<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 25, 1998
CHASE MORTGAGE FINANCE CORPORATION
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(Exact name of registrant specified in Charter)
Delaware 33-92950 52-1495132
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(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
343 Thornall Street, Edison, NJ 08837 32256
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(Address of principal executive offices) Zip Code
Registrant's telephone, including area code: (732) 205-0600
- ------------------------------------------------------------------------------
(Former name and former address, if changed since last report)
<PAGE>
ITEM 2. Acquisition or Disposition of Assets:General.
On June 25, 1998, Chase Mortgage Finance Corporation issued
its Multi-Class Mortgage Pass-Through Certificates, Series 1998-S2, such series
representing interests in a pool of fixed rate conventional one- to four-family
mortage loans. Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in the prospectus dated June 22, 1998, as
supplemented by the prospectus supplement dated June 22, 1998 (together, the
"Prospectus").
The Class A Certificates consist of the Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the
Class A-7 Certificates, the Class A-8 Certificates, the Class A-9 Certificates,
the Class A-10 Certificates, the Class A-11 Certificates, the Class A-12
Certificates, the Class A-13 Certificates, the Class A-14 Certificates, the
Class A-X Certificates, the Class A- P Certificates, the Class A-R Certificates.
The Class M Certificates consist of the Class M Certificates. The Class B
Certificates consist of the Class B-1 Certificates, the Class B-2 Certificates,
the Class B-3 Certificates, the Class B-4 Certificates and the Class B-5
Certificates.
The Class A Certificates evidence in the aggregate the Class A
Percentage ownership interest in the Trust Fund. The Class M Certificates
evidence in the aggregate the Class M Percentage ownership interest in the Trust
Fund. The Class B Certificates evidence the remaining ownership interest in the
Trust Fund and are subordinated to the rights of the Class A Certificates and
the Class M Certificates to the extent described in the Prospectus. The Trust
Fund consists of the Mortgage Pool and certain other property described in the
Prospectus.
<PAGE>
ITEM 7. Financial Statements and Exhibits.
(c) Exhibits
<TABLE>
<CAPTION>
Item 601(a)
of Regulation S-K
Exhibit No. Description
- ----------- -----------
<S> <C>
4 Pooling and Servicing Agreement among Chase
Mortgage Finance Corporation, Chase
Manhattan Mortgage Corporation and Citibank,
N.A., as trustee, dated as of June 1, 1998,
for Multi-Class Mortgage Pass-Through
Certificates, Series 1998-S2.
</TABLE>
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
CHASE MORTGAGE FINANCE CORPORATION
June 25, 1998
By: /s/ Eileen Lindblom
-------------------------
Name: Eileen Lindblom
Title: Vice President
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
- ---------- -----------
<S> <C>
4 Pooling and Servicing Agreement among Chase
Mortgage Finance Corporation, Chase
Manhattan Mortgage Corporation and Citibank,
N.A., as trustee, dated as of June 1, 1998,
for Multi-Class Mortgage Pass-Through
Certificates, Series 1998-S2.
</TABLE>
<PAGE>
EXECUTION COPY
CHASE MORTGAGE FINANCE CORPORATION,
DEPOSITOR,
CHASE MANHATTAN MORTGAGE CORPORATION,
SERVICER
and
CITIBANK, N.A.,
TRUSTEE
POOLING AND SERVICING AGREEMENT
Dated as of June 1, 1998
$530,008,725.39
Multi-Class Mortgage Pass-Through Certificates
Series 1998-S2
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TRUST FUND. . . . . . . . . . . . . . . . . . 38
Section 2.01. Conveyance of Mortgage Loans. . . . . . . . . . . . . . . 38
Section 2.02. Acceptance by Trustee . . . . . . . . . . . . . . . . . . 41
Section 2.03. Trust Fund; Authentication of Certificates. . . . . . . . 43
Section 2.04. REMIC Election. . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR AND
THE SERVICER; REPURCHASE OF MORTGAGE LOANS. . . . . . . . . . . . . . . . . 46
Section 3.01. Representations and Warranties of the Depositor
with respect to the Mortgage Loans. . . . . . . . . . . . 46
Section 3.02. Representations and Warranties of the Servicer. . . . . . 54
Section 3.03. Option to Substitute. . . . . . . . . . . . . . . . . . . 55
ARTICLE IV
THE CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 4.01. The Certificates. . . . . . . . . . . . . . . . . . . . . 56
Section 4.02. Registration of Transfer and Exchange of Certificates . . 59
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates . . . . 62
Section 4.04. Persons Deemed Owners . . . . . . . . . . . . . . . . . . 63
Section 4.05. Appointment of Paying Agent; Certificate Account. . . . . 63
Section 4.06. Authenticating Agents . . . . . . . . . . . . . . . . . . 64
ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS. . . . . . . . . . . . . . . 65
Section 5.01. Servicer to Service Mortgage Loans. . . . . . . . . . . . 65
Section 5.02. Sub-Servicing Agreements Between Servicer and Sub-
Servicers; Enforcement of Sub-Servicer's Obligations. . . 66
Section 5.03. Successor Sub-Servicers . . . . . . . . . . . . . . . . . 67
Section 5.04. Liability of the Servicer . . . . . . . . . . . . . . . . 67
Section 5.05. No Contractual Relationship Between Sub-Servicer
and Trustee or Certificateholders . . . . . . . . . . . . 67
Section 5.06. Termination of Sub-Servicing Agreement. . . . . . . . . . 67
Section 5.07. Collection of Mortgage Loan Payments. . . . . . . . . . . 67
Section 5.08. Establishment of Collection Account; Deposit
in Collection Account . . . . . . . . . . . . . . . . . . 68
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Section 5.09. Permitted Withdrawals from the Collection Account . . . . 69
Section 5.10. Establishment of Escrow Account; Deposits in
Escrow Account. . . . . . . . . . . . . . . . . . . . . . 70
Section 5.11. Permitted Withdrawals from Escrow Account . . . . . . . . 71
Section 5.12. Payment of Taxes, Insurance and Other Charges . . . . . . 71
Section 5.13. Transfer of Accounts. . . . . . . . . . . . . . . . . . . 71
Section 5.14. [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . 71
Section 5.15. Maintenance of the Primary Insurance Policies.. . . . . . 71
Section 5.16. Maintenance of Standard Hazard Policies . . . . . . . . . 72
Section 5.17. [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . 73
Section 5.18. [Reserved]. . . . . . . . . . . . . . . . . . . . . . . . 73
Section 5.19. Fidelity Bond and Errors and Omissions Insurance. . . . . 73
Section 5.20. Collections under Insurance Policies; Enforcement of
Due-On-Sale Clauses; Assumption Agreements. . . . . . . . 73
Section 5.21. Income and Realization from Defaulted Mortgage Loans. . . 74
Section 5.22. Trustee to Cooperate; Release of Mortgage Files . . . . . 76
Section 5.23. Servicing and Other Compensation. . . . . . . . . . . . . 77
Section 5.24. 1934 Act Reports. . . . . . . . . . . . . . . . . . . . . 77
Section 5.25. Annual Statement as to Compliance . . . . . . . . . . . . 78
Section 5.26. Annual Independent Public Accountants' Servicing Report . 78
Section 5.27. Access to Certain Documentation; Rights of the
Depositor in Respect of the Servicer. . . . . . . . . . . 78
Section 5.28. REMIC-Related Covenants . . . . . . . . . . . . . . . . . 79
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS . . . . . . . . . . . . . . . . . . . . .82
Section 6.01. Distributions . . . . . . . . . . . . . . . . . . . . . . 82
Section 6.02. Statements to the Certificateholders. . . . . . . . . . . 88
Section 6.03. Advances by the Servicer. . . . . . . . . . . . . . . . . 90
Section 6.04. Allocation of Realized Losses . . . . . . . . . . . . . . 90
Section 6.05. Compensating Interest; Allocation of Certain Interest
Shortfalls. . . . . . . . . . . . . . . . . . . . . . . . 92
Section 6.06. Subordination . . . . . . . . . . . . . . . . . . . . . . 92
ARTICLE VII
REPORTS TO BE PREPARED BY THE SERVICER. . . . . . . . . . . . . . . . . . . 93
Section 7.01. Servicer Shall Provide Information as
Reasonably Required . . . . . . . . . . . . . . . . . . . 93
Section 7.02. Federal Information Returns and Reports to
Certificateholders. . . . . . . . . . . . . . . . . . . . 93
ARTICLE VIII
THE DEPOSITOR AND THE SERVICER. . . . . . . . . . . . . . . . . . . . . . . 95
Section 8.01. Indemnification; Third Party Claims . . . . . . . . . . . 95
Section 8.02. Merger or Consolidation of the Depositor or
the Servicer. . . . . . . . . . . . . . . . . . . . . . . 95
Section 8.03. Limitation on Liability of the Depositor, the
Servicer, the Trustee and Others. . . . . . . . . . . . . 96
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Section 8.04. Depositor and Servicer Not to Resign. . . . . . . . . . . 96
Section 8.05. Successor to the Servicer . . . . . . . . . . . . . . . . 97
Section 8.06. Maintenance of Ratings. . . . . . . . . . . . . . . . . . 98
ARTICLE IX
DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 9.01. Events of Default . . . . . . . . . . . . . . . . . . . . 98
Section 9.02. Waiver of Defaults. . . . . . . . . . . . . . . . . . . .100
Section 9.03. Trustee to Act; Appointment of Successor. . . . . . . . .100
Section 9.04. Notification to Certificateholders and the
Rating Agencies . . . . . . . . . . . . . . . . . . . . .100
ARTICLE X
CONCERNING THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . .100
Section 10.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . .101
Section 10.02. Certain Matters Affecting the Trustee . . . . . . . . . .101
Section 10.03. Trustee Not Liable for Certificates or Mortgage Loans . .103
Section 10.04. Trustee May Own Certificates. . . . . . . . . . . . . . .103
Section 10.05. Fees and Expenses . . . . . . . . . . . . . . . . . . . .103
Section 10.06. Eligibility Requirements for Trustee. . . . . . . . . . .103
Section 10.07. Resignation and Removal of the Trustee. . . . . . . . . .104
Section 10.08. Successor Trustee . . . . . . . . . . . . . . . . . . . .105
Section 10.09. Merger or Consolidation of Trustee. . . . . . . . . . . .105
Section 10.10. Appointment of Co-Trustee or Separate Trustee . . . . . .105
Section 10.11. Appointment of Office or Agency . . . . . . . . . . . . .106
ARTICLE XI
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106
Section 11.01. Termination . . . . . . . . . . . . . . . . . . . . . . .107
ARTICLE XII
MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . . .108
Section 12.01. Severability of Provisions. . . . . . . . . . . . . . . .108
Section 12.02. Limitation on Rights of Certificateholders. . . . . . . .109
Section 12.03. Amendment . . . . . . . . . . . . . . . . . . . . . . . .109
Section 12.04. Counterparts. . . . . . . . . . . . . . . . . . . . . . .110
Section 12.05. Duration of Agreement . . . . . . . . . . . . . . . . . .110
Section 12.06. Governing Law . . . . . . . . . . . . . . . . . . . . . .110
Section 12.07. Notices . . . . . . . . . . . . . . . . . . . . . . . . .110
EXHIBIT A MORTGAGE LOAN SCHEDULE
EXHIBIT B CONTENTS OF MORTGAGE FILE
EXHIBIT C FORMS OF CLASS A CERTIFICATES
EXHIBIT D FORM OF CLASS M CERTIFICATE
iii
<PAGE>
EXHIBIT E FORMS OF CLASS B CERTIFICATES
EXHIBIT F FORM OF CLASS A-R CERTIFICATE
EXHIBIT G FORM OF TRUSTEE CERTIFICATION
EXHIBIT H FORM OF INVESTMENT LETTER
EXHIBIT I FORM OF RULE 144A INVESTMENT LETTER
EXHIBIT J FORM OF SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
EXHIBIT K FORM OF CLASS A-R TRANSFEREE LETTER
EXHIBIT L REQUEST FOR RELEASE OF DOCUMENTS
ANNEX A
SCHEDULE ONE
SCHEDULE TWO
SCHEDULE THREE
SCHEDULE FOUR
SCHEDULE FIVE
iv
<PAGE>
This Pooling and Servicing Agreement, dated as of June 1, 1998, is
executed among Chase Mortgage Finance Corporation, as depositor (together
with its permitted successors and assigns, the "Depositor"), Chase Manhattan
Mortgage Corporation, as servicer (together with its permitted successors and
assigns, the "Servicer") and Citibank, N.A., as trustee (together with its
permitted successors and assigns, the "Trustee").
In consideration of the premises and the mutual agreements
hereinafter set forth, the Depositor, the Servicer and the Trustee agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the
context otherwise requires, shall have the following meanings:
ACCEPTED SERVICING PRACTICES: With respect to any Mortgage Loan,
those mortgage servicing practices (including collection procedures) of
prudent mortgage banking institutions which service mortgage loans of the
same type as such Mortgage Loan in the jurisdiction where the related
Mortgaged Property is located, and which are in accordance with FNMA
servicing practices and procedures, for MBS pool mortgages, as defined in the
FNMA Guides including future updates.
ADJUSTED LOCK-OUT PERCENTAGE: Equals (i) for any Distribution Date
prior to the Distribution Date in July 2003, 0% and (ii) for any Distribution
Date on or after the Distribution Date in July 2003, the Lock-out Percentage.
ADVANCE: The aggregate of the advances made by the Servicer with
respect to a particular Distribution Date pursuant to Section 6.03.
AGGREGATE CLASS A INTEREST ACCRUAL AMOUNT: On any Distribution
Date, an amount equal to the sum of the Class A-1 Interest Accrual Amount,
the Class A-2 Interest Accrual Amount, the Class A-3 Interest Accrual Amount,
the Class A-4 Interest Accrual Amount, the Class A-5 Interest Accrual Amount,
the Class A-6 Interest Accrual Amount, the Class A-7 Interest Accrual Amount,
the Class A-8 Interest Accrual Amount, the Class A-9 Interest Accrual Amount,
the Class A-10 Interest Accrual Amount, the Class A-11 Interest Accrual
Amount, the Class A-12 Interest Accrual Amount, the Class A-14 Interest
Accrual Amount, the Class A-R Interest Accrual Amount and the Class A-X
Interest Accrual Amount.
AGGREGATE CLASS A INTEREST SHORTFALL: On any Distribution Date, an
amount equal to the sum of the Class A-1 Shortfall, the Class A-2 Shortfall,
the Class A-3 Shortfall, the Class A-4 Shortfall, the Class A-5 Shortfall,
the Class A-6 Shortfall, the Class A-7
<PAGE>
Shortfall, the Class A-8 Shortfall, the Class A-9 Shortfall, the Class A-10
Shortfall, the Class A-11 Shortfall, the Class A-12 Shortfall, the Class A-14
Shortfall, the Class A-R Shortfall and the Class A-X Shortfall.
AGREEMENT: This Pooling and Servicing Agreement and all amendments
hereof and supplements hereto.
APPRAISED VALUE: The value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of
the Mortgaged Property.
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice of
transfer or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction where the related Mortgaged Property is located to
reflect of record the sale and assignment of the Mortgage Loan to the
Trustee, which assignment, notice of transfer or equivalent instrument may,
if permitted by law, be in the form of one or more blanket assignments
covering Mortgages secured by Mortgaged Properties located in the same county.
AUTHENTICATING AGENT: The meaning specified in Section 4.06.
AVAILABLE DISTRIBUTION AMOUNT: On any Distribution Date, an amount
equal to the amount on deposit in the Certificate Account as of the close of
business on the related Determination Date except:
(a) amounts received on particular Mortgage Loans as late payments
or other recoveries of principal or interest (including Liquidation
Proceeds, Insurance Proceeds and condemnation awards) and respecting
which the Servicer previously made an unreimbursed Advance of such
amounts;
(b) reimbursement for Nonrecoverable Advances and other amounts
permitted to be withdrawn by the Servicer pursuant to Section 5.09 from,
or not required to be deposited in, the Collection Account;
(c) amounts representing the Servicing Fee with respect to such
Distribution Date;
(d) amounts representing all or part of a Monthly Payment due (i)
after the related Due Period or (ii) on or prior to the Cut-off Date;
(e) all Repurchase Proceeds, Principal Prepayments, Liquidation
Proceeds, Insurance Proceeds and condemnation awards with respect to
Mortgage Loans received after the related Principal Prepayment Period,
and all related payments of interest representing interest for any
period of time after the last day of the related Due Period for such
Mortgage Loans; and
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(f) all income from Eligible Investments held in the Collection
Account for the account of the Servicer.
BANKRUPTCY AMOUNT: As of any date of determination, $50,000.00
minus all Bankruptcy Losses on the Mortgage Loans, if any, previously
allocated to the Certificates in accordance with Section 6.04.
BANKRUPTCY LOSS: With respect to any Mortgage Loan, a Realized
Loss resulting from a Deficient Valuation or Debt Service Reduction.
BOOK-ENTRY CERTIFICATES: The Class A Certificates (other than the
Class A-R and Class A-X Certificates), referred to collectively.
BUSINESS DAY: Any day other than (a) a Saturday or Sunday, (b) a
legal holiday in the State of New York or (c) a day on which banking
institutions in the State of New York are authorized or obligated by law or
executive order to be closed.
CARRY-OVER SUBORDINATED PRINCIPAL AMOUNT: As of any Distribution
Date, with respect to any Class of Subordinated Certificates, an amount, if
any, equal to the amount of principal distributable to such Class on any
prior Distribution Date that has not been so distributed.
CASH LIQUIDATION: Recovery of all cash proceeds by the Servicer
with respect to the liquidation of any Mortgage Loan, including Insurance
Proceeds and other payments or recoveries (whether made at one time or over a
period of time) which the Servicer deems to be finally recoverable, in
connection with the sale, assignment or satisfaction of such Mortgage Loan,
trustee's sale, foreclosure sale or otherwise, but only if title to the
related Mortgaged Property was not acquired by foreclosure or deed in lieu of
foreclosure by the Servicer pursuant to Section 5.21.
CERTIFICATE: Any Class A, Class M or Class B Certificate.
CERTIFICATE ACCOUNT: The account created and maintained pursuant
to Section 4.05.
CERTIFICATEHOLDER or HOLDER: The person in whose name a
Certificate is registered in the Certificate Register, except that, solely
for the purposes of giving any consent, waiver, request or demand pursuant to
this Agreement, any Certificate registered in the name of the Depositor, the
Servicer, any Sub-Servicer, or any of their respective affiliates shall be
disregarded and the undivided Percentage Interest evidenced thereby shall not
be taken into account in determining whether the requisite amount of
Percentage Interests necessary to effect any such consent, waiver, request or
demand has been obtained. The Trustee shall be entitled to
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<PAGE>
conclusively rely upon the certificate of the Depositor or the Servicer as to
the determination of which Certificates are registered in the name of such
affiliates.
CERTIFICATE OWNER: Any Person who is the beneficial owner of a
Book-Entry Certificate registered in the name of the Depository or its
nominee.
CERTIFICATE RATE: The per annum rate of interest borne by each
Class of Certificates (other than the Class A-P and Class A-13 Certificates),
which rate shall equal 6.50% with respect to the Class A-1 and Class A-2
Certificates, 6.60% with respect to the Class A-3 Certificates, 7.00% with
respect to the Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class
A-10, Class A-11 and Class A-12 Certificates, and 6.75% with respect to the
Class A-4, Class A-14, Class A-R, Class M, Class B-1, Class B-2, Class B-3,
Class B-4 and Class B-5 Certificates. In the case of the Class A-X
Certificates, the Certificate Rate shall equal, with respect to any
Distribution Date, the weighted average, expressed as a percentage, of the
Stripped Interest Rate on each Mortgage Loan having a Stripped Interest Rate
exceeding zero as of the Due Date in the month immediately preceding the
month in which such Distribution Date occurs, weighted on the basis of the
respective Principal Balances of the Mortgage Loans, which Principal Balances
shall be the Principal Balances of the Mortgage Loans at the close of
business on the immediately preceding Distribution Date after giving effect
to distributions thereon allocable to principal (or, in the case of the
Certificate Rate for the initial Distribution Date, at the close of business
on the Cut-off Date). Interest with respect to each Class of Certificates
(other than the Class A-13 and Class A-P Certificates) at the Certificate
Rate shall be calculated based on a year of 360 days comprised of twelve
30-day months.
CERTIFICATE REGISTER: The register maintained pursuant to Section
4.02.
CHASE: The Chase Manhattan Bank, a New York State banking
corporation, or its successor in interest.
CLASS: Pertaining to the Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class
A-11, Class A-12, Class A-13, Class A-14, Class A-P, Class A-R, Class A-X,
Class M, Class B-1, Class B-2, Class B-3, Class B-4 or Class B-5
Certificates, as the case may be.
CLASS A, CLASS M OR CLASS B: Pertaining to Class A Certificates,
Class M Certificates or Class B Certificates, as the case may be.
CLASS A-7 ACCRETION TERMINATION DATE: The Distribution Date
following the Credit Support Depletion Date.
CLASS A-8 ACCRETION TERMINATION DATE: The earlier to occur of (i)
the Distribution Date following the Distribution Date on which the aggregate
Outstanding
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Certificate Principal Balance of the Class A-6 and Class A-7 Certificates is
reduced to zero and (ii) the Distribution Date following the Credit Support
Depletion Date.
CLASS A-10 ACCRETION TERMINATION DATE: The Distribution Date
following the Credit Support Depletion Date.
CLASS A-11 ACCRETION TERMINATION DATE: The Distribution Date
following the Credit Support Depletion Date.
CLASS A-12 ACCRETION TERMINATION DATE: The earlier to occur of (i)
the Distribution Date following the Distribution Date on which the aggregate
Outstanding Certificate Principal Balance of the Class A-9 and Class A-11
Certificates is reduced to zero and (ii) the Distribution Date following the
Credit Support Depletion Date.
CLASS A-P AMOUNT: With respect to any Distribution Date, the
applicable PO Percentage of (i) all principal received on or in respect of
each Discount Mortgage Loan (exclusive of any amounts in respect of any
Monthly Payment) during the related Principal Prepayment Period and (ii) all
principal received as part of a Monthly Payment on or in respect of a
Discount Mortgage Loan during the related Due Period.
CLASS A CERTIFICATES: The Class A-1, Class A-2, Class A-3, Class
A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class
A-11, Class A-12, Class A-13, Class A-14, Class A-P, Class A-R and Class A-X
Certificates, referred to collectively.
CLASS A-1 CERTIFICATE: Any one of the Class A-1 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-2 CERTIFICATE: Any one of the Class A-2 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-3 CERTIFICATE: Any one of the Class A-3 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-4 CERTIFICATE: Any one of the Class A-4 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
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CLASS A-5 CERTIFICATE: Any one of the Class A-5 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-6 CERTIFICATE: Any one of the Class A-6 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-7 CERTIFICATE: Any one of the Class A-7 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-8 CERTIFICATE: Any one of the Class A-8 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-9 CERTIFICATE: Any one of the Class A-9 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-10 CERTIFICATE: Any one of the Class A-10 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-11 CERTIFICATE: Any one of the Class A-11 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-12 CERTIFICATE: Any one of the Class A-12 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-13 CERTIFICATE: Any one of the Class A-13 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-14 CERTIFICATE: Any one of the Class A-14 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and
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Class B Certificates, substantially in the form of the Class A Certificate
set forth in Exhibit C hereto.
CLASS A-P CERTIFICATE: Any one of the Class A-P Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-R CERTIFICATE: The Class A-R Certificate executed by the
Trustee and authenticated by the Trustee, which represents the Residual
Interest, substantially in the form of the Class A-R Certificate set forth in
Exhibit F hereto.
CLASS A-X CERTIFICATE: Any one of the Class A-X Certificates
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-6 COMPONENT ONE: The portion of the Certificate Principal
Balance of the Class A-6 Certificates designated as such in Section 4.01(d).
CLASS A-6 COMPONENT TWO: The portion of the Certificate Principal
Balance of the Class A-6 Certificates designated as such in Section 4.01(d).
CLASS A-P DISTRIBUTION AMOUNT: With respect to any Distribution
Date, the amounts distributed to the Class A-P Certificates pursuant to
Sections 6.01(b)(ii) and 6.01(b)(iii).
CLASS A-1 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-1 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-1
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class A-1 Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS A-2 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-2 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-2
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class A-2 Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS A-3 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-3 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-3
Certificates on such Distribution Date pursuant to Section 6.05(b) and
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(ii) any Realized Loss Interest Shortfall allocated to the Class A-3
Certificates on such Distribution Date pursuant to Section 6.05(c).
CLASS A-4 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the Class
A-4 Notional Balance minus (i) any Compensating Interest Shortfall allocated
to the Class A-4 Certificates on such Distribution Date pursuant to Section
6.05(b) and (ii) any Realized Loss Interest Shortfall allocated to the Class
A-4 Certificates on such Distribution Date pursuant to Section 6.05(c).
CLASS A-5 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-5 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-5
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class A-5 Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS A-6 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-6 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-6
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class A-6 Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS A-7 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-7 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-7
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class A-7 Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS A-8 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-8 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-8
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class A-8 Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS A-9 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-9 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-9
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class A-9 Certificates
on such Distribution Date pursuant to Section 6.05(c).
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CLASS A-10 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-10 Certificates
minus (i) any Compensating Interest Shortfall allocated to the Class A-10
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class A-10 Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS A-11 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-11 Certificates
minus (i) any Compensating Interest Shortfall allocated to the Class A-11
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class A-11 Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS A-12 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-12 Certificates
minus (i) any Compensating Interest Shortfall allocated to the Class A-12
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class A-12 Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS A-14 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-14 Certificates
minus (i) any Compensating Interest Shortfall allocated to the Class A-14
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class A-14 Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS A-R INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-R Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-R
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class A-R Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS A-X INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the Class
A-X Notional Balance minus (i) any Compensating Interest Shortfall allocated
to the Class A-X Certificates on such Distribution Date pursuant to Section
6.05(b) and (ii) any Realized Loss Interest Shortfall allocated to the Class
A-X Certificates on such Distribution Date pursuant to Section 6.05(c).
CLASS A-4 NOTIONAL BALANCE: With respect to any Distribution Date,
an amount equal to the sum of (i) the product of (x) the Outstanding
Certificate Principal Balance of
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the Class A-1 Certificates and (y) a fraction, the numerator of which is the
difference between the Certificate Rate with respect to the Class A-4
Certificates and the Certificate Rate with respect to the Class A-1
Certificates and the denominator of which is the Certificate Rate with
respect to the Class A-4 Certificates, (ii) the product of (x) the
Outstanding Certificate Principal Balance of the Class A-2 Certificates and
(y) a fraction, the numerator of which is the difference between the
Certificate Rate with respect to the Class A-4 Certificates and the
Certificate Rate with respect to the Class A-2 Certificates and the
denominator of which is the Certificate Rate with respect to the Class A-4
Certificates and (iii) the product of (x) the Outstanding Certificate
Principal Balance of the Class A-3 Certificates and (y) a fraction, the
numerator of which is the difference between the Certificate Rate with
respect to the Class A-4 Certificates and the Certificate Rate with respect
to the Class A-3 Certificates and the denominator of which is the Certificate
Rate with respect to the Class A-4 Certificates.
CLASS A-X NOTIONAL BALANCE: With respect to any Distribution Date,
an amount equal to the aggregate Scheduled Principal Balance of the
Non-Discount Mortgage Loans.
CLASS A PERCENTAGE: As of any Distribution Date, the percentage
obtained by dividing the Class A Principal Balance by the Mortgage Pool
Principal Balance, but not more than 100%.
CLASS A PRINCIPAL BALANCE: As of any Distribution Date, (a) the
Class A Principal Balance for the immediately preceding Distribution Date
less (b) amounts distributed to the Class A Certificateholders on such
preceding Distribution Date allocable to principal (including the principal
portion of Advances of the Servicer made pursuant to Section 6.03 and
Realized Losses allocated to the Class A Certificates pursuant to Section
6.04); provided that the Class A Principal Balance on the first Distribution
Date shall be the Original Class A Principal Balance.
CLASS A-1 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-1 Interest Accrual Amount
over the amount actually distributed to the Class A-1 Certificateholders on
such Distribution Date pursuant to Section 6.01(b)(i)(A).
CLASS A-2 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-2 Interest Accrual Amount
over the amount actually distributed to the Class A-2 Certificateholders on
such Distribution Date pursuant to Section 6.01(b)(i)(B).
CLASS A-3 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-3 Interest Accrual Amount
over the amount actually distributed to the Class A-3 Certificateholders on
such Distribution Date pursuant to Section 6.01(b)(i)(C).
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<PAGE>
CLASS A-4 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-4 Interest Accrual Amount
over the amount actually distributed to the Class A-4 Certificateholders on
such Distribution Date pursuant to Section 6.01(b)(i)(D).
CLASS A-5 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-5 Interest Accrual Amount
over the amount actually distributed to the Class A-5 Certificateholders on
such Distribution Date pursuant to Section 6.01(b)(i)(E).
CLASS A-6 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-6 Interest Accrual Amount
over the amount actually distributed to the Class A-6 Certificateholders on
such Distribution Date pursuant to Section 6.01(b)(i)(F).
CLASS A-7 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-7 Interest Accrual Amount
over the amount actually distributed to the Class A-7 Certificateholders on
such Distribution Date (or, prior to the Class A-7 Accretion Termination
Date, added to the Outstanding Certificate Principal Balance of the Class
A-7 Certificates) pursuant to Section 6.01(b)(i)(G).
CLASS A-8 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-8 Interest Accrual Amount
over the amount actually distributed to the Class A-8 Certificateholders on
such Distribution Date (or, prior to the Class A-8 Accretion Termination
Date, added to the Outstanding Certificate Principal Balance of the Class
A-8 Certificates) pursuant to Section 6.01(b)(i)(H).
CLASS A-9 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-9 Interest Accrual Amount
over the amount actually distributed to the Class A-9 Certificateholders on
such Distribution Date pursuant to Section 6.01(b)(i)(I).
CLASS A-10 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-10 Interest Accrual Amount
over the amount actually distributed to the Class A-10 Certificateholders on
such Distribution Date (or, prior to the Class A-10 Accretion Termination
Date, added to the Outstanding Certificate Principal Balance of the Class
A-10 Certificates) pursuant to Section 6.01(b)(i)(J).
CLASS A-11 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-11 Interest Accrual Amount
over the amount actually distributed to the Class A-11 Certificateholders on
such Distribution Date (or, prior to the Class A-11 Accretion Termination
Date, added to the Outstanding Certificate Principal Balance of the Class
A-11 Certificates) pursuant to Section 6.01(b)(i)(K).
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<PAGE>
CLASS A-12 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-12 Interest Accrual Amount
over the amount actually distributed to the Class A-12 Certificateholders on
such Distribution Date (or, prior to the Class A-12 Accretion Termination
Date, added to the Outstanding Certificate Principal Balance of the Class
A-12 Certificates) pursuant to Section 6.01(b)(i)(L).
CLASS A-14 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-14 Interest Accrual Amount
over the amount actually distributed to the Class A-14 Certificateholders on
such Distribution Date pursuant to Section 6.01(b)(i)(M).
CLASS A-R SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-R Interest Accrual Amount
over the amount actually distributed to the Class A-R Certificateholders on
such Distribution Date pursuant to Section 6.01(b)(i)(N).
CLASS A-X SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class A-X Interest Accrual Amount
over the amount actually distributed to the Class A-X Certificates on such
Distribution Date pursuant to Section 6.01(b)(i)(O).
CLASS A-P SHORTFALL AMOUNT: With respect to any Distribution Date
prior to and including the Credit Support Depletion Date, to the extent of
amounts available to pay the Subordinated Optimal Principal Amount (without
regard to clause (b)(2) of the definition of such term), an amount equal to
the sum of (i) the applicable PO Percentage of any Realized Loss (other than
an Excess Loss) with respect to a Discount Mortgage Loan and (ii) the sum of
amounts, if any, by which the amounts specified in clause (i) with respect to
each prior Distribution Date exceeded the amount actually distributed in
respect thereof on such prior Distribution Date and not subsequently
distributed to the Class A-P Certificateholders.
CLASS B CERTIFICATES: The Class B-1, Class B-2, Class B-3, Class
B-4 and Class B-5 Certificates, referred to collectively.
CLASS B-1 CERTIFICATE: Any one of the Class B-1 Certificates
executed by the Trustee and authenticated by the Trustee, subordinated in
right of payment to the Class A and Class M Certificates, substantially in
the form of the Class B Certificate set forth in Exhibit E hereto.
CLASS B-2 CERTIFICATE: Any one of the Class B-2 Certificates
executed by the Trustee and authenticated by the Trustee, subordinated in
right of payment to the Class A, Class M and Class B-1 Certificates,
substantially in the form of the Class B Certificate set forth in Exhibit E
hereto.
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CLASS B-3 CERTIFICATE: Any one of the Class B-3 Certificates
executed by the Trustee and authenticated by the Trustee, subordinated in
right of payment to the Class A, Class M, Class B-1 and Class B-2
Certificates, substantially in the form of the Class B Certificate set forth
in Exhibit E hereto.
CLASS B-4 CERTIFICATE: Any one of the Class B-4 Certificates
executed by the Trustee and authenticated by the Trustee, subordinated in
right of payment to the Class A, Class M, Class B-1, Class B-2 and Class B-3
Certificates, substantially in the form of the Class B Certificate set forth
in Exhibit E hereto.
CLASS B-5 CERTIFICATE: Any one of the Class B-5 Certificates
executed by the Trustee and authenticated by the Trustee, subordinated in
right of payment to the Class A, Class M, Class B-1, Class B-2, Class B-3 and
Class B-4 Certificates, substantially in the form of the Class B Certificate
set forth in Exhibit E hereto.
CLASS B-1 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class B-1 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class B-1
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class B-1 Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS B-2 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class B-2 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class B-2
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class B-2 Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS B-3 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class B-3 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class B-3
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class B-3 Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS B-4 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class B-4 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class B-4
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class B-4 Certificates
on such Distribution Date pursuant to Section 6.05(c).
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CLASS B-5 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class B-5 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class B-5
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii)
any Realized Loss Interest Shortfall allocated to the Class B-5 Certificates
on such Distribution Date pursuant to Section 6.05(c).
CLASS B-1 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class B-1 Interest Accrual Amount
over the amount actually distributed to the Class B-1 Certificates on such
Distribution Date pursuant to Section 6.01(d)(i)(1) (A) and (B).
CLASS B-2 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class B-2 Interest Accrual Amount
over the amount actually distributed to the Class B-2 Certificates on such
Distribution Date pursuant to Section 6.01(d)(i)(2) (A) and (B).
CLASS B-3 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class B-3 Interest Accrual Amount
over the amount actually distributed to the Class B-3 Certificates on such
Distribution Date pursuant to Section 6.01(d)(i)(3) (A) and (B).
CLASS B-4 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class B-4 Interest Accrual Amount
over the amount actually distributed to the Class B-4 Certificates on such
Distribution Date pursuant to Section 6.01(d)(i)(4) (A) and (B).
CLASS B-5 SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class B-5 Interest Accrual Amount
over the amount actually distributed to the Class B-5 Certificates on such
Distribution Date pursuant to Section 6.01(d)(i)(5) (A) and (B).
CLASS B PERCENTAGE: As of any Distribution Date, the difference
between 100% and the sum of (i) the Class A Percentage and (ii) the Class M
Percentage for such Distribution Date.
CLASS B PRINCIPAL BALANCE: As of any Distribution Date, the excess
of the Mortgage Pool Principal Balance (together with the principal portion
of any Monthly Payment due but not paid with respect to which an Advance has
not been made) over the sum of (i) the Class A Principal Balance and (ii) the
Class M Principal Balance.
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CLASS M CERTIFICATE: Any one of the Class M Certificates executed
by the Trustee and authenticated by the Trustee, subordinated in right of
payment to the Class A Certificates, substantially in the form of the Class M
Certificate set forth in Exhibit D hereto.
CLASS M INTEREST ACCRUAL AMOUNT: With respect to any Distribution
Date, one month's interest at the Certificate Rate on the Outstanding
Certificate Principal Balance of the Class M Certificates minus (i) any
Compensating Interest Shortfall allocated to the Class M Certificates on such
Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class M Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS M PERCENTAGE: As of any Distribution Date, the percentage
obtained by dividing the Class M Principal Balance by the Mortgage Pool
Principal Balance, but not more than 100%; provided, however, that on any
Distribution Date on which the Class B Percentage equals 0%, the Class M
Percentage shall equal 100% minus the Class A Percentage.
CLASS M PRINCIPAL BALANCE: As of any Distribution Date, (a) the
Class M Principal Balance for the immediately preceding Distribution Date
less (b) amounts distributed to the Class M Certificateholders on such
preceding Distribution Date allocable to principal (including the principal
portion of Advances of the Servicer made pursuant to Section 6.03 and
Realized Losses allocated to the Class M Certificates pursuant to Section
6.04); provided that the Class M Principal Balance on the first Distribution
Date shall be the Original Class M Principal Balance, and provided further
that if the aggregate Outstanding Certificate Principal Balance of the Class
B Certificates has been reduced to zero, as of any Distribution Date, the
Class M Principal Balance will equal the excess of the Mortgage Pool
Principal Balance (together with the portion of any Monthly Payment due but
not paid with respect to which an Advance has not been made) over the Class A
Principal Balance.
CLASS M SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class M Interest Accrual Amount
over the amount actually distributed to the Class M Certificateholders on
such Distribution Date pursuant to Section 6.01(c)(i) (A) and (B).
CLOSING DATE: June 25, 1998.
CMMC: Chase Manhattan Mortgage Corporation, a New Jersey
corporation, or its successor in interest.
CODE: The Internal Revenue Code of 1986, as amended from time to
time, and any successor statutes thereto, and applicable U.S. Department of
Treasury temporary or final regulations promulgated thereunder.
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COLLECTION ACCOUNT: The account created and maintained pursuant to
Section 5.08.
COMPENSATING INTEREST: The meaning specified in Section 6.05(a).
COMPENSATING INTEREST SHORTFALL: The meaning specified in Section
6.05(b).
COMPONENT: Either of Class A-6 Component One or Class A-6
Component Two.
