourth, to the Holders of the Class A-3 Certificates,
until the Class Certificate Principal Balance of such
Class is reduced to zero;
(iv) the Available Funds remaining after giving effect to the
distributions specified in subsections (i), (ii) and (iii) above, to the
Certificateholders in the following order of priority:
(A) to the Servicer, the amount to which the Servicer shall
be entitled, by way of indemnification, pursuant to
Section 6.03;
(B) to the Holders of the Class B-1 Certificates, the
related Interest Distributable Amount for that date;
(C) to the Holders of the Class B-1 Certificates, an amount
allocable to principal equal to its Pro Rata Share for
such Distribution Date until the Class Certificate
Principal Balance of such Class is reduced to zero;
(D) to the Holders of the Class B-2 Certificates, the
related Interest Distributable Amount for that date;
(E) to the Holders of the Class B-2 Certificates, an amount
allocable to principal equal to its Pro Rata Share for
such Distribution Date until the Class Certificate
Principal Balance of such Class is reduced to zero;
(F) to the Holders of the Class B-3 Certificates, the
related Interest Distributable Amount for that date;
(G) to the Holders of the Class B-3 Certificates, an amount
allocable to principal equal to its Pro Rata Share for
such Distribution Date until the Class Certificate
Principal Balance of such Class is reduced to zero;
(H) to the Holders of the Class B-4 Certificates, the
related Interest Distributable Amount for that date;
(I) to the Holders of the Class B-4 Certificates, an amount
allocable to principal equal to its Pro Rata Share for
such Distribution Date until the Class Certificate
Principal Balance of such Class is reduced to zero;
(J) to the Holders of the Class B-5 Certificates, the
related Interest Distributable Amount for that date;
(K) to the Holders of the Class B-5 Certificates, an amount
allocable to principal equal to its Pro Rata Share for
such Distribution Date until the Class Certificate
Principal Balance of such Class is reduced to zero;
(L) to the Holders of the Class B-6 Certificates, the
related Interest Distributable Amount for that date;
(M) to the Holders of the Class B-6 Certificates, an amount
allocable to principal equal to its Pro Rata Share for
such Distribution Date until the Class Certificate
Principal Balance of such Class is reduced to zero; and
(N) to the Holder of the Class A-R Certificate, any
Available Funds then remaining.
(b) Amounts to be paid to the Holders of a Class of Certificates shall be
payable with respect to all Certificates of that Class, pro rata, based on the
Certificate Principal Balance or Certificate Notional Balance, as applicable,
of each Certificate of that Class.
(c) [Reserved].
(d) On each Distribution Date, the Interest Distributable Amounts for the
Classes of Senior Certificates and Subordinate Certificates on such
Distribution Date shall be reduced by the pro rata share of each such Class
in:
(i) Net Prepayment Interest Shortfalls and Relief Act Reductions,
based on such Class's Interest Distributable Amount without taking into
account such Net Prepayment Interest Shortfalls and Relief Act
Reductions;
(ii) after the Special Hazard Coverage Termination Date, with
respect to each Mortgage Loan that became a Special Hazard Mortgage Loan
during the related Prepayment Period, the excess of one month's interest
at the related Net Loan Rate on the Stated Principal Balance of such
Mortgage Loan as of the Due Date in such month over the amount of
Liquidation Proceeds applied as interest on such Mortgage Loan with
respect to such related Prepayment Period;
(iii) after the Bankruptcy Coverage Termination Date, with respect
to each Mortgage Loan that became subject to a Bankruptcy Loss during the
related Prepayment Period, the interest portion of the related Debt
Service Reduction or Deficient Valuation; and
(iv) after the Fraud Coverage Termination Date, with respect to each
Mortgage Loan that became a Fraud Loan during the related Prepayment
Period, the excess of one month's interest at the related Net Loan Rate
on the Stated Principal Balance of such Mortgage Loan as of the Due Date
in such month over the amount of Liquidation Proceeds applied as interest
on such Mortgage Loan with respect to such month.
(e) Notwithstanding the priority and allocation set forth in Section
4.01(a)(iv) above, if with respect to any Class of Subordinate Certificates on
any Distribution Date the sum of the related Class Subordination Percentages
of such Class and of all other Classes of Subordinate Certificates which have
a higher numerical Class designation than such Class (the "Applicable Credit
Support Percentage") is less than the Original Applicable Credit Support
Percentage for such Class, no distribution of Principal Prepayments will be
made to any such Classes (the "Restricted Classes") and the amount of such
Principal Prepayment otherwise distributable to the Restricted Classes shall
be distributed to any Classes of Subordinate Certificates having lower
numerical Class designations than such Class, pro rata, based on the Class
Certificate Principal Balances of the respective Classes immediately prior to
such Distribution Date and shall be distributed in the sequential order
provided in Section 4.01(a)(iv) above.
(f) Distributions on Physical Certificates. The Trustee shall make
distributions in respect of a Distribution Date to each Certificateholder of
record on the related Record Date (other than as provided in Section 10.01
hereof respecting the final distribution), in the case of Certificateholders
of the Physical Certificates, by check or money order mailed to such
Certificateholder at the address appearing in the Certificate Register, or by
wire transfer. Distributions among Certificateholders of a Class shall be made
in proportion to the Percentage Interests evidenced by the Certificates of
that Class held by such Certificateholders.
(g) Distributions on Book-Entry Certificates. Each distribution with
respect to a Book-Entry Certificate shall be paid to the Depository, which
shall credit the amount of such distribution to the accounts of its Depository
Participants in accordance with its normal procedures. Each Depository
Participant shall be responsible for disbursing such distribution to the
Certificate Owners that it represents and to each indirect participating
brokerage firm (a "brokerage firm" or "indirect participating firm") for which
it acts as agent. Each brokerage firm shall be responsible for disbursing
funds to the Certificate Owners that it represents. All such credits and
disbursements with respect to a Book-Entry Certificate are to be made by the
Depository and the Depository Participants in accordance with the provisions
of the Certificates. None of the Trustee, the Depositor, the Servicer or the
Seller shall have any responsibility therefor.
SECTION 4.02. [Reserved].
SECTION 4.03. Allocation of Realized Losses.
(a) On or prior to each Determination Date, the Servicer shall determine
the total amount of Realized Losses, including Excess Losses, with respect to
the Mortgage Loans and the related Distribution Date, and provide such
information to the Trustee, accompanied by its Officers' Certificate.
(b) Realized Losses, Bankruptcy Losses, Fraud Losses and Special Hazard
Losses with respect to any Distribution Date shall be allocated as follows:
(i) Realized Losses, Bankruptcy Losses, Fraud Losses and Special
Hazard Losses (other than Excess Losses) shall be allocated:
first, to the Subordinate Certificates in reverse order of their
respective numerical Class designations (beginning with the Class of
Subordinate Certificates with the highest numerical Class
designation) until the Class Certificate Principal Balance of each
such Class is reduced to zero; and
second, to the Senior Certificates other than the Class X
Certificates, pro rata, until the Class Certificate Principal
Balance of each Class of Senior Certificates is reduced to zero;
(ii) any Excess Losses on the Mortgage Loans shall be allocated to
the Senior Certificates and the Subordinate Certificates, pro rata, on
the basis of the respective Class Certificate Principal Balances of the
Classes of Senior Certificates and Subordinate Certificates.
(c) The Class Certificate Principal Balance of the Class of Subordinate
Certificates then outstanding with the highest numerical Class designation
shall be reduced on each Distribution Date by the amount, if any, by which the
aggregate of the Class Certificate Principal Balances of all outstanding
Classes of Certificates (after giving effect to the distribution of principal
and the allocation of Realized Losses, Bankruptcy Losses, Fraud Losses and
Special Hazard Losses and Excess Losses on such Distribution Date) exceeds the
aggregate of the Stated Principal Balances of all the Mortgage Loans for the
following Distribution Date.
(d) Any Realized Loss, Bankruptcy Loss, Fraud Loss, Special Hazard Loss
or Excess Loss allocated to a Class of Certificates or any reduction in the
Class Certificate Principal Balance of a Class of Certificates pursuant to
Section 4.03(b) or (c) shall be allocated among the Certificates of such
Class, pro rata, in proportion to their respective Certificate Principal
Balances.
(e) Any allocation of Realized Losses to a Certificate or any reduction
in the Certificate Principal Balance of a Certificate pursuant to Section
4.03(b) or (c) shall be accomplished by reducing the Certificate Principal
Balance thereof immediately following the distributions made on the related
Distribution Date in accordance with the definition of "Certificate Principal
Balance".
SECTION 4.04. Statements.
(a) On each Distribution Date, based, as applicable, on information
provided to it by the Servicer, the Trustee shall make available to each
Holder of the Regular Certificates, the Seller, the Servicer and the Rating
Agencies, a statement (the "Distribution Date Statement") as to the
distributions made on such Distribution Date:
(i) the amount of the distribution made on such Distribution Date to
the Holders of each Class of Certificates allocable to principal;
(ii) the amount of the distribution made on such Distribution Date
to the Holders of each Class of Certificates allocable to interest;
(iii) the Pro Rata Senior Percentage, Senior Percentage, Senior
Prepayment Percentage and Subordinate Percentage for the following
Distribution Date;
(iv) the aggregate amount of servicing compensation received by the
Servicer during the related Due Period and such other customary
information as the Trustee deems necessary or desirable, or which a
Certificateholder reasonably requests, to enable Certificateholders to
prepare their tax returns;
(v) the aggregate amount of Advances for the related Due Period and
the amount of unreimbursed Advances;
(vi) the Special Hazard Loss Coverage Amount, the Fraud Loss
Coverage Amount and the Bankruptcy Loss Coverage Amount, each as of the
related Determination Date;
(vii) the Pool Balance and Net WAC at the Close of Business at the
end of the related Due Period;
(viii) the aggregate Principal Balance of the Mortgage Loans at the
Close of Business at the end of the related Due Period;
(ix) the number, weighted average remaining term to maturity and
weighted average Loan Rate of the Mortgage Loans as of the related Due
Date;
(x) the number and aggregate unpaid principal balance of Mortgage
Loans (a) 30 to 59 days Delinquent, (b) 60 to 89 days Delinquent, (c) 90
or more days Delinquent, (d) as to which foreclosure proceedings have
been commenced and (e) in bankruptcy, in each case as of the Close of
Business on the last day of the calendar month preceding such
Distribution Date;
(xi) the book value of any REO Property as of the Close of Business
on the last Business Day of the calendar month preceding the Distribution
Date, and, cumulatively, the total number and cumulative principal
balance of all REO Properties as of the Close of Business of the last day
of the preceding Due Period;
(xii) the aggregate amount of Principal Prepayments made during the
related Prepayment Period;
(xiii) the aggregate amount of Realized Losses incurred during the
related Due Period and the cumulative amount of Realized Losses;
(xiv) the Class Certificate Principal Balance of each Class of
Certificates (other than the Class X Certificates) and the Class X
Certificate Notional Balance of the Class X Certificates, after giving
effect to any distributions made thereon, on such Distribution Date;
(xv) the Interest Distributable Amount in respect of each Class of
the Certificates, for such Distribution Date and the respective portions
thereof, if any, remaining unpaid following the distributions made in
respect of such Certificates on such Distribution Date;
(xvi) the aggregate amount of any Prepayment Interest Shortfalls and
the Unpaid Interest Shortfall Amount for such Distribution Date, to the
extent not covered by payments by the Servicer pursuant to Section 3.24
hereof;
(xvii) the Available Funds;
(xviii) the Pass-Through Rate for each Class of Certificates for
such Distribution Date; and
(xix) the aggregate Principal Balance of Mortgage Loans purchased by
the Servicer or the Seller during the related Due Period, and indicating
the Section of this Agreement requiring or allowing the purchase of each
such Mortgage Loan.
The Trustee will make the Distribution Date Statement (and, at its
option, any additional files containing the same information in an alternative
format) available each month to Certificateholders and the other parties to
this Agreement via the Trustee's internet website and will forward the
Distribution Date Statement to each Rating Agency. The Trustee's internet
website shall initially be located at "http://www.ctslink.com". Assistance in
using the website can be obtained by calling the Trustee's customer service
desk at (301) 815-6600. Parties that are unable to use the above distribution
options are entitled to have a paper copy mailed to them via first class mail
by calling the customer service desk and requesting same. The Trustee shall
have the right to change the way Distribution Date Statements are distributed
in order to make such distribution more convenient and/or more accessible to
the above parties and the Trustee shall provide timely and adequate
notification to all the above parties regarding any such changes. The
Trustee's obligations pursuant to this Section 4.04 are limited to the extent
of its receipt of all necessary information from the Servicer. The Trustee may
fully rely upon and shall have no liability with respect to information
provided by the Servicer.
In the case of information furnished pursuant to subclauses (i) and (ii)
above, the amounts shall be expressed in a separate section of the report as a
dollar amount for each Class for each $1,000 original dollar amount as of the
Cut-Off Date.
In addition, certain additional information as agreed upon by the
Servicer will be provided by the Trustee to a Certificateholder upon the
request of such Certificateholder.
(b) Within a reasonable period of time after the end of each calendar
year, the Trustee shall, upon written request, furnish to each Person who at
any time during the calendar year was a Certificateholder of a Regular
Certificate, if requested in writing by such Person, such information as is
reasonably necessary to provide to such Person a statement containing the
information set forth in subclauses (i) through (iii) above, aggregated for
such calendar year or applicable portion thereof during which such Person was
a Certificateholder. Such obligation of the Trustee shall be deemed to have
been satisfied to the extent that substantially comparable information shall
be prepared and furnished by the Trustee to Certificateholders pursuant to any
requirements of the Code as are in force from time to time.
(c) On each Distribution Date, the Trustee shall supply an electronic
tape to Bloomberg Financial Markets, Inc. in a format acceptable to Bloomberg
Financial Markets, Inc.
(d) [Reserved].
SECTION 4.05. Remittance Reports; Advances.
(a) No later than the fifth Business Day prior to each Distribution Date,
the Servicer shall deliver to the Trustee, by telecopy or electronic mail (or
by such other means as the Servicer and the Trustee may agree from time to
time), a remittance report (the "Remittance Report") with respect to the
related Distribution Date, which Remittance Report shall include such
information with respect to the Mortgage Loans as the Trustee may reasonably
require to perform the calculations necessary to make the distributions
contemplated by Section 4.01 hereof and to prepare the Distribution Date
Statements contemplated by Section 4.04 hereof. The Trustee shall not be
responsible to recompute, recalculate or verify any information provided to it
by the Servicer.
(b) The amount of Advances to be made by the Servicer for any
Distribution Date shall equal, subject to Section 4.05(d) below, the sum of
(i) the aggregate amount of Monthly Payments (net of the related Servicing
Fee) due during the related Due Period in respect of the Mortgage Loans, which
Monthly Payments were Delinquent on a contractual basis as of the Close of
Business on the related Determination Date and (ii) with respect to each REO
Property, which REO Property was acquired during or prior to the related Due
Period and as to which REO Property an REO Disposition did not occur during
the related Due Period, an amount equal to the excess, if any, of the REO
Imputed Interest on such REO Property for the most recently ended calendar
month, over the net income from such REO Property transferred to the
Distribution Account pursuant to Section 3.23 hereof for distribution on such
Distribution Date.
On or before the Close of Business in the City of New York on each
Servicer Remittance Date, the Servicer shall remit in immediately available
funds to the Trustee for deposit in the Distribution Account an amount equal
to the aggregate amount of Advances, if any, to be made in respect of the
Mortgage Loans and REO Properties for the related Distribution Date either (i)
from its own funds previously deposited in the Collection Account or (ii) from
the Collection Account, to the extent of funds held therein for future
distribution (in which case it will cause to be made an appropriate entry in
the records of the Collection Account that amounts held for future
distribution have been, as permitted by this Section 4.05, used by the
Servicer in discharge of any such Advance) or (iii) in the form of any
combination of (i) and (ii) aggregating the total amount of Advances to be
made by the Servicer with respect to the Mortgage Loans and REO Properties.
Any amounts held for future distribution and so used shall be appropriately
reflected in the Servicer's records and replaced by the Servicer by deposit in
the Collection Account on or before any future Servicer Remittance Date to the
extent that the Available Funds for the related Distribution Date (determined
without regard to Advances to be made on the Servicer Remittance Date) shall
be less than the total amount that would be distributed to the Classes of
Certificateholders pursuant to Section 4.01 on such Distribution Date if such
amounts held for future distributions had not been so used to make Advances.
The Trustee will promptly provide notice to the Servicer by telecopy in the
event that the amount remitted by the Servicer to the Trustee on such date is
less than the Advances required to be made by the Servicer for the related
Distribution Date, as set forth in the related Remittance Report.
(c) The obligation of the Servicer to make such Advances is mandatory,
notwithstanding any other provision of this Agreement but subject to (d) below
and, with respect to any Mortgage Loan serviced by the Servicer, shall
continue until the Mortgage Loan is paid in full or until the recovery of all
Liquidation Proceeds thereon.
(d) Notwithstanding anything herein to the contrary, no Advance or
Servicing Advance shall be required to be made hereunder by the Servicer if
such Advance or Servicing Advance would, if made, constitute a Nonrecoverable
Advance. The determination by the Servicer that it has made a Nonrecoverable
Advance or that any proposed Advance or Servicing Advance, if made, would
constitute a Nonrecoverable Advance, shall be evidenced by an Officers'
Certificate of the Servicer delivered to the Depositor and the Trustee.
ARTICLE V
THE CERTIFICATES
SECTION 5.01. The Certificates.
Each of the Class A-1, Class A-2 and Class A-3 Certificates shall be
substantially in the form annexed hereto as Exhibit A, the Class X
Certificates shall be substantially in the form annexed hereto as Exhibit B,
the Class A-R Certificate shall be substantially in the form annexed hereto as
Exhibit C, and each of the Subordinate Certificates shall be substantially in
the form annexed hereto as Exhibit D. Each of the Certificates shall, on
original issue, be executed, authenticated and delivered by the Trustee to or
upon the order of the Depositor concurrently with the sale and assignment to
the Trustee of the Trust Fund. Each Class of the Regular Certificates shall be
initially evidenced by one or more Certificates representing a Percentage
Interest with a minimum dollar denomination of $25,000 and integral dollar
multiples of $1 in excess thereof, except that one Certificate of each such
Class of Certificates may be in a different denomination so that the sum of
the denominations of all outstanding Certificates of such Class shall equal
the Class Certificate Principal Balance or Class Certificate Notional Balance
of such Class on the Closing Date. The Class A-R Certificate is issuable only
in a Percentage Interest of 100%.
The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature on behalf of the Trustee by a Responsible 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 Trustee shall bind the Trust, 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 Certificate. No Certificate shall be entitled to any
benefit under this Agreement or be valid for any purpose, unless such
Certificate shall have been manually authenticated by the Trustee
substantially in the form provided for herein, and such 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. Subject to
Section 5.02(c), the Senior Certificates (other than the Class A-R
Certificate) and the Class B-1, Class B-2 and Class B-3 Certificates shall be
Book-Entry Certificates. The Class A-R Certificate and the Class B-4, Class
B-5 and Class B-6 Certificates shall be Physical Certificates.
SECTION 5.02. Registration of Transfer and Exchange of Certificates.
(a) The Certificate Registrar shall cause to be kept at the Corporate
Trust Office a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Registrar shall provide for
the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall initially serve as
Certificate Registrar for the purpose of registering Certificates and
transfers and exchanges of Certificates as herein provided.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Certificate Registrar maintained for such purpose
pursuant to the foregoing paragraph (or the deemed surrender of a Certificate
pursuant to Section 8.17(g)) and, in the case of a Private Certificate or
Class A-R Certificate, upon satisfaction of the conditions set forth below,
the Trustee on behalf of the Trust shall execute, authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Certificates of the same aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged
for other Certificates in authorized denominations and the same aggregate
Percentage Interests, upon surrender of the Certificates to be exchanged at
any such office or agency. Whenever any Certificates are so surrendered for
exchange, the Trustee shall execute on behalf of the Trust and authenticate
and deliver the Certificates which the Certificateholder making the exchange
is entitled to receive. Every Certificate presented or surrendered for
registration of transfer or exchange shall (if so required by the Trustee or
the Certificate Registrar) be duly endorsed by, or be accompanied by a written
instrument of transfer satisfactory to the Trustee and the Certificate
Registrar duly executed by, the Holder thereof or his attorney duly authorized
in writing.
(b) Except as provided in paragraph (c) below, the Book-Entry
Certificates shall at all times remain registered in the name of the
Depository or its nominee and at all times: (i) registration of such
Certificates may not be transferred by the Trustee or the Certificate
Registrar except to another Depository; (ii) the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Certificates; (iii) ownership and transfers of
registration of such Certificates on the books of the Depository shall be
governed by applicable rules established by the Depository; (iv) the
Depository may collect its usual and customary fees, charges and expenses from
its Depository Participants; (v) the Trustee shall for all purposes deal with
the Depository as representative of the Certificate Owners of the Certificates
for purposes of exercising the rights of Holders under this Agreement, and
requests and directions for and votes of such representative shall not be
deemed to be inconsistent if they are made with respect to different
Certificate Owners; (vi) the Trustee and the Certificate Registrar may rely
and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to indirect participating firms and
Persons shown on the books of such indirect participating firms as direct or
indirect Certificate Owners; and (vii) the direct participants of the
Depository shall have no rights under this Agreement under or with respect to
any of the Certificates held on their behalf by the Depository, and the
Depository may be treated by the Trustee, the Certificate Registrar and their
respective agents, employees, officers and directors as the absolute owner of
the Certificates for all purposes whatsoever.
All transfers by Certificate Owners of Book-Entry Certificates shall be
made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owners. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners that it represents or of brokerage firms for which it acts
as agent in accordance with the Depository's normal procedures. The parties
hereto are hereby authorized to execute a Letter of Representations with the
Depository or take such other action as may be necessary or desirable to
register a Book-Entry Certificate to the Depository. In the event of any
conflict between the terms of any such Letter of Representation and this
Agreement, the terms of this Agreement shall control.
(c) If (i)(x) the Depository or the Depositor advises the Trustee in
writing that the Depository is no longer willing or able to discharge properly
its responsibilities as Depository and (y) the Trustee or the Depositor is
unable to locate a qualified successor, (ii) the Depositor, at its sole
option, with the consent of the Trustee, elects to terminate the book-entry
system through the Depository or (iii) after the occurrence of a Servicer
Event of Termination, the Certificate Owners of each Book-Entry Certificate
representing Percentage Interests of such Classes aggregating not less than
51% advises the Trustee and Depository through the Financial Intermediaries
and the Depository Participants in writing that the continuation of a
book-entry system through the Depository to the exclusion of definitive, fully
registered certificates (the "Definitive Certificates") to Certificate Owners
is no longer in the best interests of the Certificate Owners. Upon surrender
to the Certificate Registrar of the Book-Entry Certificates by the Depository,
accompanied by registration instructions from the Depository for registration,
the Trustee shall, at the Depositor's expense, in the case of (ii) above, or
the Seller's expense, in the case of (i) and (iii) above, execute on behalf of
the Trust and authenticate the Definitive Certificates. Neither the Depositor
nor the Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on, such
instructions. Upon the issuance of Definitive Certificates, the Trustee, the
Certificate Registrar, the Servicer, any Paying Agent and the Depositor shall
recognize the Holders of the Definitive Certificates as Certificateholders
hereunder.