CORPORATE TRUST OFFICE: The principal office of the Trustee at
which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this instrument is
located at 120 Wall Street, New York, New York 10043.
CREDIT SUPPORT: With respect to each Class of Subordinated
Certificates (other than the Class B-5 Certificates), the level of credit
support supporting such Class, expressed as a percentage of the aggregate
Outstanding Certificate Principal Balance of all Classes of Certificates
(other than the Class A-P Certificates). With respect to each Distribution
Date, Credit Support for each such Class will equal in each case the
percentage, rounded to two decimal places, obtained by dividing the aggregate
Outstanding Certificate Principal Balances immediately prior to such
Distribution Date of all Classes of Subordinated Certificates having higher
numerical class designations than such Class (for this purpose, each Class of
Class M Certificates shall be deemed to have a lower numerical class
designation than each Class of Class B Certificates) by the aggregate
Outstanding Certificate Principal Balance of all Classes of Certificates
(other than the Class A-P Certificates) immediately prior to such
Distribution Date.
CREDIT SUPPORT DEPLETION DATE: The first Distribution Date on
which the aggregate outstanding principal balance of the Subordinated
Certificates has been or will be reduced to zero.
CUT-OFF DATE: June 1, 1998.
DCR: Duff & Phelps Credit Rating Co. or its successor in interest.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court
of competent jurisdiction in a proceeding under the Bankruptcy Code, other
than such a reduction resulting from a Deficient Valuation.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent
jurisdiction in an amount less than the
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then outstanding principal balance of the Mortgage Loan, which valuation
results from a proceeding initiated under the Bankruptcy Code.
DEFINITIVE CERTIFICATES: The Certificates referred to in Section
4.01(c).
DEPOSITOR: Chase Mortgage Finance Corporation, a Delaware
corporation, or its successor in interest or any successor under this
Agreement appointed as herein provided.
DEPOSITORY: The Depository Trust Company, the nominee of which is
Cede & Co.
DEPOSITORY AGREEMENT: The agreement referred to in Section 4.01(b).
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person for whom from time to time the Depository effects
book-entry transfers and pledges of securities deposited with the Depository.
DETERMINATION DATE: The sixteenth day of the month in which the
related Distribution Date occurs (or, if such sixteenth day is not a Business
Day, the preceding Business Day).
DISCOUNT MORTGAGE LOAN: Any Mortgage Loan having a Net Mortgage
Rate less than the Remittance Rate.
DISQUALIFIED ORGANIZATION: An organization referred to in section
860E(e)(5) of the Code.
DISTRIBUTION DATE: The 25th day of any month, or if such 25th day
is not a Business Day, the first Business Day immediately following,
beginning with July 27, 1998.
DUE DATE: The first day of each month, being the day of the month
on which each Monthly Payment is due on a Mortgage Loan, exclusive of any
days of grace.
DUE PERIOD: With respect to any Distribution Date, the period from
the second day of the month preceding the month in which such Distribution
Date occurs through the first day of the month in which such Distribution
Date occurs.
ELIGIBLE ACCOUNT: An account that is (i) maintained with a
depository institution the long-term unsecured debt obligations of which are
rated by each Rating Agency in one of its two highest rating categories, or
(ii) maintained with the corporate trust department of a national bank which
has a rating of at least Baa3 or P-3 by Moody's, or (iii) an account or
accounts the deposits in which are fully insured by the FDIC, or (iv) an
account or accounts in a depository institution in which such accounts are
insured by the FDIC (to the limit established by
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the FDIC), the uninsured deposits in which accounts are otherwise secured
such that, as evidenced by an Opinion of Counsel delivered to and acceptable
to the Trustee and each Rating Agency, the Certificateholders have a claim
with respect to the funds in such account and a perfected first security
interest against any collateral (which shall be limited to Eligible
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such account
is maintained, or (v) otherwise acceptable to each Rating Agency without
reduction or withdrawal of the rating of any Class of Certificates, as
evidenced by a letter from each Rating Agency.
ELIGIBLE INVESTMENTS: One or more of the following:
(i) obligations of, or guaranteed as to principal and interest by,
the United States or obligations of any agency or instrumentality
thereof when such obligations are backed by the full faith and credit of
the United States; provided that any such obligation held as a "cash
flow investment" within the meaning of section 860G(a)(6) of the Code
shall not have a remaining maturity of more than 45 days;
(ii) repurchase agreements on obligations specified in clause (i)
maturing not more than two months from the date of acquisition thereof,
provided that the long-term unsecured obligations of the party agreeing
to repurchase such obligations are at the time rated by each Rating
Agency in one of its two highest rating categories and the short-term
debt obligations of the party agreeing to repurchase are rated Prime -1
by Moody's and D-1 by DCR if rated by DCR;
(iii) federal funds, certificates of deposit, time deposits and
bankers' acceptances (which shall each have an original maturity of not
more than 60 days and, in the case of bankers' acceptances, shall in no
event have an original maturity of more than 365 days) of any United
States depository institution or trust company incorporated under the
laws of the United States or any state, provided that the long-term
unsecured debt obligations of such depository institution or trust
company at the date of acquisition thereof have been rated by each
Rating Agency in one of its two highest rating categories and the
short-term obligations of such depository institution or trust company
are rated Prime -1 by Moody's and D-1 by DCR if rated by DCR;
(iv) commercial paper (having original maturities of not more than
365 days) of any corporation incorporated under the laws of the United
States or any state thereof which on the date of acquisition has been
rated by each Rating Agency in its highest short-term unsecured
commercial paper rating category; provided that such commercial paper
shall have a remaining maturity of not more than 45 days;
(v) units of taxable money market funds (including those for which
the Trustee or the Servicer or any affiliate thereof receives
compensation with respect to such investment) which funds have been
rated by each Rating Agency in its highest rating
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category or which have been designated in writing by each Rating Agency
as Eligible Investments with respect to this definition;
(vi) other obligations or securities that are "permitted
investments" within the meaning of Section 860G(a)(5) of the Code and
acceptable to each Rating Agency rating the Certificates as an Eligible
Investment hereunder and will not result in a reduction or withdrawal in
the then current rating of any Class of Certificates, as evidenced by a
letter to such effect from each Rating Agency.
provided that no such instrument shall be an Eligible Investment if such
instrument evidences either (a) a right to receive only interest payments
with respect to the obligations underlying such instrument, or (b) both
principal and interest payments derived from obligations underlying such
instrument where the interest and principal payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ESCROW ACCOUNT: The account or accounts created and maintained
pursuant to Section 5.10.
ESCROW PAYMENTS: The amounts constituting applicable ground rents,
taxes, assessments, water rates, Standard Hazard Policy premiums and other
payments required to be escrowed by the Mortgagor with the mortgagee pursuant
to a Mortgage Loan.
EVENT OF DEFAULT: Any of the events specified in Section 9.01.
EXCEPTION REPORT: The report of the Trustee referred to in Section
2.02.
EXCESS BANKRUPTCY LOSS: Any Bankruptcy Loss, or portion thereof,
which exceeds the then applicable Bankruptcy Amount.
EXCESS FRAUD LOSS: Any Fraud Loss, or portion thereof, which
exceeds the then applicable Fraud Loss Amount.
EXCESS LOSSES: Excess Bankruptcy Losses, Excess Fraud Losses and
Excess Special Hazard Losses, referred to collectively.
EXCESS PROCEEDS: All amounts (net of the related Servicing
Advances) received on any Mortgage Loan (whether as regular principal
payments, Principal Prepayments, Repurchase Proceeds, Liquidation Proceeds,
Insurance Proceeds, condemnation awards, or with respect to a disposition of
a Mortgaged Property which has been acquired by foreclosure or deed in lieu
of foreclosure or otherwise) in excess of the Principal Balance at the
Cut-off Date of such
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Mortgage Loan and accrued interest thereon at its Mortgage Rate to the Due
Date immediately succeeding the date of prepayment, repurchase or
liquidation, as the case may be.
EXCESS SPECIAL HAZARD LOSS: Any Special Hazard Loss, or portion
thereof, that exceeds the then applicable Special Hazard Amount.
FDIC: The Federal Deposit Insurance Corporation or any successor
organization.
FHLMC: The Federal Home Loan Mortgage Corporation or any successor
organization.
FIDELITY BOND: A fidelity bond and errors and omissions insurance
to be maintained by the Servicer pursuant to Section 5.19.
FNMA: The Federal National Mortgage Association, or any successor
organization.
FNMA GUIDES: The FNMA Sellers' Guide and the FNMA Servicers'
Guide, and all amendments or additions thereto.
FRAUD LOSS: Any Realized Loss or portion thereof sustained by
reason of a default arising from fraud, dishonesty or misrepresentation in
connection with the related Mortgage Loan, including by reason of the denial
of coverage under any related Primary Insurance Policy.
FRAUD LOSS AMOUNT: As of any date of determination after the
Cut-off Date, an amount equal to: (X) prior to the first anniversary of the
Cut-off Date, 2.00% (initially, $10,600,175.00) of the aggregate outstanding
principal balance of all of the Mortgage Loans as of the Cut-off Date minus
the aggregate amount of Fraud Loss on the Mortgage Loans allocated to the
Certificates in accordance with Section 6.04 since the Cut-off Date up to
such date of determination and (Y) from the first to the fifth anniversary of
the Cut-off Date, (1) 1.00% of the aggregate outstanding principal balance of
all of the Mortgage Loans as of the most recent anniversary of the Cut-off
Date minus (2) the Fraud Losses allocated to the Certificates in accordance
with Section 6.04 since the most recent anniversary of the Cut-off Date up to
such date of determination. On and after the fifth anniversary of the
Cut-off Date, the Fraud Loss Amount shall be zero.
INDIRECT PARTICIPANT: A broker, dealer, bank or other financial
institution or other Person that clears through or maintains a custodial
relationship with a Depository Participant.
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INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to any
insurance policy covering a Mortgage Loan, net of costs of collecting such
proceeds and net of amounts released to the Mortgagor or applied to the
restoration of the Mortgaged Property.
INSURED EXPENSES: Expenses covered by any insurance policy.
LATE COLLECTIONS: With respect to any Mortgage Loan, all amounts
received during any Due Period, whether as late payments of Monthly Payments
or as Liquidation Proceeds, condemnation proceeds, Insurance Proceeds, or
with respect to a disposition of a Mortgaged Property which has been acquired
by foreclosure or deed in lieu of foreclosure or otherwise, which represent
late payments or collections of Monthly Payments due but delinquent for a
previous Due Period and not previously recovered.
LIQUIDATED MORTGAGE LOAN: Any Mortgage Loan (a) as to which the
Servicer has determined that all amounts which it expects to recover from or
on account of such Mortgage Loan or property acquired in respect thereof have
been recovered, (b) as to which a Cash Liquidation has taken place or (c)
with respect to which the Mortgaged Property has been acquired by foreclosure
or deed in lieu of foreclosure and a disposition (the term disposition shall
include, for purposes of a repurchase pursuant to Section 11.01, any
repurchase of a Mortgaged Property pursuant to such Section) of such
Mortgaged Property has occurred.
LIQUIDATION EXPENSES: Expenses which are incurred by the Servicer
or any Sub-Servicer in connection with the liquidation of any defaulted
Mortgage Loan or property acquired in respect thereof including, without
limitation, legal fees and expenses, any unreimbursed amount expended by the
Servicer pursuant to Sections 5.16 and 5.21 respecting the related Mortgage
Loan and any related and unreimbursed expenditures for real estate property
taxes or for property restoration or preservation.
LIQUIDATION PRINCIPAL: With respect to any Distribution Date, with
respect to each Mortgage Loan which became a Liquidated Mortgage Loan during
the related Principal Prepayment Period, an amount equal to the applicable
Non-PO Percentage of the principal portion of Net Liquidation Proceeds
received with respect to such Liquidated Mortgage Loan, net of any
unreimbursed Advanced with respect thereto (but not in excess of the
Principal Balance thereof).
LIQUIDATION PROCEEDS: Cash (including Insurance Proceeds) received
by the Servicer in connection with the liquidation of any Mortgage Loan or
Mortgaged Property acquired in respect thereof, whether through the sale or
assignment of such Mortgage Loan (other than pursuant to Section 5.21),
trustee's sale, foreclosure sale or otherwise, or the sale of the Mortgaged
Property if the Mortgaged Property is acquired in satisfaction of the
Mortgage Loan other than amounts required to be paid to the Mortgagor
pursuant to law or the terms of the applicable Mortgage Note.
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LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage, the
numerator of which is the outstanding principal amount of the related
Mortgage Loan at the time of origination (or, (i) for purposes of Section
5.15, at the time of determination and (ii) for purposes of a Mortgage Loan
with respect to which a conversion from adjustable rate to fixed rate has
occurred, at the time of initial origination) and the denominator of which is
the appraised value of the related Mortgaged Property at the time of
origination or, in the case of a Mortgage Loan financing the acquisition of
the Mortgaged Property, the sales price of the Mortgaged Property, if such
sales price is less than such appraised value.
LOCK-OUT LIQUIDATION AMOUNT: With respect to any Distribution
Date, the aggregate, for each Mortgage Loan which became a Liquidated
Mortgage Loan during the calendar month preceding the month of such
Distribution Date, of the lesser of (i) the Lock-out Percentage of the Non-PO
Percentage of the Principal Balance of such Mortgage Loan and (ii) the
Lock-out Percentage on any Distribution Date occurring prior to the fifth
anniversary of the first Distribution Date, and the Lock-out Prepayment
Percentage on any Distribution Date thereafter, in each case, of the Net
Liquidation Proceeds with respect to such Mortgage Loan.
LOCK-OUT PERCENTAGE: With respect to any Distribution Date, the
lesser of (I) (A) the sum of (i) the Outstanding Certificate Principal
Balance of the Class A-14 Certificates and (ii) $34,673,500.00 divided by (B)
the aggregate Outstanding Certificate Principal Balance of the Certificates
(other than the Class A-P Certificates), in each case immediately prior to
the Distribution Date and (II) 100.00%.
LOCK-OUT PREPAYMENT PERCENTAGE: The product of (a) the Lock-out
Percentage and (b) the Step Down Percentage.
LOCK-OUT PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date, the sum of (i) the Adjusted Lock-out Percentage of the
applicable Non-PO Percentage of the principal portion of all Monthly
Payments, whether or not received, which were due on the related Due Date on
outstanding Mortgage Loans as of such Due Date, (ii) the Lock-out Prepayment
Percentage of the applicable Non-PO Percentage of (A) the principal portion
of Principal Prepayments, (B) the sum of the principal portion of Insurance
Proceeds, condemnation awards and other cash proceeds from a source other
than the applicable Mortgagor, to the extent required to be deposited in the
Collection Account pursuant to Section 5.08(iv) and (v), in each case
received during the related Principal Prepayment Period, net of related
unreimbursed Servicing Advances and net of any portion thereof which, as to
any such Mortgage Loan, constitutes Late Collections that have been the
subject of an Advance on any prior Distribution Date and (C) with respect to
each Mortgage Loan repurchased during the related Principal Prepayment Period
pursuant to Section 2.02, 3.01, 5.21 or 11.01, an amount equal to the Non-PO
Class A Prepayment Percentage of the applicable Non-PO Percentage of the
principal portion of the Purchase Price (net of amounts with respect to which
a distribution of principal has previously been made to the Non-PO Class A
Certificateholders) and (iii) with
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respect to any Distribution Date on or after the Distribution Date in
July 2003, the Lock-out Liquidation Amount.
MASTER REMIC: The pool of assets consisting of the Subsidiary
Regular Interests and all payments of principal or interest on or with
respect to the Subsidiary Regular Interests after the Cut-off Date.
MASTER RESIDUAL INTEREST: The interest in the Master REMIC
represented by amounts, if any, remaining in the Collection Account following
termination of the Trust Fund after payments to the Class A
Certificateholders (other than the Class A-R Certificateholders), the Class M
Certificateholders, the Class B Certificateholders and the Class A-R
Certificates with respect to their interests in the Subsidiary Residual
Interest (or the holders of any separate certificates representing the
Subsidiary Residual Interest).
MODIFIED MORTGAGE LOAN: Any Mortgage Loan which the Servicer has
modified pursuant to Section 5.01.
MONTHLY PAYMENT: The minimum required monthly payment of principal
and interest due on a Mortgage Loan as specified in the Mortgage Note for any
Due Date (before any adjustment to such scheduled amount by reason of any
bankruptcy or similar proceeding or any moratorium or similar waiver or grace
period). Monthly Payments shall be deemed due on an Outstanding Mortgage
Loan until such time as it becomes a Liquidated Mortgage Loan.
MOODY'S: Moody's Investors Service, Inc. or its successor in
interest.
MORTGAGE: The mortgage, deed of trust or other instrument creating
a first lien or a first priority ownership interest in an estate in fee
simple in real property securing a Mortgage Note.
MORTGAGE FILE: As to each Mortgage Loan, the items referred to in
Exhibit B annexed hereto.
MORTGAGE LOAN: An individual mortgage loan and all rights with
respect thereto, evidenced by a Mortgage and a Mortgage Note, sold and
assigned by the Depositor to the Trustee and which is subject to this
Agreement and included in the Trust Fund. The Mortgage Loans originally sold
and subject to this Agreement are identified on the Mortgage Loan Schedule.
MORTGAGE LOAN SCHEDULE: The schedule of Mortgage Loans attached
hereto as Exhibit A as it may be amended in accordance with Section 3.03,
setting forth the following information as to each Mortgage Loan: (i) the
Mortgage Loan identifying number; (ii) the street address of the Mortgaged
Property including the zip code; (iii) an indication of whether the Mortgaged
Property is owner-occupied; (iv) the property type of the Mortgaged Property;
(v)
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the original number of months to stated maturity; (vi) the number of
months remaining to stated maturity from the Cut-off Date; (vii) the original
Loan-to-Value Ratio; (viii) the original principal balance of the Mortgage
Loan; (ix) the unpaid principal balance of the Mortgage Loan as of the close
of business on the Cut-off Date; (x) the Mortgage Rate; (xi) the amount of
the current Monthly Payment; and (xii) the PO Percentage with respect to such
Mortgage Loan.
MORTGAGE NOTE: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
MORTGAGE POOL: The pool of Mortgage Loans held in the Trust Fund.
MORTGAGE POOL PRINCIPAL BALANCE: As of any date of determination,
the aggregate of the Principal Balances of each Outstanding Mortgage Loan on
such date of determination less the principal portion of any Monthly Payment
due but not paid with respect to which an Advance has not been made.
MORTGAGED PROPERTY: The property securing a Mortgage Note.
MORTGAGE RATE: With respect to each Mortgage Loan, the per annum
rate of interest borne by the Mortgage Loan, as specified in the Mortgage
Note.
MORTGAGOR: The obligor on a Mortgage Note.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses.
NET MORTGAGE RATE: With respect to each Mortgage Loan, a per annum
rate of interest for the applicable period equal to the Mortgage Rate less
the Servicing Fee.
NON-DISCOUNT MORTGAGE LOANS: The Mortgage Loans having Net
Mortgage Rates in excess of the Remittance Rate.
NON-PO ALLOCATED AMOUNT: At the time of any determination, the
amount derived by (i) multiplying the Principal Balance of each Mortgage Loan
on such date of determination by the Non-PO Percentage with respect to such
Mortgage Loan and (ii) summing the results.
NON-PO CLASS A CERTIFICATES: The Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10,
Class A-11, Class A-12, Class A-13, Class A-14, Class A-R and Class A-X
Certificates, referred to collectively.
NON-PO CLASS A OPTIMAL PRINCIPAL AMOUNT: With respect to any
Distribution Date, the lesser of (a) the Non-PO Class A Principal Balance and
(b) the sum of:
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(i) the Non-PO Class A Percentage of the applicable Non-PO
Percentage of the principal portion of all Monthly Payments, whether or
not received, which were due during the related Due Period on Mortgage
Loans which were outstanding during such Due Period;
(ii) the Non-PO Class A Prepayment Percentage of the applicable
Non-PO Percentage of all Principal Prepayments made on any Mortgage Loan
during the related Principal Prepayment Period;
(iii) with respect to each Mortgage Loan not described in (iv)
below, the Non-PO Class A Percentage of the applicable Non-PO Percentage
of the principal portion of all Insurance Proceeds, condemnation awards
and any other cash proceeds from a source other than the applicable
Mortgagor, to the extent required to be deposited in the Collection
Account pursuant to Section 5.08(iv) and (v), which were received during
the related Principal Prepayment Period, net of related unreimbursed
Servicing Advances and net of any portion thereof which, as to any such
Mortgage Loan, constitutes Late Collections that have been the subject
of an Advance on any prior Distribution Date;
(iv) with respect to each Mortgage Loan which has become a
Liquidated Mortgage Loan during the related Principal Prepayment Period,
the lesser of (A) the Non-PO Class A Percentage of applicable Non-PO
Percentage of an amount equal to the Principal Balance of such
Liquidated Mortgage Loan as of the Due Date immediately preceding the
date on which it became a Liquidated Mortgage Loan and (B) the Non-PO
Class A Prepayment Percentage of the applicable Non-PO Percentage of the
Net Liquidation Proceeds with respect to such liquidated Mortgage Loan
(net of any unreimbursed Advances);
(v) with respect to each Mortgage Loan repurchased during the
related Principal Prepayment Period pursuant to Section 2.02, 3.01, 5.21
or 11.01, an amount equal to the Non-PO Class A Prepayment Percentage of
the applicable Non-PO Percentage of the principal portion of the
Purchase Price (net of amounts with respect to which a distribution of
principal has previously been made to the Non-PO Class A
Certificateholders); and
(vi) on or after the Credit Support Depletion Date, the excess of
the Non-PO Class A Principal Balance (calculated after giving effect to
reductions thereof on such Distribution Date with respect to the amounts
described in (i) - (v) above) over the Non-PO Allocated Amount, if any,
as of the preceding Distribution Date.
NON-PO CLASS A PERCENTAGE: As of any Distribution Date, the
fraction, expressed as a percentage (which shall never exceed 100%), the
numerator of which is the Non-PO Class A Principal Balance and the
denominator of which is the Non-PO Allocated Amount as of the immediately
preceding Due Date.
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NON-PO CLASS A PREPAYMENT PERCENTAGE: As of any Distribution Date
up to and including the Step-Down Date, 100%; as of any Distribution Date
during the first year thereafter, the Non-PO Class A Percentage plus 70% of
the Subordinated Percentage for such Distribution Date; as of any
Distribution Date during the second year thereafter, the Non-PO Class A
Percentage plus 60% of the Subordinated Percentage for such Distribution
Date; as of any Distribution Date during the third year thereafter, the
Non-PO Class A Percentage plus 40% of the Subordinated Percentage for such
Distribution Date; as of any Distribution Date during the fourth year
thereafter, the Non-PO Class A Percentage plus 20% of the Subordinated
Percentage for such Distribution Date; and as of any Distribution Date after
the fourth year thereafter, the Non-PO Class A Percentage; provided that if
the Non-PO Class A Percentage as of any such Distribution Date is greater
than the Non-PO Class A Percentage on the first Distribution Date, the Non-PO
Class A Prepayment Percentage shall be 100%; and provided further that
whenever the Non-PO Class A Percentage equals 0%, the Non-PO Class A
Prepayment Percentage shall equal 0%.
NON-PO CLASS A PRINCIPAL BALANCE: As of any Distribution Date, (a)
the Non-PO Class A Principal Balance for the immediately preceding
Distribution Date less (b) amounts distributed (or deemed distributed) to the
Non-PO Class A Certificateholders on such preceding Distribution Date
allocable to principal (including the principal portion of Advances of the
Servicer made pursuant to Section 6.03 and Realized Losses allocated to the
Non-PO Class A Certificates pursuant to Section 6.04); provided that the
Non-PO Class A Principal Balance on the first Distribution Date shall be the
Original Non-PO Class A Principal Balance.
NON-PO CLASS A PRINCIPAL PAYMENT RULES: (I) With respect to any
Distribution Date prior to the Credit Support Depletion Date, distributions
to the Non-PO Class A Certificateholders pursuant to Section 6.01(b)(ii)(A)
shall be made in the following amounts and priority:
first, to the Class A-14 Certificates up to the Lockout Principal
Distribution Amount, until the Outstanding Certificate Principal Balance of
such Class has been reduced to zero;
second, to the Class A-R Certificate, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero; and
third, to the Class A-1 and Class A-2 Certificates, pro rata based upon
their Outstanding Certificate Principal Balances, until the Outstanding
Certificate Principal Balance of each such Class has been reduced to its
Planned Principal Balance;
fourth, to the Class A-3 Certificates, until the Outstanding Certificate
Principal Balance of such Class has been reduced to its Planned Principal
Balance;
fifth, 3.5714950464% of the portion of the Non-PO Class A Optimal
Principal Amount remaining after making the distributions in clauses first
through fourth above, to the Class A-13
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Certificates, until the Outstanding Certificate Principal Balance of such Class
has been reduced to zero;
sixth, (A) 37.0932179506% of the portion of the Non-PO Class A Optimal
Principal Amount remaining after making the distributions in clauses first
through fifth above sequentially as follows:
(1) first, to the Class A-5 Certificates and Class A-6 Component
One, pro rata based upon their Outstanding Certificate Principal
Balances, until the aggregate Outstanding Certificate Principal
Balance of such Class and such Component has been reduced to the
Schedule One Balance;
(2) second, to Class A-6 Component Two, until the Outstanding
Certificate Principal Balance of such Component has been reduced to
its Schedule Two Balance;
(3) third, to the Class A-5 Certificates and Class A-6 Component
One, pro rata based upon their Outstanding Certificate Principal
Balances, until the aggregate Outstanding Certificate Principal
Balance of such Class and such Component has been reduced to the
Schedule Three Balance;
(4) fourth, to the Class A-7 Certificates, until the Outstanding
Certificate Principal Balance of such Class has been reduced to
zero;
(5) fifth, to the Class A-5 Certificates and Class A-6 Component
One, until the Outstanding Certificate Principal Balances of such
Class and such Component have been reduced to zero; and
(6) sixth, to Class A-6 Component Two and the Class A-8
Certificates, sequentially in that order, until the Outstanding
Certificate Principal Balances of such Component and such Class
have been reduced to zero;
(B) 62.9067820494% of the portion of the Non-PO Class A Optimal
Principal Amount remaining after making the distributions in clauses first
through fifth above, sequentially as follows:
(1) first, to the Class A-9 Certificates, until the Outstanding
Certificate Principal Balance of such Class has been reduced to its
Schedule Four Balance;
(2) second, to the Class A-10 Certificates, until the Outstanding
Certificate Principal Balance of such Class has been reduced to
zero;
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(3) third, to the Class A-9 Certificates, until the Outstanding
Certificate Principal Balance of such Class has been reduced to its
Schedule Five Balance; and
(4) fourth, the Class A-11, Class A-9 and Class A-12 Certificates,
sequentially, in that order, until the Outstanding Certificate
Principal Balance of each such Class has been reduced to zero;
seventh, to the Class A-13 Certificates, until the Outstanding
Certificate Principal Balance of such Class has been reduced to zero;
eighth, to the Class A-1 and Class A-2 Certificates, pro rata based upon
their Outstanding Certificate Principal Balances, without regard to their
respective Planned Principal Balances, until the Outstanding Certificate
Principal Balances of such Classes have been reduced to zero; and
ninth, to the Class A-3 and Class A-14 Certificates, sequentially in
that order, until the Outstanding Certificate Principal Balances of each such
Class has been reduced to zero;
(II) With respect to any Distribution Date on or after the Credit
Support Depletion Date, distributions pursuant to Section
6.01(b)(i)(A) shall be made pro rata among the outstanding Classes
of Non-PO Class A Certificates in relation to the respective
Outstanding Certificate Principal Balances of such outstanding
Classes, and not in accordance with the priority of payments among
such Classes set forth in clause (I) above.
NON-PO PERCENTAGE: With respect to each Mortgage Loan, the
fraction, expressed as a percentage (but not greater than 100%), the
numerator of which equals the applicable Net Mortgage Rate and the
denominator of which equals the Remittance Rate.
NONRECOVERABLE ADVANCE: Any Advance previously made or proposed to
be made in respect of a Mortgage Loan by the Servicer pursuant to Section
6.03 which, in the good faith judgment of the Servicer, will not or, in the
case of a proposed Advance, would not, ultimately be recoverable by the
Servicer from Late Collections or otherwise. The determination by the
Servicer that it has made, or would be making, a Nonrecoverable Advance shall
be evidenced by a certificate of a Servicing Officer of the Servicer
delivered to the Trustee, any co-trustee and the Depositor and detailing the
reasons for such determination.
OFFICERS' CERTIFICATE: A certificate signed by two of the Chairman
of the Board, the Vice Chairman of the Board, the President or a Vice
President, the Treasurer or the Secretary or one of the Assistant Treasurers
or Assistant Secretaries or any other duly authorized officer of the
Depositor or the Servicer, and delivered to the Trustee.
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OPINION OF COUNSEL: A written opinion of counsel, who may be
counsel for the Depositor or the Servicer and who is reasonably acceptable to
the Trustee.
ORIGINAL CERTIFICATE PRINCIPAL BALANCE: With respect to any Class
of Certificates, the amount specified for such Class in Section 4.01(d).
ORIGINAL CLASS A PRINCIPAL BALANCE:
$507,481,694.95
ORIGINAL CLASS M PRINCIPAL BALANCE:
$11,396,000.00
ORIGINAL CLASS B PRINCIPAL BALANCE:
$11,131,030.44
ORIGINAL NON-PO CLASS A PRINCIPAL
BALANCE:
$507,243,720.95
ORIGINAL CREDIT SUPPORT: With respect to any Class of Subordinated
Certificates (other than the Class B-5 Certificates), the level of Credit
Support indicated below:
Class M: 2.10%
Class B-1: 1.25%
Class B-2: 0.80%
Class B-3: 0.45%
Class B-4: 0.25%
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE: With respect to any
Class (other than the Class A-4 and Class A-X Certificates) or Component of
Certificates and any Distribution Date, the Original Certificate Principal
Balance of such Class or Component (plus (i) in the case of the Class A-7
Certificates, the Class A-7 Accrual Amount with respect to each previous
Distribution Date prior to the Class A-7 Accretion Termination Date, (ii) in
the case of the Class A-8 Certificates, the Class A-8 Accrual Amount with
respect to each previous Distribution Date prior to the Class A-8 Accretion
Termination Date, (iii) in the case of the Class A-10 Certificates, the Class
A-10 Accrual Amount with respect to each previous Distribution Date prior to
the Class A-10 Accretion Termination Date, (iv) in the case of the Class A-11
Certificates, the Class A-11 Accrual Amount with respect to each previous
Distribution Date prior to the Class A-11 Accretion Termination Date, and (v)
in the case of the Class A-12 Certificates, the Class A-12 Accrual Amount
with respect to each previous Distribution Date prior to the Class A-12
Accretion Termination Date) minus the sum of (i) any distributions of
principal made on such Class or Component prior to such Distribution Date and
(ii) any Realized Losses allocated to such Class or Component prior to such
Distribution Date; provided, however, that (I) with respect to the Class of
Class B Certificates then outstanding having the highest numerical class
designation, the Outstanding Certificate Principal Balance of such Class
shall equal the excess of the Mortgage Pool Principal Balance (together with
the principal portion of any Monthly Payment due but not paid with respect to
which an Advance has not been made)
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over the sum of the Outstanding Certificate Principal Balances of all Classes
of Certificates (other than the Class of Class B Certificates then
outstanding having the highest numerical class designation); and (II) during
such time as the Outstanding Certificate Principal Balance of the Class B-1
Certificates equals zero, with respect to the Class M Certificates, the
Outstanding Certificate Principal Balance of such Class shall equal the
excess of the Mortgage Pool Principal Balance (together with the principal
portion of any Monthly Payment due but not paid with respect to which an
Advance has not been made) over the Class A Principal Balance.
OUTSTANDING MORTGAGE LOAN: As to any Distribution Date, a Mortgage
Loan which was not paid in full during the related or any previous Principal
Prepayment Period, which did not become a Liquidated Mortgage Loan during the
related or any previous Principal Prepayment Period and which was not
repurchased under Section 2.02, 3.01, 5.21 or 11.01 during the related or any
previous Principal Prepayment Period.
PACs: The Class A-1, Class A-2 and Class A-3 Certificates,
referred to collectively.
PASS-THRU ENTITY: A "Pass-Thru Entity" as defined in Section
860E(e)(6) of the Code.
PAYING AGENT: The Person appointed by the Trustee as Paying Agent
pursuant to Section 4.05.
PERCENTAGE INTEREST: As to any Certificate (other than a Class A-4
or Class A-X Certificate), the percentage interest evidenced thereby in
distributions required to be made hereunder, such percentage interest being
equal, with respect to any Class, to the percentage obtained by dividing the
denomination of such Certificate by the aggregate of the denominations of all
the Certificates of such Class and with respect to all Certificates, the
percentage obtained by dividing the denomination of such Certificate by the
aggregate of the denominations of all the Certificates. With respect to any
Class A-4 or Class A-X Certificate, the percentage interest specified on the
face of such Certificate.
PERSON: Any individual, corporation, partnership, limited
liability company, limited liability partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
PLANNED PRINCIPAL BALANCE: With respect to any Distribution Date
and any PAC, the amount specified for such Class for such Distribution Date
in Appendix A hereto.
PO PERCENTAGE: The PO Percentage with respect to each Mortgage
Loan as identified on the Mortgage Loan Schedule, such percentage being equal
to the fraction, expressed as a percentage (but not less than 0%), the
numerator of which equals the excess of the
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Remittance Rate over the applicable Net Mortgage Rate and the denominator of
which equals the Remittance Rate.
PRIMARY INSURANCE POLICY: Each primary policy of mortgage guaranty
insurance or any replacement policy therefor referred to in Section 5.15
hereof.
PRINCIPAL BALANCE: At the time of any determination, the principal
balance of a Mortgage Loan remaining to be paid at the close of business on
the Cut-off Date (after deduction of all principal payments due on or before
the Cut-off Date whether or not paid) (or, in the case of a substitute
Mortgage Loan included in the Trust Fund pursuant to Section 3.04, the close
of business as of the date of substitution) reduced by all amounts previously
distributed to Certificateholders that are allocable to payments of principal
on such Mortgage Loan (including the principal portion of Advances of the
Servicer made pursuant to Section 6.03).
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal
on a Mortgage Loan (other than Late Collections) which is received other than
as part of a Monthly Payment; provided, however, that the term Principal
Prepayment does not include Insurance Proceeds, Liquidation Proceeds,
condemnation awards or other cash proceeds from a source other than the
applicable Mortgagor.
PRINCIPAL PREPAYMENT PERIOD: With respect to any Distribution
Date, the period beginning on the first day of the month preceding the month
in which such Distribution Date occurs and ending on the last day of such
month.
PURCHASE PRICE: With respect to any Mortgage Loan required to be
purchased on any date pursuant to Section 2.02, 3.01, 5.01, 5.21 or 11.01, an
amount equal to the sum of (a) 100% of the Principal Balance thereof, (b)
unpaid accrued interest at the Mortgage Rate thereon from the Due Date on
which interest was last paid by the Mortgagor or Advanced by the Servicer to
the Due Date next following the date of repurchase and (c) the aggregate of
any unreimbursed Advances.
QUALIFIED INSURER: An insurance company duly qualified as such
under the laws of the states in which the Mortgaged Properties are located,
duly authorized and licensed in such states to transact the applicable
insurance business and to write the insurance provided, approved as an
insurer by FNMA and FHLMC and whose claims-paying ability is rated in the two
highest rating categories by Moody's and DCR with respect to primary mortgage
insurance and in the two highest rating categories for general policyholder
rating and financial performance index rating by Best's with respect to
hazard and flood insurance.
RATING AGENCY: Any nationally recognized statistical rating
organization, or its successor, that rated one or more Classes of
Certificates at the request of the Depositor at the time of the initial
issuance of the Certificates. If such organization or a successor is no
longer in existence, "Rating Agency" shall be such nationally recognized
statistical rating organization, or
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other comparable Person, designated by the Depositor, notice of which
designation shall be given to the Trustee and the Servicer. References
herein to the two highest long-term debt rating categories of a Rating Agency
shall mean AA or better in the case of DCR and Aa or better in the case of
Moody's.
REALIZED LOSS: With respect to (i) a Liquidated Mortgage Loan, the
amount, if any, by which the unpaid Principal Balance and accrued interest
thereon at a rate equal to the Net Mortgage Rate exceeds the amount actually
recovered by the Servicer with respect thereto (net of reimbursement of
Advances and Servicing Advances) at the time such Mortgage Loan became a
Liquidated Mortgage Loan or (ii) with respect to a Mortgage Loan which is not
a Liquidated Mortgage Loan, any amount of principal that the Mortgagor is no
longer legally required to pay (except for the extinguishment of debt that
results from the exercise of remedies due to default by the Mortgagor).
REALIZED LOSS INTEREST SHORTFALL: The meaning specified in Section
6.05(c).
RECORD DATE: The close of business of the last Business Day of the
month preceding the month of the related Distribution Date.
RELEVANT MORTGAGE LOAN: The meaning specified in Section 5.01.
REMIC: A "real estate mortgage investment conduit," as such term
is defined in Section 860D of the Code. References herein to "the REMIC"
shall mean the REMIC created hereunder.
REMIC POOL: Either of the Master REMIC or the Subsidiary REMIC.
REMIC PROVISIONS: Provisions of the federal income tax law
relating to REMICs which appear at Sections 860A through 860G of Part IV of
Subchapter M of Chapter 1 of Subtitle A of the Code, and related provisions,
and U.S. Department of the Treasury temporary, proposed or final regulations
and rulings promulgated thereunder, as the foregoing are in effect (or with
respect to proposed regulations, are proposed to be in effect) from time to
time.
REMITTANCE RATE: 6.75% per annum.
REPURCHASE PROCEEDS: All proceeds of any Mortgage Loan or property
acquired in respect thereof repurchased pursuant to Section 2.02, 3.01, 5.01,
5.21 or 11.01.