(d) No transfer, sale, pledge or other disposition of any Private
Certificate shall be made unless such disposition is exempt from the
registration requirements of the 1933 Act, and any applicable state securities
laws or is made in accordance with the 1933 Act and laws. In the event of any
such transfer, (i) unless such transfer is made in reliance upon Rule 144A (as
evidenced by the investment letter delivered to the Trustee, in substantially
the form attached hereto as Exhibit I under the 1933 Act, the Trustee and the
Depositor shall require a written Opinion of Counsel (which may be in-house
counsel) acceptable to and in form and substance reasonably satisfactory to
the Trustee and the Depositor that such transfer may be made pursuant to an
exemption, describing the applicable exemption and the basis therefor, from
the 1933 Act or is being made pursuant to the 1933 Act, which Opinion of
Counsel shall not be an expense of the Trustee or the Depositor or (ii) the
Trustee shall require the transferor to execute a transferor certificate (in
substantially the form attached hereto as Exhibit J) and the transferee to
execute an investment letter (in substantially the form attached hereto as
Exhibit I) acceptable to and in form and substance reasonably satisfactory to
the Depositor and the Trustee certifying to the Depositor and the Trustee the
facts surrounding such transfer, which investment letter shall not be an
expense of the Trustee or the Depositor. Each Holder of a Private Certificate
desiring to effect such transfer shall, and does hereby agree to, indemnify
the Trustee, the Seller, the Servicer and the Depositor 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 that is also a Physical
Certificate shall be made unless the Trustee shall have received either (i) a
representation from the transferee of such Certificate, acceptable to and in
form and substance satisfactory to the Trustee and the Depositor (such
requirement is satisfied only by the Trustee's receipt of a representation
letter from the transferee substantially in the form of Exhibit I hereto), to
the effect that such transferee is not an employee benefit plan subject to
Section 406 of ERISA or a plan or arrangement subject to Section 4975 of the
Code, nor a person acting on behalf of any such plan or arrangement nor using
the assets of any such plan or arrangement to effect such transfer or (ii) if
the purchaser is an insurance company, a representation that the purchaser is
an insurance company which is purchasing such Certificates with funds
contained in an "insurance company general account" (as such term is defined
in Section V(e) of Prohibited Transaction Class Exemption ("PTCE") 95-60 and
that the purchase and holding of such Certificates are covered under Sections
I and III of PTCE 95-60 or (iii) an Opinion of Counsel satisfactory to the
Trustee, which Opinion of Counsel shall not be an expense of either the
Trustee or the Trust, addressed to the Trustee, to the effect that the
purchase and holding of such ERISA-Restricted Certificate will not constitute
or result in a prohibited transaction under Section 406 of ERISA or Section
4975 of the Code, will not result in the assets of the Trust being deemed to
be "plan assets" and subject to the prohibited transaction provisions of ERISA
and the Code and will not subject the Trustee, the Servicer or the Depositor
to any obligation in addition to those expressly undertaken in this Agreement
or to any liability. Notwithstanding anything else to the contrary herein, any
purported transfer of an ERISA-Restricted Certificate that is also a Physical
Certificate to an employee benefit plan subject to ERISA or Section 4975 of
the Code without the delivery to the Trustee of an Opinion of Counsel
satisfactory to the Trustee as described above shall be void and of no effect.
In the case of an ERISA-Restricted Certificate that is also a Book-Entry
Certificate, for purposes of clauses (i) or (ii) of the first sentence of the
preceding paragraph, such representations shall be deemed to have been made to
the Trustee by the transferee's acceptance of such ERISA-Restricted
Certificate that is also a Book-Entry Certificate (or the acceptance by a
Certificate Owner of the beneficial interest in such Certificate).
To the extent permitted under applicable law (including, but not limited
to, ERISA), neither the Trustee nor the Certificate Registrar shall have any
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(d) 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
Trustee or the Certificate Registrar in accordance with the foregoing
requirements. In addition, neither the Trustee nor the Certificate Registrar
shall be required to monitor, determine or inquire as to compliance with the
transfer restrictions with respect to any ERISA-Restricted Certificates in the
form of Book-Entry Certificates, and neither the Trustee nor the Certificate
Registrar shall have any liability for transfers of Book-Entry Certificates or
any interests therein made in violation of the restrictions on transfer
described in the Prospectus Supplement and this Agreement.
(e) Each Person who has or who acquires any Ownership Interest in the
Class A-R Certificate shall be deemed by the acceptance or acquisition of such
Ownership Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Depositor or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (v)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Ownership Interest in the Class A-R Certificate are expressly
subject to the following provisions:
(i) Each Person holding or acquiring any Ownership Interest in the
Class A-R Certificate shall be a Permitted Transferee and shall promptly
notify the Trustee of any change or impending change in its status as a
Permitted Transferee.
(ii) No Ownership Interest in the Class A-R Certificate may be
registered on the Closing Date or thereafter transferred, and the Trustee
shall not register the Transfer of the Class A-R Certificate unless, in
addition to the certificates required to be delivered under subsection
(b) above, the Trustee shall have been furnished with an affidavit
("Transfer Affidavit") of the initial owner or proposed transferee in the
form attached hereto as Exhibit L.
(iii) In connection with any proposed transfer of any Ownership
Interest in a Class A-R Certificate, the Trustee shall as a condition to
registration of the transfer, require delivery to it, in form and
substance satisfactory to it, of each of the following:
A. a Transferor Certificate in the form of Exhibit K hereto
from the proposed transferee to the effect that such transferee is a
Permitted Transferee and that it is not acquiring an Ownership
Interest in the Class A-R Certificate that is the subject of the
proposed transfer as a nominee, trustee or agent for any Person who
is not a Permitted Transferee; and
B. a covenant of the proposed transferee to the effect that the
proposed transferee agrees to be bound by and to abide by the
transfer restrictions applicable to the Class A-R Certificate.
(iv) Any attempted or purported Transfer of any Ownership Interest
in the Class A-R Certificate in violation of the provisions of this
Section shall be absolutely null and void and shall vest no rights in the
purported transferee. If any purported transferee shall, in violation of
the provisions of this Section, become a Holder of the Class A-R
Certificate, then the prior Holder of the Class A-R Certificate that is a
Permitted Transferee shall, upon discovery that the registration of
Transfer of the Class A-R Certificate was not in fact permitted by this
Section, be restored to all rights as Holder thereof retroactive to the
date of registration of transfer of the Class A-R Certificate. Neither
the Trustee nor the Certificate Registrar shall have any liability to any
Person for any registration of Transfer of the Class A-R Certificate that
is in fact not permitted by this Section or for making any distributions
due on the Class A-R 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 Trustee received the documents specified in
clause (iii). The Trustee shall be entitled to recover from any Holder of
the Class A-R Certificate that was in fact not a Permitted Transferee at
the time such distributions were made all distributions made on the Class
A-R Certificate. Any such distributions so recovered by the Trustee shall
be distributed and delivered by the Trustee to the last Holder of the
Class A-R Certificate that is a Permitted Transferee.
(v) If any Person other than a Permitted Transferee acquires any
Ownership Interest in the Class A-R Certificate in violation of the
restrictions in this Section, then the Trustee shall have the right but
not the obligation, without notice to the Holder of the Class A-R
Certificate or any other Person having an Ownership Interest therein, to
notify the Depositor to arrange for the sale of the Class A-R
Certificate. The proceeds of such sale, net of commissions (which may
include commissions payable to the Depositor or its affiliates in
connection with such sale), expenses and taxes due, if any, will be
remitted by the Trustee to the previous Holder of the Class A-R
Certificate that is a Permitted Transferee, except that in the event that
the Trustee determines that the Holder of the Class A-R Certificate may
be liable for any amount due under this Section or any other provisions
of this Agreement, the Trustee may withhold a corresponding amount from
such remittance as security for such claim. The terms and conditions of
any sale under this clause (v) shall be determined in the sole discretion
of the Trustee and it shall not be liable to any Person having an
Ownership Interest in the Class A-R Certificate as a result of its
exercise of such discretion.
(vi) If any Person other than a Permitted Transferee acquires any
Ownership Interest in the Class A-R Certificate in violation of the
restrictions in this Section, then the Trustee upon receipt of reasonable
compensation will provide to the Internal Revenue Service, and to the
persons specified in Sections 860E(e)(3) and (6) of the Code, information
needed to compute the tax imposed under Section 860E(e)(5) of the Code on
transfers of residual interests to disqualified organizations.
The foregoing provisions of this Section shall cease to apply to transfers
occurring on or after the date on which there shall have been delivered to the
Trustee and the Servicer, in form and substance satisfactory to the Trustee,
(i) written notification from the Rating Agencies that the removal of the
restrictions on Transfer set forth in this Section will not cause such Rating
Agency to downgrade its rating of the Certificates and (ii) an Opinion of
Counsel to the effect that such removal will not cause either REMIC hereunder
to fail to qualify as a REMIC.
(f) No service charge shall be made for any registration of transfer or
exchange of Certificates of any Class, but the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of
Certificates.
All Certificates surrendered for registration of transfer or exchange
shall be cancelled by the Certificate Registrar and disposed of pursuant to
its standard procedures.
SECTION 5.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar or the Certificate Registrar receives evidence to its satisfaction
of the destruction, loss or theft of any Certificate and (ii) there is
delivered to the Trustee, the Depositor and the Certificate Registrar such
security or indemnity as may be required by them to save each of them
harmless, then, in the absence of notice to the Trustee or the Certificate
Registrar that such Certificate has been acquired by a bona fide purchaser,
the Trustee shall execute on behalf of the Trust, authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and Percentage Interest. Upon the
issuance of any new Certificate under this Section, the Trustee or the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) in connection therewith. Any duplicate Certificate
issued pursuant to this Section, shall constitute complete and indefeasible
evidence of ownership in the Trust, as if originally issued, whether or not
the lost, stolen or destroyed Certificate shall be found at any time.
SECTION 5.04. Persons Deemed Owners.
The Servicer, the Depositor, the Trustee, the Certificate Registrar, any
Paying Agent and any agent of the Servicer, the Depositor, the Certificate
Registrar, any Paying Agent or the Trustee may treat the Person, including a
Depository, in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section
4.01 hereof and for all other purposes whatsoever, and none of the Servicer,
the Trust, the Trustee, the Certificate Registrar, the Paying Agent or any
agent of any of them shall be affected by notice to the contrary.
SECTION 5.05. Appointment of Paying Agent.
(a) The Paying Agent shall make distributions to Certificateholders from
the Distribution Account pursuant to Section 4.01 hereof and shall report the
amounts of such distributions to the Trustee. The duties of the Paying Agent
may include the obligation (i) to withdraw funds from the Collection Accounts
pursuant to Section 3.11(a) hereof and for the purpose of making the
distributions referred to above and (ii) to distribute statements and provide
information to Certificateholders as required hereunder. The Paying Agent
hereunder shall at all times be an entity duly incorporated and validly
existing under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers and subject to
supervision or examination by federal or state authorities. The Paying Agent
shall initially be the Trustee. The Trustee may appoint a successor to act as
Paying Agent, which appointment shall be reasonably satisfactory to the
Depositor.
(b) The Trustee shall cause the Paying Agent (if other than the Trustee)
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent shall hold all sums, if
any, held by it for payment to the Certificateholders in trust for the benefit
of the Certificateholders entitled thereto until such sums shall be paid to
such Certificateholders and shall agree that it shall comply with all
requirements of the Code regarding the withholding of payments in respect of
federal income taxes due from Certificate Owners and otherwise comply with the
provisions of this Agreement applicable to it.
ARTICLE VI
THE SELLER, THE SERVICER AND THE DEPOSITOR
SECTION 6.01. Liability of the Seller, the Servicer and the Depositor.
The Seller and the Servicer shall be liable in accordance herewith only
to the extent of the obligations specifically imposed upon and undertaken by
the Seller or the Servicer, as the case may be, herein. The Depositor shall be
liable in accordance herewith only to the extent of the obligations
specifically imposed upon and undertaken by the Depositor herein.
SECTION 6.02. Merger or Consolidation of, or Assumption of the
Obligations of, the Seller, the Servicer or the Depositor.
Any entity into which the Seller, the Servicer or the Depositor may be
merged or consolidated, or any entity resulting from any merger, conversion or
consolidation to which the Seller, the Servicer or the Depositor shall be a
party, or any corporation succeeding to the business of the Seller, the
Servicer or the Depositor, shall be the successor of the Seller, the Servicer
or the Depositor, 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 Servicer shall satisfy all the requirements of Section 7.02
hereof with respect to the qualifications of a successor Servicer.
SECTION 6.03. Limitation on Liability of the Servicer and Others.