RESPONSIBLE OFFICER: When used with respect to the Trustee, any
Senior Vice President, any Vice President, any Assistant Vice President, any
Senior Trust Officer, any Trust Officer or any other officer of the Trustee
in its Corporate Trust Office customarily
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performing functions similar to those performed by any of the above
designated officers and also, with respect to a particular matter, any other
officer in its Corporate Trust Office to whom such matter is referred because
of such officer's knowledge of and familiarity with the particular subject.
SALE AGREEMENT: The Mortgage Loan Sale Agreement dated as of June
25, 1998 between the Depositor and CMMC.
SCHEDULE ONE BALANCE: With respect to any Distribution Date and
the Class A-5 Certificates and Class A-6 Component One, the aggregate amount
specified for such Class and such Component for such Distribution Date on
Schedule One hereto.
SCHEDULE TWO BALANCE: With respect to any Distribution Date and
Class A-6 Component Two, the amount specified for such Component for such
Distribution Date on Schedule Two hereto.
SCHEDULE THREE BALANCE: With respect to any Distribution Date and
the Class A-5 Certificates and Class A-6 Component One, the aggregate amount
specified for such Class and such Component for such Distribution Date on
Schedule Three hereto.
SCHEDULE FOUR BALANCE: With respect to any Distribution Date and
the Class A-9 Certificates, the amount specified for such Class for such
Distribution Date on Schedule Four hereto.
SCHEDULE FIVE BALANCE: With respect to any Distribution Date and
the Class A-9 Certificates, the amount specified for such Class for such
Distribution Date on Schedule Five hereto.
SCHEDULED PRINCIPAL BALANCE: With respect to any Mortgage Loan as
of any Distribution Date, the unpaid principal balance of such Mortgage Loan
as specified in the amortization schedule at the time relating thereto
(before any adjustment to such schedule by reason of bankruptcy or similar
proceeding or any moratorium or similar waiver or grace period) as of the Due
Date in the month preceding the month of such Distribution Date, or as the
Cut-off Date, with respect to the first Distribution Date, after giving
effect to any previously applied prepayments, the payment of principal due on
such first day of the month and any reduction of the principal balance of
such Mortgage Loan by a bankruptcy court, irrespective of any delinquency in
payment by the related Mortgagor.
SELLER: CMMC.
SERVICER: CMMC or any successor under this Agreement as herein
provided.
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SERVICING ADVANCES: All customary, reasonable and necessary "out
of pocket" costs and expenses incurred in the performance by the Servicer of
its servicing obligations and which are "unanticipated expenses" of the
REMIC, as defined in the REMIC Provisions, including, but not limited to, the
cost of (i) the preservation, restoration and protection of the Mortgaged
Property, (ii) any enforcement or judicial proceedings, including
foreclosures, (iii) the management and liquidation of the Mortgaged Property
if the Mortgaged Property is acquired in satisfaction of the Mortgage, (iv)
taxes and assessments on the Mortgaged Properties subject to the Mortgage
Loans and (v) compliance with the obligations under Section 5.21.
SERVICING FEE: The amount of the monthly fee paid for the
servicing of the Mortgage Loans, equal to, as of any Distribution Date, the
total of, with respect to each Mortgage Loan, one-twelfth of 0.3085% per
annum of the Principal Balance thereof as of the Determination Date in the
preceding month, subject to adjustment as provided in Section 6.05. The
Servicing Fee shall be payable only at the time of and with respect to those
Mortgage Loans for which payment is in fact made of the entire amount of the
Monthly Payments that shall have come due and only at the time such Monthly
Payment shall be made. The right to receive the Servicing Fee is limited to,
and the Servicing Fee is payable solely from, the interest portion of such
Monthly Payments (or the interest portion of any Principal Prepayment in
full) collected by the Servicer, or as otherwise provided under Section 5.09
or 5.23.
SERVICING OFFICER: Any officer of the Servicer or any Sub-servicer
involved in, or responsible for, the administration and servicing of the
Mortgage Loans whose name appears on a written certificate listing servicing
officers furnished to the Trustee by the Servicer on or prior to the Closing
Date, and signed on behalf of the Servicer or any Sub-servicer by its
President, any Vice President or its Treasurer, as such certificate may from
time to time be amended.
SINGLE CERTIFICATE: A Certificate of any Class that evidences the
smallest permissible original denomination for such Class of Certificates as
specified in Section 4.01(d).
SPECIAL HAZARD AMOUNT: Initially, $5,410,582.00. As of the first
anniversary of the Cut-off Date, the Special Hazard Amount shall be reduced,
but not increased, to the lesser of (i) the initial Special Hazard Amount
less the sum of all amounts allocated to the Subordinated Certificates in
respect of Special Hazard Losses on the Mortgage Loans during such year or
(ii) the Adjustment Amount for such anniversary. As of each subsequent
anniversary of the Cut-off Date, the Special Hazard Amount on the immediately
preceding anniversary of the Cut-off Date less the sum of all amounts
allocated to the Subordinated Certificates in respect of Special Hazard
Losses on the Mortgage Loans during such year and (ii) the Adjustment Amount
for such anniversary. The "Adjustment Amount" with respect to each
anniversary of the Cut-off Date will be equal to the greatest of (i) 1.00%
multiplied by the aggregate outstanding principal balance of the Mortgage
Loans, (ii) the aggregate outstanding principal balance of the Mortgage Loans
secured by Mortgaged Properties located in the
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California postal zip code area in which the highest percentage of Mortgage
Loans by Principal Balance are located and (iii) twice the outstanding
principal balance of the Mortgage Loan having the largest outstanding
principal balance.
SPECIAL HAZARD LOSS: Any Realized Loss or portion thereof
resulting from direct physical loss or damage to the Mortgaged Property,
which is not insured against under the Standard Hazard Policy required to be
maintained hereunder.
STANDARD HAZARD POLICY: Each standard hazard insurance policy or
replacement therefor referred to in Section 5.16.
STARTUP DAY: The meaning specified in Section 2.04(a).
STEP-DOWN DATE: The earliest of the Distribution Date in June 2003
or any succeeding Distribution Date on which the following conditions are
satisfied as of the last day of the month preceding such Distribution Date:
(a) the aggregate outstanding Principal Balance of Outstanding
Mortgage Loans 60 days or more delinquent (including loans in
foreclosure and with respect to owned real estate) does not exceed 50%
of the aggregate Outstanding Certificate Balance of the Subordinated
Certificates as of such date; and
(b) Realized Losses through the last day of the month preceding
such Distribution Date (including Nonrecoverable Advances) do not exceed
the following thresholds:
(i) if such Distribution Date occurs between and including
July 2003 and June 2004, 30% of the Subordinated Percentage of the
Mortgage Pool Principal Balance as of the Cut-off Date;
(ii) if such Distribution Date occurs between and including
July 2004 and June 2005, 35% of the Subordinated Percentage of the
Mortgage Pool Principal Balance as of the Cut-off Date;
(iii) if such Distribution Date occurs between and
including July 2005 and June 2006, 40% of the Subordinated
Percentage of the Mortgage Pool Principal Balance as of the Cut-off
Date;
(iv) if such Distribution Date occurs between and
including July 2006 and June 2007, 45% of the Subordinated
Percentage of the Mortgage Pool Principal Balance as of the Cut-off
Date; and
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(v) if such Distribution Date occurs after June 2007, 50% of
the Subordinated Percentage of the Mortgage Pool Principal Balance
as of the Cut-off Date.
STEP DOWN PERCENTAGE: With respect to any Distribution Date, the
percentage indicated below:
<TABLE>
<CAPTION>
Distribution Date Occurring in Step Down Percentage
------------------------------ --------------------
<S> <C>
July 1998 through June 2003 . . . . . . . . . . . . 0%
July 2003 through June 2004 . . . . . . . . . . . . 30%
July 2004 through June 2005 . . . . . . . . . . . . 40%
July 2005 through June 2006 . . . . . . . . . . . . 60%
July 2006 through June 2007 . . . . . . . . . . . . 80%
July 2007 and thereafter . . . . . . . . . . . . . 100%
</TABLE>
STRIPPED INTEREST RATE: For each Mortgage Loan, the excess, if
any, of the Net Mortgage Rate for such Mortgage Loan over the Remittance
Rate.
SUBORDINATED CERTIFICATES: The Class M and Class B Certificates,
referred to collectively.
SUBORDINATED OPTIMAL PRINCIPAL AMOUNT: With respect to any
Distribution Date, the lesser of (a) the aggregate Outstanding Certificate
Principal Balance of the Subordinated Certificates (before giving effect to
any distributions of principal on such Distribution Date) and (b)(1) the sum
of: (i) the Subordinated Percentage of the applicable Non-PO Percentage of
the principal portion of all Monthly Payments, whether or not received, which
were due during the related Due Period on Mortgage Loans which were
outstanding during such Due Period; (ii) the Subordinated Prepayment
Percentage of the applicable Non-PO Percentage of all Principal Prepayments
made on any Mortgage Loan during the related Principal Prepayment Period;
(iii) with respect to each Mortgage Loan not described in (iv) below, the
Subordinated Percentage of the applicable Non-PO Percentage of the principal
portion of all Insurance Proceeds, condemnation awards and any other cash
proceeds from a source other than the applicable Mortgagor, to the extent
required to be deposited in the Collection Account pursuant to Section
5.08(iv) and (v), which were received during the related Principal Prepayment
Period, net of related unreimbursed Servicing Advances and net of any portion
thereof which, as to any such Mortgage Loan, constitutes Late Collections
that have been the subject of an Advance on any prior Distribution Date; (iv)
with respect to each Mortgage Loan which has become a Liquidated Mortgage
Loan during the related Principal Prepayment Period, an amount equal to the
portion (if any) of the Net Liquidation Proceeds with respect to such
liquidated Mortgage Loan (net of any unreimbursed Advances) that was not
included in the Class A-P Amount or the Non-PO Class A Optimal Principal
Amount with respect to such Distribution Date; and (v) with respect to each
Mortgage Loan repurchased during the related Principal
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Prepayment Period pursuant to Section 2.02, 3.01, 5.21 or 11.01, an amount
equal to the Subordinated Prepayment Percentage of the applicable Non-PO
Percentage of the principal portion of the Purchase Price (net of amounts
with respect to which a distribution of principal has previously been made to
the Subordinated Certificateholders) minus (2) the Class A-P Shortfall Amount
with respect to such Distribution Date.
SUBORDINATED PERCENTAGE: As of any Distribution Date, the difference
between 100% and the Non-PO Class A Percentage.
SUBORDINATED PREPAYMENT PERCENTAGE: As of any Distribution Date,
the difference between 100% and the Non-PO Class A Prepayment Percentage.
SUB-SERVICER: Any Person with whom the Servicer enters into a
Sub-Servicing Agreement.
SUB-SERVICING AGREEMENT: Any agreement between the Servicer and
any Sub-Servicer, relating to servicing or administration of certain Mortgage
Loans as provided in Section 5.02, in such form as has been approved by the
Servicer and the Depositor.
SUBSIDIARY REGULAR INTEREST: There shall be six Subsidiary Regular
Interests. The first subsidiary regular interest (the "First Subsidiary
Regular Interest") shall have the same characteristics as the Class A-1 and
Class A-2 Certificates and the portion of the Class A-4 Certificates
represented by the portion of such Class described in clauses (i) and (ii) of
the definition of Class A-4 Notional Balance (such portion, "Class A-4 Part
One"), and shall have the right to receive distributions from the Mortgage
Pool in the amounts necessary to make all required distributions with respect
to such Classes, or portion thereof, as the case may be. The second
subsidiary regular interest (the "Second Subsidiary Regular Interest") shall
have the same characteristics as the Class A-3 Certificates and the portion
of the Class A-4 Certificates represented by the portion of the Class A-4
Certificates represented by the portion of such Class described in clause
(iii) of the definition of Class A-4 Notional Balance (such portion "Class
A-4 Part Two"), and shall have the right to receive distributions from the
Mortgage Pool in the amounts necessary to make all required distributions
with respect to such Classes, or portion thereof, as the case may be. The
third subsidiary regular interest (the "Third Subsidiary Regular Interest")
shall have the same characteristics as the Class A-5, Class A-6, Class A-7,
Class A-8, Class A-9, Class A-10, Class A-11, Class A-12 and Class A-13
Certificates, and shall have the right to receive distributions from the
Mortgage Pool in the amounts necessary to make all required distributions
with respect to such Classes. The fourth subsidiary regular interest (the
"Fourth Subsidiary Regular Interest") shall have the same characteristics as
the Class A-14, Class M, Class B-1, Class B-2, Class B-3, Class B-4 and Class
B-5 Certificates, and shall have the right to receive distributions from the
Mortgage Pool in the amounts necessary to make all required distributions
with respect to such Classes. The fifth subsidiary regular interest (the
"Fifth Subsidiary Regular Interest") shall have the same characteristics as
the Class A-P Certificates, and shall have the right to receive distributions
from the Mortgage Pool in the
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amounts necessary to make all required distributions with respect to such
Class. The sixth subsidiary regular interest (the "Sixth Subsidiary Regular
Interest") shall have the same characteristics as the Class A-X Certificates,
and shall have the right to receive distributions from the Mortgage Pool in
the amounts necessary to make all required distributions with respect to such
Class.
SUBSIDIARY REMIC: The pool of assets consisting of the Trust Fund.
SUBSIDIARY RESIDUAL INTEREST: The interest in the Subsidiary REMIC
consisting of Excess Proceeds and Substitute Excess Interest, and with
respect to each Mortgage Loan, any amounts payable or received with respect
to such Mortgage Loan after payment in full of the Subsidiary Regular
Interests.
SUBSTITUTE EXCESS INTEREST: As defined in Section 3.04.
TRUST: The Trust created pursuant to this Agreement.
TRUST FUND: The corpus of the Trust consisting of (i) the Mortgage
Loans, (ii) such assets as shall from time to time be identified as deposited
in the Collection Account and the Certificate Account, (iii) property which
secured a Mortgage Loan and which has been acquired by foreclosure or deed in
lieu of foreclosure, (iv) Standard Hazard Policies and any other insurance
policies, and the proceeds thereof and (v) any proceeds of any of the
foregoing.
TRUSTEE: Citibank, N.A., a national banking association and its
successors and any corporation resulting from or surviving any consolidation
or merger to which it or its successors may be a party, and any successor
trustee at the time serving as successor trustee hereunder, appointed as
herein provided.
U.S. PERSON: A "United States Person" as defined in Section
7701(a)(30) of the Code.
[END OF ARTICLE I]
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TRUST FUND
Section 2.01. Conveyance of Mortgage Loans. The Depositor,
concurrently with the execution and delivery hereof, does hereby sell,
transfer, assign, set over and convey to the Trustee without recourse all the
right, title and interest of the Depositor in and to the Mortgage Loans,
including all interest and principal received on or with respect to the
Mortgage Loans on
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or after the Cut-off Date (other than Monthly Payments due on the Mortgage
Loans on or before the Cut-off Date).
In connection with such assignment, the Depositor does hereby deliver
to, and deposit with, the Trustee the following documents or instruments with
respect to each Mortgage Loan so assigned:
(A) (I) Original Mortgage Note (or a lost note affidavit
(including a copy of the original Mortgage Note)) or (II) original
Consolidation, Extension and Modification Agreement (or a lost note
affidavit (including a copy of the original Consolidation, Extension and
Modification Agreement), in either case endorsed, "Pay to the order of
Citibank, N.A., as trustee, without recourse."
(B) The original Mortgage (including all riders thereto) with
evidence of recording thereon, or a copy thereof certified by the
public recording office in which such mortgage has been recorded or, if
the original Mortgage has not been returned from the applicable public
recording office, a true certified copy, certified by the Seller, of the
original Mortgage together with a certificate of the Seller certifying
that the original Mortgage has been delivered for recording in the
appropriate public recording office of the jurisdiction in which the
Mortgaged Property is located.
(C) The original Assignment of Mortgage to "Citibank, N.A., as
trustee," which assignment shall be in form and substance acceptable for
recording, or a copy certified by the Seller as a true and correct copy
of the original Assignment which has been sent for recordation. Subject
to the foregoing, such assignments may, if permitted by law, be by
blanket assignments for Mortgage Loans covering Mortgaged Properties
situated within the same county. If the Assignment of Mortgage is in
blanket form, a copy of the Assignment of Mortgage shall be included in
the related individual Mortgage File.
(D) The original policy of title insurance, including riders and
endorsements thereto, or if the policy has not yet been issued, a
written commitment or interim binder or preliminary report of title
issued by the title insurance or escrow company.
(E) Originals of all recorded intervening Assignments of Mortgage,
or copies thereof, certified by the public recording office in which
such Assignments or Mortgage have been recorded showing a complete chain
of title from the originator to the Depositor, with evidence of
recording, thereon, or a copy thereof certified by the public recording
office in which such Assignment of Mortgage has been recorded or, if the
original Assignment of Mortgage has not been returned from the
applicable public recording office, a true certified copy, certified by
the Seller of the original Assignment of Mortgage together with a
certificate of the Seller certifying that the original
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<PAGE>
Assignment of Mortgage has been delivered for recording in the appropriate
public recording office of the jurisdiction in which the Mortgaged Property
is located.
(F) Originals, or copies thereof certified by the public recording
office in which such documents have been recorded, of each assumption,
extension, modification, written assurance or substitution agreements,
if applicable, or if the original of such document has not been returned
from the applicable public recording office, a true certified copy,
certified by the Seller, of such original document together with
certificate of Seller certifying the original of such document has been
delivered for recording in the appropriate recording office of the
jurisdiction in which the Mortgaged Property is located.
(G) If the Mortgaged Note or Mortgage or any other material
document or instrument relating to the Mortgaged Loan has been signed by
a person on behalf of the Mortgagor, the original power of attorney or
other instrument that authorized and empowered such person to sign
bearing evidence that such instrument has been recorded, if so required
in the appropriate jurisdiction where the Mortgaged Property is located
(or, in lieu thereof, a duplicate or conformed copy of such instrument,
together with a certificate of receipt from the recording office,
certifying that such copy represents a true and complete copy of the
original and that such original has been or is currently submitted to be
recorded in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located), or if the
original power of attorney or other such instrument has been
delivered for recording in the appropriate public recording office of
the jurisdiction in which the Mortgaged Property is located.
If in connection with any Mortgage Loan the Depositor cannot
deliver the Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, with evidence of recording thereon
concurrently with the execution and delivery of this Agreement solely because
of a delay caused by the public recording office where such Mortgage,
Assignments of Mortgage or assumption, consolidation or modification, as the
case may be, has been delivered for recordation, the Depositor shall deliver
or cause to be delivered to the Trustee written notice stating that such
Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, has been delivered to the appropriate
public recording office for recordation. Thereafter, the Depositor shall
deliver or cause to be delivered to the Trustee such Mortgage, Assignments of
Mortgage or assumption, consolidation or modification, as the case may be,
with evidence of recording indicated thereon upon receipt thereof from the
public recording office.
The Servicer shall cause to be recorded in the appropriate public
recording office for real property records each Assignment of Mortgage
referred to in this Section 2.01 as soon as practicable. While each
Assignment of Mortgage to be recorded is being recorded, the Servicer shall
deliver to the Trustee a photocopy of such document. If any such Assignment
of Mortgage is returned unrecorded to the Servicer because of any defect
therein, the Servicer shall cause such
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<PAGE>
defect to be cured and such document to be recorded in accordance with this
paragraph. The Depositor shall deliver or cause to be delivered each
original recorded Assignment of Mortgage and intermediate assignment to the
Trustee within 270 days of the Closing Date or shall deliver to the Trustee
on or before such date an Officer's Certificate stating that such document
has been delivered to the appropriate public recording office for
recordation, but has not been returned solely because of a delay caused by
such recording office. In any event, the Depositor shall use all reasonable
efforts to cause each such document with evidence of recording thereon to be
delivered to the Trustee within 300 days of the Closing Date.
The ownership of each Mortgage Note, the Mortgage and the contents
of the related Mortgage File is vested in the Trustee. Neither the Depositor
nor the Servicer shall take any action inconsistent with such ownership and
shall not claim any ownership interest therein. The Depositor and the
Servicer shall respond to any third party inquiries with respect to ownership
of the Mortgage Loans by stating that such ownership is held by the Trustee
on behalf of the Certificateholders. Mortgage documents relating to the
Mortgage Loans not delivered to the Trustee are and shall be held in trust by
the Servicer or any Sub-Servicer, for the benefit of the Trustee as the owner
thereof, and the Servicer's or such Sub-Servicer's possession of the contents
of each Mortgage File so retained is for the sole purpose of servicing the
related Mortgage Loan, and such retention and possession by the Servicer or
such Sub-Servicer is in a custodial capacity only. The Depositor agrees to
take no action inconsistent with the Trustee's ownership of the Mortgage
Loans, to promptly indicate to all inquiring parties that the Mortgage Loans
have been sold and to claim no ownership interest in the Mortgage Loans.
Each Mortgage File and the mortgage documents relating to the Mortgage Loans
contain proprietary business information of the Servicer and its customers.
The Trustee and the Depositor agree that they will not use such information
for business purposes without the express written consent of the Servicer and
that all such information shall be kept strictly confidential.
It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to
this Agreement shall constitute a purchase and sale and not a loan. If a
conveyance of Mortgage Loans from the Seller to the Depositor is
characterized as a pledge and not a sale, then the Depositor shall be deemed
to have transferred to the Trustee all of the Depositor's right, title and
interest in, to and under the obligations of the Seller deemed to be secured
by said pledge; and it is the intention of this Agreement that the Depositor
shall also be deemed to have granted to the Trustee a first priority security
interest in all of the Depositor's right, title, and interest in, to and
under the obligations of the Seller to the Depositor deemed to be secured by
said pledge and that the Trustee shall be deemed to be an independent
custodian for purposes of perfection of the security interest granted to the
Depositor. If the conveyance of the Mortgage Loans from the Depositor to the
Trustee is characterized as a pledge, it is the intention of this Agreement
that this Agreement shall constitute a security agreement under applicable
law, and that the Depositor shall be deemed to have granted to the Trustee a
first priority security interest in all of the Depositor's right, title and
interest in, to and under the Mortgage Loans, all payments of principal of or
interest on such Mortgage Loans, all other rights relating to and payments
made in respect of the Trust Fund, and all proceeds of any
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thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the
Trustee shall be deemed to be the collateral agent for the benefit of such
Person.
In addition to the conveyance made in the first paragraph of this
Section 2.01, the Depositor does hereby convey, assign and set over to the
Trustee all of its right, title and interest in that portion of the Trust
Fund described in items (ii), (iii), (iv) and (v) of the definition thereof
and further assigns to the Trustee for the benefit of the Certificateholders
those representations and warranties of the Seller contained in the Sale
Agreement and described in Section 3.01 hereof and the benefit of the
repurchase obligations of the Seller described in Sections 2.02 and 3.01
hereof and the obligations of the Seller contained in the Sale Agreement to
take, at the request of the Depositor or the Trustee, all action on its part
which is reasonably necessary to ensure the enforceability of a Mortgage
Loan.
Section 2.02. Acceptance by Trustee. Except as set forth in the
Exception Report delivered contemporaneously herewith (the "Exception
Report"), the Trustee acknowledges receipt of the Mortgage Note for each
Mortgage Loan and delivery of a Mortgage File (but does not acknowledge
receipt of all documents required to be included in such Mortgage File) with
respect to each Mortgage Loan and declares that it holds and will hold such
documents and any other documents constituting a part of the Mortgage Files
delivered to it in trust for the use and benefit of all present and future
Certificateholders. The Depositor will cause the Seller to repurchase any
Mortgage Loans to which an exception was taken in the Exception Report unless
such exception is cured to the satisfaction of the Trustee within 45 Business
Days of the Closing Date.
The Trustee agrees, for the benefit of Certificateholders, to
review each Mortgage File delivered to it within 270 days after the Closing
Date to ascertain that all documents required by Section 2.01 have been
executed and received, and that such documents relate to the Mortgage Loans
identified in Exhibit A that have been conveyed to it. If the Trustee finds
any document or documents constituting a part of a Mortgage File to be
missing or defective (that is, mutilated, damaged, defaced or unexecuted) in
any material respect, the Trustee shall promptly (and in any event within no
more than five Business Days) after such finding so notify the Servicer, the
Seller and the Depositor. In addition, the Trustee shall also notify the
Servicer, the Seller and the Depositor, if (a) in examining the Mortgage
Files, the documentation shows on its face (i) any adverse claim, lien or
encumbrance, (ii) that any Mortgage Note was overdue or had been dishonored,
(iii) any evidence on the face of any Mortgage Note or Mortgage of any
security interest or other right or interest therein, or (iv) any defense
against or claim to the Mortgage Note by any party or (b) the original
Mortgage with evidence of recording thereon with respect to a Mortgage Loan
is not received within 270 days of the Closing Date. The Trustee shall
request that the Seller correct or cure such omission, defect or other
irregularity, or substitute a Mortgage Loan pursuant to the provisions of
Section 3.03, within 60 days from the date the Seller was notified of such
omission or defect and, if the Seller does not correct or cure such omission
or defect within such period, that the Seller purchase such Mortgage Loan
from
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the Trustee within 90 days from the date the Trustee notified the Seller
of such omission, defect or other irregularity at the Purchase Price of such
Mortgage Loan. The Purchase Price for any Mortgage Loan purchased pursuant
to this Section 2.02 shall be paid to the Servicer and deposited by the
Servicer in the Collection Account promptly upon receipt, and, upon receipt
by the Trustee of written notification of such deposit signed by a Servicing
Officer, the Trustee shall promptly release to the Seller the related
Mortgage File and the Trustee shall execute and deliver such instruments of
transfer or assignment, without recourse, as shall be necessary to vest in
the Seller or its designee, as the case may be, any Mortgage Loan released
pursuant hereto, and the Trustee shall have no further responsibility with
regard to such Mortgage Loan. It is understood and agreed that the
obligation of the Seller to purchase, cure or substitute any Mortgage Loan as
to which a material defect in or omission of a constituent document exists
shall constitute the sole remedy respecting such defect or omission available
to the Trustee on behalf of Certificateholders. The Trustee shall be under
no duty or obligation to inspect, review and examine such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable or appropriate to the represented purpose, or that they have
actually been recorded, or that they are other than what they purport to be
on their face. The Trustee shall keep confidential the name of each
Mortgagor and shall not solicit any such Mortgagor for the purpose of
refinancing the related Mortgage Loan.
Within 280 days of the Closing Date, the Trustee shall deliver to
the Depositor and the Servicer the Trustee's Certification, substantially in
the form of Exhibit G attached hereto, setting forth the status of the
Mortgage Files as of such date.
Section 2.03. Trust Fund; Authentication of Certificates. The
Trustee acknowledges and accepts the assignment to it of the Trust Fund
created pursuant to this Agreement in trust for the use and benefit of all
present and future Certificateholders. The Trustee acknowledges the
assignment to it for the benefit of the Trust Fund of the Mortgage Loans and
has caused to be authenticated and delivered to or upon the order of the
Depositor, in exchange for the Mortgage Loans, Certificates duly
authenticated by the Trustee or, if an Authenticating Agent has been
appointed pursuant to Section 4.06, the Authenticating Agent in authorized
denominations evidencing ownership of the entire Trust Fund.
Section 2.04. REMIC Election.
(a) The Depositor hereby instructs and authorizes the Trustee to
make appropriate elections to treat each of the Subsidiary REMIC and the
Master REMIC as a REMIC. This Agreement shall be construed so as to carry
out the intention of the parties that each REMIC Pool be treated as a REMIC
at all times prior to the date on which the Trust Fund is terminated. The
Closing Date is hereby designated as the "startup day" of each REMIC Pool
within the meaning of Section 860G(a)(9) of the Code. The "regular
interests" (within the meaning of Section 860G(a)(1) of the Code) in the
Master REMIC shall consist of the Class A Certificates (other than the Class
A-R Certificate), the Class M Certificates and the Class B Certificates, and
the "residual interest" (within the meaning of Section 860G(a)(2) of the
Code) in the Master
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REMIC shall consist of the Master Residual Interest, and all such interests
shall be designated as such on the Startup Day. The "regular interests"
(within the meaning of Section 860G(a)(1) of the Code) in the Subsidiary
REMIC shall consist of the Subsidiary Regular Interests and the "residual
interest" (within the meaning of Section 860G(a)(2) of the Code) in the
Subsidiary REMIC shall consist of the Subsidiary Residual Interest and all
such interests shall be designated as such on the Startup Date. The regular
interests in the Subsidiary REMIC shall be held by the Master REMIC at all
times and shall not be transferable under any circumstances.
(b) All payments with respect to the Class A-1 and Class A-2
Certificates and Class A-4 Part One shall be considered to have been made
solely from the First Subsidiary Regular Interest. All payments with respect
to the Class A-3 Certificates and Class A-4 Part Two shall be considered to
have been made solely from the Second Subsidiary Regular Interest. All
payments with respect to the Class A-5, Class A-6, Class A-7, Class A-8,
Class A-9, Class A-10, Class A-11, Class A-12 and Class A-13 Certificates
shall be considered to have been made solely from the Third Subsidiary
Regular Interest. All payments with respect to the Class A-14, Class M,
Class B-1, Class B-2, Class B-3, Class B-4 and Class B-5 Certificates shall
be considered to have been made solely from the Fourth Subsidiary Regular
Interest. All payments with respect to the Class A-P Certificates shall be
considered to have been made solely from the Fifth Subsidiary Regular
Interest. All payments with respect to Class A-X Certificates shall be
considered to have been made solely from the Sixth Subsidiary Regular
Interest.
The principal amount of the regular interests in the Master REMIC is
equal to the sum of the Original Class A Principal Balance, the Original
Class M Principal Balance and the Original Class B Principal Balance. The
original principal balance of the First Subsidiary Regular Interest is equal
to the aggregate principal balance of the Class A-1 and Class A-2
Certificates. The original principal balance of the Second Subsidiary
Regular Interest is equal to the principal balance of the Class A-3
Certificates. The original principal balance of the Third Subsidiary Regular
Interest is equal to the aggregate principal balance of the Class A-5, Class
A-6, Class A-7, Class A-8, Class A-9, Class A-10, Class A-11, Class A-12 and
Class A-13 Certificates. The original principal balance of the Fourth
Subsidiary Regular Interest is equal to the aggregate principal balance of
the Class A-14, Class M, Class B-1, Class B-2, Class B-3, Class B-4 and Class
B-5 Certificates. The original principal balance of the Fifth Subsidiary
Regular Interest is equal to the principal balance of the Class A-P
Certificates. The original principal balance of the Sixth Subsidiary Regular
Interest is zero.
The interest rate on the First Subsidiary Regular Interest, the Second
Subsidiary Regular Interest, the Third Subsidiary Regular Interest and the
Fourth Subsidiary Regular Interest is 6.75%. The interest rate on the Fifth
Subsidiary Regular Interest is 0.00%. The interest rate on the Sixth
Subsidiary Regular Interest is equal to the aggregate of the Stripped
Interest Rates.
(c) The assets of the Subsidiary REMIC shall consist of the pool
of assets consisting of the Trust Fund. The assets of the Master REMIC shall
consist of the pool of assets
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consisting of the Subsidiary Regular Interests and all payments or principal
or interest on or with respect to the Subsidiary Regular Interests after the
Cut-off Date.
(d) Solely for the purposes of Section 1.860G-1(a)(4)(iii) of the
Treasury regulations, the "latest possible maturity date" by which the
Outstanding Certificate Principal Balance of each Class of Certificates
representing a regular interest in the Master REMIC would be reduced to zero
is the Distribution Date immediately following the latest scheduled maturity
of any Mortgage Loan.
(e) The "tax matters person" with respect to each REMIC Pool for
purposes of the REMIC provisions shall be the beneficial owner of the Class
A-R Certificate having the largest Percentage Interest of such Class;
provided, however, that such largest beneficial owner and, to the extent
relevant, each other Holder of a Class A-R Certificate, by it acceptance
thereof, irrevocably appoints the Servicer as its agent and attorney-in-fact
to act as "tax matters person" with respect to each REMIC Pool for purposes
of the REMIC provisions.
(f) It is intended that each REMIC Pool shall constitute, and that
the affairs of the Trust Fund shall be conducted so as to qualify each REMIC
Pool as, a "real estate mortgage investment conduit" as defined in and in
accordance with the REMIC Provisions. In furtherance of such intention, the
Servicer covenants and agrees that it shall act as agent (and the Servicer is
hereby appointed to act as agent) on behalf of the Trust Fund and the Holder
of the Class A-R Certificate and that in such capacity it shall:
(i) prepare and file, or cause to be prepared and filed, in a
timely manner, a U.S. Real Estate Mortgage Investment Conduit Income Tax
Return (Form 1066) and prepare and file or cause to be prepared and
filed with the Internal Revenue Service and applicable state or local
tax authorities income tax or information returns for each taxable year
with respect to each REMIC Pool, using the calendar year as the taxable
year and the accrual method of accounting, containing such information
and at the times and in the manner as may be required by the Code or
state or local tax laws, regulations, or rules, and shall furnish or
cause to be furnished to Certificateholders the schedules, statements or
information at such times and in such manner as may be required thereby;
(ii) within thirty days of the Closing Date, shall furnish or
cause to be furnished to the Internal Revenue Service, on Form 8811 or
as otherwise may be required by the Code, the name, title, address, and
telephone number of the person that the holders of the Certificates may
contact for tax information relating thereto (and the Servicer shall act
as the representative of each REMIC Pool for this purpose), together
with such additional information as may be required by such Form, and
shall update such information at the time or times in the manner
required by the Code;
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(iii) make or cause to be made elections, on behalf of
each REMIC Pool, to be treated as a REMIC, and make the appropriate
designations, if applicable, in accordance with this Section 2.04 on the
federal tax return of each REMIC Pool for its first taxable year (and,
if necessary, under applicable state law);
(iv) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal Revenue Service
and, if necessary, state tax authorities, all information returns or
reports, or furnish or cause to be furnished by telephone, mail,
publication or other appropriate method such information, as and when
required to be provided to them in accordance with the REMIC Provisions,
including without limitation, the calculation of any original issue
discount;
(v) provide information necessary for the computation of tax
imposed on the transfer of the Class A-R Certificate to a Disqualified
Organization, or an agent (including a broker, nominee or other
middleman) of a Disqualified Organization, or a pass-through entity in
which a Disqualified Organization is the record holder of an interest
(the reasonable cost of computing and furnishing such information may be
charged to the Person liable for such tax);
(vi) ensure that federal, state or local income tax or
information returns shall be signed by the Trustee or such other person
as may be required to sign such returns by the Code or state or local
laws, regulations or rules; and
(vii) maintain such records relating to each REMIC Pool,
as may be required by the Code and, as may be necessary to prepare the
foregoing returns, schedules, statements or information.
[END OF ARTICLE II]
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR AND
THE SERVICER; REPURCHASE OF MORTGAGE LOANS
Section 3.01. Representations and Warranties of the Depositor with
respect to the Mortgage Loans.
The Depositor hereby represents and warrants to the Trustee for the
benefit of the Certificateholders that on the Closing Date it has entered
into the Sale Agreement with CMMC as Seller, that the Seller has made the
following representations and warranties with respect to each Mortgage Loan
in such Sale Agreement as of the Closing Date, which representations and
warranties run to and are for the benefit of the Depositor and the Trustee
for the benefit of the
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Certificateholders, and as to which the Depositor has assigned to the Trustee
for the benefit of the Certificateholders, pursuant to Section 2.01 hereof,
the right to cause the Seller to repurchase a Mortgage Loan as to which there
has occurred an uncured breach of representations and warranties in
accordance with the provisions of the Sale Agreement.
(a) The information set forth in the Mortgage Loan Schedule is
complete, true and correct in all material respects;
(b) The Mortgage creates a first lien or a first priority
ownership interest in an estate in fee simple in real property securing the
related Mortgage Note;
(c) All payments due prior to the Cut-off Date for such Mortgage
Loan have been made as of the Closing Date, the Mortgage Loan is not
delinquent in payment more than 30 days and has not been dishonored; to the
best of the Seller's knowledge, there are no material defaults under the
terms of the Mortgage Loan; the Seller has not advanced funds, or induced,
solicited or knowingly received any advance of funds from a party other than
the owner of the Mortgaged Property subject to the Mortgage, directly or
indirectly, for the payment of any amount required by the Mortgage Loan;
there has been no more than one delinquency in excess of 30 days during the
preceding twelve-month period;
(d) To the best of the Seller's knowledge, all taxes, governmental
assessments, insurance premiums, water, sewer and municipal charges,
leasehold payments or ground rents which previously became due and owing have
been paid, or escrow funds have been established in an amount sufficient to
pay for every such escrowed item which remains unpaid and which has been
assessed but is not yet due and payable;
(e) The terms of the Mortgage Note and the Mortgage have not been
impaired, waived, altered or modified in any respect, except by written
instruments. No Mortgagor has been released, in whole or in part, from the
terms thereof except in connection with an assumption agreement and which
assumption agreement is part of the Mortgage File and the terms of which are
reflected in the Mortgage Loan Schedule;
(f) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including, without
limitation, the defense of usury, nor will the operation of any of the terms
of the Mortgage Note or Mortgage, or the exercise of any right thereunder,
render the Mortgage Note or Mortgage unenforceable, in whole or in part, or
subject to any right of rescission, set-off, counterclaim or defense,
including the defense of usury, and no such right of rescission, set-off,
counterclaim or defense has been asserted with respect thereto, and the
Mortgagor was not a debtor in any state or federal bankruptcy or insolvency
proceeding at the time the Mortgage Loan was originated;
(g) All buildings or other customarily insured improvements upon
the Mortgaged Property are insured by an insurer acceptable under the FNMA
Guides against loss by
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fire, hazards of extended coverage and such other hazards as are provided for
in the FNMA Guides or by FHLMC. All such standard hazard policies are in
full force and effect and on the date of origination contained a standard
mortgagee clause naming the Seller and its successors in interest and assigns
as loss payee and such clause is still in effect and all premiums due thereon
have been paid. If required by the Flood Disaster Protection Act of 1973, as
amended, the Mortgage Loan is covered by a flood insurance policy meeting the
requirements of the current guidelines of the Federal Insurance
Administration which policy conforms to FNMA and FHLMC requirements. The
Mortgage obligates the Mortgagor thereunder to maintain all such insurance at
the Mortgagor's cost and expense, and on the Mortgagor's failure to do so,
authorizes the holder of the Mortgage to maintain such insurance at the
Mortgagor's cost and expense and to seek reimbursement therefor from the
Mortgagor;
(h) Any and all requirements of any federal, state or local law
including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity
or disclosure laws applicable to the Mortgage Loan have been complied with in
all material respects;
(i) The Mortgage has not been satisfied, canceled or subordinated,
in whole or in part, or rescinded, and the Mortgaged Property has not been
released from the lien of the Mortgage, in whole or in part nor has any
instrument been executed that would effect any such release, cancellation,
subordination or rescission;
(j) The Mortgage is a valid, subsisting, enforceable and perfected
first lien on the Mortgaged Property, including, all buildings on the
Mortgaged Property and all installations and mechanical, electrical,
plumbing, heating and air conditioning systems affixed to such buildings, and
all additions, alterations and replacements made at any time with respect to
the foregoing securing the Mortgage Note's original principal balance. The
Mortgage and the Mortgage Note do not contain any evidence of any security
interest or other interest or right thereto. Such lien is free and clear of
all adverse claims, liens and encumbrances having priority over the first
lien of the Mortgage subject only to (1) the lien of non-delinquent current
real property taxes and assessments not yet due and payable, (2) covenants,
conditions and restrictions, rights of way, easements and other matters of
the public record as of the date of recording which are acceptable to
mortgage lending institutions generally and either (A) which are referred to
or otherwise considered in the appraisal made for the originator of the
Mortgage Loan, or (B) which do not adversely affect the appraised value of
the Mortgaged Property as set forth in such appraisal, and (3) other matters
to which like properties are commonly subject which do not materially
interfere with the benefits of the security intended to be provided by the
Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property. Any security agreement, chattel mortgage or equivalent
document related to and delivered in connection with the Mortgage Loan
establishes and creates a valid, subsisting, enforceable and perfected first
lien and first priority security interest on the property described therein,
and the Depositor has the full right to sell and assign the same to the
Trustee for the benefit of the Certificateholders;
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(k) The Mortgage Note and the related Mortgage are original and
genuine and each is the legal, valid and binding obligation of the maker
thereof, enforceable in all respects in accordance with its terms subject to
bankruptcy, insolvency and other laws of general application affecting the
rights of creditors and the Depositor has taken all action necessary to
transfer such rights of enforceability to the Trustee for the benefit of the
Certificateholders. All parties to the Mortgage Note and the Mortgage had
the legal capacity to enter into the Mortgage Loan and to execute and deliver
the Mortgage Note and the Mortgage. The Mortgage Note and the Mortgage have
been duly and property executed by such parties. The proceeds of the
Mortgage Loan have been fully disbursed and there is no requirement for
future advances thereunder, and any and all requirements as to completion of
any on-site or off-site improvements and as to disbursements of any escrow
funds therefor have been complied with;
(1) The Depositor is the sole owner of record and holder of the
Mortgage Loan and the indebtedness evidenced by the Mortgage Note, except for
the Assignments of Mortgage which have been sent for recording, and upon
recordation the Depositor will be the owner of record of the Mortgage and the
indebtedness evidenced by the Mortgage Note, and upon the sale of the
Mortgage Loan to the Trust for the benefit of the Certificateholders, the
Depositor will retain the Mortgage File or any part thereof with respect
thereto not delivered to the Trust for the benefit of the Certificateholders
or its designee in trust only for the purpose of servicing and supervising
the servicing of the Mortgage Loan. Immediately prior to the transfer and
assignment to the Trust for the benefit of the Certificateholders, the
Mortgage Loan, including the Mortgage Note and the Mortgage, were not subject
to an assignment or pledge, and the Depositor had good and marketable title
to and was the sole owner thereof and had full right to transfer and sell the
Mortgage Loan to the Trustee for the benefit of the Certificateholders free
and clear of any encumbrance, equity, lien, pledge, charge, claim or security
interest and has the full right and authority subject to no interest or
participation of, or agreement with, any other party, to sell and assign the
Mortgage Loan pursuant to this Agreement and following the sale of the
Mortgagee Loan, the Trustee for the benefit of the Certificateholders will
own such Mortgage Loan free and clear of any encumbrance, equity,
participation interest, lien, pledge, charge, claim or security interest;
(m) The Mortgage Loan is covered by an ALTA lender's title
insurance policy or other generally acceptable form of policy or insurance
acceptable to FNMA or FHLMC, issued by a title insurer acceptable to FNMA or
FHLMC and qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring (subject to the exceptions contained in (j)
(1), (2) and (3) above) the Seller, its successors and assigns, as to the
first priority lien of the Mortgage in the original principal amount of the
Mortgage Loan. Such lender's title insurance policy insures ingress and
egress by or upon the Mortgaged Property or any interest therein. Where
required by state law or regulation, the Mortgagor has been given the
opportunity to choose the carrier of the required mortgage title insurance.
The Seller, its successors and assigns, are the sole insureds of such
lender's title insurance policy, such title insurance policy has been duly
and validly endorsed to the Trustee for the benefit of the Certificateholders
or the assignment to the Trustee for the benefit of the Certificateholders of
the Seller's interest therein
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does not require the consent of or notification to the insurer and such
lender's title insurance policy is in full force and effect and will be in
full force and effect upon the consummation of the transactions contemplated
by this Agreement. No claims have been made under such lender's title
insurance policy, and no prior holder of the related Mortgage, including the
Seller, has done, by act or omission, anything which would impair the
coverage of such lender's title insurance policy;
(n) There is no default, breach, violation or event of
acceleration existent, under the Mortgage or the related Mortgage Note and no
event which, with the passage of time or with notice and the expiration of
any grace or cure period, would constitute a default, breach, violation or
event permitting acceleration; and neither the Seller nor any prior mortgagee
has waived any default, breach, violation or event permitting acceleration;
(o) There are no mechanics', or similar liens or claims which have
been filed for work, labor or material (and no rights are outstanding that
under law could give rise to such liens) affecting the related Mortgaged
Property which are or may be liens prior to or equal to the lien of the
related Mortgage;
(p) All improvements subject to the Mortgage which were considered
in determining the Appraised Value of the Mortgaged Property lie wholly
within the boundaries and building restriction lines of the Mortgaged
Property (and wholly within the project with respect to a condominium unit)
and no improvements on adjoining properties encroach upon the Mortgaged
Property except those which are insured against by the title insurance policy
referred to in clause (m) above and all improvements on the property comply
with all applicable zoning and subdivision laws and ordinances; the Mortgaged
Property is lawfully occupied under applicable law;
(q) The Mortgage Loan complies in all material respects with all
the terms, conditions and requirements of the Seller's underwriting standards
in effect at the time of origination of such Mortgage Loan. The Mortgage
Notes and Mortgages (exclusive of any riders) are on forms generally
acceptable to FNMA or FHLMC. Monthly Payments under the Mortgage Note are
due and payable on the first day of each month. The Mortgage contains the
usual and enforceable provisions of the originator at the time of origination
for the acceleration of the payment of the unpaid principal amount of the
Mortgage Loan if the related Mortgaged Property is sold without the prior
consent of the mortgagee thereunder;
(r) To the best of the Seller's knowledge, the Mortgaged Property
is not subject to any material damage by waste, fire, earthquake, windstorm,
flood or other casualty. To the best of the Seller's knowledge, at
origination of the Mortgage Loan there was, and there currently is, no
proceeding pending for the total or partial condemnation of the Mortgaged
Property;
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(s) The related Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the benefits
of the security provided thereby, including, (l) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (2) otherwise by
judicial foreclosure. There is no homestead or other exemption available to
the Mortgagor which would interfere with the right to sell the Mortgaged
Property at a trustee's sale or the right to foreclose the Mortgage;
(t) If the Mortgage constitutes a deed of trust, a trustee,
authorized and duly qualified if required under applicable law to act as
such, has been properly designated and currently so serves and is named in
the Mortgage, and no fees or expenses, except as may be required by local
law, are or will become payable by, the Purchaser to the trustee under the
deed of trust, except in connection with a trustee's sale or attempted sale
after default by the Mortgagor;
(u) The Mortgage File contains an appraisal of the related
Mortgaged Property signed prior to the final approval of the mortgage loan
application by an appraiser approved by the Seller who had no interest,
direct or indirect, in the Mortgaged Property or in any loan made on the
security thereof, and whose compensation is not affected by the approval or
disapproval of the Mortgage Loan. The appraisal is in a form acceptable to
FNMA or FHLMC;
(v) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the
period in which they held and disposed of such interest, were) (A) in
substantial compliance with any and all applicable licensing requirements of
the laws of the state wherein the Mortgaged Property is located, and (B) (1)
organized under the laws of such state, or (2) qualified to do business in
such state, or (3) federal savings and loan associations or national banks or
a Federal Home Loan Bank or savings bank having principal offices in such
state, or (4) not doing business in such state;
(w) The related Mortgage Note is not and has not been secured by
any collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security interest of any applicable agreement or
chattel mortgage referred to above and such collateral does not serve as
security for any other obligation;
(x) The Mortgagor has received all disclosure materials required
by applicable law with respect to the making of such mortgage loans;
(y) The Mortgage Loan does not contain "graduated payment"
features;
(z) The Mortgagor is not in bankruptcy and, to the best of the
Seller's knowledge, the Mortgagor is not insolvent;
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(aa) The Mortgage Loans are fixed rate mortgage loans. The
Mortgage Loans have an original term to maturity of not more than thirty (30)
years, with interest payable in arrears on the first day of each month. Each
Mortgage Note is payable in equal monthly installments of principal and
interest which is sufficient to amortize the Mortgage Loan fully by the
stated maturity date. No Mortgage Loan contains terms or provisions which
would result in negative amortization;
(bb) Each Mortgage Note, each Mortgage, each Assignment of Mortgage
and any other documents required pursuant to this Agreement to be delivered
to the Trustee on behalf of the Certificateholders or its designee, or its
assignee for each Mortgage Loan, have been, on or before the Closing Date,
delivered to the Trustee on behalf of the Certificateholders or its designee,
or its assignee;
(cc) All escrow payments have been collected in full compliance
with state and federal law and the provisions of the related Mortgage Note
and Mortgage. As to any Mortgage Loan that is the subject of an escrow,
escrow of funds is not prohibited by applicable law and has been established
in an amount sufficient to pay for every escrowed item that remains unpaid
and has been assessed but is not yet due and payable. No escrow deposits or
other charges or payments due under the Mortgage Note have been capitalized
under any Mortgage or the related Mortgage Note. Any interest required to be
paid pursuant to state, federal and local law has been properly paid and
credited;
(dd) [Reserved];
(ee) In the event the Mortgage Loan has a Loan-to-Value Ratio
greater than 80%, the excess of the principal balance of the Mortgage Loan
over 75% of the Appraised Value, with respect to a refinanced Mortgage Loan,
or the lesser of the Appraised Value or the purchase price of the Mortgaged
Property, with respect to a purchase money Mortgage Loan, is and will be
insured as to payment defaults by a Primary Insurance Policy issued by a
Qualified Insurer. All provisions of such Primary Insurance Policy have been
and are being complied with such policy is in full force and effect, and all
premiums due thereunder have been paid. No action, inaction, or event has
occurred and no state of facts exists that has, or will result in the
exclusion from, denial of, or defense to coverage. Any Mortgage Loan subject
to a Primary Insurance Policy obligates the Mortgagor thereunder to maintain
the Primary Insurance Policy and to pay all premiums and charges in
connection therewith. The Mortgage Rate for the Mortgage Loan as set forth
on the Mortgage Loan Schedule is net of any such insurance premium;
(ff) The assignment of Mortgage is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(gg) As to Mortgage Loans that are not secured by an interest in a
leasehold estate, the Mortgaged Property is located in the state identified
in the Mortgage Loan Schedule and consists of a single parcel of real
property with a detached single family residence erected
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thereon, or a two-to four-family dwelling, or an individual condominium unit
in a condominium project, or an individual unit in an attached planned unit
development or a detached planned unit development, provided, however, that
no residence or dwelling is a single parcel of real property with a mobile
home thereon. As of the date of origination, no portion of the Mortgaged
Property was used for commercial purposes, and since the date of origination,
to the best of the Seller's knowledge, no portion of the Mortgaged Property
is used for commercial purposes;
(hh) If the Mortgaged Property is a condominium unit or a planned
unit development (other than a de minimis planned unit development) such
condominium or planned unit development project meets the Seller's
eligibility requirements, as set forth in the Seller's underwriting
guidelines;
(ii) To the best of the Seller's knowledge, there is no pending
action or proceeding directly involving the Mortgaged Property in which
compliance with any environmental law, rule or regulation is an issue;
(jj) The Mortgagor has not notified the Seller, and the Depositor
has no knowledge of any relief requested or allowed to the Mortgagor under
the Soldiers' and Sailors' Civil Relief Act of 1940;
(kk) No Mortgage Loan was made in connection with the construction
or rehabilitation of a Mortgaged Property or facilitating the trade-in or
exchange of a Mortgaged Property;
(ll) No action has been taken or failed to be taken by Depositor,
on or prior to the Closing Date which has resulted or will result in an
exclusion from, denial of, or defense to coverage under any Primary
Insurance Policy (including, without limitation, any exclusions, denials or
defenses which would limit or reduce the availability of the timely payment
of the full amount of the loss otherwise due thereunder to the insured)
whether arising out of actions, representations, errors, omissions,
negligence, or fraud of the Depositor, or for any other reason under such
coverage;
(mm) The Mortgage Loan was originated by a mortgagee approved by
the Secretary of Housing and Urban Development pursuant to Sections 203 and
211 of the Act, a savings and loan association, a savings bank, a commercial
bank, credit union, insurance company or similar institution which is
supervised and examined by a federal or state authority;
(nn) Principal payments on the Mortgage Loan commenced no more than
sixty (60) days after funds were disbursed in connection with the Mortgage
Loan. The Mortgage Note is payable on the first day of each month in equal
monthly installments of principal and interest, with interest calculated and
payable in arrears, sufficient to amortize the Mortgage Loan fully by the
stated maturity date, over an original term of not more than thirty years
from commencement of amortization; and
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(oo) The Mortgage Loan is a "qualified mortgage" within the meaning
of Section 860G(a)(3) of the Code (without regard to Treasury Regulations
Section 1.860G-2(f) or any similar rule that provides that a defective
obligation is a qualified mortgage for a temporary period);
Upon discovery by any of the Depositor, the Servicer or the Trustee
of a breach of any of the foregoing representations and warranties which
materially and adversely affects the value of a Mortgage Loan or the interest
of the Certificateholders (or which materially and adversely affects the
interests of the Certificateholders in the related Mortgage Loan in the case
of a representation and warranty relating to a particular Mortgage Loan), the
party discovering such breach shall give prompt written notice to the other
parties and to the Seller, which notice shall specify the date of discovery.
Pursuant to the Sale Agreement, the Seller shall within 90 days from the
earlier of (i) the date specified in the notice as the date of discovery of
such breach or (ii) the date the Seller otherwise discovers such breach, cure
such breach, substitute a Mortgage Loan pursuant to the provisions of Section
3.03 or, if the breach relates to a particular Mortgage Loan, purchase such
Mortgage Loan from the Trustee at the Purchase Price. The Purchase Price for
the purchased Mortgage Loan shall be paid to the Servicer and shall be
deposited by the Servicer in the Collection Account promptly upon receipt,
and, upon receipt by the Trustee of written notification of such deposit
signed by a Servicing Officer, the Trustee shall promptly release to the
Seller the related Mortgage File, and the Trustee shall execute and deliver
such instruments of transfer or assignment as may be provided to it by the
Servicer, without recourse, as shall be necessary to vest in the Seller or
its designee, as the case may be, any Mortgage Loan released pursuant hereto,
and the Trustee shall have no further responsibility with regard to such
Mortgage Loan. It is understood and agreed that the obligation of the Seller
to cure, substitute or purchase any Mortgage Loan as to which such a breach
has occurred shall constitute the sole remedy respecting such breach
available to Certificateholders or the Trustee on behalf of
Certificateholders.
Section 3.02. Representations and Warranties of the Servicer. The
Servicer represents and warrants to, and covenants with, the Trustee for the
benefit of the Certificateholders that as of the Closing Date:
(a) The Servicer is a corporation duly chartered and validly
existing in good standing under the laws of the State of New Jersey, and
the Servicer is duly qualified or registered as a foreign corporation in
good standing in each jurisdiction in which the ownership or lease or
its properties or the conduct of its business requires such
qualification;
(b) The execution and delivery of this Agreement by the Servicer
and its performance and compliance with the terms of this Agreement will
not violate the Servicer's corporate charter or by-laws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach
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of, any material contract, agreement or other instrument to which the
Servicer is a party or which may be applicable to the Servicer or any of
its assets;
(c) This Agreement, assuming due authorization, execution and
delivery by the Trustee and the Depositor, constitutes a valid, legal
and binding obligation of the Servicer, enforceable against it in
accordance with the terms hereof subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally and to general principles of
equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law;
(d) The Servicer is not in default with respect to any order or
decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which default might have
consequences that would materially and adversely affect the condition
(financial or other) or operations of the Servicer or its properties or
might have consequences that would affect its performance hereunder; and
(e) No litigation is pending or, to the best of the Servicer's
knowledge, threatened against the Servicer which would prohibit its
entering into this Agreement or performing its obligations under this
Agreement.
It is understood and agreed that the representations and warranties
set forth in this Section 3.02 shall survive the issuance and delivery of the
Certificates and shall be continuing as long as any Certificate shall be
outstanding or this Agreement has been terminated.
Section 3.03. Option to Substitute. If the Seller is required to
repurchase any Mortgage Loan pursuant to Section 2.02 or 3.01, the Seller
may, at its option, within two years from the Closing Date, remove such
defective Mortgage Loan from the terms of this Agreement and substitute
another mortgage loan for such defective Mortgage Loan, in lieu of
repurchasing such defective Mortgage Loan. Any substitute Mortgage Loan
shall (a) have a Principal Balance at the time of substitution not in excess
of the Principal Balance of the removed Mortgage Loan (the amount of any
difference, plus one month's interest thereon at the Mortgage Rate borne by
the removed Mortgage Loan, being paid by the Seller and deemed to be a
Principal Prepayment to be deposited by the Servicer in the Collection
Account), (b) have a Mortgage Rate not less than, and not more than one
percentage point greater than, the Mortgage Rate of the removed Mortgage Loan
(provided, however, that if the Mortgage Rate on the substitute Mortgage Loan
exceeds the Mortgage Rate on the removed Mortgage Loan, the amount of that
excess interest (the "Substitute Excess Interest") shall be payable to the
Residual Interest), (c) have a remaining term to stated maturity not later
than, and not more than one year less than, the remaining term to stated
maturity of the removed Mortgage Loan, (d) be, in the reasonable
determination of the Servicer, of the same type, quality and character
(including location of the Mortgaged Property) as the removed Mortgage Loan
as if the breach had not occurred, (e) have a Loan-to-Value Ratio at
origination no greater than that of the removed Mortgage Loan and (f) be, in
the reasonable
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determination of the Servicer, in material compliance with the
representations and warranties contained in the Sale Agreement and described
in Section 3.01, as of the date of substitution.
The Servicer shall amend the Mortgage Loan Schedule to reflect the
withdrawal of the removed Mortgage Loan from this Agreement and the
substitution of such substitute Mortgage Loan therefor and shall send a copy
of such amended Mortgage Loan Schedule to the Trustee. The Sale Agreement
provides that upon such amendment the Seller shall be deemed to have made as
to such substitute Mortgage Loan the representations and warranties set forth
in Section 3.01 as of the date of such substitution, which shall be
continuing as long as any Certificate shall be outstanding or this Agreement
has not been terminated, and the remedies for breach of any such
representation or warranty shall be as set forth in Section 3.01. Upon such
amendment, the Trustee shall review the Mortgage File delivered to it
relating to the substitute Mortgage Loan, within the time and in the manner
and with the remedies specified in Section 2.02, except that for purposes of
this Section 3.03 (other than the two-year period specified in the first
sentence of this Section), such time shall be measured from the date of the
applicable substitution. In the event of such a substitution, accrued
interest on the substitute Mortgage Loan for the month in which the
substitution occurs and any Principal Prepayments made thereon during such
month shall be the property of the Trust Fund, and accrued interest for such
month on the Mortgage Loan for which the substitution is made and any
Principal Prepayments made thereon during such month shall be the property of
the Seller. The principal payment on a substitute Mortgage Loan due on the
Due Date in the month of substitution shall be the property of the Seller,
and the principal payment on the Mortgage Loan for which the substitution is
made due on such date shall be the property of the Trust Fund.
[END OF ARTICLE III]
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates. (a) The Class A, Class M and
Class B Certificates shall be substantially in the forms thereof included
within Exhibits C, D, E and F and shall, on original issue, be executed by
the Depositor and authenticated by the Trustee (or, if an Authenticating
Agent has been appointed pursuant to Section 4.06, the Authenticating Agent)
upon receipt by the Trustee of the documents specified in Section 2.01,
delivered to or upon the order of the Depositor.
(b) The Depository, the Depositor, the Paying Agent and the
Trustee have entered into a Depository Agreement dated as of June 25, 1998
(the "Depository Agreement"). 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 the
Book-Entry Certificates may not be transferred as provided in Section 4.02
except to a successor
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to the Depository; (ii) ownership and transfers of registration of the
Book-Entry Certificates on the books of the Depository shall be governed by
applicable rules established by the Depository; (iii) the Depository may
collect its usual and customary fees, charges and expenses from its
Depository Participants; (iv) the Trustee shall deal with the Depository,
Depository Participants and Indirect Participants as representatives of the
Certificate Owners of the Book-Entry Certificates for purposes of exercising
the rights of such Holders under this Agreement, and requests and directions
for and votes of such representatives shall not be deemed to be inconsistent
if they are made with respect to different Certificate Owners; and (v) the
Trustee 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
Participants and persons shown on the books of such Indirect Participants as
direct or indirect Certificate Owners. The Depository Agreement provides
that the Depository shall maintain book-entry records with respect to the
Certificate Owners and with respect to ownership and transfers of such
Certificates.
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 it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
(c) If (i)(A) the Depositor advises the Depositor, the Paying
Agent or the Trustee in writing that the Depository is no longer willing or
able to properly discharge its responsibilities as Depository and (B) the
Trustee, the Paying Agent or the Depositor are unable after exercise of their
reasonable best efforts to locate a qualified successor or (ii) the Depositor
at its option advises the Trustee in writing that it elects to terminate the
book-entry system through the Depository, the Trustee or, if a Paying Agent
has been appointed under Section 4.05, the Paying Agent, shall notify all
Certificate Owners, through the Depository, of the occurrence of any such
event and of the availability of definitive, fully registered Certificates
(the "Definitive Certificates") to Certificate Owners requesting the same.
Upon surrender to the Trustee or, if a Paying Agent has been appointed under
Section 4.05, the Paying Agent, of the Book-Entry Certificates by the
Depository for registration and receipt by the Trustee or, if a Paying Agent
has been appointed under Section 4.05, the Paying Agent, of an adequate
supply of certificates from the Depositor, the Trustee or if the Paying Agent
is appointed under Section 4.05, the Paying Agent shall issue the Definitive
Certificates based on information received from the Depository. Neither the
Depositor, the Servicer, the Paying Agent 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.
(d) The Certificates shall be issuable in the minimum original
dollar denominations (and integral multiples of $1,000 in excess of such
amount) and aggregate original dollar denominations per Class as set forth in
the following table (except that one
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Certificate of each of Class A-13, Class A-14, Class A-P and Class B-5
Certificates may be issued in a different denomination).
Aggregate Original Certificate
Minimum Principal Balance of all
Original Certificates of the CUSIP
Class Denomination Indicated Class Number
------- -------------- ------------------------------ -------
A-1 $25,000.00 $70,900,00.00 161626 3X2
A-2 $25,000.00 $42,347,000.00 161626 3Y0
A-3 $25,000.00 $59,497,000.00 161626 3Z7
A-4 (1) (1) 161626 4A1
A-5 $25,000.00 $46,300,000.00 161626 4B9
A-6(2) $25,000.00 $35,700,000.00 161626 4C7
A-7 $25,000.00 $7,000,000.00 161626 4D5
A-8 $25,000.00 $500,000.00 161626 4E3
A-9 $25,000.00 $127,600,000.00 161626 4F0
A-10 $25,000.00 $15,600,000.00 161626 4G8
A-11 $25,000.00 $7,599,000.00 161626 4H6
A-12 $25,000.00 $985,000.00 161626 4K9
A-13 $25,000.00 $8,937,320.00 161626 4L7
A-14 $25,000.00 $84,278,300.00 161626 4M5
A-P $25,000.00 $237,974.00 161626 4P8
A-R(3) $100.00 $100.95 161626 4N3
A-X (4) (4) N/A
M $100,000.00 $11,396,000.00 161626 4Q6
B-1 $100,000.00 $4,505,000.00 161626 4R4
B-2 $100,000.00 $2,385,000.00 161626 4S2
B-3 $100,000.00 $1,855,000.00 161626 4T0
B-4 $100,000.00 $1,061,000.00 161626 4U7
B-5 $100,000.00 $1,325,030.44 161626 4V5
_______________
(1) The Class A-4 Certificates have no Principal Balance, but accrue
interest on the Class A-4 Notional Balance (initially, $5,516,488.89).
(2) The Class A-6 Certificates consist of two Components. Class A-6
Component One shall have an Original Certificate Principal Balance of
$13,800,000.00 and Class A-6 Component Two shall have an Original
Certificate Principal Balance of $21,900,000.00. Such Components shall
not be separately transferrable.
(3) The Class A-R Certificate represents the Master Residual Interest and
the Subsidiary Residual Interest.
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(4) The Class A-X Certificates have no Principal Balance, but accrue
interest on the Class A-X Notional Balance (initially, $511,626,605.16).
The Certificates shall be signed by manual or facsimile signature
on behalf of the Depositor by an officer of the Depositor. Certificates
bearing the manual or facsimile signatures of individuals who were at the
time of signature officers of the Depositor shall bind the Depositor,
notwithstanding that such individuals or any of them have ceased to be an
officer prior to the authentication and delivery of such Certificate or did
not hold such offices at the date of such Certificates. No Certificate shall
be entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a manual authentication by an
officer of the Depositor 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.
Section 4.02. Registration of Transfer and Exchange of
Certificates. (a) The Trustee or, if a Paying Agent has been appointed
hereunder pursuant to Section 4.05, the Paying Agent, shall cause to be kept
a Certificate Register in which, subject to such reasonable regulations as it
may prescribe, the Trustee shall provide for the registration of Certificates
and of transfers and exchanges of Certificates as herein provided. The
Components of the Class A-6 Certificates shall not be separately
transferrable.
(b) Upon surrender for registration of transfer of any Certificate
at any office or agency of the Trustee or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, maintained for such purpose,
the Depositor shall execute and the Trustee or if an Authenticating Agent is
appointed under Section 4.06, the Authenticating Agent shall authenticate and
deliver, in the name of the designated transferee or transferees, a
Certificate of a like Class and aggregate Percentage Interest and dated the
date of authentication by the Authenticating Agent.
(c) No transfer of a Class A-X, Class B-3, Class B-4 or Class B-5
Certificate shall be made unless such transfer is made pursuant to an
effective registration statement or otherwise in accordance with the
requirements under the Securities Act of 1933, as amended. If such a
transfer is to be made in reliance upon an exemption from said Act, (i) the
Depositor may require (except with respect to the initial transfer of a Class
B-3, Class B-4 or Class B-5 Certificate from Lehman Brothers Inc. and except
if the transferee executes a certificate substantially in the form of Exhibit
I hereto) a written opinion of independent counsel acceptable to and in form
and substance satisfactory to the Depositor that such transfer may be made
pursuant to an exemption, describing the applicable exemption and the basis
therefor, from said Act and laws or is being made pursuant to said Act and
laws, which opinion of counsel shall not be an expense of the Trust Fund, the
Trustee, the Depositor or the Servicer, and (ii) the Depositor shall require
the transferee to execute a certification substantially in the form of
Exhibit H or Exhibit I.
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(d) No transfer of a Subordinated Certificate shall be made to any
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of such plan or using the assets of such
plan. No transfer of a Subordinated Certificate shall be made unless the
Depositor shall have received either (i) a representation letter from the
transferee of such Certificate acceptable to and in form and substance
satisfactory to the Depositor, to the effect that (A) such transferee is not
an employee benefit plan subject to Section 406 of ERISA or Section 4975 of
the Code, nor a person acting on behalf of any such plan or using the assets
of such plan, or, alternatively, in the case of an insurance company, the
assets of any separate accounts to effect such acquisition, or alternatively,
(B) the source of funds for the purchase of such Certificate is an "insurance
company general account" within the meaning of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60"), 60 Fed. Reg. 35925 (July 12, 1995), and the
conditions set forth in Section I and III of PTCE 95-60 are satisfied with
respect to the purchase and holding of such Certificate, which representation
letter shall not be an expense of the Trustee, the Depositor or the Servicer,
or (ii) in the case of a Subordinated Certificate presented for registration
in the name of an employee benefit plan subject to ERISA or Section 4975 of
the Code (or comparable provisions of any subsequent enactments) or a trustee
of any such plan or any other Person who is using the assets of any such plan
to effect such acquisition, an Opinion of Counsel satisfactory to the
Depositor to the effect that the purchase or holding of such Subordinated
Certificate will not result in the assets of the Trust Fund being deemed to
be "plan assets" pursuant to the Department of Labor Plan Asset Regulations
set forth in 29 C.F.R. Section 2510.3-101 and subject to the fiduciary
responsibility provisions of ERISA or the prohibited transaction provisions
of the Code, will not constitute or result in a prohibited transaction within
the meaning of Section 406 or Section 407 of ERISA or Section 4975 of the
Code, and will not subject the Trustee, the Depositor or the Servicer to any
obligation in addition to those undertaken in this Agreement, which opinion
of counsel shall not be an expense of the Trustee, the Depositor or the
Servicer.
(e) At the option of a Certificateholder, a Certificate may be
exchanged for another Certificate or Certificates of authorized denominations
of a like Class, upon surrender of the Certificate to be exchanged at any
office or agency of the Trustee or, if a Paying Agent has been appointed
under Section 4.05, the Paying Agent, maintained for such purpose. Whenever
the Certificate is so surrendered for exchange, the Depositor shall execute
and the Authenticating Agent shall authenticate and deliver, the Certificate
which the Certificateholder making the exchange is entitled to receive.
Every Certificate presented or surrendered for transfer or exchange shall (if
so required by the Authenticating Agent) be duly endorsed by, or be
accompanied by a written instrument of transfer in the form satisfactory to
the Authenticating Agent duly executed by, the Holder thereof or his attorney
duly authorized in writing.
(f) No service charge shall be made to the Holder for any transfer
or exchange of a Certificate, but the Servicer may require payment by the
Certificateholders of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of
such Certificate.
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(g) All Certificates surrendered for transfer or exchange shall be
destroyed by the Trustee or, if a Paying Agent has been appointed under
Section 4.05, the Paying Agent, in accordance with the Trustee's or, if a
Paying Agent has been appointed under Section 4.05, the Paying Agent's,
standard procedures.
(h) At the option of the Holder of the Class A-R Certificate, the
Subsidiary Residual Interest and the Master Residual Interest may be severed
and represented by separate certificates; provided, however, that such
separate certification may not occur until the Trustee receives an Opinion of
Counsel to the effect that separate certification in the form and manner
proposed would not result in the imposition of federal tax upon either REMIC
Pool or cause either REMIC Pool to fail to qualify as a REMIC; and provided
further, that the provisions of Sections 4.02(c), 402(d), 402(i) and 7.02(b)
will apply to each such separate certificate as if the separate certificate
were a Class A-R Certificate. If, as evidenced b an Opinion of Counsel, it
is necessary to preserve the REMIC status of either REMIC Pool, the
Subsidiary Residual Interest and the Master Residual Interest shall be
severed and represented by separate Certificates.
(i) A Disqualified Organization is prohibited from acquiring
beneficial ownership of a Class A-R Certificate. Notwithstanding anything to
the contrary contained herein, unless and until the Servicer shall have
received an Opinion of Counsel, satisfactory to it in form and substance, to
the effect that the absence of the conditions contained in this Section
4.02(i) would not result in the imposition of federal tax upon either REMIC
Pool or cause either REMIC Pool to fail to qualify as a REMIC, no transfer,
sale or other disposition of the Class A-R Certificate (including for
purposes of this section any beneficial interest therein) may be made without
the express written consent of the Servicer, which consent is to be granted
by the Servicer only upon compliance with the requirements of this Section
and a copy of which written consent shall be supplied to the Servicer. As a
condition to granting its consent to a transfer of a Class A-R Certificate,
the Servicer shall require the proposed transferee of such Certificate
(including, in the case of the initial issuance of the Class A-R Certificate,
the initial Holder thereof) to execute a letter and affidavit substantially
in the form attached hereto as Exhibit K.
As a condition to the granting of the consent referred to in this
Section 4.02(i), prior to the transfer, sale, pledge, hypothecation or other
disposition of the Class A-R Certificate or any interest therein, the
Servicer shall require that the proposed transferee deliver to it (1) its
taxpayer identification number and state, under penalties of perjury that
such number is the social security or employee identification number, as the
case may be, of the transferee or provide an affidavit under penalties of
perjury stating that as of the date of such transfer such transferee is not
and has no intention of becoming a Disqualified Organization, (2) an
affidavit stating (i) that such transferee is not acquiring such Class A-R
Certificate as an agent, broker, nominee, or middleman for a Disqualified
Organization, (ii) if the Residual Interest is a "non-economic residual
interest" within the meaning of Treas. Reg. Section 1.860E-1(c)(2), (X) that
no purpose of the acquisition of the Class A-R Certificate is to avoid or
impede the assessment or collection of tax, (Y) that such transferee has
historically paid its debts as they came due and will continue to pay its
debts as they come due, and (Z) that such transferee represents that it
understands that, as the
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holder of the non-economic residual interest, the transferee may incur tax
liabilities in excess of any cash flows generated by the interest and that
the transferee intends to pay taxes associated with holding the residual
interest, and (iii) unless the Servicer consents to the transfer of the Class
A-R Certificate to a Person who is not a U.S. Person and who has furnished a
duly completed and effective Form 4224, that it is a U.S. Person, and (3) the
transferor deliver to the Servicer a written certification that as of the
date of such transfer it has no knowledge and no reason to know that the
affirmations described in clauses (1) and (2) were false. The Servicer shall
not grant the consent referred to in this Section 4.02(i) if it has actual
knowledge that any statement made in the affidavit issued pursuant to the
preceding sentence is not true. Notwithstanding any purported transfer, sale
or other disposition of the Class A-R Certificate to a Disqualified
Organization, such transfer, sale or other disposition shall be deemed to be
of no legal force or effect whatsoever and such Disqualified Organization
shall not be deemed to be a Class A-R Certificateholder for any purpose
hereunder, including, but not limited to, the receipt of distributions on
such Class A-R Certificate. If any purported transfer shall be in violation
of the provisions of this Section 4.02(i) then the prior holder of the Class
A-R Certificate shall, upon discovery that the transfer of such Class A-R
Certificate was not in fact permitted by this Section 4.02(i), be restored to
all rights as a Holder thereof retroactive to the date of the purported
transfer of such Class A-R Certificate. The Trustee and the Servicer shall
be under no liability to any Person for any registration or transfer of a
Class A-R Certificate that is not permitted by this Section 4.02(i) or for
making payments due on such Class A-R Certificate to the purported Holder
thereof or taking any other action with respect to such purported Holder
under the provisions of this Agreement so long as the transfer was not
registered under the written certification of the Servicer as described in
this Section 4.02(i). The prior Holder shall be entitled to recover from any
purported Holder of a Class A-R Certificate that was in fact not a permitted
purported transferee under this Section 4.02(i) at the time it became a
purported Holder all payments made to such purported Holder on such Class A-R
Certificate; provided that the Servicer shall not be responsible for such
recovery. Each Class A-R Certificateholder, by the acceptance of the Class
A-R Certificate, shall be deemed for all purposes to have consented to the
provisions of this Section 4.02(i) and to any amendment to this Agreement
deemed necessary by counsel of the Trustee or the Servicer to ensure that the
Class A-R Certificate is not transferred to a Disqualified Organization and
that any transfer of such Class A-R Certificate will not cause the imposition
of a tax upon either REMIC Pool or cause either REMIC Pool to fail to qualify
as a REMIC. The restrictions on transfer of the Class A-R Certificate will
cease to apply and be void upon receipt by the Servicer of an Opinion of
Counsel to the effect that such restrictions on transfer are no longer
necessary to avoid the risk of material federal taxation to either REMIC Pool
or prevent either REMIC Pool from qualifying as a REMIC.
(j) The Servicer shall make available upon written request to each
Holder and each proposed transferee of a Class A-X, Class B-3, Class B-4 or
Class B-5 Certificate such information as may be required to permit the
proposed transfer to be effected pursuant to Rule 144A under the Securities
Act of 1933.
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Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Trustee or, if a
Paying Agent has been appointed under Section 4.05, the Paying Agent, or the
Trustee or, if a Paying Agent has been appointed under Section 4.05, the
Paying Agent, receives evidence to its satisfaction of the destruction, loss
or theft of any Certificate, and (b) there is delivered to the Trustee or, if
a Paying Agent has been appointed under Section 4.05, the Paying Agent, such
security or indemnity as may be required by it to save it harmless, then, in
the absence of notice to the Trustee or, if a Paying Agent has been appointed
under Section 4.05, the Paying Agent, that such Certificate has been acquired
by a bona fide purchaser, the Trustee or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, shall 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 Class. Upon the
issuance of any new Certificate under this Section, the Trustee or, if a
Paying Agent has been appointed under Section 4.05, the Paying Agent, may
require of the Certificateholder 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 connected therewith. Any replacement Certificate of any
Class issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership of the Percentage Interest in the
distributions to which the Certificateholders of such Class are entitled, as
if originally issued, whether or not the mutilated, destroyed, lost or stolen
Certificate shall be found at any time, and such mutilated, destroyed, lost
or stolen Certificate shall be of no force or effect under this Agreement, to
the extent permitted by law.