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to the Trust or the
Certificateholders for any action taken or for refraining from the taking of
any action by the Servicer in good faith pursuant to this Agreement, or for
errors in judgment; provided, however, that this provision shall not protect
the Servicer or any such Person against any liability that would otherwise be
imposed by reason of its willful misfeasance, bad faith or negligence in the
performance of duties of the Servicer or by reason of the Servicer's failure
to perform its obligations and duties hereunder. The preceding sentence shall
not limit the obligations of the Servicer pursuant to Section 6.05 hereof. The
Servicer and any director or officer or employee or agent of the Servicer may
rely in good faith on any document of any kind prima facie properly executed
and submitted by any Person respecting any matters arising hereunder. The
Servicer and any director or officer or employee or agent of the Servicer
shall be indemnified by the Trust 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 its willful misfeasance, bad faith or negligence in the performance
of duties hereunder or by reason of its failure to perform its obligations and
duties hereunder. The Servicer shall be under no obligation to appear in,
prosecute or defend any legal action that is not incidental to its respective
duties hereunder, provided, however, that the Servicer may undertake any such
action which it may deem necessary or desirable in respect of this Agreement,
and the rights and duties of the parties hereto and the interests of the
Certificateholders hereunder. The Servicer's right to indemnity or
reimbursement pursuant to this Section shall be subject to the payment
priority described in Section 4.01(a) hereof and shall survive any resignation
or termination of the Servicer pursuant to Section 6.04 or 7.01 hereof with
respect to any losses, expenses, costs or liabilities arising prior to such
resignation or termination (or arising from events that occurred prior to such
resignation or termination). This paragraph shall apply to the Servicer solely
in its capacity as Servicer hereunder and in no other capacities.
SECTION 6.04. Servicer Not to Resign.
Subject to the provisions of Section 7.01 and Section 6.02 hereof, the
Servicer shall not resign from the obligations and duties hereby imposed on it
except (i) upon determination that the performance of the Servicer's
obligations or duties hereunder are no longer permissible under applicable law
or are in material conflict by reason of applicable law with any other
activities carried on by the Servicer or its subsidiaries or Affiliates, the
other activities of the Servicer so causing such a conflict being of a type
and nature carried on by the Servicer or its subsidiaries or the Servicer
Affiliates at the date of this Agreement or (ii) upon satisfaction of the
following conditions: (a) the Servicer has proposed a successor Servicer to
the Trustee in writing and such proposed successor Servicer is acceptable to
the Trustee, (b) each Rating Agency shall have delivered a letter to the
Trustee prior to the appointment of the successor Servicer stating that the
proposed appointment of such successor Servicer as the Servicer hereunder will
not result in the reduction or withdrawal of the then current rating of the
Regular Certificates; provided, however, that no such resignation by the
Servicer shall become effective until such successor servicer or, in the case
of clause (i) above, the Trustee shall have assumed the Servicer's
responsibilities and obligations hereunder or, in the case of clause (ii)
above, the Trustee shall have designated a successor servicer in accordance
with Section 7.02 hereof. Any such resignation shall not relieve the resigning
Servicer of responsibility for any of the obligations specified in Sections
7.01 and 7.02 hereof as obligations that survive the resignation or
termination of the Servicer. Any such determination permitting the resignation
of the Servicer pursuant to clause (i) above shall be evidenced by an Opinion
of Counsel to such effect delivered to the Trustee.
SECTION 6.05. Delegation of Duties.
In the ordinary course of business, the Servicer at any time may delegate
any of its duties hereunder to any Person, including any Servicer Affiliates,
who agrees to conduct such duties in accordance with standards comparable to
those set forth in Section 3.01 hereof. Such delegation shall not relieve the
Servicer of its liabilities and responsibilities with respect to such duties
and shall not constitute a resignation within the meaning of Section 6.04
hereof.
ARTICLE VII
DEFAULT
SECTION 7.01. Servicer Events of Termination.
(a) If any one of the following events (each, a "Servicer Event of
Termination") shall occur and be continuing:
(i) the failure by the Servicer to make any Advance or to deposit in
the Collection Account or the Distribution Account any deposit required
to be made under the terms of this Agreement, which continues unremedied
for a period of no later than 12:00 noon on one Business Day after the
date upon which written notice of such failure requiring the same to be
remedied shall have been given to the Servicer by any other Person; or
(ii) the failure by the Servicer to make any required Servicing
Advance which failure continues unremedied for a period of 60 days, or
the failure by the Servicer duly to observe or perform, in any material
respect, any other covenants, obligations or agreements of the Servicer
as set forth in this Agreement, which failure continues unremedied for a
period of 60 days, after the date (A) on which written notice of such
failure, requiring the same to be remedied, shall have been given to the
Servicer by the Trustee or to the Servicer and the Trustee by Holders of
Regular Certificates evidencing at least 25% of the Voting Rights or (B)
actual knowledge of such failure by a Servicing Officer of the Servicer;
or
(iii) the entry against the Servicer of a decree or order by a court
or agency or supervisory authority having jurisdiction in the premises
for the appointment of a trustee, conservator, receiver or liquidator in
any insolvency, conservatorship, receivership, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding up or liquidation of the Servicer's affairs, and the continuance
of any such decree or order unstayed and in effect for a period of 60
days; or
(iv) the Servicer shall voluntarily go into liquidation, consent to
the appointment of a conservator or receiver or liquidator or similar
person in any insolvency, readjustment of debt, marshalling of assets and
liabilities or similar proceedings of or relating to the Servicer or of
or relating to all or substantially all of the Servicer's property; or a
decree or order of a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a conservator,
receiver, liquidator or similar person in any insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings, or
for the winding-up or liquidation of the Servicer's affairs, shall have
been entered against the Servicer and such decree or order shall have
remained in force undischarged, unbonded or unstayed for a period of 60
days; or the Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors or voluntarily suspend payment of its
obligations;
(b) then, and in each and every such case, so long as a Servicer Event of
Termination shall not have been remedied within the applicable grace period in
the case of (ii), (iii) and (iv) above, the Trustee may, and at the direction
of the Holders of each Class of Regular Certificates evidencing Percentage
Interests aggregating not less than 51%, by notice then given in writing to
the Servicer (and to the Trustee if given by Holders of Certificates) shall,
terminate all of the rights and obligations of the Servicer as the servicer
under this Agreement. Any such notice to the Servicer shall also be given to
the Rating Agencies, the Depositor and the Seller. On or after the receipt by
the Servicer (and by the Trustee if such notice is given by the Holders) of
such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Certificates or the Mortgage Loans or
otherwise, shall pass to and be vested in the Trustee; and, without
limitation, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the terminated Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer and
endorsement of each Mortgage Loan and related documents or otherwise. The
Servicer agrees to cooperate with the Trustee in effecting the termination of
the responsibilities and rights of the Servicer hereunder, including, without
limitation, the delivery to the Trustee of all documents and records requested
by it to enable it to assume the Servicer's functions under this Agreement
within ten Business Days subsequent to such notice, the transfer within one
Business Day subsequent to such notice to the Trustee for the administration
by it of all cash amounts that shall at the time be held by the Servicer and
to be deposited by it in the Collection Account, the Distribution Account, any
REO Account or the Servicing Account or that have been deposited by the
Servicer in such accounts or thereafter received by the Servicer with respect
to the Mortgage Loans or any REO Property received by the Servicer.
In connection with the termination of the Servicer, the Trustee will be
entitled to be reimbursed by the Trust Fund (in the event that the Servicer
does not timely reimburse the Trustee) for all of the reasonable costs
associated with the termination of the Servicer, appointment of any successor
Servicer and the transfer of the related servicing to the successor Servicer,
including without limitation all reasonable costs and expenses associated with
the completion, correction or manipulation of servicing data as may be
required to correct any errors or insufficiencies in the servicing data or
otherwise to enable the Trustee or the successor Servicer to service the
Mortgage Loans properly and effectively.
SECTION 7.02. Trustee to Act; Appointment of Successor.
(a) Within not more than 90 days from the date the Servicer (and the
Trustee, if notice is sent by the Holders) receives a notice of termination
pursuant to Section 7.01, the Trustee (or any successor Servicer appointed by
the Trustee in accordance with this Section 7.02) shall be the successor in
all respects to the terminated Servicer in its capacity as a 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 Servicer by the terms and provisions hereof arising on
and after its succession. As compensation therefor, the Trustee shall be
entitled to such compensation as the Servicer would have been entitled to
hereunder if no such notice of termination had been given. Notwithstanding the
above, (i) if the Trustee is unwilling to act as successor Servicer or (ii) if
the Trustee is legally unable so to act, the Trustee shall appoint or petition
a court of competent jurisdiction to appoint, any established housing and home
finance institution, bank or other mortgage loan or home equity loan servicer
having a net worth of not less than $15,000,000 as the successor to the
terminated Servicer hereunder in the assumption of all or any part of the
responsibilities, duties or liabilities of the terminated Servicer hereunder;
provided, however, that the appointment of any such successor Servicer shall
not result in the qualification, reduction or withdrawal of the ratings that
are in effect on the Certificates by the Rating Agencies as evidenced by a
letter to such effect from the Rating Agencies. Pending appointment of a
successor to the Servicer hereunder, unless the Trustee is prohibited by law
from so acting, the Trustee shall act in such capacity as hereinabove
provided. In connection with such appointment and assumption, the successor
shall be entitled to receive compensation out of payments on Mortgage Loans in
an amount equal to the compensation which the predecessor Servicer would
otherwise have received pursuant to Section 3.18 hereof. The appointment of a
successor Servicer shall not affect any liability of the predecessor Servicer
which may have arisen under this Agreement prior to its termination as
Servicer, including without limitation any liability to pay any deductible
under an insurance policy pursuant to Section 3.14 hereof or to indemnify the
Trustee pursuant to Section 8.05 hereof), nor shall any successor Servicer be
liable for any acts or omissions of the predecessor Servicer or for any breach
by the Servicer of any of its representations or warranties contained herein
or in any related document or agreement. The Trustee and such successor shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
(b) Any successor, including the Trustee, to the Servicer shall, during
the term of its service as the Servicer, continue to service and administer
the Mortgage Loans for the benefit of Certificateholders, and maintain in
force a policy or policies of insurance covering errors and omissions in the
performance of its obligations as the Servicer hereunder and a Fidelity Bond
in respect of its officers, employees and agents to the same extent as the
Servicer is so required pursuant to Section 3.14 hereof.
SECTION 7.03. Waiver of Servicer Events of Termination.
The Majority Certificateholders may, on behalf of all Certificateholders,
by notice in writing to the Servicer and the Trustee, waive any events
permitting removal of the Servicer as a servicer pursuant to this Article VII,
provided, however, that the Majority Certificateholders may not waive an event
that results in a failure to make any required distribution on a Certificate
without the consent of the Holder of such Certificate. Upon any waiver of a
Servicer Event of Termination, such event shall cease to exist and any
Servicer Event of Termination arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to
any subsequent or other event or impair any right consequent thereto except to
the extent expressly so waived. Notice of any such waiver shall be given by
the Trustee to the Rating Agencies.
SECTION 7.04. Notification to Certificateholders.
(a) Upon any termination or appointment of a successor to the Servicer
pursuant to this Article VII or Section 6.04 hereof, the Trustee shall give
prompt written notice thereof to the Certificateholders at their respective
addresses appearing in the Certificate Register and to the Rating Agencies.
(b) No later than 60 days after the occurrence of any event which
constitutes or which, with notice or a lapse of time or both, would constitute
a Servicer Event of Termination of which a Responsible Officer of the Trustee
becomes aware, the Trustee shall transmit by mail to all Certificateholders
notice of such occurrence unless such Servicer Event of Termination shall have
been waived or cured.
SECTION 7.05. Survivability of Servicer Liabilities.
Notwithstanding anything herein to the contrary, upon termination of the
Servicer hereunder, any liabilities of the Servicer which accrued prior to
such termination shall survive such termination.
ARTICLE VIII
THE TRUSTEE
SECTION 8.01. Duties of Trustee.