Section 4.04. Persons Deemed Owners. Prior to due presentation of
a Certificate of any Class for registration of transfer, the Depositor, the
Servicer, the Paying Agent and the Trustee may treat the person in whose name
any Certificate is registered on the Record Date as the owner of such
Certificate and the Percentage Interest in the distributions to which the
Certificateholders of such Class are entitled on the relevant date as the
Holder of such Certificate and the Percentage Interest represented by such
Certificate for the purpose of receiving remittances pursuant to Section 6.01
and for all other purposes whatsoever, and neither the Depositor, the
Servicer nor the Trustee shall be affected by notice to the contrary.
Section 4.05. Appointment of Paying Agent; Certificate Account.
The Trustee may appoint a Paying Agent hereunder, which Paying Agent shall
not be Depositor, the Seller, or an affiliate of the Depositor or the Seller
unless such Paying Agent is the Corporate Trust Department of Chase. In the
event of any such appointment, on the Business Day prior to each Distribution
Date, the Servicer shall deposit or cause to be deposited with the Paying
Agent from funds on deposit in the Collection Account a sum up to the
Available Distribution Amount, such sum to be held in trust for the benefit
of Certificateholders in a segregated account (the "Certificate Account")
which shall be an Eligible Account in the name of "Citibank, N.A., as
Trustee, in trust for and for the benefit of the Certificateholders of
Multi-Class Mortgage Pass-Through Certificates, Chase Mortgage Finance
Corporation, Series 1998-S2 - Certificate Account". The Servicer shall cause
the Paying Agent to perform each of the obligations of the Paying Agent set
forth herein and shall be liable to the Trustee and the Certificateholders
for failure of the Paying Agent to perform such obligations. If the Paying
Agent is a party other than
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the Trustee, the Trustee shall have no liability in connection with the
performance or failure of performance of the Paying Agent. The Trustee
designates the Corporate Trust Department of Chase as the initial Paying
Agent. Only the Trustee may remove the Paying Agent, and may do so at will.
If, on any Distribution Date, the Paying Agent fails to distribute
to Certificateholders the amounts then on deposit in the Certificate Account
for the purposes specified herein, the Trustee shall be obligated promptly
upon its knowledge thereof to distribute such amounts to Certificateholders
in the manner and in such amounts based upon information provided by the
Servicer; provided that in no event shall the Trustee be obligated for
purposes of this paragraph to distribute to Certificateholders any amounts
other than those on deposit in the Certificate Account or expend any funds
not reimbursable pursuant to Section 10.05 hereof, except as otherwise
provided herein. Notwithstanding anything in this Agreement to the contrary,
the Trustee shall be liable to the Servicer and the Certificateholders only
for its negligence in connection with the withdrawal of funds from the
Certificate Account by the Trustee and the distribution of such funds by the
Trustee to Certificateholders pursuant to this paragraph.
The Servicer shall cause each Paying Agent other than the Trustee
to execute and deliver to the Servicer and the Trustee on the Closing Date
or, if subsequently appointed, on the date of appointment, a written
instrument executed by an officer of the Paying Agent in which such Paying
Agent shall agree with the Servicer and the Trustee that such Paying Agent
will hold all sums held by it for the payment to Certificateholders in trust
for the benefit of the Certificateholders entitled thereto until such sums
shall be paid to such Certificateholders.
Section 4.06. Authenticating Agents. (a) The Trustee may appoint
one or more Authenticating Agents (each, an "Authenticating Agent") which
shall be authorized to act on behalf of the Trustee in authenticating the
Certificates. Wherever reference is made in this Agreement to the
authentication of Certificates by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication on
behalf of the Trustee by an Authenticating Agent and a certificate of
authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent must be an entity organized and doing business
under the laws of the United States of America or of any state, having a
combined capital and surplus of at least $15,000,000, authorized under such
laws to do a trust business and subject to supervision or examination by
federal or state authorities. If the Authenticating Agent is a party other
than the Trustee, the Trustee shall have no liability in connection with the
performance or failure of performance of the Authenticating Agent. The
Trustee hereby appoints Chase as the initial Authenticating Agent.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which any Authenticating Agent
shall be a party, or any Person succeeding to the corporate agency business
of any Authenticating Agent, shall continue to be the
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Authenticating Agent without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least
30 days' advance written notice of resignation to the Trustee and the
Depositor. The Trustee may at any time terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and the Depositor. Upon receiving a notice of
resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible in accordance within the
provisions of this Section 4.06, the Trustee may appoint a successor
Authenticating Agent, shall give written notice of such appointment to the
Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section 4.06.
No Authenticating Agent shall have responsibility or liability for any action
taken by it as such at the direction of the Trustee. Any Authenticating
Agent shall be entitled to reasonable compensation for its services and any
such compensation shall be payable solely by the Trustee, without any right
of reimbursement from the Depositor, the Servicer or the Trust Fund.
[END OF ARTICLE IV]
ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01. Servicer to Service Mortgage Loans. The Servicer
shall service and administer the Mortgage Loans and shall have full power and
authority, acting alone or through Sub-Servicers as provided in Section 5.02,
to do any and all things which it may deem necessary or desirable in
connection with such servicing and administration, all in accordance with
Accepted Servicing Practices. Without limiting the generality of the
foregoing, the Servicer in its own name or in the name of a Sub-Servicer
shall, pursuant to a power of attorney granted hereby by the Trustee for such
purposes, when the Servicer or the Sub-Servicer, as the case may be, believes
it appropriate in its best judgment, to execute and deliver, on behalf of the
Certificateholders and the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and
all other comparable instruments, with respect to the Mortgage Loans and with
respect to the Mortgaged Properties; provided, however, that subject to the
provisions of this paragraph, the Servicer may allow a modification with
respect to a Mortgage Loan if the Servicer would take such action in the
ordinary course of its business if it were the owner of the Mortgage Loan.
The Servicer may agree to a modification of any Mortgage Loan (the "Relevant
Mortgage Loan") upon the request of the related Mortgagor, provided that (i)
the modification is in lieu of a refinancing and the Mortgage Rate on the
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Relevant Mortgage Loan, as modified, is approximately a prevailing market
rate of newly-originated mortgage loans having similar terms, (ii) the
aggregate of the adjusted bases of all Modified Mortgage Loans (including the
Relevant Mortgage Loans) plus the aggregate adjusted bases of any assets that
are not qualified mortgages or permitted investments under Section 860G(a) of
the Code that are assets of the Trust Fund established hereunder at all times
on any day is less than one percent of the aggregate of the adjusted bases of
all assets of the Trust Fund (including such Modified Mortgage Loans) on such
day, and (iii) the Servicer purchases the Relevant Mortgage Loan from the
Trust Fund as described below. Effective immediately after such
modification, and, in any event, on the same Business Day on which the
modification occurs, all right, title and interest of the Trustee in and to
the Modified Mortgage Loan shall automatically be deemed transferred and
assigned to the Servicer and all benefits and burdens of ownership thereof,
including without limitation the right to accrued interest thereon from and
including the date of modification and the risk of default thereon, shall
pass to the Servicer. To confirm such transfer and assignment, the Servicer,
as servicer hereunder, as soon as practicable shall execute an instrument of
assignment of the Modified Mortgage Loan without recourse in customary form
to the Servicer in its individual capacity. The Servicer shall deposit the
Purchase Price for any Modified Mortgage Loan in the Collection Account
pursuant to Section 5.08. Upon receipt by the Trustee of written
notification of any such deposit signed by a Servicing Officer, the Trustee
shall release to the Servicer the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as shall be necessary more fully to vest in the Servicer any
Modified Mortgage Loan previously transferred and assigned pursuant thereto.
The Servicer shall furnish to the Trustee for execution and
redelivery to the Servicer or, at the request of the Servicer, a
Sub-Servicer, such documents necessary or appropriate to enable the Servicer
to service and administer the Mortgage Loans and the Trustee shall not be
responsible for the Servicer's application thereof. The Servicer agrees to
remain eligible as either a FNMA or FHLMC seller/servicer, or both, for so
long as it is Servicer.
All Servicing Advances made by the Servicer in effecting the timely
payment of taxes, insurance and assessments on the properties subject to the
Mortgage Loans shall not, for the purpose of calculating monthly
distributions to Certificateholders, be added to the amount owing under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loan
so permit, and such Servicing Advances shall be recoverable by the Servicer
to the extent permitted by Sections 5.09 and 5.23.
Section 5.02. Sub-Servicing Agreements Between Servicer and
Sub-Servicers; Enforcement of Sub-Servicer's Obligations. (a) The Servicer
may enter into Sub-Servicing Agreements with Sub-Servicers for the servicing
and administration of all or part of the Mortgage Loans. References in this
Agreement to actions taken or to be taken by the Servicer in servicing the
Mortgage Loans include actions taken or to be taken by a Sub-Servicer on
behalf of the Servicer. Each Sub-Servicing Agreement will be upon such terms
and conditions as are not inconsistent with this Agreement and as the
Servicer and the Sub-Servicer have agreed. The
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Servicer shall notify the Trustee in writing promptly upon the appointment of
any Sub-Servicer. For purposes of this Agreement, the receipt by the
Sub-Servicer of any amount with respect to a Mortgage Loan (other than
amounts representing servicing compensation or reimbursement for an advance)
shall be treated as the receipt by the Servicer of such amount. The
Sub-Servicer shall deposit all such funds in an Eligible Account.
(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 related Sub-Servicing Agreement.
Such enforcement, including, without limitation, the legal prosecution of
claims, termination of Sub-Servicing Agreements as appropriate, and the
pursuit of other 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 but shall be
reimbursed therefor only (i) from a general recovery resulting from such
enforcement only to the extent, if any, that such recovery exceeds all
amounts due in respect of the related Mortgage Loans or (ii) from a specific
recovery of costs, expenses or attorneys' fees against the party against whom
such enforcement is directed.
Section 5.03. Successor Sub-Servicers. The Servicer shall be
entitled to terminate any Sub-Servicing Agreement that may exist in
accordance with the terms and conditions of such Sub-Servicing Agreement and
without any limitation by virtue of this Agreement.
Section 5.04. Liability of the Servicer. Notwithstanding any
Sub-Servicing Agreement, any of 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 liable to the Trustee and Certificateholders for
the servicing and administering of the Mortgage Loans in accordance with the
provisions of this Agreement without diminution of such obligation or
liability by virtue of such Sub-Servicing Agreements or arrangements or by
virtue of indemnification from the Sub-Servicer and to the same extent and
under the same terms and conditions as if the 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 and nothing contained in this Agreement shall be deemed to limit or
modify such indemnification.
Section 5.05. No Contractual Relationship Between Sub-Servicer and
Trustee or Certificateholders. Any Sub-Servicing Agreement that may be
entered into and any other transactions or services relating to the Mortgage
Loans involving a Sub-Servicer in its capacity as such and not as an
originator shall be deemed to be between the Sub-Servicer and the Servicer
alone, and the Trustee and Certificateholders shall not be deemed parties
thereto and shall have no claims, rights, obligations, duties or liabilities
with respect to the Sub-Servicer.
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Section 5.06. Termination of Sub-Servicing Agreement. If the
Servicer shall for any reason no longer be the Servicer hereunder (including
by reason of any Event of Default), the Servicer shall thereupon terminate
each Sub-Servicing Agreement that may have been entered into, and the
Trustee, its designee or the successor servicer and the Trustee shall not be
deemed to have assumed any of the Servicer's interest therein or to have
replaced the Servicer as a party to any such Sub-Servicing Agreement.
Section 5.07. Collection of Mortgage Loan Payments. Continuously
from the date hereof until the principal and interest on all Mortgage Loans
are paid in full, the Servicer will proceed diligently to collect all
payments due under each of the Mortgage Loans when the same shall become due
and payable and shall, to the extent such procedures shall be consistent with
this Agreement, follow such collection procedures as it follows with respect
to conventional mortgage loans held in its own portfolio. Any such
arrangements shall not diminish or otherwise affect the Servicer's obligation
to make Advances pursuant to Section 6.03.
Section 5.08. Establishment of Collection Account; Deposit in
Collection Account. With respect to all of the Mortgage Loans, the Servicer
shall segregate and hold all funds collected and received pursuant to a
Mortgage Loan separate and apart from any of its own funds and general assets
and shall establish and maintain one or more Collection Accounts for the
benefit of the Certificateholders (collectively, the "Collection Account")
which are Eligible Accounts, in the form of a trust account, in the name of
"Citibank, N.A., as Trustee, in trust for and for the benefit of the
Certificateholders of Multi-Class Mortgage Pass-Through Certificates, Chase
Mortgage Finance Corporation, Series 1998-S2 - Collection Account." Such
Collection Account shall be established with a commercial bank, a savings
bank or a savings and loan association. The Servicer may invest, or cause
the institution maintaining the Collection Account to invest, moneys in the
Collection Account in Eligible Investments, which shall mature not later than
the Business Day next preceding the Distribution Date next following the date
of such investment and shall not be sold or disposed of prior to its
maturity. All income and gain realized from any such investment shall be for
the benefit of the Servicer as additional compensation and shall be subject
to its withdrawal or order from time to time. The amount of any losses
incurred in respect of any such investments (to the extent not offset by
income from other such investments) shall be deposited in the Collection
Account by the Servicer out of its own funds immediately as realized;
provided, however, that if the Trustee becomes Servicer, the Trustee shall
not be required to deposit the amount of any loss incurred prior to it
becoming Servicer.
The Servicer shall deposit or cause to be deposited in the
Collection Account on a daily basis (and not later than the second Business
Day following receipt), and retain therein:
(i) All payments which were received after the Cut-off Date on
account of principal of the Mortgage Loans (other than the principal
portion of Monthly Payments due on or before the Cut-off Date), and all
Principal Prepayments collected on or after the Cut-off Date;
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(ii) All payments which were received after the Cut-off Date on
account of interest on the Mortgage Loans (net of the Servicing
Fee)(other than the interest portion of Monthly Payments due on or
before the Cut-off Date);
(iii) Net Liquidation Proceeds;
(iv) All Insurance Proceeds received by the Servicer under any
title, hazard or other insurance policy, including amounts required to
be deposited pursuant to Sections 5.16 and 5.20, other than proceeds to
be held in the Escrow Account or applied to the restoration or repair of
the Mortgaged Property or released to the Mortgagor in accordance with
the Servicer's normal servicing procedures or otherwise applied or held
as required by applicable law;
(v) All awards or settlements in respect of condemnation
proceedings affecting any Mortgaged Property which are not released to
the Mortgagor in accordance with the Servicer's normal servicing
procedures;
(vi) All Repurchase Proceeds;
(vii) All Advances made by the Servicer pursuant to Section
6.03;
(viii) All amounts representing revenues under the insurance
provided pursuant to Section 5.19 to the extent of any losses borne by
any Certificateholder;
(ix) All revenues from any Mortgaged Property acquired by the
Servicer by foreclosure or deed in lieu of foreclosure net of any
Servicing Advances with respect to such Mortgaged Property; and
(x) Any other amounts required to be deposited therein
pursuant to this Agreement.
The Servicer shall maintain accounting records on a loan-by-loan
basis with respect to the Collection Account. The Servicer shall give notice
to the Trustee and the Depositor and each Rating Agency of any change in the
location of the Collection Account, prior to the use thereof.
Notwithstanding anything to the contrary herein, no Monthly Payment or any
portion thereof shall be permitted to remain in the Collection Account for
more than 12 months. Any Monthly Payment or any portion thereof that has
remained in the Collection Account for 12 months shall be deemed a Principal
Prepayment and distributed to Certificateholders pursuant to the provisions
of this Agreement on the Distribution Date immediately following the end of
such 12 month period.
Section 5.09. Permitted Withdrawals from the Collection Account.
The Servicer may, from time to time, withdraw funds from the Collection
Account for the following purposes:
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(i) to reimburse itself for Advances made pursuant to Section
6.03 (including amounts to reimburse the related Sub-Servicer for advances
made pursuant to the applicable Sub-Servicing Agreement), the Servicer's
and the Sub-Servicer's right to receive reimbursement pursuant to this
subclause (i) being limited to amounts received on particular Mortgage
Loans which represent Late Collections (net of the Servicing Fees) with
respect to those particular Mortgage Loans;
(ii) to pay itself the Servicing Fee;
(iii) to reimburse itself for unreimbursed Servicing Advances,
or to pay the related Sub-Servicer any unreimbursed Servicing Advances,
the Servicer's right to receive reimbursement or make payments to the
Sub-Servicer pursuant to this subclause (iii) with respect to any
Mortgage Loan being limited to related Liquidation Proceeds, Insurance
Proceeds, and condemnation awards;
(iv) to reimburse itself (or the related Sub-Servicer) or
the Depositor for expenses incurred by and recoverable by or
reimbursable to it pursuant to Section 5.01 or 5.16;
(v) to reimburse itself (or the related Sub-Servicer) for any
Nonrecoverable Advances;
(vi) to pay to itself (or the related Sub-Servicer) income
earned on the investment of funds deposited in the Collection Account;
(vii) to make deposits into the Certificate Account in the
amounts and in the manner provided for herein;
(viii) to make payments to itself or others pursuant to any
provision of this Agreement, and to clear and terminate the Collection
Account upon the termination of this Agreement; and
(ix) to withdraw amounts deposited in error.
Section 5.10. Establishment of Escrow Account; Deposits in Escrow
Account. With respect to those Mortgage Loans on which the Servicer or any
Sub-Servicer collects Escrow Payments, if any, the Servicer shall, and shall
cause the Sub-Servicer to, segregate and hold all funds collected and
received pursuant to each such Mortgage Loan which constitute Escrow Payments
separate and apart from any of its own funds and general assets and shall
establish and maintain one or more Escrow Accounts, in the form of trust
accounts. Such Escrow Accounts shall be established with a commercial bank,
a mutual savings bank or a savings and loan association the deposits of which
are insured by the FDIC in a manner which shall provide maximum available
insurance thereunder, and which may be drawn on by the
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Servicer. The Servicer shall give notice to the Trustee of the location of
any Escrow Account, and of any change thereof, prior to the use thereof.
Nothing in this paragraph shall be deemed to require the Servicer to collect
Escrow Payments in the absence of a provision in the related Mortgage
requiring such collection.
The Servicer shall deposit, or cause to be deposited, in any Escrow
Account or Accounts on a daily basis, and retain therein, (i) all Escrow
Payments collected on account of any Mortgage Loans, for the purpose of
effecting timely payment of any such items as required under the terms of
this Agreement and (ii) all amounts representing proceeds of any hazard
insurance policy which are to be applied to the restoration or repair of any
Mortgaged Property. The Servicer shall make withdrawals therefrom only to
effect such payments as are required under this Agreement, and for such other
purposes as are set forth in Section 5.11. The Servicer shall be entitled to
retain any interest paid on funds deposited in the Escrow Account by the
depository institution other than interest on escrowed funds required by law
to be paid to the related Mortgagor and, to the extent required by law, the
Servicer shall pay interest on escrowed funds to the related Mortgagor
notwithstanding that the Escrow Account is non-interest-bearing or that
interest paid thereon is insufficient for such purposes.
Section 5.11. Permitted Withdrawals from Escrow Account.
Withdrawals from any Escrow Account or Accounts may be made by the Servicer
only (i) to effect timely payments of ground rents, taxes, assessments, water
rates, Standard Hazard Policy premiums, or other items constituting Escrow
Payments for the related Mortgage, (ii) to reimburse the Servicer for any
Servicing Advance made by the Servicer, with respect to a related Mortgage
Loan but only from amounts received on the related Mortgage Loan which
represent late payments or collections of Escrow Payments thereunder, (iii)
to refund to any Mortgagor any funds found to be in excess of the amounts
required under the terms of the related Mortgage Loan or under applicable
law, (iv) for application to restoration or repair of the property subject to
the related Mortgage, (v) to pay to the Servicer, or to the Mortgagor to the
extent required by law, any interest paid on the funds deposited in the
Escrow Account, (vi) to clear and terminate the Escrow Account on the
termination of this Agreement or (vii) to withdraw amounts deposited in
error.
Section 5.12. Payment of Taxes, Insurance and Other Charges. With
respect to each Mortgage Loan, the Servicer shall maintain, or cause to be
maintained, accurate records reflecting any delinquencies or nonpayments with
regard to taxes, assessments and Standard Hazard Policy premiums. The
Servicer assumes full responsibility for ensuring the payment of all such
bills and shall effect payments of all such bills irrespective of each
Mortgagor's faithful performance in the payment of same or the making of the
Escrow Payments and shall make advances from its own funds to effect such
payments.
Section 5.13. Transfer of Accounts. The Servicer may transfer the
Collection Account or Escrow Account to an Eligible Account maintained with a
different depository institution from time to time.
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Section 5.14. [Reserved].
Section 5.15. Maintenance of the Primary Insurance Policies. The
Servicer shall not take, or permit any Sub-Servicer to take, any action which
would result in non-coverage under any applicable Primary Insurance Policy of
any loss which, but for the actions of the Servicer or Sub-Servicer, would
have been covered thereunder. Except as otherwise required by applicable
law, to the extent coverage is available and until the Loan-to-Value Ratio of
the related Mortgage Loan is reduced to 80%, the Servicer shall keep or cause
to be kept in full force and effect each such Primary Insurance Policy in an
amount equal to the amount by which the unpaid principal balance of the
related Mortgage Loan exceeds 75% of the value (as described in the
definition of Loan-to-Value Ratio) of the related Mortgaged Property. The
Servicer shall not cancel or refuse to renew any such Primary Insurance
Policy or consent to any Sub-Servicer canceling or refusing to renew any such
Primary Insurance Policy applicable to a Mortgage Loan subserviced by it,
that is in effect at the date of the initial issuance of the Certificates and
is required to be kept in force hereunder unless the replacement Primary
Insurance Policy for such canceled or non-renewed policy is maintained with
an insurer whose claims-paying ability is rated at least as high as the
original insurer or is acceptable to each Rating Agency as confirmed in
writing by each such Rating Agency, unless otherwise required by law.
Section 5.16. Maintenance of Standard Hazard Policies. (a) The
Servicer shall cause to be maintained for each Mortgage Loan a Standard
Hazard Policy with extended coverage as is prudent in the area where the
Mortgaged Property is located in an amount which is equal to the greater of
(i) the lesser of (A) 100% of the maximum insurable value of the improvements
securing such Mortgage Loan or (B) the principal balance owing on such
Mortgage Loan, or (ii) such amount required to prevent the Mortgagor or
mortgagee from becoming a co-insurer. If the Mortgaged Property is in an
area identified at the time of origination in the Federal Register by the
Federal Emergency Management Agency as having special flood hazards (and such
flood insurance has been made available) the Servicer will cause to be
maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration with a generally
acceptable insurance carrier, in an amount representing coverage not less
than the least of (i) the outstanding Principal Balance of the Mortgage Loan,
(ii) the full insurable value or (iii) the maximum amount of insurance which
is available under the Flood Disaster Protection Act of 1973. The Servicer
shall also maintain on property acquired upon foreclosure, or by deed in lieu
of foreclosure, of any Mortgage Loan, fire and hazard insurance with extended
coverage in an amount which is not less than the lesser of (i) the
outstanding principal balance of the Mortgage Loan or (ii) the maximum
insurable value of the improvements which are a part of such property,
liability insurance, and, to the extent available, flood insurance in an
amount as provided above. Any amounts 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 property acquired in
liquidation of the Mortgage Loan, or released to the Mortgagor in accordance
with the Servicer's normal servicing procedures) shall be deposited, subject
to applicable law, in the Collection Account. It is understood and agreed
that no earthquake or other additional insurance need be required by the
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Servicer of any Mortgagor or maintained on property acquired in respect of a
Mortgage Loan, other than pursuant to such applicable laws and regulations as
shall at any time be in force and as shall require such additional insurance.
All such Standard Hazard Policies and other policies shall be endorsed with
standard mortgagee clauses with loss payable to the Servicer or its designee.
Any such Standard Hazard Policies or other policies may be in the form of
blanket policies; provided, however, that in the event of any claim arising
in connection with a hazard loss the Servicer shall be obligated, in the case
of blanket insurance policies, to deposit in the Collection Account any
amount not payable under such blanket policy because of a deductible clause
in such policy and not otherwise payable under an individual policy. The
Servicer shall not interfere with the Mortgagor's freedom of choice in
selecting either his insurance carrier or agent; provided, however, that the
Servicer shall not accept any such insurance policies from insurance
companies unless such companies are acceptable insurers in the discretion of
the Servicer.
(b) Any cost incurred by the Servicer in maintaining any of the
foregoing insurance shall not, for the purpose of calculating monthly
distributions to Certificateholders, be added to the amount owing under the
Mortgage Loan, notwithstanding that the terms of the Mortgage Loan so permit.
Such costs (other than the costs of maintaining a blanket hazard insurance
policy not attributable to a specific Mortgaged Property) shall be
recoverable by the Servicer from the Mortgagor or out of Insurance Proceeds
or Liquidation Proceeds or to the extent permitted by Section 5.09.
Section 5.17. [Reserved].
Section 5.18. [Reserved]
Section 5.19. Fidelity Bond and Errors and Omissions Insurance.
The Servicer shall maintain, at its own expense, a blanket fidelity bond and
an errors and omissions insurance policy, with broad coverage with
responsible companies on all officers, employees or other persons acting on
behalf of the Servicer in any capacity with regard to the Mortgage Loans to
handle funds, money, documents and papers relating to the Mortgage Loans.
Any such fidelity bond and errors and omissions insurance shall protect and
insure the Servicer against losses, including forgery, theft, embezzlement,
fraud, errors and omissions and negligent acts of such persons and shall be
maintained at a level acceptable to FNMA. No provision of this Section 5.19
requiring such fidelity bond and errors and omissions insurance shall
diminish or relieve the Servicer from its duties and obligations as set forth
in this Agreement. Upon request of the Trustee, the Servicer shall cause to
be delivered to the Trustee a certification evidencing coverage under such
fidelity bond and insurance policy. Promptly upon receipt of any notice from
the surety or the insurer that such fidelity bond or insurance policy has
been terminated or modified in a materially adverse manner, the Servicer
shall notify the Trustee and each Rating Agency of any such termination or
modification.
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Section 5.20. Collections under Insurance Policies; Enforcement of
Due-On-Sale Clauses; Assumption Agreements. (a) In connection with its
activities as administrator and servicer of the Mortgage Loans, the Servicer
agrees to present, on behalf of itself, the Trustee and the
Certificateholders, claims to the insurer under any Standard Hazard Policies
and, in this regard, to take such reasonable action as shall be necessary to
permit recovery under any insurance policies. Pursuant to Section 5.08, the
Servicer shall deposit Insurance Proceeds in the Collection Account.
(b) When any Mortgaged Property is conveyed by the Mortgagor, the
Servicer shall enforce any due-on-sale clause contained in any Mortgage Note
or Mortgage, to the extent permitted by such Mortgage Note or Mortgage,
applicable law and governmental regulations. Subject to the foregoing, the
Servicer is authorized to take or enter into an assumption or substitution
agreement from or with the Person to whom such property has been or is about
to be conveyed. In connection with such assumption or substitution, the
Servicer shall apply such underwriting standards and follow such practices
and procedures as shall be normal and usual and as it applies to mortgage
loans owned solely by it.
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 conveyance
by the Mortgagor of the Mortgaged Property or any assumption of a Mortgage
Loan by operation of law which the Servicer in good faith determines it may
be restricted by law from preventing, for any reason whatsoever.
(c) Subject to the Servicer's duty to enforce any due-on-sale
clause to the effect set forth in Section 5.20(b), in any case in which a
Mortgaged Property is to be conveyed to a Person by a Mortgagor, and such
Person is to enter into an assumption agreement or modification agreement or
supplement to the Mortgage Note or Mortgage, the Servicer shall so notify the
Trustee by forwarding to the Trustee the original copy of such assumption or
substitution agreement, which copy shall be added by the Trustee to the
related Mortgage File and shall, for all purposes, be considered a part of
such Mortgage File to the same extent as all other documents and instruments
constituting a part thereof. In connection with any such assumption,
modification agreement or substitution agreement, the interest rate of the
related Mortgage Note shall not be changed, the principal amount of the
Mortgage Note shall not be increased or decreased and the maturity of the
Mortgage Note shall not be extended, nor shall it be shortened by more than
one year. Any fee collected by the Servicer for entering into an assumption
or substitution of liability agreement with respect to such Mortgage Loan
shall be retained by the Servicer as additional servicing compensation.
Section 5.21. Income and Realization from Defaulted Mortgage
Loans. The Servicer, on behalf of the Trustee, shall foreclose upon or
otherwise comparably convert the ownership of Mortgaged Properties securing
such of the Mortgage Loans as come into and continue in default and as to
which no satisfactory arrangements can be made for collection of delinquent
payments pursuant to Section 5.07, shall manage, conserve, protect and
operate such
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Mortgaged Properties for the purposes of their prompt disposition and sale,
and shall dispose of such Mortgaged Properties on such terms and conditions
as it deems in the best interests of the Certificateholders. The Servicer
shall sell such property prior to the close of the third calendar year
beginning after the year in which such foreclosure or conversion occurs or
such longer period as would not prevent such Mortgaged Property from
constituting "foreclosure property" within the meaning of Section 860G(a)(8)
of the Code. In connection with such activities, the Servicer shall follow
such practices and procedures as it shall deem necessary or advisable, as
shall be normal and usual in its general mortgage servicing activities,
including its management of foreclosed properties for a temporary period as
contemplated herein. The foregoing is subject to the provisions of Section
5.28 of this Agreement and to the proviso that the Servicer shall not be
required to expend its own funds in connection with any management,
foreclosure or towards the restoration of any property unless it shall
determine that such management, restoration or foreclosure will increase the
Liquidation Proceeds of the Mortgage Loan to Certificateholders after
reimbursement to itself for such expenses (respecting which it shall have
priority for purposes of withdrawals from the Collection Account pursuant to
Section 5.09). The Servicer shall be permitted to earn income with respect
to any Mortgaged Properties, provided such income does not constitute "net
income from foreclosure property" within the meaning of Section 860G(c) of
the Code. The income earned from the management of such Mortgaged
Properties, net of reimbursement to the Servicer for expenses (including any
taxes) incurred in connection with such management, shall be applied to the
payment of principal of and interest on the related defaulted Mortgage Loans
(with interest accruing and principal amortizing as though such Mortgage
Loans were still current) and all such income shall be deemed, for all
purposes in this Agreement, to be payments on account of principal and
interest on the related Mortgage Notes and shall be deposited into the
Collection Account. To the extent the income received is in excess of the
amount attributable to amortizing principal and accrued interest at the Net
Mortgage Rate on the related Mortgage Loan, such excess shall be deposited in
the Collection Account.
The Servicer shall take into account the existence of any hazardous
substances, hazardous wastes or solid wastes, as such terms are defined in
the Comprehensive Environmental Response Compensation and Liability Act, the
Resources Conservation and Recovery Act of 1976, or other federal, state or
local environmental legislation, on a Mortgaged Property in determining
whether to foreclose upon or otherwise comparably convert the ownership of
such property. To the extent that the Servicer has actual knowledge of any
such substance or waste, it shall consult with the Trustee regarding the
appropriate course of action. The Servicer shall not institute foreclosure
actions with respect to a property containing substance or waste as described
above if it reasonably believes that such action would not be consistent with
its servicing standards, and in no event shall the Servicer manage, operate
or take any other action with respect thereto which the Servicer in good
faith believes will result in "clean-up" or other liability under applicable
law. The net income from the rental or sale of a REO Property shall be
deposited in the Collection Account within two (2) Business Days after
receipt thereof by the Servicer.
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The Servicer may enter into a special servicing agreement with an
unaffiliated holder of 100% Percentage Interest of a Class B Certificate or a
holder of a class of securities representing interests in such Class B
Certificate and/or other subordinate mortgage pass-through certificates, such
agreement to be (i) substantially in the form of Exhibit J hereto or (ii)
subject to each Rating Agency's acknowledgment that the ratings of the
Certificates in effect immediately prior to the entering into of such
agreement would not be qualified, downgraded or withdrawn and the
Certificates wold not be placed on credit review status (except for possible
upgrading) as a result of such agreement. Any such agreement may contain
provisions whereby such holder may instruct the Servicer to commence or delay
foreclosure proceedings with respect to delinquent Mortgage Loans and will
contain provisions for the deposit of cash by the holder that would be
available for distribution to Certificateholders if Liquidation Proceeds are
less than they otherwise may have been had the Servicer acted in accordance
with its normal procedures.
Section 5.22. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon becoming aware of the payment in full of any Mortgage Loan, or upon
the receipt by the Servicer of a notification that payment in full will be
made in a manner customary for such purposes, the Servicer shall immediately
notify the Trustee (if the Trustee holds the related Mortgage File) by a
certification (which certification shall include a statement to the effect
that all amounts received or to be received in connection with such payment
which are required to be deposited in the Collection Account pursuant to
Section 5.08 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, within five Business Days the Trustee shall
release the related Mortgage File to the Servicer and execute and deliver to
the Servicer the request for reconveyance, deed of reconveyance or release or
satisfaction of mortgage or such other instruments releasing the lien of the
Mortgage as have been provided by the Servicer to the Trustee, together with
the Mortgage Note with written evidence of cancellation thereon, and the
Trustee shall have no further responsibility with respect to said Mortgage
File. Upon any such payment in full, or the receipt of such notification,
the Servicer is authorized to procure from the Trustee under the deed of
trust which secured the Mortgage Note, if any, a deed of full reconveyance
covering the property encumbered by such deed of trust, which assignment of
deed of trust, except as otherwise provided by any applicable law, shall be
recorded by the Servicer in the appropriate land records in the jurisdiction
in which the assignment of deed of trust is recorded, or, as the case may be,
to procure from the Trustee an instrument of satisfaction or, if the
Mortgagor so requests, an assignment without recourse, which deed of
reconveyance, instrument of satisfaction or assignment shall be delivered by
the Servicer to the Person or Persons entitled thereto. No expenses incurred
in connection with any instrument of satisfaction or deed of reconveyance
shall be chargeable to the Collection Account or to the Trustee.
(b) From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan, the Servicer shall deliver to the Trustee a
certificate of a Servicing Officer requesting that possession of the Mortgage
File be released to the Servicer and certifying as to the reason for such
release and that such release will not invalidate any insurance coverage
provided in respect of the Mortgage Loan under any of the insurance policies
required by this
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Agreement. With such certificate, the Servicer shall require that the
Trustee release the Mortgage File, and, within five Business Days, the
Trustee shall deliver the Mortgage File or any document therein to the
Servicer. The Servicer shall cause each Mortgage File so released to be
returned to the Trustee when the need therefor by the Servicer no longer
exists, unless (i) the Mortgage Loan has been liquidated and the Net
Liquidation Proceeds relating to the Mortgage Loan have been deposited in the
Collection Account or (ii) the Mortgage File 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 to the Trustee a certificate
of a Servicing Officer in the form of Exhibit L hereto certifying as to the
name and address of the Person to which such Mortgage File was delivered and
the purpose or purposes of such delivery.
(c) Upon written request of the Servicer, the Trustee shall
execute and deliver to the Servicer any court pleadings, requests for
trustee's sale or other documents prepared by and delivered by the Servicer
to the Trustee 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. Together with
such documents or pleadings, the Servicer shall deliver to the Trustee a
certificate of a Servicing Officer requesting that such pleadings or
documents be executed by the Trustee and certifying as to the reason such
documents or pleadings are required and that the execution and delivery
thereof by the Trustee will not invalidate any insurance coverage under the
insurance policies required under this Agreement or invalidate or otherwise
affect the lien of the Mortgage, except for the termination of such a lien
upon completion of the foreclosure or trustee's sale.
Section 5.23. Servicing and Other Compensation. The Servicer, as
compensation for its activities hereunder, shall be entitled to receive, on
or prior to each Distribution Date, the amounts provided for as the Servicing
Fee and as reimbursement for Nonrecoverable Advances, Servicing Advances and
reimbursement for Advances, all as specified by Section 5.09. The amount of
compensation or reimbursement provided for shall be accounted for on a
Mortgage Loan-by-Mortgage Loan basis.
Additional servicing compensation in the form of assumption fees,
prepayment fees and late payment charges shall be retained by the Servicer,
to the extent permitted by applicable law. The Servicer shall be required to
pay all expenses incurred by it in connection with its servicing activities
hereunder (including the fees and expenses of the Trustee and any
Sub-Servicer) and shall not be entitled to reimbursement therefor except as
specifically provided in Sections 5.09 and 5.21.
Section 5.24. 1934 Act Reports. (a) The Servicer shall, on
behalf of the Trust, make all filings ("Periodic Reports") required to be
made by the Depositor or the Trust (other
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than the filings relating to the closing of this transaction) with respect to
the Class A Certificates, the Class M Certificates, the Class B-1
Certificates and the Class B-2 Certificates pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder.
(b) Within 30 days after the beginning of the first fiscal year
during which the Trust's obligation to file Periodic Reports pursuant to the
Exchange Act shall have been suspended, the Servicer shall prepare, or cause
to be prepared, a notice on Commission Form 15 ("Form 15") and is hereby
authorized to and shall execute such Form 15 on the Trust's behalf; provided,
however, that the Servicer shall be under no obligation to prepare such
notice if the number of Certificateholders exceeds 300. The Servicer shall
file any notice on Form 15 with the Commission in accordance with the
provisions of Rule 15d-6 under the Exchange Act.
Section 5.25. Annual Statement as to Compliance.
The Servicer will deliver to the Depositor and the Trustee on or
before April 15 of each year, beginning with April 15 in the year which
begins not less than three months after the Closing Date, an Officers'
Certificate stating, as to each signer thereof, that (i) a review of the
activities of the Servicer during the preceding calendar year and of
performance under this Agreement has been made under such officer's
supervision, (ii) to the best of such officer's knowledge, based on such
review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year, or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and
the nature and status thereof and (iii) to the best of such officer's
knowledge, each Sub-Servicer has fulfilled its obligations under its
Sub-Servicing Agreement in all material respects, or if there has been a
material default in the fulfillment of such obligations, specifying such
default known to such officers and the nature and status thereof. Copies of
such statement shall be provided to each Rating Agency by the Servicer.