The Trustee, prior to the occurrence of a Servicer Event of Termination
and after the curing or waiver of all Servicer Events of Termination which may
have occurred, undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement. If a Servicer Event of Termination
has occurred (which has not been cured or waived) of which a Responsible
Officer has knowledge, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and
skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee, which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement; provided, however, that the
Trustee will not be responsible for the accuracy or content of any such
resolutions, certificates, statements, opinions, reports, documents or other
instruments. If any such instrument is found not to conform to the
requirements of this Agreement in a material manner the Trustee shall take
such action as it deems appropriate to have the instrument corrected.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act
or its own willful misconduct; provided, however, that:
(i) prior to the occurrence of a Servicer Event of Termination, and
after the curing of all such Servicer Events of Termination which may
have occurred, the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Agreement, the
Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) the Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer of the Trustee,
unless it shall be proved that the Trustee was negligent in ascertaining
or investigating the facts related thereto;
(iii) the Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the consent or at the direction of Holders of
Certificates as provided herein relating to the time, method and place of
conducting any remedy pursuant to this Agreement, or exercising or
omitting to exercise any trust or power conferred upon the Trustee, under
this Agreement; and
(iv) the Trustee shall not be charged with knowledge of any Servicer
Event of Termination unless a Responsible Officer of the Trustee at the
Corporate Trust Office obtains actual knowledge of such failure or the
Trustee receives written notice of such Servicer Event of Termination
from the Servicer or the Majority Certificateholders.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there is
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of,
any of the obligations of the Servicer under this Agreement, except during
such time, if any, as the Trustee shall be the successor to, and be vested
with the rights, duties, powers and privileges of, the Servicer in accordance
with the terms of this Agreement.
SECTION 8.02. Certain Matters Affecting the Trustee.
Except as otherwise provided in Section 8.01 hereof:
(a) the Trustee may request and rely upon, and shall be protected in
acting or refraining from acting upon, any resolution, Officers' Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other
paper or document reasonably believed by it to be genuine and to have been
signed or presented by the proper party or parties, and the manner of
obtaining consents and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such reasonable regulations
as the Trustee may prescribe;
(b) the Trustee may consult with counsel and any written advice of its
counsel or 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 advice or Opinion of
Counsel;
(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation hereunder or in relation hereto, at the request, order
or direction of any of the Certificateholders, pursuant to the provisions of
this Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which may be incurred therein or thereby; the right of the Trustee
to perform any discretionary act enumerated in this Agreement shall not be
construed as a duty, and the Trustee shall not be answerable for other than
its negligence or willful misconduct in the performance of any such act;
(d) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(e) prior to the occurrence of a Servicer Event of Termination and after
the curing or waiver of all Servicer Events of Termination which may have
occurred, the Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other
paper or documents, unless requested in writing to do so by the Majority
Certificateholder; provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Trustee, not reasonably assured to the Trustee by the security afforded to it
by the terms of this Agreement, the Trustee may require reasonable indemnity
against such cost, expense or liability as a condition to such proceeding. The
reasonable expense of every such examination shall be paid by the Servicer or,
if paid by the Trustee, shall be reimbursed by the Servicer upon demand (or,
if the Servicer fails to reimburse the Trustee, by the Trust Fund). Nothing in
this clause (v) shall derogate from the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information regarding the
Mortgagors;
(f) the Trustee shall not be accountable, shall have no liability and
makes no representation as to any acts or omissions hereunder of the Servicer
until such time as the Trustee may be required to act as the Servicer pursuant
to Section 7.02 hereof and thereupon only for the acts or omissions of the
Trustee as the successor Servicer;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or a custodian; and
(h) the right of the Trustee to perform any discretionary act enumerated
in this Agreement shall not be construed as a duty, and the Trustee shall not
be answerable for other than its negligence or willful misconduct in the
performance of such act.
SECTION 8.03. Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
authentication of the Trustee on the Certificates) shall be taken as the
statements of the Seller, and the Trustee assumes no responsibility for the
correctness of the same. The Trustee makes no representations as to the
validity or sufficiency of this Agreement or of the Certificates (other than
the signature and authentication of the Trustee on the Certificates) or of any
Mortgage Loan or related document. The Trustee shall not be accountable for
the use or application by the Servicer, or for the use or application of any
funds paid to the Servicer in respect of Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Servicer. The Trustee shall at no
time have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Mortgage or any Mortgage Loan, or the
perfection and priority of any Mortgage or the maintenance of any such
perfection and priority, or for or with respect to the sufficiency of the
Trust or its ability to generate the payments to be distributed to
Certificateholders under this Agreement, including, without limitation: the
existence, condition and ownership of any Mortgaged Property; the existence
and enforceability of any hazard insurance thereon (other than if the Trustee
shall assume the duties of the Servicer pursuant to Section 7.02 hereof); the
validity of the assignment of any Mortgage Loan to the Trustee or of any
intervening assignment; the completeness of any Mortgage Loan; the performance
or enforcement of any Mortgage Loan (other than if the Trustee shall assume
the duties of a Servicer pursuant to Section 7.02); the compliance by the
Depositor, the Seller or the Servicer with any warranty or representation made
under this Agreement or in any related document or the accuracy of any such
warranty or representation prior to the Trustee's receipt of notice or other
discovery of any non-compliance therewith or any breach thereof; any
investment of monies by or at the direction of the Servicer or any loss
resulting therefrom, it being understood that the Trustee shall remain
responsible for any Trust property that it may hold in its individual
capacity; the acts or omissions of the Servicer (other than if the Trustee
shall assume the duties of the Servicer pursuant to Section 7.02 and then only
for the acts or omissions of the Trustee as the successor Servicer), any
Sub-Servicer or any Mortgagor; any action of the Servicer (other than if the
Trustee shall assume the duties of the Servicer pursuant to Section 7.02), or
any Sub-Servicer taken in the name of the Trustee; the failure of the Servicer
or any Sub-Servicer to act or perform any duties required of it as agent of
the Trustee hereunder; or any action by the Trustee taken at the instruction
of the Servicer (other than if the Trustee shall assume the duties of the
Servicer pursuant to Section 7.02 and then only for the actions of the Trustee
as the successor Servicer); provided, however, that the foregoing shall not
relieve the Trustee of its obligation to perform its duties under this
Agreement, including, without limitation, the Trustee's duty to review the
Mortgage Files, if so required pursuant to Section 2.01 hereof. The Trustee
shall have no responsibility for filing any financing or continuation
statement in any public office at any time or to otherwise perfect or maintain
the perfection of any security interest or lien granted to it hereunder
(unless the Trustee shall have become the successor Servicer).
SECTION 8.04. Trustee May Own Certificates.
The Trustee in its individual or any other capacity may become the owner
or pledgee of Certificates and may transact any banking and trust business
with the Seller, the Servicer, the Depositor or their Affiliates with the same
rights as it would have if it were not Trustee.
SECTION 8.05. Trustee's Fees and Expenses.
The Trustee, as compensation for all services rendered by the Trustee in
the exercise and performance of any of the powers and duties hereunder, shall
be entitled to withdraw from the Distribution Account on each Distribution
Date an amount equal to the Trustee Fee for such Distribution Date. The Trust
Fund shall pay or reimburse the Trustee upon request on any Distribution Date
for all reasonable expenses, disbursements and advances incurred or made by
the Trustee in accordance with any of the provisions of this Agreement in
respect of which the Trustee has not been previously reimbursed (including but
not limited to Section 7.01 and Section 8.02(e) hereof and including the
reasonable compensation and the expenses and disbursements of its counsel and
of all persons not regularly in its employ) except any such expense,
disbursement or advance as may arise from its negligence or bad faith or which
is the responsibility of Certificateholders or the Trustee hereunder. On each
such Distribution Date, the Trustee shall be entitled to withdraw from the
Distribution Account the amount of such payment or reimbursement for such
Distribution Date. In addition, the Trust Fund shall indemnify the Trustee and
its officers, directors, employees and agents from, and hold it harmless
against, any and all losses, liabilities, damages, claims or expenses incurred
in connection with any legal action relating to this Agreement, the Trust Fund
or the Certificates, other than any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence of the Trustee in the
performance of its duties hereunder or by reason of the Trustee's reckless
disregard of obligations and duties hereunder. This section shall survive
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 an entity duly organized and
validly existing under the laws of the United States of America or any state
thereof, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least $50,000,000 and a minimum long-term
debt rating of BBB by S&P and Fitch and Ba2 by Moody's, and a short-term
rating of at least F-1 by Fitch, if rated by Fitch, and in one of the two
highest short-term rating categories of both S&P and Moody's, and subject to
supervision or examination by federal or state authority. If such entity
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 entity
shall be deemed to be its combined capital and surplus as set forth in its
most recent report of condition so published. The principal office of the
Trustee (other than the initial Trustee) shall be in a state with respect to
which an Opinion of Counsel has been delivered to such Trustee at the time
such Trustee is appointed Trustee to the effect that the Trust will not be a
taxable entity under the laws of such state. 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.
SECTION 8.07. Resignation or Removal of Trustee.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Depositor, the Seller,
the Servicer and the Rating Agencies. Upon receiving such notice of
resignation, the Depositor shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor Trustee. If
no successor Trustee shall have been so appointed and having accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.06 hereof or if at any time the Trustee shall be
legally unable to act, or shall be adjudged a bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then
the Depositor may remove the Trustee. If the Depositor removes the Trustee
under the authority of the immediately preceding sentence, the Depositor shall
promptly appoint a successor Trustee by written instrument, in quadruplicate,
one copy of which instrument shall be delivered to the Servicer, one copy to
the Trustee so removed and one copy to the successor trustee.
The Majority Certificateholders may at any time remove the Trustee by
written instrument or instruments delivered to the Servicer, the Depositor and
the Trustee; the Depositor shall thereupon use its best efforts to appoint a
successor trustee in accordance with this Section.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 8.07 shall not
become effective until acceptance of appointment by the successor Trustee as
provided in Section 8.08 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, the Seller, the Servicer
and to its predecessor Trustee an instrument accepting such appointment
hereunder, and thereupon the resignation or removal of the predecessor Trustee
shall become effective, and such successor Trustee, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with like effect as if
originally named as Trustee. The Depositor, the Seller, the Servicer and the
predecessor Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this Section
8.08 unless at the time of such acceptance such successor Trustee shall be
eligible under the provisions of Section 8.06 hereof and the appointment of
such successor Trustee shall not result in a downgrading of the Senior
Certificates by either Rating Agency, as evidenced by a letter from each
Rating Agency.
Upon acceptance of appointment by a successor Trustee as provided in this
Section 8.08, the successor Trustee shall mail notice of the appointment of a
successor Trustee hereunder to all Holders of Certificates at their addresses
as shown in the Certificate Register and to each Rating Agency.
SECTION 8.09. Merger or Consolidation of Trustee.
Any entity into which the Trustee may be merged or converted or with
which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
entity succeeding to the business of the Trustee, shall be the successor of
the Trustee hereunder, provided such entity shall be eligible under the
provisions of Section 8.06 hereof, without the execution or filing of any
paper or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
SECTION 8.10. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for
the purpose of meeting any legal requirements of any jurisdiction in which any
part of the Trust or any Mortgaged Property may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons, with the consent
of the Depositor, which consent shall not be unreasonably withheld, 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, and
to vest in such Person or Persons, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and, subject
to the other provisions of this Section 8.10, such powers, duties,
obligations, rights and trusts as the Servicer and the Trustee may consider
necessary or desirable. Any such co-trustee or separate trustee shall be
subject to the written approval of the Servicer. If a Servicer Event of
Termination shall have occurred and be continuing with respect to the
Servicer, 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 hereof, and no notice
to Certificateholders of the appointment of any co-trustee or separate trustee
shall be required under Section 8.08 hereof.
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 shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining 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 Servicer hereunder), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event
such rights, powers, duties and obligations (including the holding of
title to the Trust 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 Servicer and the Trustee, acting jointly, may at any time
accept the resignation of or remove any separate trustee or co-trustee,
except that if a Servicer Event of Termination shall have occurred and be
continuing with respect to the Servicer, the Trustee alone may accept the
resignation 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 Depositor and the Servicer.
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. Limitation of Liability.
The Certificates are executed by the Trustee, not in its individual
capacity but solely as Trustee of the Trust, in the exercise of the powers and
authority conferred and vested in it by this Agreement. Each of the
undertakings and agreements made on the part of the Trustee in the
Certificates is made and intended not as a personal undertaking or agreement
by the Trustee but is made and intended for the purpose of binding only the
Trust.
SECTION 8.12. Trustee May Enforce Claims Without Possession of
Certificates.
(a) All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee for the benefit
of all Holders of such Certificates, subject to the provisions of this
Agreement. Any recovery of judgment shall, after provision for the payment of
the reasonable compensation, expenses, disbursement and advances of the
Trustee, its agents and counsel, be for the ratable benefit or the
Certificateholders in respect of which such judgment has been recovered.
(b) The Trustee shall afford the Seller, the Depositor, the Servicer and
each Certificateholder upon reasonable notice during normal business hours at
its Corporate Trust Office or other office designated by the Trustee, access
to all records maintained by the Trustee in respect of its duties hereunder
and access to officers of the Trustee responsible for performing such duties.
Upon request, the Trustee shall furnish the Depositor, the Servicer and any
requesting Certificateholder with its most recent audited financial
statements. The Trustee shall cooperate fully with the Seller, the Servicer,
the Depositor and such Certificateholder and shall, subject to the first
sentence of this Section 8.12(b), make available to the Seller, the Servicer,
the Depositor and such Certificateholder for review and copying such books,
documents or records as may be requested with respect to the Trustee's duties
hereunder. The Seller, the Depositor, the Servicer and the Certificateholders
shall not have any responsibility or liability for any action or failure to
act by the Trustee and are not obligated to supervise the performance of the
Trustee under this Agreement or otherwise.
SECTION 8.13. Suits for Enforcement.
In case a Servicer Event of Termination or other default by the Servicer
or the Depositor hereunder shall occur and be continuing, the Trustee may
proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in aid of the execution
of any power granted in this Agreement or for the enforcement of any other
legal, equitable or other remedy, as the Trustee, being advised by counsel,
and subject to the foregoing, shall deem most effectual to protect and enforce
any of the rights of the Trustee and the Certificateholders.
SECTION 8.14. Waiver of Bond Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee post a bond or other surety with any
court, agency or body whatsoever.
SECTION 8.15. Waiver of Inventory, Accounting and Appraisal Requirement.
The Trustee shall be relieved of, and each Certificateholder hereby
waives, any requirement of any jurisdiction in which the Trust, or any part
thereof, may be located that the Trustee file any inventory, accounting or
appraisal of the Trust with any court, agency or body at any time or in any
manner whatsoever.
SECTION 8.16. Appointment of Custodians.
The Trustee may, with the consent of the Servicer, appoint one or more
custodians to hold all or a portion of the Mortgage Files as agent for the
Trustee, by entering into a Custodial Agreement. The custodian may at any time
be terminated by the Servicer or may resign, in each case upon 60 days' notice
to the Trustee, and a substitute custodian appointed therefor with the consent
of the Trustee, which consent shall not be unreasonably withheld. Subject to
this Article VIII, the Trustee agrees to comply with the terms of each
Custodial Agreement and to enforce the terms and provisions thereof against
the custodian for the benefit of the Certificateholders having an interest in
any Mortgage File held by such custodian. Each custodian shall be a depository
institution or trust company subject to supervision by federal or state
authority, shall have combined capital and surplus of at least $15,000,000 and
shall be qualified to do business in the jurisdiction in which it holds any
Mortgage File. The Servicer shall pay from its own funds, without any right to
reimbursement, the fees, costs and expenses of each custodian (including the
costs of custodian's counsel).
SECTION 8.17. Put and Call.
(a) During the Option Period, each Holder or, in respect of a Certificate
which is a Book-Entry Certificate, each Certificate Owner, of a Class A-1,
Class A-2 or Class A-3 Certificate, may exercise the related Put Option by
written notice to the Trustee or, to the extent that such Class A-1, Class A-2
or Class A-3 Certificate is a Book-Entry Certificate, to the Depository. Any
such written notice by a Holder of a Class A-1, Class A-2 or Class A-3
Certificate to the Trustee must be substantially in the form of the Put Option
Notice and must be made at the Corporate Trust Office of the Trustee. Any
exercise by the Holder or Certificate Owner of a Class A-1, Class A-2 or Class
A-3 Certificate of the related Put Option shall be void and without effect
unless, at all times during the period beginning on the date of such exercise
to and including the Put and Call Date, such Holder or Certificate Owner is
the beneficial owner of the relevant interest or interests in such Class A-1,
Class A-2 or Class A-3 Certificate. Except as provided in the immediately
preceding sentence, notice by the Holder of a Class A-1, Class A-2 or Class
A-3 Certificate of the exercise of the related Put Option shall be
irrevocable.
(b) Upon the exercise by Holders of the Class A-1, Class A-2 and Class
A-3 Certificates of the Put Options in respect of more than 90% of the
aggregate outstanding Certificate Principal Balance of the Class A-1, Class
A-2 and Class A-3 Certificates, the Standby Purchaser may exercise its
Optional Call during the period commencing on the Business Day following the
end of the Option Period and ending on the day which is ten days prior to the
Put and Call Date by providing written notice to the Trustee during such
period in substantially the form of the Optional Call Notice; provided,
however, that the Optional Call shall be exercisable by the Standby Purchaser
only with respect to all, but no fewer than all, of the Class A-1, Class A-2
and Class A-3 Certificates in respect of which the related Put Options were
not exercised during the Option Period. Notice by the Standby Purchaser of the
exercise of the Optional Call shall be irrevocable.
(c) At the end of the Option Period, based on information obtained by the
Trustee from the Depository with respect to Book-Entry Certificates, if
applicable, the Trustee shall notify the Standby Purchaser in writing, in a
manner consistent with the notification requirements of Section 10 of the Put
and Call Agreement, of the number of Class A-1, Class A-2 and Class A-3
Certificateholders or Certificate Owners, as applicable, who have exercised
their respective Put Options and the Percentage Interest of the Class
Certificate Principal Balance of each such Class held by such
Certificateholders or Certificate Owners, as applicable.
(d) At least ten days prior to the Put and Call Date, the Trustee shall,
in a manner consistent with the notification requirements of Section 10.01(b),
notify the Holder and the Depository of each Class A-1, Class A-2 and Class
A-3 Certificate as to which the related Optional Call has been properly
exercised by the Standby Purchaser under Section 8.17(b) of this Agreement and
otherwise in accordance with the Put and Call Agreement.
(e) Pursuant to Section 6(a) of the Put and Call Agreement, the Standby
Purchaser has agreed to deposit into the Distribution Account (by wire
transfer in immediately available funds to the Trustee), no later than one (1)
Business Day prior to the Put and Call Date, the Put and Call Purchase Price
for each Class A-1, Class A-2 and Class A-3 Certificate (or part thereof) for
which the related Put Option has been exercised and each Optional Call
Interest in respect of which the Standby Purchaser has exercised the related
Optional Call. On the Put and Call Date, with respect to each Class A-1, Class
A-2 and Class A-3 Certificate for which the related Put Option was exercised
and each Optional Call Interest for which the Optional Call was exercised, the
Trustee shall withdraw from the Distribution Account the applicable Put and
Call Purchase Price and distribute it to the related Certificateholder by wire
transfer in immediately available funds for the account of such
Certificateholder, or by any other means of payment as specified by such
Certificateholder and at the address of such Holder appearing in the
Certificate Register, provided that such payment shall only be made after
presentation and surrender of the Certificate if the Certificates are no
longer Book-Entry Certificates.
(f) With respect to each Book-Entry Certificate in respect of which the
related Put Option has been exercised, or for which the Standby Purchaser has
exercised the related Optional Call, and, in each case, provided that the
Standby Purchaser shall have deposited the applicable Put and Call Purchase
Price into the Distribution Account on the Put and Call Date, the transfer of
each applicable Certificate Owner's interest in such Book-Entry Certificate to
the Standby Purchaser, as Certificate Owner, shall be effected by the
applicable Depository Participant (or the applicable indirect participant in
the Depository, as the case may be) upon notice by the Trustee. Upon such
transfer, the Certificate Owner of such Book-Entry Certificate prior to such
exercise of the related Put Option or Optional Call, as the case may be, shall
cease to hold its interest in such Book-Entry Certificate on or after the Put
and Call Date.
(g) Notwithstanding any provision herein to the contrary, with respect to
each Definitive Certificate in respect of which the related Put Option has
been exercised, or for which the Standby Purchaser has exercised the related
Optional Call, and, in each case, provided that the Standby Purchaser shall
have deposited the applicable Put and Call Purchase Price into the
Distribution Account on the Put and Call Date, the Holder of such Definitive
Certificate prior to such exercise of the related Put Option or Optional Call,
as the case may be, shall be deemed to have surrendered such Definitive
Certificate to the Certificate Registrar for transfer to the Standby
Purchaser. On such Put and Call Date, the Trustee shall cause the Certificate
Registrar to note in the Certificate Register the registration of the transfer
of such Definitive Certificate to the Standby Purchaser, and the Standby
Purchaser shall be recognized as the Record Holder of such Definitive
Certificate. Each Holder of a Class A-1, Class A-2 or Class A-3 Certificate is
deemed, by acceptance of any such Certificate, to acknowledge and accept the
provisions of this Section 8.17(g).
(h) The Trustee shall treat each Put Option and Optional Call as
contractual rights combined with a regular interest within the meaning of
Treasury regulation ss. 1.860G-2(i) and will account for each Put Option and
Optional Call separately from the corresponding Class A-1, Class A-2 or Class
A-3 Certificate.
ARTICLE IX
REMIC ADMINISTRATION
SECTION 9.01. REMIC Administration.
(a) As set forth in the Preliminary Statement to this Agreement, two
REMIC elections shall be made by the Trustee on Form 1066 or other appropriate
federal tax or information return for the taxable year ending on the last day
of the calendar year in which the Certificates are issued. The regular
interests in each REMIC and the related residual interest shall be as
designated in the Preliminary Statement. Following the Closing Date, the
Trustee shall apply to the IRS for an employer identification number for each
REMIC created hereunder by means of a Form SS-4 or other acceptable method,
and shall timely complete and file a Form 8811.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC created hereunder within the meaning of section 86OG(a)(9) of the Code.
(c) Except as provided in subsection (d) of this Section 9.01, the Seller
shall pay any and all tax related expenses (not including taxes) of each REMIC
created hereunder, including but not limited to any professional fees or
expenses related to audits or any administrative or judicial proceedings with
respect to such REMIC that involve the Internal Revenue Service or state tax
authorities, but only to the extent that (i) such expenses are ordinary or
routine expenses, including expenses of a routine audit but not expenses of
litigation (except as described in (ii)); or (ii) such expenses or liabilities
(including taxes and penalties) are attributable to the negligence or willful
misconduct of the Seller in fulfilling its duties hereunder (including its
duties as tax return preparer). The Seller shall be entitled to reimbursement
of expenses referred to in clause (i) above from the Collection Account.
(d) The Trustee shall prepare, sign and file, all of the federal and
state tax and information returns of each REMIC created hereunder as the
direct representative. The expenses of preparing and filing such returns shall
be borne by the Trustee. Notwithstanding the foregoing, the Trustee shall have
no obligation to prepare, file or otherwise deal with partnership tax
information or returns. In the event that partnership tax information or
returns are required by the Internal Revenue Service, the Seller, at its own
cost and expense, will prepare and file all necessary returns.
(e) The Holder of the Class A-R Certificate at any time holding the
largest Percentage Interest thereof shall be the "tax matters person" as
defined in the REMIC Provisions (the "Tax Matters Person") with respect to
each REMIC created hereunder and shall act as Tax Matters Person for each such
REMIC. The Trustee, as agent for the Tax Matters Person, shall perform on
behalf of each REMIC created hereunder all reporting and other tax compliance
duties that are the responsibility of each such REMIC under the Code, the
REMIC Provisions or other compliance guidance issued by the Internal Revenue
Service or any state or local taxing authority. Among its other duties, if
required by the Code, the REMIC Provisions or other such guidance, the
Trustee, as agent for the Tax Matters Person, shall provide (i) to the
Treasury or other governmental authority such information as is necessary for
the application of any tax relating to the Transfer of the Class A-R
Certificate to any disqualified person or organization and (ii) to the
Certificateholders such information or reports as are required by the Code or
REMIC Provisions.