Copies of such statement shall also be provided by the Servicer to any
Certificateholder upon request. If the Servicer shall fail to provide such
copies and a Responsible Officer of the Trustee is aware that the Servicer
has not so provided copies, the Trustee shall provide such copies at the
Servicer's expense if the Trustee has received such statement.
Section 5.26. Annual Independent Public Accountants' Servicing
Report. On or before April 15 of each year, beginning with April 15 in the
year which begins not less than three months after the Closing Date, the
Servicer at its expense shall cause a firm of independent public accountants
which is a member of the American Institute of Certified Public Accountants
to furnish a statement to the Depositor and the Trustee to the effect that
such firm has examined certain documents and records relating to the
servicing of the Mortgage Loans and that, on the basis of such examination
conducted substantially in compliance with the Uniform Single Audit Program
for Mortgage Bankers, such servicing has been conducted in compliance with
the manner of servicing set forth in pooling and servicing agreements
substantially similar to this Agreement, except for (i) such exceptions as
such firm shall believe to be immaterial and (ii)
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such other exceptions as shall be set forth in such statement. Copies of
such statement shall be provided to each Rating Agency, and, upon request, to
the Certificateholders, by the Servicer, or by the Trustee at the Servicer's
expense if the Trustee has received such statement and the Servicer shall
fail to provide such copies and the Trustee is aware that the Servicer has
not so provided copies.
Section 5.27. Access to Certain Documentation; Rights of the
Depositor in Respect of the Servicer. The Servicer shall provide access to
the Trustee, Certificateholders which are savings and loan associations,
banks or insurance companies or examiners of any federal or state banking or
insurance regulatory authority to the documentation regarding the Mortgage
Loans if so required by applicable regulations of any regulatory authority,
such access to be afforded subject to reimbursement for expenses without
charge but only upon reasonable request and during normal business hours at
the offices of the Servicer designated by it. The Depositor may, but is not
obligated to, enforce the obligations of the Servicer under this Agreement
and may, but is not obligated to, appoint and cause a designee to perform,
any defaulted obligations of the Servicer hereunder or exercise the rights of
the Servicer hereunder; provided that the Servicer shall not be relieved of
any of its obligations hereunder by virtue of the appointment of a designee
by the Depositor or its designee. The Depositor shall not assume any
responsibility or liability for any action or failure to take action by the
Servicer and is not obligated to supervise the performance of the Servicer
under this Agreement or otherwise.
Section 5.28. REMIC-Related Covenants. For as long as the Trust
Fund shall exist, the Servicer and the Trustee shall act in accordance
herewith to assure continuing treatment of each REMIC Pool as a REMIC. In
particular:
(a) The Servicer shall not create, or permit the creation of, any
"interests" in either REMIC Pool within the meaning of Section 860G(a) of the
Code other than the "regular interests" in each REMIC Pool designated as such
in Section 2.04(a) and the Residual Interest;
(b) As of all times as may be required by the Code, the Servicer
will ensure that substantially all of the assets of each REMIC Pool will
consist of "qualified mortgages" as defined in section 860G(a)(3) of the Code
and "permitted investments" as defined in section 860G(a)(5) of the Code.
The Servicer and the Trustee, upon the direction of the Servicer, also will
maintain records that are sufficient to indicate each REMIC Pool's compliance
with applicable requirements of the Code (and applicable Proposed, Temporary
or final Treasury Regulations) relating to the assets held by such REMIC
Pool. Further, the Servicer shall not permit and the Trustee shall not
accept the transfer or substitution of any Mortgage Loan other than pursuant
to Section 3.03, 5.01 or 5.21 of this Agreement, and the Servicer shall, in
any case, not permit substitution later than two years from the Closing Date
unless the Servicer and the Trustee have received an Opinion of Counsel,
which will not be an expense of the Trust Fund, that such transfer or
substitution would not adversely affect the REMIC status of either REMIC Pool
or would not otherwise be prohibited by this Agreement;
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(c) The Servicer shall ensure that neither REMIC Pool receives a
fee or other compensation for services and that neither REMIC Pool receives
any income from assets other than "qualified mortgages" within the meaning of
section 860G(a)(3) of the Code or "permitted investments" within the meaning
of section 860G(a)(5) of the Code, and shall take whatever action it deems
necessary to avoid any material tax imposed by the Code on either REMIC Pool;
(d) The Trustee shall not sell or permit the sale of all or any
portion of the Mortgage Loans or of any Eligible Investment unless such sale
is as a result of a repurchase of the Mortgage Loans pursuant to this
Agreement or the Trustee has received an Opinion of Counsel, which will not
be an expense of the Trust Fund or the Trustee, to the effect that such sale
(i) is pursuant to a "qualified liquidation" as defined in section 860F(a)(4)
of the Code and as described in Section 11.01 hereof, or (ii) would not be
treated as a "prohibited transaction" within the meaning of section
860F(a)(2) of the Code that results in the realization of a material amount
of gain or loss for federal income tax purposes;
(e) The Trustee shall not accept any contribution to either REMIC
Pool after the Startup Day without an Opinion of Counsel (which shall not be
an expense of the Trustee) that such contribution is included within the
exceptions provided in Section 860G(d)(2) of the Code and, therefore, will
not be subject to the tax imposed by Section 860G(d)(1) of the Code; and
(f) Notwithstanding anything to the contrary in this Agreement,
the Servicer and the Trustee, at the direction of the Servicer, shall take
any other action or refuse to take any action otherwise required (including
adjusting the Purchase Price for any Mortgage Loan) where the Servicer deems
such action or inaction reasonably necessary to ensure the REMIC status of
each REMIC Pool under the Code and applicable regulations or to avoid the
imposition of any material tax liability on either REMIC Pool that will
affect amounts distributable to the Certificateholders.
(g) In the event that any applicable federal, state or local tax,
including interest, penalties or assessments, additional amounts or additions
to tax, is imposed on either REMIC Pool, such tax shall be treated in the
same manner as a Realized Loss and shall be charged against amounts otherwise
distributable to the Holders of the Certificates, except as provided in the
last sentence of this Section 5.28 (g). The Trustee or, if a Paying Agent
has been appointed under Section 4.05, the Paying Agent shall withdraw from
the Collection Account sufficient funds to pay or provide for the payment of,
and to actually pay, such tax as is estimated to be legally owed by (but such
authorization shall not prevent the Trustee or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent from contesting, at the
expense of the Trust Fund (other than as a consequence of a breach of its
obligations under this Agreement), any such tax in appropriate proceedings,
and withholding payment of such tax, if permitted by law, pending the outcome
of such proceedings). The Trustee or, if a Paying Agent has been appointed
under Section 4.05, the Paying Agent is hereby authorized to and shall
segregate, into a separate non-interest bearing account, the net income from
any "prohibited transaction" under Code
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Section 860F(a), the amount of any taxable contribution to the Trust Fund
after the Startup Day that is subject to tax under Code Section 860G(d), and
35% of any estimated "net income from foreclosure property" under Section
860G(c) and use such income or amount, to the extent necessary, to pay such
tax. To the extent that any such tax is paid to the Internal Revenue Service
or applicable state or local tax authorities, the Trustee or a Paying Agent
has been appointed under Section 4.05, the Paying Agent shall retain an equal
amount from future amounts otherwise distributable to the Holder of the Class
A-R Certificate and shall distribute such retained amounts to the Holders of
the other Classes of Certificates, to the extent they remain outstanding,
until they are fully reimbursed for any amount of such taxes previously
charged to the then Holder of the Class R Certificate. Neither the Trustee
nor the Servicer shall be responsible for any taxes imposed on either REMIC
Pool except to the extent such taxes arise as a consequence of a breach of
their respective obligations under this Agreement.
[END OF ARTICLE V]
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ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01. Distributions. (a) On each Distribution Date, the
Paying Agent shall apply an amount equal to the Available Distribution Amount
in the following order of priority:
(i) to the Non-PO Class A Certificateholders, all distributable
amounts up to the sum of (A) the Aggregate Class A Interest Accrual
Amount and (B) the Aggregate Class A Interest Shortfall;
(ii) the balance, if any, of the Available Distribution Amount
shall be allocated, first, pro rata (in accordance with the maximum
amounts distributable in accordance with this clause (ii)) between (A)
the Non-PO Class A Certificateholders, the amounts distributable
pursuant to (b)(ii)(A) below, up to the Non-PO Class A Optimal Principal
Amount and (B) the Class A-P Certificateholders, the Class A-P Amount,
in accordance with (b)(ii)(B) below and second, to the Class A-P
Certificateholders, the Class A-P Shortfall Amount, in accordance with
(b)(iii) below;
(iii) to the Class M Certificateholders, the balance, if any,
of the Available Distribution Amount after making the distributions
provided for in paragraphs (i) and (ii) above, in accordance with, and
up to the amount calculated pursuant to, Section 6.01(c) below;
(iv) to the Class B Certificateholders, the balance, if any,
of the Available Distribution Amount after making the distributions
provided for in paragraphs (i) through (iii) above, in accordance with,
and up to the amounts calculated pursuant to, Section 6.01(d) below; and
(v) to the Class A-R Certificateholders the balance, if any, of
the Available Distribution Amount remaining after the distributions
provided for in paragraphs (i) through (iv) above.
(b) Amounts payable to the Class A Certificateholders on any
Distribution Date shall be distributed as follows:
(i) to the extent the amount available for distribution pursuant
to (a)(i) is sufficient:
(A) to the Class A-1 Certificateholders, (1) the Class A-1
Interest Accrual Amount plus (2) the Class A-1 Shortfall from the
preceding Distribution Date;
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(B) to the Class A-2 Certificateholders, (1) the Class
A-2 Interest Accrual Amount plus (2) the Class A-2 Shortfall from
the preceding Distribution Date;
(C) to the Class A-3 Certificateholders, (1) the Class A-3
Interest Accrual Amount plus (2) the Class A-3 Shortfall from the
preceding Distribution Date;
(D) to the Class A-4 Certificateholders, (1) the Class A-4
Interest Accrual Amount plus (2) the Class A-4 Shortfall from the
preceding Distribution Date;
(E) to the Class A-5 Certificateholders, (1) the Class A-5
Interest Accrual Amount plus (2) the Class A-5 Shortfall from the
preceding Distribution Date;
(F) to the Class A-6 Certificateholders, (1) the Class A-6
Interest Accrual Amount plus (2) the Class A-6 Shortfall from the
preceding Distribution Date;
(G) to the Class A-7 Certificateholders, (1) the Class A-7
Interest Accrual Amount plus (2) the Class A-7 Shortfall from the
preceding Distribution Date ; provided, however, that on each
Distribution Date prior to the Class A-7 Accretion Termination
Date, amounts calculated pursuant to this clause (G) will be added
to the Outstanding Certificate Principal Balance of the Class A-7
Certificates and distributed, as principal, in accordance with
Section 6.01(b)(i)(P);
(H) to the Class A-8 Certificateholders, (1) the Class
A-8 Interest Accrual Amount plus (2) the Class A-8 Shortfall from
the preceding Distribution Date; provided, however, that on each
Distribution Date prior to the Class A-8 Accretion Termination
Date, amounts calculated pursuant to this clause (H) will be added
to the Outstanding Certificate Principal Balance of the Class A-8
Certificates and distributed, as principal, in accordance with
Section 6.01(b)(i)(P);
(I) to the Class A-9 Certificateholders, (1) the Class A-9
Interest Accrual Amount plus (2) the Class A-9 Shortfall from the
preceding Distribution Date;
(J) to the Class A-10 Certificateholders, (1) the Class A-10
Interest Accrual Amount plus (2) the Class A-10 Shortfall from the
preceding Distribution Date; provided, however, that on each
Distribution Date prior to the Class A-10 Accretion Termination
Date, amounts calculated pursuant to this clause (J) will be
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added to the Outstanding Certificate Principal Balance of the
Class A-10 Certificates and distributed, as principal, in
accordance with Section 6.01(b)(i)(Q);
(K) to the Class A-11 Certificateholders, (1) the Class A-11
Interest Accrual Amount plus (2) the Class A-11 Shortfall from the
preceding Distribution Date; provided, however, that on each
Distribution Date prior to the Class A-11 Accretion Termination
Date, amounts calculated pursuant to this clause (K) will be added
to the Outstanding Certificate Principal Balance of the Class A-11
Certificates and distributed, as principal, in accordance with
Section 6.01(b)(i)(Q);
(L) to the Class A-12 Certificateholders, (1) the Class A-12
Interest Accrual Amount plus (2) the Class A-12 Shortfall from the
preceding Distribution Date; provided, however, that on each
Distribution Date prior to the Class A-12 Accretion Termination
Date, amounts calculated pursuant to this clause (L) will be added
to the Outstanding Certificate Principal Balance of the Class A-12
Certificates and distributed, as principal, in accordance with
Section 6.01(b)(i)(Q);
(M) to the Class A-14 Certificateholders, (1) the Class A-14
Interest Accrual Amount plus (2) the Class A-14 Shortfall from the
preceding Distribution Date;
(N) to the Class A-R Certificateholder, (1) the Class A-R
Interest Accrual Amount plus (2) the Class A-R Shortfall from the
preceding Distribution Date; and
(O) to the Class A-X Certificateholders, (1) the Class A-X
Interest Accrual Amount plus (2) the Class A-X Shortfall from the
preceding Distribution Date;
(P)(i) on each Distribution Date prior to the Class A-7
Accretion Termination Date, the sum of the Class A-7 Accrual Amount
and the Class A-8 Accrual Amount will be distributed as follows and
(ii) on each Distribution Date prior to the Class A-8 Accretion
Termination Date, the Class A-8 Accrual Amount will be distributed
as follows:
first, to the Class A-5 Certificates and Class A-6 Component One, pro
rata based upon their Outstanding Certificate Principal Balances, until
the aggregate Outstanding Certificate Principal Balance of such Class
and such Component has been reduced to the Schedule One Balance;
second, to Class A-6 Component Two until the Outstanding Certificate
Principal Balance of such Component has been reduced to its Schedule Two
Balance;
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third, to the Class A-5 Certificates and Class A-6 Component One until
the aggregate Outstanding Certificate Principal Balance of such Class
and such Component has been reduced to the Schedule Three Balance;
fourth, to the Class A-7 Certificates until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero;
fifth, to the Class A-5 Certificates and Class A-6 Component One until
the Outstanding Certificate Principal Balances of such Class and such
Component have been reduced to zero; and
sixth, to Class A-6 Component Two and the Class A-8 Certificates,
sequentially, in that order, until the Outstanding Certificate Principal
Balances of such Component and such Class have been reduced to zero.
(Q)(i) on each Distribution Date prior to the Class A-10
Accretion Termination Date, the sum of the Class A-10 Accrual Amount,
the Class A-11 Accrual Amount and the Class A-12 Accrual Amount will be
distributed as follows and (ii) on each Distribution Date prior to the
Class A-11 Accretion Termination Date, the sum of the Class A-11 Accrual
Amount and the Class A-12 Accrual Amount will be distributed as
follows and (iii) on each Distribution Date prior to the Class A-12
Accretion Termination Date, the Class A-12 Accrual Amount will be
distributed as follows:
first, to the Class A-9 Certificates until the Outstanding Certificate
Principal Balance of such Class has been reduced to its Schedule Four
Balance;
second, to the Class A-10 Certificates until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero;
third, to the Class A-9 Certificates until the Outstanding Certificate
Principal Balance of such Class has been reduced to its Schedule Five
Balance; and
fourth, to the Class A-11, Class A-9 and Class A-12 Certificates,
sequentially, in that order, until the Outstanding Certificate Principal
Balance of each such Class has been reduced to zero.
(ii) concurrently, (A) to the Non-PO Class A Certificateholders, up
to the Non-PO Class A Optimal Principal Amount, allocated among the
Non-PO Class A Certificates in accordance with the Non-PO Class A
Principal Payment Rules and (B) to the Class A-P Certificateholders, the
Class A-P Amount;
(iii) to the Class A-P Certificateholders, the Class A-P
Shortfall Amount; provided, however, that any amounts distributed
pursuant to this Section 6.01(b)(iii) shall
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not cause a further reduction in the Outstanding Certificate Principal
Balance of the Class A-P Certificates.
(iv) If the Available Distribution Amount is insufficient to make
the distributions set forth in (b)(i) above, the Paying Agent shall
distribute the Available Distribution Amount to the Non-PO Class A
Certificateholders pro rata in accordance with the amounts otherwise
distributable to them pursuant to (b)(i)(A)-(Q) above.
(c) Amounts payable on any Distribution Date to the Class M
Certificateholders shall be distributed up to an amount equal to (A) the
Class M Interest Accrual Amount plus (B) the Class M Shortfall from the
preceding Distribution Date plus (C) the portion of the Subordinated Optimal
Principal Amount allocable (pursuant to Section 6.01(e)) to the Class M
Certificates plus (D) any Carry-over Subordinated Principal Amounts with
respect to the Class M Certificates.
(d) Amounts payable on any Distribution Date to the Class B
Certificateholders pursuant to Section 6.01(a)(iv) shall be distributed in
the following priority:
(1) first, to the Class B-1 Certificateholders, up to an amount
equal to (A) the Class B-1 Interest Accrual Amount plus (B) the Class B-1
Shortfall from the preceding Distribution Date plus (C) the pro rata portion,
if any, of the Subordinated Optimal Principal Amount allocable to the Class
B-1 Certificates in accordance with Section 6.01(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-1 Certificates
plus (E) any portion of the Subordinated Optimal Principal Amount allocated
to the Class M Certificates in excess of the Outstanding Certificate
Principal Balance of such Class;
(2) second, to the Class B-2 Certificateholders, up to an amount
equal to (A) the Class B-2 Interest Accrual Amount plus (B) the Class B-2
Shortfall from the preceding Distribution Date plus (C) the pro rata portion,
if any, of the Subordinated Optimal Principal Amount allocable to the Class
B-2 Certificates in accordance with Section 6.01(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-2 Certificates
plus (E) any portion of the Subordinated Optimal Principal Amount allocated
to the Class B-1 Certificates in excess of the Outstanding Certificate
Principal Balance of such Class;
(3) third, to the Class B-3 Certificateholders, up to an amount
equal to (A) the Class B-3 Interest Accrual Amount plus (B) the Class B-3
Shortfall from the preceding Distribution Date plus (C) the pro rata portion,
if any, of the Subordinated Optimal Principal Amount allocable to the Class
B-3 Certificates in accordance with Section 6.01(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-3 Certificates
plus (E) any portion of the Subordinated Optimal Principal Amount allocated
to the Class B-2 Certificates in excess of the Outstanding Certificate
Principal Balance of such Class;
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(4) fourth, to the Class B-4 Certificateholders, up to an amount
equal to (A) the Class B-4 Interest Accrual Amount plus (B) the Class B-4
Shortfall from the preceding Distribution Date plus (C) the pro rata portion,
if any, of the Subordinated Optimal Principal Amount allocable to the Class
B-4 Certificates in accordance with Section 6.01(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-4 Certificates
plus (E) any portion of the Subordinated Optimal Principal Amount allocated
to the Class B-3 Certificates in excess of the Outstanding Certificate
Principal Balance of such Class; and
(5) fifth, to the Class B-5 Certificateholders, up to an amount
equal to (A) the Class B-5 Interest Accrual Amount plus (B) the Class B-5
Shortfall from the preceding Distribution Date plus (C) the pro rata portion,
if any, of the Subordinated Optimal Principal Amount allocable to the Class
B-5 Certificates in accordance with Section 6.01(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-5 Certificates
plus (E) any portion of the Subordinated Optimal Principal Amount allocated
to the Class B-4 Certificates in excess of the Outstanding Certificate
Principal Balance of such Class.
(e) On each Distribution Date, the Subordinated Optimal Principal
Amount shall be allocated among the Classes of Subordinated Certificates
entitled, pursuant to the next succeeding sentence, to an allocation of
principal on such Distribution Date, pro rata based upon the Outstanding
Certificate Principal Balances of all such Classes so entitled. With respect
to the Subordinated Certificates, on each Distribution Date, principal shall
be distributable to (1) any Class of Subordinated Certificates which has
current Credit Support (before giving effect to any distribution of principal
and any Realized Losses allocable on such Distribution Date) greater than or
equal to the Original Credit Support for such Class; (2) the Class having the
lowest numerical class designation of any outstanding Class of Subordinated
Certificates which does not meet the criteria in (1) above; and (3) the Class
B-5 Certificates if all other outstanding Classes of Subordinated
Certificates meet the criteria in (1) above or if no other Class of
Subordinated Certificates is outstanding; provided, however, that no Class of
Subordinated Certificates shall receive any distributions of principal if any
Class of Subordinated Certificates having a lower numerical class designation
than such Class fails to meet the criteria in (1) above. For purposes of
this paragraph, the Class M Certificates shall be deemed to have a lower
numerical class designation than each Class of Class B Certificates.
(f) The Servicer shall make all calculations necessary to make the
distributions described in this Section 6.01. All distributions made to
Certificateholders of any Class on each Distribution Date will be made to the
Certificateholders of the respective Class of record on the next preceding
Record Date, except that the final distribution with respect to each Class
shall be made as provided in the forms of Certificates. All distributions
made to Certificateholders shall be based on the Percentage Interest of the
Class represented by their respective Certificates, and shall be made either
by transfer in immediately available funds to the account of such Holder at a
bank or other financial or depository institution having appropriate
facilities therefor, if such Holder has so notified the Trustee or, if a
Paying Agent has been appointed under Section 4.05, the Paying Agent, in
writing at least 10 Business Days prior to the
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first Distribution Date for which distribution by wire transfer is to be made
and such Holder's Certificates of such Class in the aggregate evidence an
original denomination of not less than $5,000,000 or such Holder holds a 100%
Percentage Interest of such Class or, if not, by check mailed to the address
of the Person entitled thereto as it appears on the Certificate Register,
except that the final distribution in retirement of the Certificates will be
made only upon presentation and surrender of the Certificates at the office
specified in the final Distribution Notice. If on any Determination Date,
the Servicer determines that there are no Mortgage Loans outstanding and no
other funds or assets in the Trust Fund other than the funds in the
Certificate Account, the Trustee or if a Paying Agent has been appointed
under Section 4.05, the Paying Agent shall promptly send the final
distribution notice to each Certificateholder specifying the manner in which
the final distribution will be made.
Section 6.02. Statements to the Certificateholders. (a) Not
later than the second Business Day prior to each Distribution Date, the
Servicer shall send to the Paying Agent and the Trustee the relevant
information for purposes of this Section 6.02. Not later than each
Distribution Date, the Paying Agent shall send to each Certificateholder, the
Depositor, the Trustee (if other than the Paying Agent), the Servicer, any
co-trustee, and each Rating Agency a statement setting forth the following
information, after giving effect to the distributions to be made by the
Paying Agent pursuant to Section 6.01 on or as of such Distribution Date:
(i) with respect to each Class and Component of Certificates
the amount of such distribution to Holders of such Class allocable to
principal;
(ii) with respect to each Class of Certificates the amount of
such distribution to Holders of such Class allocable to interest;
(iii) the aggregate amount of any Principal Prepayments and
Repurchase Proceeds included in the distributions to Certificateholders;
(iv) the aggregate amount of any Advances by the Servicer
pursuant to Section 6.03;
(v) the number of Outstanding Mortgage Loans and the
Mortgage Pool Principal Balance as of the close of business as of the
end of the related Principal Prepayment Period;
(vi) the related amount of the Servicing Fees (as adjusted
pursuant to Section 6.05) retained or withdrawn from the Collection
Account by the Servicer;
(vii) the number and aggregate principal amounts of Mortgage
Loans (A) delinquent (1) one Monthly Payment, (2) two Monthly Payments
and (3) three or more Monthly Payments and (B) in foreclosure, in each
case, as of the end of the related Principal Prepayment Period;
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(viii) the number and the principal balance of Mortgage Loans
with respect to any real estate acquired through foreclosure or grant of
a deed in lieu of foreclosure;
(ix) the aggregate amount of all Advances recovered during the
related Due Period;
(x) with respect to the following Distribution Date, the Class A
Percentage, the Class M Percentage, the Class B Percentage, the Class A
Principal Balance, the Class M Principal Balance, the Class B Principal
Balance, the Non-PO Class A Percentage, the Non-PO Class A Prepayment
Percentage, and the level of Credit Support, if any, with respect to
each class of Subordinated Certificates;
(xi) the aggregate amount of Realized Losses during the
related Due Period and the aggregate amount of Realized Losses since the
Cut-off Date;
(xii) the allocation to each Class and Component of
Certificates of any Realized Losses during the related Due Period;
(xiii) the Outstanding Certificate Principal Balance of each
Class and Component of Certificates after giving effect to the
distributions to each Class on such Distribution Date; and
(xiv) the amount of any Compensating Interest Shortfalls on
such Distribution Date.
The Paying Agent's responsibility for sending the above information
to the Certificateholders is limited to the availability, timeliness and
accuracy of the information derived from the Servicer.
Upon reasonable advance notice in writing if required by federal
regulation, the Servicer will provide to each Certificateholder which is a
savings and loan association, bank or insurance company certain reports and
access during business hours to information and documentation regarding the
Mortgage Loans sufficient to permit such Certificateholder to comply with
applicable regulations of regulatory authorities with respect to investment
in the Certificates; provided, that the Servicer shall be entitled to be
reimbursed by each such Certificateholder for the Servicer's actual expenses
incurred in providing such reports and access.
(b) The Servicer shall cause to be prepared, and the Servicer or
the Trustee, as required by applicable law, shall file, any and all tax
returns, information statements or other filings required to be delivered to
Certificateholders and any governmental taxing authority pursuant to any
applicable law with respect to the Trust Fund and the transactions
contemplated hereby (the Servicer or the Trustee may, at its option but with
the consent of the other, which consent shall not be unreasonably withheld,
appoint an organization which regularly engages in
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the preparation and filing of such documents on a continuous basis for profit
and which represents itself to be expert in such matters) and the Servicer
shall maintain a record of the information necessary for the application of
Section 860E(e) of the Code and shall make such information available as
required by Section 860D(a)(6) of the Code; provided, however, that the
Servicer shall notify the Trustee of the Trustee's obligation to make any
such filings and that any fees of the organization appointed as provided
above shall be paid by the Servicer; and provided further that if an
organization is employed, as described above, to prepare and file any such
filings, neither the Trustee nor the Servicer shall be liable for any errors
by such organization.
Section 6.03. Advances by the Servicer. If, on any Determination
Date, the Servicer determines that any Monthly Payments due on the
immediately preceding Due Date have not been received, the Servicer shall,
unless it determines in its sole discretion that such amounts will not be
recoverable from Late Collections, Liquidation Proceeds or otherwise, make an
Advance on or before the related Distribution Date in an amount equal to the
amount of such delinquent Monthly Payments, after adjustment of any
delinquent interest payment for the Servicing Fee. For purposes of this
Section 6.03, the delinquent Monthly Payments referred to in the preceding
sentence shall be deemed to include an amount equal to the Monthly Payments
that would have been due on Mortgage Loans which have been foreclosed or
otherwise terminated and in connection with which the Servicer acquired and
continues to own the Mortgaged Properties on behalf of the
Certificateholders. If the Servicer makes an Advance, it shall on or prior
to such Distribution Date either (i) deposit in the Collection Account an
amount equal to such Advance, (ii) cause to be made an appropriate entry in
the records of the Collection Account that funds in such account being held
for future distribution or withdrawal have been, as permitted by this Section
6.03, used by the Servicer to make such Advance or (iii) make Advances in the
form of any combination of clauses (i) and (ii) aggregating the amount of
such Advance. Any funds being held in the Collection Account for future
distribution to Certificateholders and so used pursuant to clause (ii) or
(iii) above shall be replaced by the Servicer from its own funds by deposit
into the Collection Account on or before any subsequent Distribution Date to
the extent that funds in the Collection Account on such Distribution Date
shall be less than the amount of payments required to be made to
Certificateholders on such Distribution Date. Any such Advance shall be
included with the distribution to the Certificateholders on the related
Distribution Date. If the Servicer determines not to make a Nonrecoverable
Advance, it shall on the related Determination Date furnish to the Trustee,
any co-trustee, and each Rating Agency notice of such determination. The
Servicer shall be entitled to be reimbursed from the Collection Account for
all Advances and Nonrecoverable Advances as provided in Section 5.09.
Section 6.04. Allocation of Realized Losses. (a) Prior to each
Determination Date, the Servicer shall determine (i) the total amount of
Realized Losses, if any, incurred during the related Principal Prepayment
Period; (ii) whether and to what extent such Realized Losses constitute
Excess Losses; and (iii) the respective portions of such Realized Losses
allocable to interest and to principal.
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(b) The principal portion of any Realized Losses other than Excess
Losses shall be allocated as follows: first, to the Class B-5 Certificates
until the Outstanding Certificate Principal Balance of the Class B-5
Certificates has been reduced to zero; second, to the Class B-4 Certificates
until the Outstanding Certificate Principal Balance of the Class B-4
Certificates has been reduced to zero; third, to Class B-3 Certificates until
the Outstanding Certificate Principal Balance of the Class B-3 Certificates
has been reduced to zero; fourth, to the Class B-2 Certificates until the
Outstanding Certificate Principal Balance of the Class B-2 Certificates has
been reduced to zero; fifth, to the Class B-1 Certificates until the
Outstanding Certificate Principal Balance of the Class B-1 Certificates has
been reduced to zero; sixth, to the Class M Certificates until the
Outstanding Certificate Principal Balance of the Class M Certificates has
been reduced to zero; and seventh, to the Non-PO Class A Certificates on a
pro rata basis until the Outstanding Certificate Principal Balance of the
Non-PO Class A Certificates has been reduced to zero; provided, however, that
if a Realized Loss occurs with respect to a Discount Mortgage Loan (A) the
amount of such Realized Loss equal to the product of (i) the amount of such
Realized Loss and (ii) the PO Percentage with respect to such Discount
Mortgage Loan will be allocated to the Class A-P Certificates and (B) the
remainder of such Realized Loss will be allocated as described above. The
principal portion of any Excess Losses shall be allocated among all Classes
of Certificates on a pro rata basis; provided, however, that the applicable
PO Percentage of any Excess Losses on the Discount Mortgage Loans shall be
allocated to the Class A-P Certificates.
(c) As used herein, an allocation of a Realized Loss on a "pro
rata basis" among two or more specified Classes or Components of Certificates
means an allocation on a pro rata basis, among the various Classes or
Components so specified, to each such Class or Component of Certificates on
the basis of their Outstanding Certificate Principal Balances (or, in the
case of the Class A-7, Class A-8, Class A-10, Class A-11 or Class A-12
Certificates, the lesser of (i) their respective Original Certificate
Principal Balance and (ii) their respective Outstanding Certificate Principal
Balance) prior to giving effect to distributions to be made on such
Distribution Date. All Realized Losses and all other losses allocated to a
Class of Certificates hereunder will be allocated among the Certificates of
such Class in proportion to the Percentage Interests evidenced thereby. All
realized Losses and all other losses allocated to the Class A-6 Certificates
will be allocated between the Components of such Class on a pro rata basis.
(d) In the event that a recovery is made with respect to any
Realized Loss, the amount of such recovery shall be distributed on the next
Distribution Date first to the Class A Certificateholders, up to the amount
to which such Realized Loss was allocated to the Class A Certificateholders;
second to the Class M Certificateholders, up to the amount to which such
Realized Loss was allocated to the Class M Certificateholders; third to the
Class B-1 Certificateholders, up to the amount to which such Realized Loss
was allocated to the Class B-1 Certificateholders; fourth to the Class B-2
Certificateholders, up to the amount to which such Realized Loss was
allocated to the Class B-2 Certificateholders; fifth to the Class B-3
Certificateholders, up to the amount to which such Realized Loss was
allocated to the Class B-3
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Certificateholders; sixth to the Class B-4 Certificateholders, up to the
amount to which such Realized Loss was allocated to the Class B-4
Certificateholders; and seventh to the Class B-5 Certificateholders, up to
the amount to which such Realized Loss was allocated to the Class B-5
Certificateholders.
Section 6.05. Compensating Interest; Allocation of Certain
Interest Shortfalls.
(a) Upon a Principal Prepayment of a Mortgage Loan, the Servicer
shall deposit into the Collection Account from its own funds, as a reduction
of its servicing compensation hereunder, an amount, if any, by which the
amount of the interest that would otherwise accrue with respect to such
Mortgage Loan from the date of prepayment to the Due Date in the related Due
Period at the Net Mortgage Rate exceeds the amount of the interest (adjusted
to the Net Mortgage Rate) collected from the Mortgagor with respect to such
period (such amount, "Compensating Interest"); provided, however, that with
respect to any
Distribution Date, the Servicer's obligation to deposit any such amount is
limited to an amount equal to the product of (i) one-twelfth of 0.125% and
(ii) the aggregate Scheduled Principal Balance of the Mortgage loans with
respect to such Distribution Date.
(b) On any Distribution Date, the excess, if any, of (X)
Compensating Interest with respect to such Distribution Date over (Y) the
amount deposited in the Collection Account pursuant to (a) above for such
Distribution Date shall equal the "Compensating Interest Shortfall" with
respect to such Distribution Date. On any Distribution Date, the
Compensating Interest Shortfall shall be allocated pro rata among the
outstanding Classes of Class A, Class M and Class B Certificates based on the
amount of interest to which each such Class would otherwise be paid (or have
added to the Outstanding Certificate Principal Balance of such Class, in the
case of the Class A-7, Class A-8, Class A-10, Class A-11 or Class A-12
Certificates) on such Distribution Date had there been no such Compensating
Interest Shortfall.
(c) The interest portion of any Realized Losses ("Realized Loss
Interest Shortfall") shall be allocated as follows: first, to the Class B-5
Certificates, second, to the Class B-4 Certificates, third, to the Class B-3
Certificates, fourth, to the Class B-2 Certificates, fifth, to the Class B-1
Certificates, sixth, to the Class M Certificates, in each case until the
Outstanding Certificate Principal Balance thereof has been reduced to zero,
and seventh, the remainder thereof shall be allocated to the Non-PO Class A
Certificates pro rata among the outstanding Classes of Non-PO Class A
Certificates based on the amount of interest to which each such Class would
otherwise be paid (or have added to the Outstanding Certificate Principal
Balance of such Class, in the case of the Class A-7, Class A-8, Class A-10,
Class A-11 or Class A-12 Certificates) on such Distribution Date had there
been no such Realized Loss Interest Shortfall.
Section 6.06. Subordination. The rights of the Class B
Certificateholders to receive distributions in respect of the Class B
Certificates on any Distribution Date shall be subordinated to the rights of
the Class A and Class M Certificateholders to receive distributions in
respect of the Class A and Class M Certificates. The rights of the Class M
Certificateholders
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to receive distributions in respect of the Class M Certificates on any
Distribution Date shall be subordinated to the rights of the Class A
Certificateholders to receive distributions in respect of the Class A
Certificates. The rights of the Class B-1 Certificateholders to receive
distributions in respect of the Class B-1 Certificates on any Distribution
Date shall be subordinate to the rights of the Class A and Class M
Certificateholders to receive distributions in respect of such Class A and
Class M Certificates. Each Class of Class B Certificates (other than the
Class B-1 Certificates) is subordinated to the Class A Certificates, the
Class M Certificates and each Class of Class B Certificates having a lower
numerical class designation than such Class of Class B Certificates. The
rights of the Servicer, as servicer, to receive funds from the Collection
Account, pursuant to Section 5.09, on account of the Servicing Fee (except as
provided in Section 6.05) in respect of each Mortgage Loan, assumption fees,
late payment charges and other mortgagor charges, reimbursement of Advances
and expenses or otherwise, shall not be subordinated to the rights of the
Class A, Class M or Class B Certificateholders. Amounts held by the Servicer
or the Trustee for future distribution to the Class M or Class B
Certificateholders, including, without limitation, in the Collection Account,
shall not be distributed in respect of the Class M or Class B Certificates
except in accordance with the terms of this Agreement. The Class B
Certificateholders are deemed to have granted a security interest in such
amounts to the Class A and Class M Certificateholders to secure the rights of
the Class A and Class M Certificateholders to receive distributions in
priority over the Class B Certificateholders. The Class M Certificateholders
are deemed to have granted a security interest in such amounts to the Class A
Certificateholders to secure the rights of the Class A Certificateholders to
receive distributions in priority over the Class A Certificateholders.
[END OF ARTICLE VI]
ARTICLE VII
REPORTS TO BE PREPARED BY THE SERVICER
Section 7.01. Servicer Shall Provide Information as Reasonably
Required. The Servicer shall furnish to the Trustee, during the term of this
Agreement, such periodic, special, or other reports or information, whether
or not provided for herein, as shall be necessary, reasonable, or appropriate
in respect to the Trustee, or otherwise in respect to the purposes of this
Agreement, all such reports or information to be as provided by and in
accordance with such applicable instructions and directions as the Trustee
may reasonably require.
Section 7.02. Federal Information Returns and Reports to
Certificateholders.
(a) For Federal income tax purposes, the taxable year of the Trust
Fund shall be a calendar year and the Servicer shall maintain or cause the
maintenance of the books of the Trust Fund on the accrual method of
accounting.
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(b) The Servicer shall prepare and file or cause to be filed with
the Internal Revenue Service federal tax or information returns with respect
to the Trust Fund and the Certificates containing such information and at the
times and in the manner as may be required by the Code or applicable Treasury
regulations, and shall furnish to each Certificateholder at any time during
the calendar year for which such returns or reports are made such statements
or information at the times and in the manner as may be required thereby.
Without limitation on any other requirement of this Section 7.02, the
Servicer shall make available the information necessary for the application
of Section 860E(e) of the Code within 60 days of such request. With respect
to the Class A-R Certificate, the Servicer shall provide such information or
cause such information to be provided to (i) the Internal Revenue Service,
(ii) the transferor of a Class A-R Certificate to a Disqualified Organization
and (iii) a Pass-Thru Entity that holds a Class A-R Certificate with one or
more record holders that are Disqualified Organizations. The Servicer also
shall provide or cause to be provided promptly the above described
computation and information relating to the tax on transfers to Disqualified
Organizations or holdings by Pass-Thru Entities within 60 days after becoming
aware of the transfer to a Disqualified Organization or Pass-Thru Entity with
one or more Disqualified Organization owners, as the case may be. In
addition, except as may be provided in Treasury Regulations, any person
holding an interest in a Pass-Thru Entity as a nominee for another will, with
respect to such interest, be treated as a Pass-Thru Entity. In connection
with the foregoing, the Servicer shall provide the name, address and
telephone number of the person who can be contacted to obtain information
required to be reported to the holders of regular interests in each REMIC
Pool (the "REMIC Reporting Agent") as required by IRS Form 8811. The Trustee
hereby designates Regina Bergeland to serve as the REMIC Reporting Agent.