(f) The Trustee (to the extent that the affairs of the REMICs are within
its control and the scope of its specific responsibilities under the
Agreement), the Servicer and the Holders of Certificates shall take any action
or cause any REMIC created hereunder to take any action necessary to create or
maintain the status of each REMIC created hereunder as a REMIC under the REMIC
Provisions and shall assist each other as necessary to create or maintain such
status. Neither the Trustee, the Servicer nor the Holder of the Class A-R
Certificate shall take any action, cause any REMIC created hereunder to take
any action or fail to take (or fail to cause to be taken) any action that,
under the REMIC Provisions, if taken or not taken, as the case may be, could
(i) endanger the status of any REMIC created hereunder as a REMIC or (ii)
result in the imposition of a tax upon any REMIC created hereunder (including
but not limited to the tax on prohibited transactions as defined in Code
Section 860F(a)(2) and the tax on prohibited contributions set forth on
Section 860G(d) of the Code) (either such event, an "Adverse REMIC Event")
unless the Trustee and the Servicer have received an Opinion of Counsel (at
the expense of the party seeking to take such action) to the effect that the
contemplated action will not endanger such status or result in the imposition
of such a tax. In addition, prior to taking any action with respect to any
REMIC created hereunder or the assets therein, or causing any such REMIC to
take any action which is not expressly permitted under the terms of this
Agreement, any Holder of the Class A-R Certificate will consult with the
Trustee and the Servicer, or their respective designees, in writing, with
respect to whether such action could cause an Adverse REMIC Event to occur
with respect to any such REMIC, and no such Person shall take any such action
or cause any REMIC created hereunder to take any such action as to which the
Trustee or the Servicer has advised it in writing that an Adverse REMIC Event
could occur. Should the Trustee choose to consult tax counsel as permitted
under Section 8.02(b) in advising any Holder of the Class A-R Certificate that
a proposed action may result in an Adverse REMIC Event, fees and expenses
related to such consultation with tax counsel shall be paid from the
Collection Account.
(g) Each Holder of the Class A-R Certificate shall pay when due any and
all taxes imposed on each REMIC created hereunder by federal or state
governmental authorities. To the extent that such Trust taxes are not paid by
the Class A-R Certificateholder, the Trustee shall pay any remaining REMIC
taxes out of current or future amounts otherwise distributable to the Holder
of the Class A-R Certificate or, if no such amounts are available, out of
other amounts held in the Distribution Account, and shall reduce amounts
otherwise payable to holders of regular interests in each such REMIC, as the
case may be.
(h) The Trustee, as agent for the Tax Matters Person, shall, for federal
income tax purposes, maintain books and records with respect to each REMIC
created hereunder on a calendar year and on an accrual basis.
(i) No additional contributions of assets shall be made to any REMIC
created hereunder, except as expressly provided in this Agreement with respect
to Qualified Substitute Mortgage Loans.
(j) Neither the Trustee nor the Servicer shall enter into any arrangement
by which any REMIC created hereunder will receive a fee or other compensation
for services.
SECTION 9.02. Prohibited Transactions and Activities.
None of the Depositor, the Servicer and the Trustee shall sell, dispose
of, or substitute for any of the Mortgage Loans, except in a disposition
pursuant to (i) the foreclosure of a Mortgage Loan, (ii) the bankruptcy of the
Trust Fund, (iii) the termination of any REMIC created hereunder pursuant to
Article X of this Agreement, (iv) a substitution pursuant to Article II or
Section 3.16 of this Agreement or (v) a repurchase of Mortgage Loans pursuant
to Article II of this Agreement, nor acquire any assets for any REMIC created
hereunder, nor sell or dispose of any investments in the Distribution Account
for gain, nor accept any contributions to any REMIC created hereunder after
the Closing Date, unless it has received an Opinion of Counsel (at the expense
of the party causing such sale, disposition, or substitution) that such
disposition, acquisition, substitution, or acceptance will not (a) affect
adversely the status of any REMIC created hereunder as a REMIC or of the
interests therein other than the Class A-R Certificate as the "residual
interest" therein, (b) affect the distribution of interest or principal on the
Certificates, (c) result in the encumbrance of the assets transferred or
assigned to the Trust Fund (except pursuant to the provisions of this
Agreement) or (d) cause any REMIC created hereunder to be subject to a tax on
prohibited transactions or prohibited contributions pursuant to the REMIC
Provisions.
SECTION 9.03. Indemnification with Respect to Certain Taxes and Loss of
REMIC Status.
In the event that any REMIC created hereunder fails to qualify as a
REMIC, lose its status as a REMIC, or incurs federal, state or local taxes as
a result of a prohibited transaction or prohibited contribution under the
REMIC Provisions due to the negligent performance by the Servicer of its
duties and obligations set forth herein, the Servicer shall indemnify the
Holder of the Class A-R Certificate against any and all losses, claims,
damages, liabilities or expenses ("Losses") resulting from such negligence;
provided, however, that the Servicer shall not be liable for any such Losses
attributable to the action or inaction of the Trustee, the Depositor or the
Holder of Class A-R Certificate, as applicable, nor for any such Losses
resulting from misinformation provided by the Holder of the Class A-R
Certificate on which the Servicer has relied. The foregoing shall not be
deemed to limit or restrict the rights and remedies of the Holder of the Class
A-R Certificate now or hereafter existing at law or in equity. Notwithstanding
the foregoing, however, in no event shall any Servicer have any liability (1)
for any action or omission that is taken in accordance with and in compliance
with the express terms of, or which is expressly permitted by the terms of,
this Agreement, (2) for any Losses other than arising out of a negligent
performance by the Servicer of its duties and obligations set forth herein,
and (3) for any special or consequential damages to Certificateholders (in
addition to payment of principal and interest on the Certificates).
SECTION 9.04. REO Property.
(a) Notwithstanding any other provision of this Agreement, the Servicer,
acting on behalf of the Trustee hereunder, shall not, and shall not permit any
Subservicer to, rent, lease, or otherwise earn income on behalf of any REMIC
created hereunder with respect to any REO Property that might cause such REO
Property to fail to qualify as "foreclosure" property within the meaning of
section 860G(a)(8) of the Code or result in the receipt by such REMIC of any
"income from non-permitted assets" within the meaning of section 860F(a)(2) of
the Code or any "net income from foreclosure property" that is subject to tax
under the REMIC Provisions unless the Servicer has obtained an Opinion of
Counsel (a copy of which shall be delivered to the Trustee) to the effect
that, under the REMIC Provisions, such action would not adversely affect the
status of any REMIC created hereunder as a REMIC and any income generated for
such REMIC by the REO Property would not result in the imposition of a tax
upon such REMIC.
(b) The Servicer shall make reasonable efforts to sell any REO Property
for its fair market value. In any event, however, the Servicer shall dispose
of any REO Property within three years of its acquisition by the Trust Fund
unless the Servicer on behalf of the Trust Fund has received a grant of
extension (a copy of which shall be provided to the Trustee) from the Internal
Revenue Service to the effect that, under the REMIC Provisions and any
relevant proposed legislation and under applicable state law, the REMIC may
hold REO Property for a longer period without adversely affecting such REMIC
status of any REMIC created hereunder or causing the imposition of a federal
or state tax upon such REMIC. If the Servicer has received such an extension,
then the Servicer shall continue to attempt to sell the REO Property for its
fair market value for such period longer than three years as such extension
permits (the "Extended Period"). If the Servicer has not received such an
extension and the Servicer is unable to sell the REO Property within 33 months
after its acquisition by the Trust Fund or if the Servicer has received such
an extension, and the Servicer is unable to sell the REO Property within the
period ending three months before the close of the Extended Period, the
Servicer shall before the end of the three year period or the Extended Period,
as applicable, (i) purchase such REO Property at a price equal to the REO
Property's fair market value or (ii) auction the REO Property to the highest
bidder (which may be the Servicer) in an auction reasonably designed to
produce a fair price prior to the expiration of the three-year period or the
Extended Period, as the case may be.
ARTICLE X
TERMINATION
SECTION 10.01. Termination.
(a) The respective obligations and responsibilities of the Seller, the
Servicer, the Depositor and the Trustee created hereby (other than the
obligation of the Trustee to make certain payments to Certificateholders after
the final Distribution Date and the obligation of the Servicer to send certain
notices as hereinafter set forth) shall terminate upon notice to the Trustee
upon the earliest of (i) the Distribution Date on which the Class Certificate
Principal Balance of each Class of Certificates has been reduced to zero, (ii)
the final payment or other liquidation of the last Mortgage Loan, (iii) the
optional purchase by the Holder of the Class A-R Certificate of the Mortgage
Loans as described below and (iv) the Latest Possible Maturity Date.
Notwithstanding the foregoing, in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James's, living on the date hereof.
The Servicer may, at its option, terminate this Agreement on any date on
which the aggregate of the Principal Balances of the Mortgage Loans on such
date is 10% or less of the aggregate of the Cut-Off Date Principal Balance of
the Mortgage Loans, by purchasing, on the next succeeding Distribution Date,
all of the outstanding Mortgage Loans and REO Properties at a price equal to
the sum of (i) the outstanding Stated Principal Balances of the Mortgage Loans
(other than in respect of REO Properties), (ii) the lesser of (x) the
appraised value of any REO Property as determined by the higher of two
appraisals completed by two independent appraisers selected by the Depositor
at the expense of the Depositor and (y) the Stated Principal Balance of each
Mortgage Loan related to any REO Property and (iii) in all cases, accrued and
unpaid interest thereon at the weighted average of the Adjusted Loan Rates
through the end of the Due Period preceding the final Distribution Date, plus
unreimbursed Servicing Advances and any unpaid Servicing Fees allocable to
such Mortgage Loans and REO Properties, plus all amounts, if any, then due and
owing to the Trustee under this Agreement (the "Termination Price").
In connection with any such purchase pursuant to the preceding paragraph,
the Servicer shall deposit in the Distribution Account all amounts then on
deposit in the Collection Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
(b) Notice of any termination pursuant to the second paragraph of Section
10.01(a), specifying the Distribution Date (which shall be a date that would
otherwise be a Distribution Date) upon which the Certificateholders may
surrender their Certificates to the Trustee for payment of the final
distribution and cancellation, shall be given promptly by the Trustee upon the
Trustee receiving notice of such date from the Holder of the Class A-R
Certificate, by letter to the Certificateholders mailed not earlier than the
10th day and not later than the 19th day of the month immediately preceding
the month of such final distribution specifying (1) the Distribution Date upon
which final distribution of the Certificates will be made upon presentation
and surrender of such Certificates at the office or agency of the Trustee
therein designated, (2) the amount of any such final distribution and (3) 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 or agency of the Trustee therein specified.
(c) Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to the Holders of the Certificates on the
Distribution Date for such final distribution, in proportion to the Percentage
Interests of their respective Class and to the extent that funds are available
for such purpose, an amount equal to the amount required to be distributed to
such Holders in accordance with the provisions of Section 4.01 hereof for such
Distribution Date.
(d) In the event that all Certificateholders shall not surrender their
Certificates for final payment and cancellation on or before such final
Distribution Date, the Trustee shall promptly following such date cause all
funds in the Distribution Account not distributed in final distribution to
Certificateholders to be withdrawn therefrom and credited to the remaining
Certificateholders by depositing such funds in a separate account for the
benefit of such Certificateholders, and 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 nine months after the second notice all the Certificates
shall not have been surrendered for cancellation, the Class A-R
Certificateholder shall be entitled to all unclaimed funds and other assets
which remain subject hereto, and the Trustee upon transfer of such funds shall
be discharged of any responsibility for such funds, and the Certificateholders
shall look to the Class A-R Certificateholder for payment.
SECTION 10.02. Additional Termination Requirements.
(a) In the event that the Servicer exercises its purchase option as
provided in Section 10.01, the Trust shall be terminated in accordance with
the following additional requirements, unless the Trustee shall have been
furnished with an Opinion of Counsel to the effect that the failure of the
Trust to comply with the requirements of this Section will not (i) result in
the imposition of taxes on "prohibited transactions" of the Trust as defined
in Section 860F of the Code or (ii) cause the REMIC constituting the Trust
Fund to fail to qualify as a REMIC at any time that any Certificates are
outstanding:
(i) within 90 days prior to the final Distribution Date, the Trustee
shall adopt and sign a plan of complete liquidation of the REMIC meeting
the requirements of a "Qualified Liquidation" under Section 860F of the
Code and any regulations thereunder;
(ii) at or after the time of adoption of such a plan of complete
liquidation and at or prior to the final Distribution Date, the Trustee
shall sell all of the assets of the Trust to the Class A-R
Certificateholder for cash pursuant to the terms of the plan of complete
liquidation; and
(iii) at the time of the making of the final payment on the
Certificates, the Trustee shall distribute or credit, or cause to be
distributed or credited to the Holders of each Class of the Certificates,
the related Class Certificate Principal Balance of the Class, plus one
month's interest thereon at the applicable Pass-Through Rate, and the
Trust shall terminate at such time.