The Servicer shall indicate the election to treat the Trust Fund as a REMIC
(which election shall apply to the taxable period ending December 31, 1998
and each calendar year thereafter) in such manner as the Code or applicable
Treasury regulations may prescribe. The Trustee shall sign all tax
information returns filed pursuant to this Section 7.02 and any other returns
as may be required by the Code, and in doing so shall rely entirely upon, and
shall have no liability for information provided by, or calculations provided
by, the Servicer. The Servicer is hereby designated as the "tax matters
person" (within the meaning of Treas. Reg. Section 1.860F-4(d)) for each
REMIC Pool. Any Holder of a Class A-R Certificate will by acceptance thereof
so appoint the Servicer as agent and attorney-in-fact for the purpose of
acting as tax matters person. In the event that the Code or applicable
Treasury Regulations prohibit the Trustee from signing tax or information
returns or other statements, or the Servicer from acting as tax matters
person (as an agent or otherwise), the Trustee or the Servicer, as the case
may be, shall take whatever action that in its sole good faith judgment is
necessary for the proper filing of such information returns or for the
provision of a tax matters person, including designation of the Holder of a
Class A-R Certificate to sign such returns or act as tax matters person.
Each Holder of a Class A-R Certificate shall be bound by this Section 7.02 by
virtue of its acceptance of a Class A-R Certificate.
[END OF ARTICLE VII]
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ARTICLE VIII
THE DEPOSITOR AND THE SERVICER
Section 8.01. Indemnification; Third Party Claims. The Servicer
agrees to indemnify the Depositor and the Trustee and hold the Depositor and
the Trustee, their officers, directors, employees and agents harmless against
any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that the
Depositor or the Trustee may sustain in any way related to failure of the
Servicer to perform its duties and service the Mortgage Loans in compliance
with the terms of this Agreement; provided that no such indemnification shall
be required with respect to acts of a prior Servicer. The Servicer shall
immediately notify the Depositor and the Trustee if a claim is made by a
third party with respect to this Agreement or the Mortgage Loans, assume
(with the consent of the Depositor and the Trustee) the defense of any such
claim and pay all expenses in connection therewith, including counsel fees,
and promptly pay, discharge and satisfy any judgment or decree which may be
entered against it, the Depositor or the Trustee in respect of such claim.
This right to indemnification shall survive the termination of this
Agreement.
Section 8.02. Merger or Consolidation of the Depositor or the
Servicer. The Depositor and the Servicer will each keep in full effect its
existence, rights and franchises as a corporation, and will obtain and
preserve its qualification to do business as a foreign corporation in each
jurisdiction in which such qualification is or shall be necessary to protect
the validity and enforceability of this Agreement, the Certificates or any of
the Mortgage Loans and to perform its duties under this Agreement. The
Servicer will not sell all or substantially all of its assets without the
prior written consent of the Depositor and the Trustee.
Any person into which the Depositor or the Servicer may be merged
or consolidated, or to whom the Depositor or the Servicer has sold
substantially all of its assets, or any corporation resulting from any
merger, conversion or consolidation to which the Depositor or the Servicer
shall be a party, or any Person succeeding to the business of the Depositor
or the Servicer, shall be the successor of the Depositor or the Servicer
hereunder, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding; provided, however, that the successor or surviving Person to
the Servicer shall satisfy the requirements of Section 8.05 with respect to
the qualifications of a successor to the Servicer.
Notwithstanding anything else in this Section 8.02 and Section 8.04
to the contrary, the Servicer may assign its rights and delegate its duties
and obligations under this Agreement; provided that the Person accepting such
assignment or delegation shall be a Person which is qualified to service
mortgage loans on behalf of FNMA or FHLMC, is approved in advance in writing
by the Trustee and the Depositor, is willing to service the Mortgage Loans
and executes and delivers to the Depositor and the Trustee an agreement, in
form and substance reasonably satisfactory to the Depositor and the Trustee,
which contains an assumption by such
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Person of the due and punctual performance and observance of each covenant
and condition to be performed or observed by the Servicer under this
Agreement; provided further that each Rating Agency's rating of any of the
Classes of Certificates that have been rated in effect immediately prior to
such assignment and delegation will not be qualified or reduced or withdrawn
as a result of such assignment and delegation. In the case of any such
assignment and delegation, the Servicer shall be released from its
obligations as Servicer under this Agreement, except that the Servicer shall
remain liable for all liabilities and obligations incurred by it as Servicer
hereunder prior to the satisfaction of the conditions to such assignment and
delegation set forth in the next preceding sentence.
Section 8.03. Limitation on Liability of the Depositor, the
Servicer, the Trustee and Others. Neither the Depositor, the Servicer nor
any of the directors, officers, employees or agents of the Depositor or the
Servicer shall be under any liability to the Trustee or the
Certificateholders for any action taken, or for refraining from the taking of
any action, in good faith pursuant to this Agreement, or for errors in
judgment; provided, however, that this provision shall not protect the
Depositor or the Servicer against any breach of warranties or representations
made herein, or failure to perform its obligations in strict compliance with
this Agreement, or any liability which would otherwise be imposed by reason
of any breach of the terms and conditions of this Agreement. The Depositor,
the Servicer, the Trustee, and any director, officer, employee or agent of
the Depositor, the Servicer or the Trustee 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. Neither the Depositor, the
Trustee nor the Servicer shall be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its
respective duties to service the Mortgage Loans in accordance with this
Agreement and which in its opinion may cause it to incur any expenses or
liability; provided, however, that the Depositor, the Trustee or the Servicer
may in its discretion (and, in the case of the Depositor or the Servicer,
with the consent of the Trustee, which consent shall not be unreasonably
withheld) undertake any such action which it may deem necessary or desirable
with respect to this Agreement and the rights and duties of the parties
hereto. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities
payable from the Collection Account and the Depositor, the Servicer or the
Trustee shall be entitled to be reimbursed therefor out of the Collection
Account as provided by Section 4.06; provided that no such right of
reimbursement shall exist with respect to the Servicer when such claim
relates to the failure of the Servicer to service the Mortgage Loans in
strict compliance with the terms of this Agreement or to a breach of a
representation or warranty made by the Servicer hereunder.
Section 8.04. Depositor and Servicer Not to Resign. Except as
described in Section 8.02, neither the Depositor nor the Servicer shall
assign this Agreement or resign from the obligations and duties hereby
imposed on it except by mutual consent of the Depositor, the Servicer and all
of the Certificateholders unless the determination is made that its duties
hereunder are no longer permissible under applicable law and such incapacity
cannot be cured by the Depositor or the Servicer. Any such determination
permitting the resignation of the
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Depositor or the Servicer shall be evidenced by an opinion of independent
counsel to such effect delivered to the Trustee which opinion of counsel
shall be in form and substance acceptable to the Trustee. Upon any such
assignment or resignation, the Depositor or the Servicer, as appropriate,
shall send notice to all Certificateholders of the effect of such assignment
or resignation upon the then current rating of the Class of Certificates by
each Rating Agency whose rating on such Class is then in effect. No such
resignation shall become effective until a successor shall have assumed the
Depositor's or the Servicer's responsibilities and obligations hereunder in
the manner provided in Section 8.05. Any purported assignment or resignation
which does not comply with the requirements of this Section shall be of no
effect.
Section 8.05. Successor to the Servicer. In connection with the
termination of the Servicer's responsibilities and duties under this
Agreement pursuant to Section 8.04 or 9.01, the Trustee shall (i) succeed to
and assume all of the Servicer's responsibilities, rights, duties and
obligations as Servicer (but not in any other capacity) under this Agreement
(except that the Trustee shall not be obligated to make Advances if
prohibited by applicable law nor to effectuate repurchases or substitutions
of Mortgage Loans pursuant to Section 2.02 and except that the Trustee makes
no representations and warranties pursuant to Sections 3.01 and 3.02). Prior
to the termination of the Servicer's responsibilities, duties and liabilities
under this Agreement, the Trustee may appoint a successor having a net worth
of not less than $15,000,000 and which is a FNMA or FHLMC approved
seller/servicer in good standing and which shall succeed to all rights and
assume all of the responsibilities, duties and liabilities of the Servicer
under this Agreement, except as aforesaid, if the Trustee receives a letter
from each Rating Agency that such appointment would not result in a reduction
or withdrawal of the current rating of any Class of Certificates that is
rated by a Rating Agency. Any co-trustee appointed pursuant to Section 10.10
for purposes of this Section 8.05 shall have an obligation to make Advances
pursuant to Section 6.03 during such time as the Trustee is the Servicer,
which obligation shall be joint and several with that of the Trustee as
Servicer. If the Trustee has become the successor to the Servicer in
accordance with this Section or Section 9.03, then notwithstanding the above,
the Trustee may, if it shall be unwilling to so act, or shall, if it is
unable to so act, appoint, or petition a court of competent jurisdiction to
appoint, any established housing and home finance institution having a net
worth of not less than $15,000,000 and which is a FNMA or FHLMC approved
seller/servicer in good standing as the successor to the Servicer hereunder
in the assumption of all of the responsibilities, duties or liabilities of
the Servicer hereunder. In connection with any such appointment and
assumption, the Trustee may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such successor
shall agree or such court shall determine; provided, however, that no such
compensation shall be in excess of that permitted under this Agreement
without the consent of all of the Certificateholders. If the Servicer's
duties, responsibilities and liabilities under this Agreement should be
terminated pursuant to Section 8.02, 8.04 or 9.01, the Servicer shall
discharge such duties and responsibilities during the period from the date it
acquires knowledge of such termination until the effective date thereof with
the same degree of diligence and prudence which it is obligated to exercise
under this Agreement, and shall take no action whatsoever that might impair
or prejudice the rights or financial condition of its successor or the
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Trust Fund. The resignation or removal of the Servicer pursuant to Section
8.02, 8.04 or 9.01 shall not become effective until a successor shall be
appointed pursuant to this Section and shall in no event relieve the Servicer
of liability for breach of the representations and warranties made pursuant
to Section 3.03.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Servicer and to the Trustee an instrument
accepting such appointment, whereupon such successor shall become fully
vested with all the rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer, with like effect as if originally named as a
party to this Agreement and the Certificates. Any termination or resignation
of the Servicer or this Agreement pursuant to Section 8.02, 8.04, 9.01 or
11.01 shall not affect any claims that the Trustee may have against the
Servicer for events or actions taken or not taken by the Servicer arising
prior to any such termination or resignation.
The Servicer shall timely deliver to the successor the funds that
were, or were required to be, in the Collection Account and the Escrow
Account, if any, and all Mortgage Files and related documents, statements and
recordkeeping held by it hereunder and the Servicer shall account for all
funds and shall execute and deliver such instruments and do such other things
as may reasonably be required to more fully and definitely vest and confirm
in the successor all such rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer.
Upon a successor's acceptance of appointment as such, the Servicer
shall notify, in writing, the Trustee, the Certificateholders and each Rating
Agency of such appointment.
Section 8.06. Maintenance of Ratings. The Servicer shall
cooperate with the Depositor and take any action that may be reasonably
necessary to maintain the current rating or ratings on the Certificates.
[END OF ARTICLE VIII]
ARTICLE IX
DEFAULT
Section 9.01. Events of Default. If one or more of the following
Events of Default shall occur and be continuing, that is to say:
(i) any failure by the Servicer to remit any payment required to
be made or distributed under the terms of this Agreement which continues
unremedied for a period of three Business Days after the date upon which
written notice of such failure, requiring the same to be remedied, shall
have been given to the Servicer by the Trustee or the Depositor or to
the Servicer, the Trustee and the Depositor by the Holders of
Certificates
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of any Class evidencing, as to such Class, Percentage Interests aggregating
not less than 25%; or
(ii) a breach by the Servicer in a material respect of any
representation or warranty set forth in Section 3.02, or failure on the
part of the Servicer duly to observe or perform in any material respect
any other of the covenants or agreements on the part of the Servicer set
forth in this Agreement, which continues unremedied for a period of 60
days after the date on which written notice of such breach or failure,
requiring the same to be remedied, shall have been given to the Servicer
by the Trustee or the Depositor or to the Servicer, the Trustee and the
Depositor by the Holders of Certificates of any Class evidencing, as to
such Class, Percentage Interests aggregating not less than 25%; or
(iii) the Servicer shall notify the Trustee in writing that it
is unable to make an Advance required to be made in accordance with
Section 6.03; or;
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered
against the Servicer and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 days; or
(v) the Servicer shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or
relating to the Servicer or of or relating to all or substantially all
of the Servicer's property; or
(vi) 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.
then, and in each and every such case, so long as an Event of Default shall
not have been remedied, the Trustee shall notify the Certificateholders and
each Rating Agency of such Event of Default. The Trustee may, and at the
written direction of the Holders of Certificates evidencing Percentage
Interests aggregating more than 50%, shall, by notice in writing to the
Servicer, terminate all the rights and obligations of the Servicer under this
Agreement and in and to the Mortgage Loans and the proceeds thereof. On or
after the receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the
Mortgage Loans or otherwise, shall pass to and be vested in the successor
appointed pursuant to Section 8.05. Upon written request from the Trustee,
the Servicer shall prepare, execute and deliver, any and all documents and
other instruments, place in such successor's possession all Mortgage Files,
and do or accomplish all other acts or things necessary
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or appropriate to effect the purposes of such notice of termination, whether
to complete the transfer and endorsement or assignment of the Mortgage Loans
and related documents, or otherwise, at the Servicer's sole expense. The
Servicer agrees to cooperate with the Trustee and any co-trustee in effecting
the termination of the Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited
or should have been credited by the Servicer to the Collection Account or
Escrow Account or thereafter received with respect to the Mortgage Loans.
The Trustee will have no obligation to take any action or institute, conduct
or defend any litigation under this Agreement at the request, order or
direction of any of the Holders of Certificates unless such
Certificateholders have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which the Trustee may
incur.
Section 9.02. Waiver of Defaults. The Trustee may waive any
default by the Servicer in the performance of its obligations hereunder and
its consequences, except that a default in the making of any required
distribution on any of the Certificates may only be waived by the holders of
a majority of the Percentage Interests of the affected Certificateholders.
Upon any such waiver of a past default, such default shall cease to exist,
and any Event of Default 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 default or impair any right consequent thereon except
to the extent expressly so waived.
Section 9.03. Trustee to Act; Appointment of Successor. On and
after the time the Servicer receives a notice of termination pursuant to
Section 9.01, the Trustee or its appointed agent shall be the successor in
all respects to the Servicer to the extent provided in Section 8.05.
Section 9.04. Notification to Certificateholders and the Rating
Agencies.
(a) Upon any such termination pursuant to Section 9.01, the
Trustee shall give prompt written notice thereof to Certificateholders at
their respective addresses appearing in the Certificate Register and to each
Rating Agency.
(b) Within 60 days of a Responsible Officer of the Trustee having
received written notice of the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
[END OF ARTICLE IX]
ARTICLE X
CONCERNING THE TRUSTEE
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Section 10.01. Duties of Trustee. The Trustee, prior to the
occurrence of an Event of Default and after the curing of all Events of
Default which may have occurred, undertakes to, and is empowered to, perform
such duties and only such duties as are specifically set forth in this
Agreement. Any permissive right of the Trustee as enumerated in this
Agreement shall not be construed as a duty; provided that in case an Event of
Default has occurred (which has not been cured), the Trustee shall exercise
such of the rights and powers vested in it by this Agreement, and use the
same degree of care and skill in their exercise as a prudent man would
exercise or use under the circumstances in the conduct of such man's own
affairs.
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, and, if the Trustee is acting
as the successor Servicer pursuant to Section 8.05 or 9.03, its own willful
misconduct with respect to its servicing obligations; provided, however,
that:
(i) Prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default which may have occurred, the duties
and obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as are specifically set
forth in this Agreement, no implied covenants or obligations shall be
read into this Agreement against the Trustee and, in the absence of bad
faith on the part of the Trustee, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of judgment made
in good faith by a Responsible Officer or Responsible Officers of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts; and
(iii) The Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Certificateholders of any Class holding
Certificates which evidence, as to such Class, Percentage Interests
aggregating not less than 25% as to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee, under this
Agreement.
Section 10.02. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 10.01:
(a) The Trustee may 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,
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appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) The Trustee may consult with counsel, and any advice or
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 trusts or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the Certificateholders, pursuant
to the provisions of this Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred
therein or thereby; nothing contained herein shall, however, relieve the
Trustee of the obligation, upon the occurrence of an Event of Default
(which has not been cured), to exercise such of the rights and powers
vested in it by this Agreement, and to use the same degree of care and
skill in their exercise as a prudent man would exercise or use under the
circumstances in the conduct of such man's own affairs;
(d) Neither the Trustee nor any of its directors, officers,
employees or agents shall be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it or any of
them to be authorized or within the discretion or rights or powers
conferred upon the Trustee by this Agreement;
(e) Prior to the occurrence of an Event of Default hereunder and
after the curing of all Events of Default which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by Holders
of Certificates of any Class evidencing, as to such Class, Percentage
Interests aggregating not less than 25% (in the case of conflicting
requests by two or more 25% or greater Percentage Interests, the Trustee
shall act in accordance with the first such request); provided, however,
that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making
of such investigation is, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of
this Agreement, the Trustee may require reasonable indemnity against
such expense or liability as a condition to such proceeding. The
reasonable expense of every such examination shall be paid by the
Servicer, if an Event of Default shall have occurred and is continuing,
and otherwise by the Certificateholder requesting the investigation;
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(f) The Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents,
subcontractors or attorneys; and
(g) Nothing in this Agreement shall be construed to require the
Trustee (acting in its capacity as Trustee) to expend its own funds.
Section 10.03. Trustee Not Liable for Certificates or Mortgage
Loans. The recitals contained herein and in the Certificates (other than the
authentication of the Certificates by an authorized signatory of the Trustee)
shall be taken as the statements of the Depositor or the Servicer, as the
case may be, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations or warranties as to the validity or
sufficiency of this Agreement or of the Certificates (except that (except as
set forth herein) the Certificates shall be duly and validly executed and
authenticated by it) or of any Mortgage Loan or related document. The
Trustee shall not be accountable for the use or application by the Depositor
or the Servicer of any of the Certificates or of the proceeds of such
Certificates, or for the use or application of any funds paid to the
Depositor or the Servicer in respect of the Mortgage Loans or deposited in or
withdrawn from the Collection Account by the Depositor or the Servicer. The
Trustee, in its capacity as trustee hereunder, shall have no responsibility
for the timeliness or the amount of payments made by the Paying Agent to the
Certificateholders.
Section 10.04. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not Trustee.
Section 10.05. Fees and Expenses. The Servicer covenants and
agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to, reasonable compensation (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust) for all services rendered by it in the execution of the trust hereby
created and in the exercise and performance of any of the powers and duties
hereunder of the Trustee, and the Servicer will pay or reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of
this Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ,
and the expenses incurred by the Trustee in connection with the appointment
of an office or agency pursuant to Section 10.11) except any such expense,
disbursement or advance as may arise from its negligence or bad faith.
Notwithstanding anything to the contrary in this Agreement, this Section
shall survive the termination of this Agreement.
Section 10.06. Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times be an entity having its principal office in a
state and city acceptable to the Depositor and organized and doing business
under the laws of such state or the United States of America, authorized
under such laws to exercise corporate trust powers, having a combined capital
and
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surplus of at least $50,000,000 and subject to supervision or examination
by federal or state authority. The Trustee shall not be an affiliate of
either Seller or the Depositor. 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, the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most recent report
of condition so published. In case at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section
10.07.
Section 10.07. Resignation and Removal of the Trustee. The
Trustee, and any co-trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Depositor, the
Servicer and each Rating Agency. Upon receiving such notice of resignation,
the Depositor shall promptly appoint a successor trustee or co-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;
provided that such appointment does not result in a reduction or withdrawal
of the rating of any of the Classes of Certificates that have been rated. If
no successor trustee shall have been so appointed and have 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 10.06 and shall fail to resign
after written request therefor by the Depositor, or if at any time the
Trustee shall become incapable of acting, or shall be adjudged bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee
or of its property or affairs for the purpose of rehabilitation, conservation
or liquidation, then the Depositor may remove the Trustee and appoint a
successor trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the Trustee so removed and one copy to the
successor trustee.
The Holders of Certificates evidencing in the aggregate more than
50% of Percentage Interest may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in triplicate, signed
by such Holders or their attorneys-in-fact duly authorized, one complete set
of which instruments shall be delivered to the Depositor, one complete set to
the Trustee so removed and one complete set to the successor so appointed.
Any resignation or removal of the Trustee or any resignation of any
co-trustee and appointment of a successor trustee or co-trustee pursuant to
any of the provisions of this Section shall become effective upon acceptance
of appointment by the successor trustee as provided in Section 10.08, or upon
acceptance of appointment by a co-trustee, as applicable, unless with respect
to a co-trustee, the Trustee receives written notice from each Rating Agency
that the failure to appoint a successor co-trustee would not result in a
withdrawal or reduction of the rating of any of the Classes of Certificates
that have been rated, in which case the resignation of any co-trustee shall
be effective upon receipt of such written notice. Any co-trustee may not be
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removed unless the Depositor and the Trustee each receive written notice from
each Rating Agency that such removal would not result in a withdrawal or
reduction of the rating of any of the Classes of Certificates that have been
rated, in which case the removal of any co-trustee shall be effective upon
receipt of such written notice.
Section 10.08. Successor Trustee. Any successor trustee appointed
as provided in Section 10.07 shall execute, acknowledge and deliver to the
Depositor 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 shall
become effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if
originally named as trustee herein. The predecessor trustee shall deliver to
the successor trustee all Mortgage Files and related documents and statements
held by it hereunder, and the Depositor, the Servicer and the predecessor
trustee shall execute and deliver such instruments and do such other things
as may reasonably be required for more fully and certainly vesting and
confirming in the successor trustee all such rights, powers, duties and
obligations.
No successor trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 10.06. Prior to the appointment of
any successor trustee becoming effective, the Depositor shall have received
from each Rating Agency written confirmation that such appointment would not
result in a reduction of the rating of the Class A or Class M Certificates.
Upon acceptance of appointment by a successor trustee as provided
in this Section, the Depositor shall mail notice of the succession of such
trustee hereunder to all Holders of Certificates at their addresses as shown
in the Certificate Register, to the Servicer, any Sub-Servicer and to each
Rating Agency. If the Depositor fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor
trustee shall cause such notice to be mailed at the expense of the Depositor.
Section 10.09. 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 corporation shall be eligible under the provisions
of Section 10.06, without the execution or filing of any paper or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 10.10. Appointment of Co-Trustee or Separate Trustee. At
any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust Fund or property securing the
same may at the time be located, the Depositor and the Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or
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more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, of any part of the Trust Fund, and to vest in such
Person or Persons, in such capacity, such title to the Trust Fund, or any
part thereof, and, subject to the other provisions of this Section 10.10,
such powers, duties, obligations, rights and trusts as the Depositor and the
Trustee may consider necessary or desirable. If the Depositor shall not have
joined in such appointment within 15 days after the receipt by it of a
request so to do, or in case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment.
No co-trustee or separate trustee hereunder shall be required to meet the
terms of eligibility as a successor trustee under Section 10.06, hereunder,
and no notice to Holders of Certificates of the appointment of co-trustee(s)
or separate trustee(s) shall be required under Section 10.08 hereof.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 10.10, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly and severally, 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 Fund or any portion thereof in any such jurisdiction)
shall be exercised and performed by such separate trustee or co-trustee at
the direction of the Trustee.
Every instrument appointing any separate trustee or co-trustee
shall refer to this Agreement and the conditions of this Article X. Each
separate trustee and co-trustee, upon its acceptance of the trusts conferred,
shall be vested with the estates or property specified in its instrument of
appointment, either jointly with the Trustee or separately, as may be
provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the
conduct of, affecting the liability of, or affording protection to, the
Trustee. Every such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name.
Section 10.11. Appointment of Office or Agency. The Trustee may
appoint an office or agency in The City of New York where Certificates may be
surrendered for registration of transfer or exchange. The Trustee will
maintain an office at the address stated in Section 12.07 hereof where
notices and demands to or upon the Trustee in respect of the Certificates may
be served.
[END OF ARTICLE X]
ARTICLE XI
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TERMINATION
Section 11.01. Termination. The respective obligations and
responsibilities of the Depositor, the Servicer (except the duty to pay the
Trustee's fees and expenses and indemnification hereunder) and the Trustee
shall terminate upon (i) the later of the final payment or other liquidation
(or any Advance with respect thereto) of the last Mortgage Loan or the
disposition of all property acquired upon foreclosure or deed in lieu of
foreclosure of any Mortgage Loan and the remittance of all funds due
hereunder; or (ii) at the option of the Servicer, on any Distribution Date
which occurs in the month next following a Due Date on which the aggregate
unpaid Principal Balance of all Outstanding Mortgage Loans is less than 10%
of the aggregate unpaid Principal Balance of the Mortgage Loans on the
Cut-off Date, so long as the Servicer deposits or causes to be deposited in
the Collection Account during the Principal Prepayment Period related to such
Distribution Date (and provides notice to the Trustee of its intention to so
deposit on or before the 20th day of such Principal Prepayment Period) an
amount equal to the Purchase Price for each Outstanding Mortgage Loan, less
any unreimbursed Advances made with respect to any Mortgage Loan (which
amount shall offset completely any unreimbursed Advances for which the
Servicer is otherwise entitled to reimbursement), and, with respect to all
property acquired in respect of any Mortgage Loan remaining in the Trust
Fund, an amount equal to the fair market value of such property, as
determined by an appraisal to be conducted by an appraiser selected by the
Trustee, less unreimbursed Advances made with respect to any Mortgage Loan
with respect to which property has been acquired; provided, however, that in
no event shall the trust created hereby continue beyond the expiration of 21
years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St.
James's, living on the date hereof. Notwithstanding the foregoing, a
termination may be effected by the making of such optional repurchases only
if the termination of the Trust Fund satisfies the requirement for a
"qualified liquidation" of each REMIC Pool within the meaning of Section
860F(a)(4) of the Code and that the purchases of the Outstanding Mortgage
Loans pursuant to the Section 11.01 will not constitute "prohibited
transactions" within the meaning of Section 860F(a)(2) of the Code.
Notice of any termination, specifying the Distribution Date upon
which all Certificateholders may surrender their Certificates to the Trustee
or, if a Paying Agent has been appointed pursuant to Section 4.05, the Paying
Agent for payment and cancellation, shall be given promptly by the Trustee
or, if a Paying Agent has been appointed under Section 4.05, the Paying
Agent, (upon direction by the Depositor 10 days prior to the date such notice
is to be mailed) by signed letter to Certificateholders and each Rating
Agency mailed no later than the 25th day of the month preceding the month of
such final distribution specifying (i) the Distribution Date upon which final
payment on the Certificates will be made upon presentation and surrender of
Certificates at the office or agency of the Trustee or, if a Paying Agent has
been appointed under Section 4.05, the Paying Agent, therein designated and
(ii) that the Record Date otherwise applicable to such Distribution Date is
not applicable, payments being made only upon presentation and surrender of
the Certificates at the office or agency of the Trustee or, if a Paying Agent
has been appointed under Section 4.05, the Paying Agent, therein specified.
The Servicer
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shall indicate the date of adoption of the plan of qualified liquidation in a
statement attached to the final federal income tax return of each REMIC Pool.
After giving such notice, the Trustee or if a Paying Agent has been
appointed under Section 4.05, the Paying Agent shall not register the
transfer or exchange of any Certificates. If such notice is given in
connection with the Servicer's election to purchase the Outstanding Mortgage
Loans, the Servicer shall deposit in the Collection Account after adoption of
the plan during the applicable Principal Prepayment Period an amount equal to
the purchase price as determined as provided in clause (ii) of the preceding
paragraph and on the Distribution Date on which such termination is to occur,
Certificateholders will be entitled to the amount of such purchase price but
not amounts in excess thereof, all as provided herein. Upon presentation and
surrender of the Certificates, the Trustee or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, shall notify the Servicer and
the Servicer shall cause to be distributed to Certificateholders an amount
equal to (a) the amount otherwise distributable on such Distribution Date, if
not in connection with a purchase; or (b) if the Servicer elected to so
purchase, the purchase price determined as provided in clause (ii) of the
preceding paragraph. Following such final deposit the Trustee shall promptly
release to the Servicer the Mortgage Files for the remaining Mortgage Loans,
and the Trustee shall execute all assignments, endorsements and other
instruments necessary to effectuate such transfer and shall have no further
responsibility with regard to said Mortgage Files.
If all of the Certificateholders shall not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, at the close of the 90 day period
beginning after the written notice is given, each remaining Certificateholder
will be credited with an amount that would have been otherwise distributed to
such Certificateholder, and the Trustee or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, 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 three months after the second notice all the Certificates shall not
have been surrendered for cancellation, the Trustee or, if a Paying Agent has
been appointed under Section 4.05, the Paying Agent, shall appoint an agent
to take appropriate and reasonable steps to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain in the
Trust Fund hereunder.
[END OF ARTICLE XI]
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements,
provisions or terms shall be deemed severable from the
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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.
Section 12.02. Limitation on Rights of Certificateholders. The
death or incapacity of any Certificateholder shall not operate to terminate
this Agreement or the Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding-up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
No Certificateholder shall have any right to vote (except as
expressly provided herein) or in any manner otherwise control the operation
and management of the Trust Fund, or the obligations of the parties hereto,
nor shall anything herein set forth, or contained in the terms of the
Certificates, be construed so as to constitute the Certificateholders from
time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third 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 the Holders of
Certificates of any Class evidencing in the aggregate not less than 25% of
the Percentage Interests of such Class shall have made written request upon
the Trustee to institute such action, suit or proceeding in its own name as
Trustee hereunder (in the case of conflicting requests by two or more 25% or
greater Percentage Interests, the Trustee shall act in accordance with the
first such request) and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and liabilities to be
incurred therein or thereby, and the Trustee, for 60 days after its receipt
of such notice, request and offer of indemnity, shall have neglected or
refused to institute any such action, suit or proceeding; it being understood
and intended, and being expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more Holders of
Certificates of any Class 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 of such Class or any
other Class, or to obtain or seek to obtain priority over or preference to
any other such Holder, or to enforce any right under this Agreement, except
in the manner herein provided and for the common benefit of
Certificateholders of such Class or all Classes, as the case may be. For the
protection and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 12.03. Amendment. This Agreement may be amended from time
to time by the Depositor, the Servicer and the Trustee, without the consent
of any of the Certificateholders, to cure any ambiguity, to correct or
supplement any provisions herein which
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may be inconsistent with any other provisions herein, to ensure continuing
treatment of the Trust Fund as a REMIC to avoid or minimize the risk of
imposition of any tax on the Trust Fund pursuant to the Code, or to make any
other provisions with respect to matters or questions arising under this
Agreement which shall not be materially inconsistent with the provisions of
this Agreement, provided that such actions shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Certificateholder of a Class having an Outstanding Certificate Principal
Balance of greater than zero or cause the Trust Fund to fail to qualify as a
REMIC.
This Agreement may also be amended from time to time by the
Depositor, the Servicer and the Trustee with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66-2/3% of the
Percentage Interest of each Class of Certificates having an Outstanding
Certificate Principal Balance greater than zero and affected thereby 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 of such Class; provided, however, that
no such amendment shall (i) reduce in any manner the amount of, or delay the
timing of, payments received on Mortgage Loans which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) reduce the aforesaid percentage of Certificates of any
class the Holders of which are required to consent to any such amendment or
(iii) change the percentage specified in clause (ii) of the first paragraph
of Section 11.01, without the consent of the Holders of all Certificates of
such Class then outstanding.
Promptly after the execution of any such amendment the Trustee
shall furnish written notification of the substance of such amendment to each
Certificateholder and each Rating Agency.
It shall not be necessary for the consent of Certificateholders
under this Section 12.03 to approve the particular form of any proposed
amendment but it shall be sufficient if such consent shall approve the
substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
Section 12.04. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts
shall be deemed to be an original, and such counterparts shall constitute but
one and the same instrument.
Section 12.05. Duration of Agreement. This Agreement shall
continue in existence and effect until terminated as herein provided.
Section 12.06. Governing Law. 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.
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Section 12.07. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by first class or registered mail, postage
prepaid, to (i) in the case of the Depositor, Chase Mortgage Finance
Corporation, 300 Tice Boulevard, 3rd Floor North, Woodcliff Lake, New Jersey
07675, Attention: Structured Finance, (ii) in the case of the Servicer,
Chase Manhattan Mortgage Corporation, 3415 Vision Drive, Columbus, Ohio
43219, Attention: Investor Accounting (with a copy to Chase Manhattan
Mortgage Corporation, 343 Thornall Street, Edison, New Jersey 08837,
Attention: Structured Finance), (iii) in the case of the Trustee, Citibank,
N.A., 111 Wall Street, 5th Floor, Zone 1, New York, New York 10043,
Attention: Structured Finance Department, (iv) in the case of Moody's,
Moody's Investors Service, Inc., 99 Church Street, Fourth Floor, New York,
New York, 10007, (v) in the case of DCR, Duff & Phelps Credit Rating Co., 17
State Street, New York, New York 10004, and (vi) in the case of any of the
foregoing persons, such other addresses as may hereafter be furnished by any
such persons to the other parties to this Agreement.
[END OF ARTICLE XII]
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<PAGE>
IN WITNESS WHEREOF, the Depositor, the Servicer and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
CHASE MORTGAGE FINANCE
CORPORATION
By:
----------------------------------------
Name:
Title:
CHASE MANHATTAN MORTGAGE
CORPORATION
By:
----------------------------------------
Name:
Title:
CITIBANK, N.A.,
as Trustee
By:
----------------------------------------
Name:
Title:
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<PAGE>
EXHIBIT A
MORTGAGE LOAN SCHEDULE
Intentionally Omitted
<PAGE>
EXHIBIT B
CONTENTS OF MORTGAGE FILE
(A) (I) Original Mortgage Note (or a lost note affidavit
(including a copy of the original Mortgage Note)) or (II) original
Consolidation, Extension and Modification Agreement (or a lost note
affidavit (including a copy of the original Consolidation, Extension and
Modification Agreement), in either case endorsed, "Pay to the order of
Citibank, N.A., as trustee, without recourse."
(B) The original Mortgage (including all riders thereto) with
evidence of recording thereon, or a copy thereof certified by the
public recording office in which such mortgage has been recorded or, if
the original Mortgage has not been returned from the applicable public
recording office, a true certified copy, certified by the Seller, of the
original Mortgage together with a certificate of the Seller certifying
that the original Mortgage has been delivered for recording in the
appropriate public recording office of the jurisdiction in which the
Mortgaged Property is located.
(C) The original Assignment of Mortgage to "Citibank, N.A., as
trustee," which assignment shall be in form and substance acceptable for
recording, or a copy certified by the Seller as a true and correct copy
of the original Assignment which has been sent for recordation. Subject
to the foregoing, such assignments may, if permitted by law, be by
blanket assignments for Mortgage Loans covering Mortgaged Properties
situated within the same county. If the Assignment of Mortgage is in
blanket form, a copy of the Assignment of Mortgage shall be included in
the related individual Mortgage File.
(D) The original policy of title insurance, including riders and
endorsements thereto, or if the policy has not yet been issued, a
written commitment or interim binder or preliminary report of title
issued by the title insurance or escrow company.
(E) Originals of all recorded intervening Assignments of Mortgage,
or copies thereof, certified by the public recording office in which
such Assignments or Mortgage have been recorded showing a complete chain
of title from the originator to the Depositor, with evidence of
recording, thereon, or a copy thereof certified by the public recording
office in which such Assignment of Mortgage has been recorded or, if the
original Assignment of Mortgage has not been returned from the
applicable public recording office, a true certified copy, certified by
the Seller of the original Assignment of Mortgage together with a
certificate of the Seller certifying that the original Assignment of
Mortgage has been delivered for recording in the appropriate public
recording office of the jurisdiction in which the Mortgaged Property is
located.
<PAGE>
(F) Originals, or copies thereof certified by the public recording
office in which such documents have been recorded, of each assumption,
extension, modification, written assurance or substitution agreements,
if applicable, or if the original of such document has not been returned
from the applicable public recording office, a true certified copy,
certified by the Seller, of such original document together with
certificate of Seller certifying the original of such document has been
delivered for recording in the appropriate recording office of the
jurisdiction in which the Mortgaged Property is located.
(G) If the Mortgaged Note or Mortgage or any other material
document or instrument relating to the Mortgaged Loan has been signed by
a person on behalf of the Mortgagor, the original power of attorney or
other instrument that authorized and empowered such person to sign
bearing evidence that such instrument has been recorded, if so required
in the appropriate jurisdiction where the Mortgaged Property is located
(or, in lieu thereof, a duplicate or conformed copy of such instrument,
together with a certificate of receipt from the recording office,
certifying that such copy represents a true and complete copy of the
original and that such original has been or is currently submitted to be
recorded in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located), or if the
original power of attorney or other such instrument has been
delivered for recording in the appropriate public recording office of
the jurisdiction in which the Mortgaged Property is located.
<PAGE>
EXHIBIT C
FORMS OF CLASS A CERTIFICATES
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
MORTGAGE FINANCE CORPORATION, THE SERVICER OR THE TRUSTEE REFERRED TO BELOW
OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR
INTEREST REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED
OR INSURED BY CHASE MORTGAGE FINANCE CORPORATION, CHASE MANHATTAN MORTGAGE
CORPORATION, THE TRUSTEE OR BY ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL
AGENCY OR INSTRUMENTALITY.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE WILL BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN
BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL
BALANCE BY INQUIRY OF THE TRUSTEE.