(b) By their acceptance of Certificates, the Holders thereof hereby agree
to appoint the Trustee as their attorney in fact to: (i) adopt such a plan of
complete liquidation (and the Certificateholders hereby appoint the Trustee as
their attorney in fact to sign such plan) as appropriate and (ii) to take such
other action in connection therewith as may be reasonably required to carry
out such plan of complete liquidation all in accordance with the terms hereof.
ARTICLE XI
[RESERVED]
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.01. Amendment.
This Agreement may be amended from time to time by the Seller, the
Depositor, the Servicer and the Trustee; and without the consent of the
Certificateholders, (i) to cure any ambiguity, (ii) to correct or supplement
any provisions herein which may be defective or inconsistent with any other
provisions herein or (iii) to make any other provisions with respect to
matters or questions arising under this Agreement, which shall not be
inconsistent with the provisions of this Agreement; provided, however, that
any such action listed in clause (i) through (iii) above shall be deemed not
to adversely affect in any material respect the interests of any
Certificateholder, if evidenced by (i) written notice to the Depositor, the
Seller, the Servicer and the Trustee from the Rating Agencies that such action
will not result in the reduction or withdrawal of the rating of any
outstanding Class of Certificates with respect to which it is a Rating Agency
or (ii) an Opinion of Counsel delivered to the Servicer and the Trustee.
In addition, this Agreement may be amended from time to time by the
Seller, the Depositor, the Servicer and the Trustee with the consent of the
Majority Certificateholders 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 or waiver shall (x) reduce in any
manner the amount of, or delay the timing of, payments on the Certificates
that are required to be made on any Certificate without the consent of the
Holder of such Certificate, (y) adversely affect in any material respect the
interests of the Holders of any Class of Certificates in a manner other than
as described in clause (x) above, without the consent of the Holders of
Certificates of such Class evidencing at least a 66% Percentage Interest in
such Class, or (z) reduce the percentage of Voting Rights required by clause
(y) above without the consent of the Holders of all Certificates of such Class
then outstanding. Upon approval of an amendment, a copy of such amendment
shall be sent to the Rating Agencies.
Notwithstanding any provision of this Agreement to the contrary, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel, delivered by and at the expense of
the Person seeking such Amendment (unless such Person is the Trustee, in which
case the Trustee shall be entitled to be reimbursed for such expenses by the
Trust pursuant to Section 8.05 hereof), to the effect that such amendment will
not result in the imposition of a tax on any REMIC created hereunder pursuant
to the REMIC Provisions or cause any REMIC created hereunder to fail to
qualify as a REMIC at any time that any Certificates are outstanding and that
the amendment is being made in accordance with the terms hereof.
Promptly after the execution of any such amendment the Trustee shall
furnish, at the expense of the Person that requested the amendment if such
Person is the Seller or the Servicer (but in no event at the expense of the
Trustee), otherwise at the expense of the Trust, a copy of such amendment and
the Opinion of Counsel referred to in the immediately preceding paragraph to
the Servicer and the Rating Agencies.
It shall not be necessary for the consent of Certificateholders under
this Section 12.01 to approve the particular form of any proposed amendment;
instead it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject
to such reasonable regulations as the Trustee may prescribe.
The Trustee may, but shall not be obligated to, enter into any amendment
pursuant to this 12.01 Section that affects its rights, duties and immunities
under this Agreement or otherwise.
SECTION 12.02. Recordation of Agreement; Counterparts.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
the counties or other comparable jurisdictions in which any or all of the
Mortgaged Properties are situated, and in any other appropriate public
recording office or elsewhere, such recordation to be effected by the Servicer
at the expense of the Trust, but only upon direction of Certificateholders
accompanied by an Opinion of Counsel to the effect that such recordation
materially and beneficially affects the interests of the Certificateholders.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall together constitute
but one and the same instrument.
SECTION 12.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not (i) operate to
terminate this Agreement or the Trust, (ii) entitle such Certificateholder's
legal representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust or (iii)
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
Except as expressly provided for herein, no Certificateholder shall have
any right to vote or in any manner otherwise control the operation and
management of the Trust, or the obligations of the parties hereto, nor shall
anything herein set forth or contained in the terms of the Certificates be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be
under any liability to any third person by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any provision of
this Agreement to institute any suit, action or proceeding in equity or at law
upon or under or with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
Certificates entitled to at least 25% of the Voting Rights shall have made
written request upon the Trustee to institute such action, suit or proceeding
in its own name as Trustee hereunder and shall have offered to the Trustee
such reasonable indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee for 15 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding. It is
understood and intended, and expressly covenanted by each Certificateholder
with every other Certificateholder and the Trustee, that no one or more
Holders of Certificates shall have any right in any manner whatever by virtue
of any provision of this Agreement to affect, disturb or prejudice the rights
of the Holders of any other of such Certificates, or to obtain or seek to
obtain priority over or preference to any other such Holder, which priority or
preference is not otherwise provided for herein, or to enforce any right under
this Agreement, except in the manner herein provided and for the equal,
ratable and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 12.03, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
SECTION 12.04. Governing Law; Jurisdiction.
This Agreement shall be construed in accordance with the laws of the
State of New York, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws. With respect to
any claim arising out of this Agreement, each party irrevocably submits to the
exclusive jurisdiction of the courts of the State of New York and the United
States District Court located in the Borough of Manhattan in The City of New
York, and each party irrevocably waives any objection which it may have at any
time to the laying of venue of any suit, action or proceeding arising out of
or relating hereto brought in any such courts, irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in any inconvenient forum and further irrevocably waives the right to
object, with respect to such claim, suit, action or proceeding brought in any
such court, that such court does not have jurisdiction over such party,
provided that service of process has been made by any lawful means.
SECTION 12.05. Notices.
All directions, demands and notices hereunder shall be in writing and
shall be deemed to have been duly given if sent by facsimile, personally
delivered at or mailed by first class mail, postage prepaid, or by express
delivery service, to (a) in the case of the Seller, to HSBC Mortgage
Corporation (USA), 2929 Walden Avenue, Depew, New York 14043, Attention:
Edward J. Baker (telecopy number (716) 651-6178), or such other address or
telecopy number as may hereafter be furnished to the Depositor, the Trustee
and the Servicer in writing by the Seller, (b) in the case of the Servicer, to
HSBC Mortgage Corporation (USA), 2929 Walden Avenue, Depew, New York 14043,
Attention: Edward J. Baker (telecopy number (716) 651-6178), or such other
address or telecopy number as may hereafter be furnished to the Seller, the
Depositor and the Trustee in writing by the Servicer, (c) in the case of the
Trustee, to Wells Fargo Bank Minnesota, N.A. at the Corporate Trust Office
(telecopy number (410) 884-2360) or, for custodial matters, to Wells Fargo
Bank Minnesota, N.A, 1015 10th Avenue S.E., Minneapolis, Minnesota 55414-0031,
Attention: Corporate Trust Services - HSBC Mortgage Loan Trust 2000-HSBC1, or
such other address or telecopy number as may hereafter be furnished to the
Depositor, the Seller and the Servicer in writing by the Trustee, and (d) in
the case of the Depositor, to Greenwich Capital Acceptance, Inc., 600
Steamboat Road, Greenwich, Connecticut 06830, Attention: Legal (telecopy
number (203) 618-2132), or such other address or telecopy number as may be
furnished to the Seller, the Servicer and the Trustee in writing by the
Depositor. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Notice of any
Servicer Event of Termination shall be given by telecopy and by certified
mail. Any notice so mailed within the time prescribed in this Agreement shall
be conclusively presumed to have duly been given when mailed, whether or not
the Certificateholder receives such notice. A copy of any notice required to
be telecopied hereunder shall also be mailed to the appropriate party in the
manner set forth above.
SECTION 12.06. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall for any reason whatsoever be 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 12.07. Article and Section References.
All article and section references used in this Agreement, unless
otherwise provided, are to articles and sections in this Agreement.
SECTION 12.08. Notice to the Rating Agencies.
(a) Each of the Trustee and the Servicer shall be obligated to use its
best reasonable efforts promptly to provide notice to the Rating Agencies with
respect to each of the following of which a Responsible Officer of the Trustee
or the Servicer, as the case may be, has actual knowledge:
(i) any material change or amendment to this Agreement;
(ii) the occurrence of any Servicer Event of Termination that has
not been cured or waived;
(iii) the resignation or termination of the Servicer or the Trustee;
(iv) the final payment to Holders of the Certificates of any Class;
(v) any change in the location of any Account; and
(vi) if the Trustee is acting as the successor Servicer pursuant to
Section 7.02 hereof, any event that would result in the inability of the
Trustee to make Advances.
(b) The Servicer shall promptly furnish to each Rating Agency copies of
the following:
(i) each annual statement as to compliance described in Section 3.20
hereof;
(ii) each annual independent public accountants' servicing report
described in Section 3.21 hereof; and
(iii) each notice delivered pursuant to Section 7.01(a) hereof which
relates to the fact that the Servicer has not made an Advance.
Any such notice pursuant to this Section 12.08 shall be in writing and
shall be deemed to have been duly given if personally delivered or mailed by
first class mail, postage prepaid, or by express delivery service to Standard
& Poor's Ratings Services, 55 Water Street, New York, New York 10041, to
Moody's Investor Service Inc., 99 Church Street, New York, New York 10007; and
to Fitch, Inc., One State Street Plaza, New York, New York 10004.
SECTION 12.09. Further Assurances.
Notwithstanding any other provision of this Agreement, neither the
Regular Certificateholders nor the Trustee shall have any obligation to
consent to any amendment or modification of this Agreement unless they have
been provided reasonable security or indemnity against their out-of-pocket
expenses (including reasonable attorneys' fees) to be incurred in connection
therewith.
SECTION 12.10. Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Certificateholders and the parties
hereto and their successors hereunder, any benefit or any legal or equitable
right, remedy or claim under this Agreement.
SECTION 12.11. Acts of Certificateholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Certificateholders may be embodied in and evidenced by one or more instruments
of substantially similar tenor signed by such Certificateholders in person or
by agent duly appointed in writing, and such action shall become effective
when such instrument or instruments are delivered to the Trustee, the Seller
and each Servicer. Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred to as the "act"
of the Certificateholders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Agreement and conclusive in favor
of the Trustee and the Trust, if made in the manner provided in this Section
12.11.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of a notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual
signing such instrument or writing acknowledged to him the execution thereof.
Whenever such execution is by a signer acting in a capacity other than his or
her individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) Any request, demand, authorization, direction, notice, consent,
waiver or other action by any Certificateholder shall bind every future Holder
of such Certificate and the Holder of every Certificate issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof,
in respect of anything done, omitted or suffered to be done by the Trustee or
the Trust in reliance thereon, whether or not notation of such action is made
upon such Certificate.
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the
Trustee have caused their names to be signed hereto by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
HSBC MORTGAGE CORPORATION (USA),
as Seller and Servicer
By: /s/ Susan Wojnar
---------------------------------------
Name: SusanWojnar
Title: Senior Vice President
GREENWICH CAPITAL ACCEPTANCE, INC.,
as Depositor
By: /s/ John Graham
---------------------------------------
Name: John Graham
Title: Vice President
WELLS FARGO BANK MINNESOTA, N.A.,
as Trustee
By: /s/ Peter J. Masterman
---------------------------------------
Name: Peter J. Masterman
Title: Vice President
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the 16th day of November 2000, before me, a notary public in and for
said State, personally appeared John Graham known to me to be a Vice President
of Greenwich Capital Acceptance, Inc., a Delaware corporation that executed
the within instrument, and also known to me to be the person who executed it
on behalf of said corporation, and acknowledged to me that such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Rachel Schlenker
--------------------
Notary Public
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the 16th day of November 2000, before me, a notary public in and for
said State, personally appeared Susan Wojnar known to me to be a Senior Vice
President of HSBC Mortgage Corporation (USA), a New York corporation that
executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Rachel Schlenker
--------------------
Notary Public
<PAGE>
STATE OF )
) ss.:
COUNTY OF )
On the 16th day of November 2000, before me, a notary public in and for
said State, personally appeared Peter J. Masterman known to me to be a Vice
President of Wells Fargo Bank Minnesota, N.A., a national banking association
that executed the within instrument, and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
/s/ Rachel Schlenker
--------------------
Notary Public