CLASS A-1 CERTIFICATE
Number 98-S2-A-1-1 Original Denomination:
$
Cut-off Date: June 1, 1998 Final Scheduled Distribution
Date: June 25, 2028
First Distribution Date: Approximate Aggregate Original
July 27, 1998 Denomination of all Class A-1
Certificates:
Certificate Rate: ____% CUSIP: 161626 ___
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
Series 1998-S2
evidencing an interest in distributions allocable to the Class A-1
Certificates with respect to a pool of conventional one- to four-family
mortgage loans formed and sold by
CHASE MORTGAGE FINANCE CORPORATION
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation
("DTC"), to the Trustee for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.
This certifies that Cede & Co. is the registered owner of the
ownership interest evidenced by this Certificate (obtained by dividing the
Original Denomination of this Certificate by the aggregate Original
Denomination of all Class A-1 Certificates) in certain monthly distributions
with respect to a pool (the "Mortgage Pool") of conventional one- to
four-family adjustable rate mortgage loans (the "Mortgage Loans") formed and
sold by Chase Mortgage Finance Corporation (the "Depositor"), which Mortgage
Loans are secured by Mortgaged Properties, and in certain other property held
in trust for the benefit of the Certificate holders (collectively, the "Trust
Fund"). The Mortgage Loans are serviced by Chase Manhattan Mortgage
Corporation (in such capacity, the "Servicer"). The Trust Fund was created
pursuant to a Pooling and Servicing Agreement dated as of June 1, 1998 (the
"Agreement") among the Depositor, the Servicer and Citibank, N.A., as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth below. To the extent not defined herein, the capitalized terms
used herein shall have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-S2,
Class A (the "Class A Certificates") and is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound. Also issued under the Agreement are Certificates
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-S2,
Class M (the "Class M Certificates") and Class B (the "Class B
Certificates"). The Class A Certificates, the Class M Certificates and the
Class B Certificates are collectively referred to as the "Certificates".
Pursuant to the terms of the Agreement, the Trustee, or, if a
Paying Agent has been appointed under Section 4.05, the Paying Agent, will
distribute from funds in the Certificate
<PAGE>
Account the amount as described on the reverse hereof on the 25th day of each
month or, if such 25th day is not a Business Day, the Business Day
immediately following (the "Distribution Date"), commencing on July 27, 1998.
Such distributions will be made to the Person in whose name this Certificate
is registered at the close of business on the last Business Day of the month
preceding the month in which such payment is made, or if such last day is not
a Business Day, the Business Day immediately preceding such last day (the
"Record Date").
Distributions on this Certificate will be made either by check
mailed to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register, or by wire transfer in
immediately available funds to the account of such Holder at a bank or other
financial or depository institution having appropriate facilities therefor,
if such Holder has so notified the Paying Agent in writing at least 10
Business Days prior to the first Distribution Date for which distribution by
wire transfer is to be made, and such Holder's Certificates evidence an
aggregate original principal balance of not less than $5,000,000 or such
Holder holds a 100% Percentage Interest of such Class. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee, or, if a Paying Agent has been appointed under
Section 4.05, the Paying Agent, of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office of the
Trustee, or, if a Paying Agent has been appointed under Section 4.05, the
Paying Agent, or agency appointed by the Trustee, or, if a Paying Agent has
been appointed under Section 4.05, the Paying Agent, for the purpose and
specified in such notice of final distribution.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof which further provisions shall
for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Authenticating Agent, by manual signature, this Certificate shall not
be entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be
duly executed.
Dated: June 25, 1998 CHASE MORTGAGE FINANCE CORPORATION
By:
---------------------------------------------
(Authorized Officer)
Certificate of Authentication
This is one of the Class A-1 Certificates
referred to in the within-mentioned
Agreement.
THE CHASE MANHATTAN BANK
as Authenticating Agent
By:
-------------------------------
Authorized Signatory
<PAGE>
REVERSE OF CERTIFICATE
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-S2
This Certificate is one of a duly authorized issue of Certificates,
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-S2,
issued in seventeen Classes of Class A Certificates, one Class of Class M
Certificates and five Classes of Class B Certificates, each evidencing an
interest in certain distributions with respect to a pool of adjustable rate
one- to four-family first Mortgage Loans formed and sold by the Depositor and
certain other property conveyed by the Depositor to the Trustee. The Class A
Certificates evidence in the aggregate the Class A Percentage of
distributions relating to repayments of principal and interest on such
Mortgage Loans. The Class M Certificates evidence in the aggregate the Class
M Percentage of distributions relating to repayments of principal and
interest on such Mortgage Loans. The Class B Certificates evidence in the
aggregate the Class B Percentage of distributions relating to repayments of
principal and interest on such Mortgage Loans.
Following the initial issuance of the Certificates, the Principal
Balance of this Certificate will be different from the Original Denomination
shown above. Anyone acquiring this Certificate may ascertain its current
Principal Balance by inquiry of the Trustee.
The Holder, by its acceptance of this Certificate, agrees that it
will look solely to the Trust Fund and certain amounts resulting from credit
enhancements for payment hereunder and that the Trustee is not liable to the
Holders for any amount payable under this Certificate or the Agreement or,
except as expressly provided in the Agreement, subject to any liability under
the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Trustee will cause to be kept at its Corporate Trust Office in
New York, New York, or at the office of any Paying Agent appointed under the
Agreement, a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trustee (or any Paying Agent, as the
case may be) will provide for the registration of Certificates and of
transfers and exchanges of Certificates. Upon surrender for registration of
transfer of any Certificate at any office or agency of the Trustee, or, if a
Paying Agent has been appointed under Section 4.05, the Paying Agent,
maintained for such purpose, the Trustee, or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, will, subject to the
limitations set forth in the Agreement, authenticate and deliver, in the name
of the designated transferee or transferees, a Certificate of a like Class
and dated the date of authentication by the Authenticating Agent.
<PAGE>
No service charge will be made to the Holder for any transfer or
exchange of the Certificate, but the Trustee, or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate. Prior to due
presentation of a Certificate for registration of transfer, the Depositor,
the Servicer and the Trustee may treat the person in whose name any
Certificate is registered as the owner of such Certificate and the Percentage
Interest in the Trust Fund evidenced thereby for the purpose of receiving
distributions pursuant to the Agreement and for all other purposes
whatsoever, and neither the Depositor, the Servicer, the Paying Agent nor the
Trustee will be affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor,
the Servicer and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions therein which may be inconsistent with the other provisions
therein, to ensure continuing treatment of the Trust Fund as a REMIC, or to
make any other provisions with respect to matters or questions arising under
the Agreement which are not materially inconsistent with the provisions of
the Agreement, provided that such action does not, as evidenced by an Opinion
of Counsel, adversely affect in any material respect the interests of any
Certificateholder.
The Agreement may also be amended from time to time by the
Depositor, the Servicer and the Trustee with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66-2/3% of the
Percentage Interests of each Class of Certificates affected thereby for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Agreement or of modifying in any manner the
rights of the Holders of Certificates of such Class; provided, however, that
no such amendment may (i) reduce in any manner the amount of, or delay the
timing of, payments received on Mortgage Loans which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) reduce the aforesaid percentage of Certificates of any
Class the Holders of which are required to consent to any such amendment or
(iii) change the percentage specified in clause (ii) of the first paragraph
of Section 11.01 of the Agreement, without the consent of the Holders of all
Certificates of such Class then outstanding.
The respective obligations and responsibilities of the Depositor,
the Servicer and the Trustee under the Agreement will terminate upon (i) the
later of the final payment or other liquidation (or any Advance with respect
thereto) of the last Mortgage Loan or the disposition of all property
acquired upon the foreclosure or deed in lieu of foreclosure of any Mortgage
Loan and the remittance of all funds due thereunder; or (ii) at the option of
the Servicer, on any Distribution Date which occurs in the month following a
Due Date on which the aggregate unpaid Principal Balance of the Outstanding
Mortgage Loans is less than 10% of the aggregate unpaid Principal Balance of
the Mortgage Loans on the Cut-off Date, so long as the Servicer deposits or
causes to be deposited in the Certificate Account during the Principal
Prepayment Period related to such Distribution Date an amount equal to the
Purchase Price for each Mortgage Loan, less any unreimbursed Advances made
with respect to any Mortgage Loan, and with respect to all property acquired
in respect of any Mortgage Loan remaining in the Trust Fund, an amount equal
to the fair market value of such property, as determined by an appraisal to
<PAGE>
be conducted by an appraiser selected by the Trustee, less unreimbursed
Advances made with respect to the Mortgage Loan with respect to which
property has been acquired; provided, however, that in no event shall the
trust created hereby continue beyond the earlier of (i) 32 years after the
Closing Date and (ii) the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late ambassador of the
United States to the Court of St. James's, living on the date hereof.
<PAGE>
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF
ASSIGNEE)
- -----------------------------------
- -----------------------------------------------------------
(Please Print or Type Name and Address of Assignee)
- -----------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby does
irrevocably constitute and appoint
__________________________________________________ Attorney to transfer the
within Certificate on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated:
(Signature guaranty)
---------------------------------
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the
face of the within Certificate in every
particular, without alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
<PAGE>
EXHIBIT D
FORM OF CLASS M CERTIFICATE
THIS CLASS M CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE EITHER (A) IS NOT AN EMPLOYEE
BENEFIT PLAN (A "PLAN") WITHIN THE MEANING OF SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), AND IS NOT
DIRECTLY OR INDIRECTLY PURCHASING ANY CERTIFICATE ON BEHALF OF, AS INVESTMENT
MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF OR WITH ASSETS OF A PLAN OR,
IN THE CASE OF AN INSURANCE COMPANY, THE ASSETS OF ANY SEPARATE ACCOUNTS TO
EFFECT SUCH ACQUISITION OR (B) THE SOURCE OF FUNDS FOR THE PURCHASE OF THE
CERTIFICATES IS AN "INSURANCE COMPANY GENERAL ACCOUNT" WITHIN THE MEANING OF
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"), 60 FED. REG.
35925 (JULY 12, 1995), AND THE CONDITIONS SET FORTH IN SECTION I AND SECTION
III OF PTCE 95-60 ARE SATISFIED WITH RESPECT TO THE PURCHASE AND HOLDING OF
THE CERTIFICATES, OR (ii) IF THIS CERTIFICATE IS PRESENTED FOR REGISTRATION
IN THE NAME OF A PLAN SUBJECT TO TITLE I OF ERISA, OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS), OR A TRUSTEE OF ANY SUCH PLAN, OR
ANY OTHER PERSON WHO IS USING THE ASSETS OF ANY SUCH PLAN TO EFFECT SUCH
ACQUISITION, AN OPINION OF COUNSEL TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF THIS CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" PURSUANT TO THE DEPARTMENT OF LABOR PLAN ASSET
REGULATIONS SET FORTH IN 29 C.F.R. Section 2510.3-101 AND TO BE SUBJECT TO
THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR THE PROHIBITED
TRANSACTION PROVISIONS OF THE CODE, WILL NOT CONSTITUTE OR RESULT IN A
PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION 406 OR SECTION 407 OF
ERISA OR SECTION 4975 OF THE CODE, AND WILL NOT SUBJECT THE TRUSTEE, THE
<PAGE>
SERVICER, THE COMPANY OR ANY OF THEIR AFFILIATES TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA OR SECTION 4975
OF THE CODE) RELATING TO THE CERTIFICATES.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
MORTGAGE FINANCE CORPORATION, THE SERVICER OR THE TRUSTEE REFERRED TO BELOW
OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR
INTEREST REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED
OR INSURED BY CHASE MORTGAGE FINANCE CORPORATION, CHASE MANHATTAN MORTGAGE
CORPORATION, THE TRUSTEE OR BY ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL
AGENCY OR INSTRUMENTALITY.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE WILL BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN
BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS PRINCIPAL BALANCE
AMOUNT BY INQUIRY OF THE TRUSTEE.
CLASS M CERTIFICATE
Number 98-S2-M-1 Original Denomination
$
Cut-off Date: June 1, 1998 Final Scheduled Distribution
Date: June 25, 2028
First Distribution Date: Approximate Aggregate Original
July 27, 1998 Denomination of all Class M
Certificates: $
Certificate Rate: ____% CUSIP: 161626 ___
<PAGE>
MORTGAGE PASS-THROUGH CERTIFICATE
Series 1998-S2
evidencing an interest in distributions allocable to the Class M Certificates
with respect to a pool of conventional one- to four-family mortgage loans
formed and sold by
CHASE MORTGAGE FINANCE CORPORATION
This certifies that TFINN & CO. is the registered owner of the
ownership interest evidenced by this Certificate (obtained by dividing the
Original Denomination of this Certificate by the aggregate Original
Denomination of all Class M Certificates) in certain monthly distributions
with respect to a pool (the "Mortgage Pool") of conventional one- to
four-family adjustable rate mortgage loans (the "Mortgage Loans") formed and
sold by Chase Mortgage Finance Corporation (the "Depositor"), which Mortgage
Loans are secured by Mortgaged Properties, and in certain other property held
in trust for the benefit of the Certificate holders (collectively, the "Trust
Fund"). The Mortgage Loans are serviced by Chase Manhattan Mortgage
Corporation (in such capacity, the "Servicer"). The Trust Fund was created
pursuant to a Pooling and Servicing Agreement dated as of June 1, 1998 (the
"Agreement") among the Depositor, the Servicer and Citibank, N.A., as trustee
(the "Trustee"), a summary of certain of the pertinent provisions of which is
set forth below. To the extent not defined herein, the capitalized terms
used herein shall have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-S2,
Class M (the "Class M Certificates") and is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which such Holder is bound. Also issued under the Agreement are Certificates
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-S2,
Class A (the "Class A Certificates") and Class B (the "Class B
Certificates"). The Class A Certificates are senior to, and the Class B
Certificates are subordinate to, the Class M Certificates in right of payment
to the extent described herein and in the Agreement. The Class A
Certificates, Class M Certificates and Class B Certificates are collectively
referred to as the "Certificates".
Pursuant to the terms of the Agreement, the Trustee, or, if a
Paying Agent has been appointed under Section 4.05, the Paying Agent, will
distribute from funds in the Certificate Account the amount as described on
the reverse hereof on the 25th day of each month or, if such 25th day is not
a Business Day, the Business Day immediately following (the "Distribution
Date"), commencing on July 27, 1998. Such distributions will be made to the
Person in whose name this Certificate is registered at the close of business
on the last Business Day of the month preceding the month in which such
payment is made, or if such last day is not a Business Day, the Business Day
immediately preceding such last day (the "Record Date").
<PAGE>
Distributions on this Certificate will be made either by check
mailed to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register, or by wire transfer in
immediately available funds to the account of such Holder at a bank or other
financial or depository institution having appropriate facilities therefor,
if such Holder has so notified the Paying Agent in writing at least 10
Business Days prior to the first Distribution Date for which distribution by
wire transfer is to be made, and such Holder's Certificates evidence an
aggregate original principal balance of not less than $5,000,000 or such
Holder holds a 100% Percentage Interest of such Class. Notwithstanding the
above, the final distribution on this Certificate will be made after due
notice by the Trustee, or, if a Paying Agent has been appointed under
Section 4.05, the Paying Agent, of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office of the
Trustee, or, if a Paying Agent has been appointed under Section 4.05, the
Paying Agent, or agency appointed by the Trustee, or, if a Paying Agent has
been appointed under Section 4.05, the Paying Agent, for the purpose and
specified in such notice of final distribution.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof which further provisions shall
for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Authenticating Agent, by manual signature, this Certificate shall not
be entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be
duly executed.
Dated: June 25, 1998 CHASE MORTGAGE FINANCE CORPORATION
By:
---------------------------------------------
(Authorized Officer)
Certificate of Authentication
This is one of the Class M Certificates
referred to in the within-mentioned
Agreement.
THE CHASE MANHATTAN BANK
as Authenticating Agent
By:
---------------------------------------
Authorized Signatory
<PAGE>
REVERSE OF CERTIFICATE
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-S2
This Certificate is one of a duly authorized issue of Certificates,
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-S2,
issued in seventeen Classes of Class A Certificates, one Class of Class M
Certificates and five Classes of Class B Certificates, each evidencing an
interest in certain distributions with respect to a pool of adjustable rate
one- to four-family first Mortgage Loans formed and sold by the Depositor and
certain other property conveyed by the Depositor to the Trustee. The Class A
Certificates evidence in the aggregate the Class A Percentage of
distributions relating to repayments of principal and interest on such
Mortgage Loans. The Class M Certificates evidence in the aggregate the Class
M Percentage of distributions relating to repayments of principal and
interest on such Mortgage Loans. The Class B Certificates evidence in the
aggregate the Class B Percentage of distributions relating to repayments of
principal and interest on such Mortgage Loans.
Following the initial issuance of the Certificates, the Principal
Balance of this Certificate will be different from the Original Denomination
shown above. Anyone acquiring this Certificate may ascertain its current
Principal Balance by inquiry of the Trustee.
The Holder, by its acceptance of this Certificate, agrees that it
will look solely to the Trust Fund and certain amounts resulting from credit
enhancements for payment hereunder and that the Trustee is not liable to the
Holders for any amount payable under this Certificate or the Agreement or,
except as expressly provided in the Agreement, subject to any liability under
the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Trustee will cause to be kept at its Corporate Trust Office in
New York, New York, or at the office of any Paying Agent appointed under the
Agreement, a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trustee (or any Paying Agent, as the
case may be) will provide for the registration of Certificates and of
transfers and exchanges of Certificates. Upon surrender for registration of
transfer of any Certificate at any office or agency of the Trustee, or, if a
Paying Agent has been appointed under Section 4.05, the Paying Agent,
maintained for such purpose, the Trustee, or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, will, subject to the
limitations set forth in the Agreement, authenticate and deliver, in the name
of the designated transferee or transferees, a Certificate of a like Class
and dated the date of authentication by the Authenticating Agent.
No service charge will be made to the Holder for any transfer or
exchange of the Certificate, but the Trustee, or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate. Prior to due
<PAGE>
presentation of a Certificate for registration of transfer, the Depositor,
the Servicer and the Trustee may treat the person in whose name any
Certificate is registered as the owner of such Certificate and the Percentage
Interest in the Trust Fund evidenced thereby for the purpose of receiving
distributions pursuant to the Agreement and for all other purposes
whatsoever, and neither the Depositor, the Servicer, the Paying Agent nor the
Trustee will be affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor,
the Servicer and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions therein which may be inconsistent with the other provisions
therein, to ensure continuing treatment of the Trust Fund as a REMIC, or to
make any other provisions with respect to matters or questions arising under
the Agreement which are not materially inconsistent with the provisions of
the Agreement, provided that such action does not, as evidenced by an Opinion
of Counsel, adversely affect in any material respect the interests of any
Certificateholder.
The Agreement may also be amended from time to time by the
Depositor, the Servicer and the Trustee with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66-2/3% of the
Percentage Interests of each Class of Certificates affected thereby for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Agreement or of modifying in any manner the
rights of the Holders of Certificates of such Class; provided, however, that
no such amendment may (i) reduce in any manner the amount of, or delay the
timing of, payments received on Mortgage Loans which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) reduce the aforesaid percentage of Certificates of any
Class the Holders of which are required to consent to any such amendment or
(iii) change the percentage specified in clause (ii) of the first paragraph
of Section 11.01 of the Agreement, without the consent of the Holders of all
Certificates of such Class then outstanding.
The respective obligations and responsibilities of the Depositor,
the Servicer and the Trustee under the Agreement will terminate upon (i) the
later of the final payment or other liquidation (or any Advance with respect
thereto) of the last Mortgage Loan or the disposition of all property
acquired upon the foreclosure or deed in lieu of foreclosure of any Mortgage
Loan and the remittance of all funds due thereunder; or (ii) at the option of
the Servicer, on any Distribution Date which occurs in the month following a
Due Date on which the aggregate unpaid Principal Balance of the Outstanding
Mortgage Loans is less than 10% of the aggregate unpaid Principal Balance of
the Mortgage Loans on the Cut-off Date, so long as the Servicer deposits or
causes to be deposited in the Certificate Account during the Principal
Prepayment Period related to such Distribution Date an amount equal to the
Purchase Price for each Mortgage Loan, less any unreimbursed Advances made
with
<PAGE>
respect to any Mortgage Loan, and with respect to all property acquired in
respect of any Mortgage Loan remaining in the Trust Fund, an amount equal to
the fair market value of such property, as determined by an appraisal to be
conducted by an appraiser selected by the Trustee, less unreimbursed Advances
made with respect to the Mortgage Loan with respect to which property has
been acquired; provided, however, that in no event shall the trust created
hereby continue beyond the earlier of (i) 32 years after the Closing Date and
(ii) the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James's, living on the date hereof.
<PAGE>
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF
ASSIGNEE)
- ------------------------------------------
- --------------------------------------------------------------
(Please Print or Type Name and Address of Assignee)
- -------------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby does
irrevocably constitute and appoint
_________________________________________________ Attorney to transfer the
within Certificate on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated:
(Signature guaranty)
----------------------------------------
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the
face of the within Certificate in every
particular, without alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
<PAGE>
EXHIBIT E
FORMS OF CLASS B CERTIFICATES
THIS CLASS B-1 CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AND THE CLASS M CERTIFICATES AS DESCRIBED IN THE POOLING AND
SERVICING AGREEMENT REFERRED TO HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR
INTEREST" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE
DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
MORTGAGE FINANCE CORPORATION ("CMFC"), THE SERVICER OR THE TRUSTEE REFERRED
TO BELOW OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC
REGULAR INTEREST REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE
GUARANTEED OR INSURED BY CMFC, CHASE MANHATTAN MORTGAGE CORPORATION, THE
TRUSTEE OR BY ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR
INSTRUMENTALITY.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE WILL BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN
BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL
BALANCE BY INQUIRY OF THE TRUSTEE.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE EITHER (A) IS NOT AN EMPLOYEE
BENEFIT PLAN (A "PLAN") WITHIN THE MEANING OF SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), AND IS NOT
DIRECTLY OR INDIRECTLY PURCHASING ANY CERTIFICATE ON BEHALF OF, AS INVESTMENT
MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF OR WITH ASSETS OF A PLAN OR,
IN THE CASE OF AN INSURANCE COMPANY, THE ASSETS OF ANY SEPARATE ACCOUNTS TO
EFFECT SUCH ACQUISITION OR (B) THE SOURCE OF FUNDS FOR THE PURCHASE OF THE
CERTIFICATES IS AN "INSURANCE COMPANY GENERAL ACCOUNT" WITHIN THE MEANING OF
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"), 60 FED. REG.
35925 (JULY 12, 1995), AND THE CONDITIONS SET FORTH IN SECTION I AND SECTION
III OF PTCE 95-60 ARE
<PAGE>
SATISFIED WITH RESPECT TO THE PURCHASE AND HOLDING OF THE CERTIFICATES, OR
(ii) IF THIS CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A PLAN
SUBJECT TO TITLE I OF ERISA, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE") (OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT
ENACTMENTS), OR A TRUSTEE OF ANY SUCH PLAN, OR ANY OTHER PERSON WHO IS USING
THE ASSETS OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION, AN OPINION OF COUNSEL
TO THE EFFECT THAT THE PURCHASE OR HOLDING OF THIS CERTIFICATE WILL NOT
RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO BE "PLAN ASSETS"
PURSUANT TO THE DEPARTMENT OF LABOR PLAN ASSET REGULATIONS SET FORTH IN 29
C.F.R. Section 2510.3-101 AND TO BE SUBJECT TO THE FIDUCIARY RESPONSIBILITY
PROVISIONS OF ERISA OR THE PROHIBITED TRANSACTION PROVISIONS OF THE CODE,
WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN THE MEANING
OF SECTION 406 OR SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE, AND WILL
NOT SUBJECT THE TRUSTEE, THE SERVICER, THE COMPANY OR ANY OF THEIR AFFILIATES
TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER
ERISA OR SECTION 4975 OF THE CODE) RELATING TO THE CERTIFICATES.
CLASS B-1 CERTIFICATE
Number 98-S2-B-1-1 Original Denomination
$
Cut-off Date: June 1, 1998 Aggregate Original Principal
Balance of all Class B-1
First Distribution Date: Certificates: $
July 27, 1998
Certificate Rate: ____% CUSIP: 161626 ___
<PAGE>
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
Series 1998-S2
evidencing an ownership interest in distributions allocable to a pool of
conventional one- to four-family mortgage loans formed and sold by
CHASE MORTGAGE FINANCE CORPORATION
This certifies that TFINN & CO. is the registered owner of the
ownership interest (the "Ownership Interest") evidenced by this Certificate
(obtained by dividing the Original Denomination of this Certificate by the
aggregate Original Denomination of all Class B-1 Certificates) in certain
distributions with respect to a pool of conventional one- to four-family
first mortgage loans (the "Mortgage Loans") formed and sold by Chase Mortgage
Finance Corporation (hereinafter called the "Depositor"), and certain other
property held in trust for the benefit of Certificate holders (collectively,
the "Trust Fund"). The Mortgage Loans are serviced by Chase Manhattan
Mortgage Corporation (the "Servicer") and are secured by first mortgages on
Mortgaged Properties. The Trust Fund was created pursuant to a Pooling and
Servicing Agreement (the "Agreement"), dated as of June 1, 1998 among the
Depositor, the Servicer and Citibank, N.A., as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth
hereafter. To the extent not defined herein, the capitalized terms used
herein have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-S2,
Class B-1 (the "Class B-1 Certificate") and is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which Agreement such Holder is bound.
The rights of the Class B Certificateholders to receive
distributions in respect of the Class B Certificates on any Distribution Date
are subordinated to the rights of the Class A and Class M Certificateholders
and the Holders of any Class or Classes of Class B Certificates having a
lower numerical class designation to receive distributions in respect of the
Class A and Class M Certificates and such Class B Certificates to the extent,
and only to the extent, set forth in the Agreement. Amounts properly
distributed to the Class B Certificateholders pursuant to the Agreement will
be deemed released from the Trust Fund, and the Class B Certificateholders
will not in any event be required to refund any such distributed amounts. The
final distribution on this Certificate will be made after due notice by the
Trustee, or, if a Paying Agent has been appointed under Section 4.05, the
Paying Agent, of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency appointed by the
Trustee, or, if a Paying Agent has been appointed under Section 4.05, the
Paying Agent, for that purpose and specified in such notice of final
distribution.
Distributions on this Certificate will be made either by check
mailed to the address of the Person entitled thereto, as such name and
address shall appear on the Certificate Register, or by wire transfer in
immediately available funds to the account of such Holder at a
<PAGE>
bank or other financial or depository institution having appropriate
facilities therefor, if such Holder has so notified the Paying Agent in
writing at least 10 Business Days prior to the first Distribution Date for
which distribution by wire transfer is to be made, and such Holder's
Certificates evidence an aggregate original principal balance of not less
than $5,000,000 or such Holder holds a 100% Percentage Interest of such
Class. Notwithstanding the above, the final distribution on this Certificate
will be made after due notice by the Trustee, or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, of the pendency of such
distribution and only upon presentation and surrender of this Certificate at
the office of the Trustee, or, if a Paying Agent has been appointed under
Section 4.05, the Paying Agent, or agency appointed by the Trustee, or, if a
Paying Agent has been appointed under Section 4.05, the Paying Agent, for the
purpose and specified in such notice of final distribution.
Following the initial issuance of the Certificates, the Principal
Balance of this Certificate will be different from the Original Denomination
shown above. Anyone acquiring this Certificate may ascertain its current
Principal Balance by inquiry of the Trustee.
The Holder, by its acceptance of this Certificate, agrees that it
will look solely to the Trust Fund and certain amounts resulting from credit
enhancements for payment hereunder and that the Trustee is not liable to the
Holders for any amount payable under this Certificate or the Agreement or,
except as expressly provided in the Agreement, subject to any liability under
the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Trustee will cause to be kept at its Corporate Trust Office in
New York, New York, or at the office of its designated agent, a Certificate
Register in which, subject to such reasonable regulations as it may
prescribe, the Trustee will provide for the registration of Certificates and
of transfers and exchanges of Certificates. Upon surrender for registration
of transfer of any Certificate at any office or agency of the Trustee, or, if
a Paying Agent has been appointed under Section 4.05, the Paying Agent,
maintained for such purpose, the Trustee, or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, will, subject to the
limitations set forth in the Agreement, authenticate and deliver, in the name
of the designated transferee or transferees, a Certificate of a like class
and dated the date of authentication by the Authenticating Agent.
No service charge will be made to the Holder for any transfer or
exchange of the Certificate, but the Trustee, or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate. Prior to due
presentation of a Certificate for registration of transfer, the Depositor,
the Servicer and the Trustee may treat the person in whose name any
Certificate is registered as the owner of such
<PAGE>
Certificate and the Ownership Interest in the Trust Fund evidenced thereby
for the purpose of receiving distributions pursuant to the Agreement and for
all other purposes whatsoever, and neither the Depositor, the Servicer the
Paying Agent nor the Trustee will be affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor,
the Servicer and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions therein, which may be inconsistent with any other provisions
therein, to ensure continuing treatment of the Trust Fund or its assets as a
REMIC and to avoid the imposition of certain tax liabilities, or to make any
other provisions with respect to matters or questions arising under the
Agreement which are not materially inconsistent with the provisions of the
Agreement, provided that such action does not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Certificateholder.
The Agreement may also be amended from time to time by the
Depositor, the Servicer and the Trustee with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66% of the Percentage
Interest of each Class of Certificates affected thereby for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of the Agreement or of modifying in any manner the rights of the
Holders of Certificates of such Class; provided, however, that no such
amendment may (i) reduce in any manner the amount of, or delay the timing of,
payments received on the Mortgage Loans which are required to be distributed
on any Certificate without the consent of the Holder of such Certificate,
(ii) reduce the aforesaid percentage of Certificates of any Class the Holders
of which are required to consent to any such amendment or (iii) change the
percentage specified in clause (ii) of the first paragraph of Section 11.01
of the Agreement, without the consent of the Holders of all Certificates of
such Class then outstanding.
The respective obligations and responsibilities of the Depositor,
the Servicer and the Trustee under the Agreement will terminate upon: (i)
the later of the final payment or other liquidation (or any Advance with
respect thereto) of the last Mortgage Loan or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan
and the remittance of all funds due thereunder; or (ii) at the option of the
Servicer, on any Distribution Date which occurs in the month next following a
Due Date on which the aggregate unpaid Principal Balance of the Outstanding
Mortgage Loans is less than 10% of the aggregate unpaid Principal Balance of
the Mortgage Loans on the Cut-off Date, so long as the Servicer deposits or
causes to be deposited in the Certificate Account during the Principal
Prepayment Period related to such Distribution Date an amount equal to the
Purchase Price for each Mortgage Loan, less any unreimbursed Advances made
with respect to any Mortgage Loan and, with respect to all property acquired
in respect of any Mortgage Loan remaining in the Trust Fund, an amount equal
to the fair market value of such property, as determined by an appraisal to
be conducted by an appraiser selected by the Trustee, less unreimbursed
Advances made with respect to the Mortgage Loan with respect to which
property has been acquired; provided, however, that in no event shall the
trust created hereby continue beyond the earlier of (i) 32 years
<PAGE>
after the Closing Date and (ii) the expiration of 21 years from the death of
the last survivor of the descendants of Joseph P. Kennedy, the late
ambassador of the United States to the Court of St. James's, living on the
date hereof.
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this
Certificate to be duly executed.
Dated: June 25, 1998 CHASE MORTGAGE FINANCE CORPORATION
By:
-------------------------------
Authorized Officer
This is one of the Class B-1
Certificates referred to
in the within-mentioned
Agreement.
THE CHASE MANHATTAN BANK
as Authenticating Agent
By:
-------------------------
Authorized Signatory
<PAGE>
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF
ASSIGNEE)
- ---------------------------------------
- -----------------------------------------------------------------
(Please Print or Type Name and Address of Assignee)
- -----------------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby does
irrevocably constitute and appoint
- -------------------------------------------------- Attorney to transfer the
within Certificate on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated:
(Signature guaranty)
------------------------------------------
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the
face of the within Certificate in every
particular, without alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
<PAGE>
EXHIBIT F
FORM OF CLASS A-R CERTIFICATE
AS MORE FULLY PROVIDED BY SECTION 4.02(i) OF THE AGREEMENT, CERTAIN SPECIFIED
ENTITIES INCLUDING (A) 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 (OTHER THAN AN
INSTRUMENTALITY THAT IS A CORPORATION ALL OF WHOSE ACTIVITIES ARE SUBJECT TO
TAX UNDER CHAPTER 1 OF SUBTITLE A OF THE CODE AND (EXCEPT IN THE CASE OF
FHLMC) A MAJORITY OF WHOSE BOARD OF DIRECTORS IS NOT SELECTED BY THE UNITED
STATES, OR ANY STATE OR POLITICAL SUBDIVISION THEREOF), (B) ANY ORGANIZATION
THAT IS EXEMPT FROM TAX IMPOSED BY CHAPTER 1 OF SUBTITLE A OF THE CODE, OTHER
THAN (X) A TAX-EXEMPT FARMERS' COOPERATIVE WITHIN THE MEANING OF SECTION 521
OF THE CODE OR (Y) AN ORGANIZATION THAT IS SUBJECT TO THE TAX IMPOSED BY
SECTION 511 OF THE CODE ON "UNRELATED BUSINESS INCOME", (C) A CORPORATION
OPERATING ON A COOPERATIVE BASIS THAT IS ENGAGED IN FURNISHING ELECTRIC
ENERGY OR PROVIDING TELEPHONE SERVICE TO PERSONS IN RURAL AREAS (WITHIN THE
MEANING OF SECTION 1381(a)(2)(C) OF THE CODE) AND (D) CERTAIN FOREIGN PERSONS
ARE PROHIBITED FROM ACQUIRING BENEFICIAL OWNERSHIP OF A CLASS A-R
CERTIFICATE.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
MORTGAGE FINANCE CORPORATION, THE SERVICER OR THE TRUSTEE REFERRED TO BELOW
OR ANY OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE NOR THE UNDERLYING
MORTGAGE LOANS ARE GUARANTEED OR INSURED BY CHASE MORTGAGE FINANCE
CORPORATION, CHASE MANHATTAN MORTGAGE CORPORATION, THE TRUSTEE OR BY ANY OF
THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE EITHER (A) IS NOT AN EMPLOYEE
BENEFIT PLAN (A "PLAN") WITHIN THE MEANING OF SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), AND IS NOT
DIRECTLY OR INDIRECTLY PURCHASING ANY CERTIFICATE ON BEHALF OF, AS INVESTMENT
MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF OR WITH ASSETS OF A PLAN OR,
IN THE CASE OF AN INSURANCE COMPANY, THE ASSETS OF ANY SEPARATE ACCOUNTS TO
EFFECT SUCH ACQUISITION OR (B) THE SOURCE OF FUNDS FOR THE PURCHASE OF THE
CERTIFICATES IS AN "INSURANCE COMPANY GENERAL ACCOUNT" WITHIN THE MEANING OF
PROHIBITED TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"), 60 FED. REG.
35925 (JULY 12, 1995), AND THE CONDITIONS SET FORTH IN SECTION I AND SECTION
III OF PTCE 95-60 ARE SATISFIED WITH RESPECT TO THE PURCHASE AND HOLDING OF
THE CERTIFICATES, OR (ii) IF THIS CERTIFICATE IS PRESENTED FOR REGISTRATION
IN
<PAGE>
THE NAME OF A PLAN SUBJECT TO TITLE I OF ERISA, OR SECTION 4975 OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS), OR A TRUSTEE OF ANY SUCH PLAN, OR
ANY OTHER PERSON WHO IS USING THE ASSETS OF ANY SUCH PLAN TO EFFECT SUCH
ACQUISITION, AN OPINION OF COUNSEL TO THE EFFECT THAT THE PURCHASE OR HOLDING
OF THIS CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" PURSUANT TO THE DEPARTMENT OF LABOR PLAN ASSET
REGULATIONS SET FORTH IN 29 C.F.R. Section 2510.3-101 AND TO BE SUBJECT TO
THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR THE PROHIBITED
TRANSACTION PROVISIONS OF THE CODE, WILL NOT CONSTITUTE OR RESULT IN A
PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION 406 OR SECTION 407 OF
ERISA OR SECTION 4975 OF THE CODE, AND WILL NOT SUBJECT THE TRUSTEE, THE
SERVICER, THE COMPANY OR ANY OF THEIR AFFILIATES TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA OR SECTION 4975
OF THE CODE) RELATING TO THE CERTIFICATES.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE WILL BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN
ABOVE. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL
BALANCE BY INQUIRY OF THE TRUSTEE.
CLASS A-R CERTIFICATE
Number: 98-S2-A-R-1 Original Denomination
$
Cut-off Date: June 1, 1998
First Distribution Date: Aggregate Original Principal
July 27, 1998 Balance of all Class A-R
Certificates: $
Certificate Rate: ____% CUSIP NO. 161626 ___
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
Series 1998-S2
evidencing an ownership interest in distributions allocable to the Residual
Interest Certificates with respect to a pool of conventional one- to
four-family first mortgage loans formed and sold by
CHASE MORTGAGE FINANCE CORPORATION
This certifies that TFINN & CO. is the registered owner of an
undivided interest in certain monthly distributions with respect to a pool
(the "Mortgage Pool) of conventional one- to four-family first mortgage loans
(the "Mortgage Loans") formed and sold by Chase Mortgage Finance Corporation
(hereinafter called the "Depositor", which term includes any successor entity
under the Agreement referred to below) and certain other property held in
trust for the
<PAGE>
benefit of Certificateholders (collectively, the "Trust Fund"). The Mortgage
Loans are serviced by Chase Manhattan Mortgage Corporation (the "Servicer")
and are secured by first mortgages on Mortgaged Properties. The Trust Fund
was created pursuant to a Pooling and Servicing Agreement (the "Agreement")
dated as of June 1, 1998 among the Depositor, the Servicer and Citibank,
N.A., as trustee (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-S2,
Class A-R (the "Class A-R Certificate") and is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which Agreement such Holder is bound. All payments made under this
Certificate will be made in accordance with the terms of the Agreement. Also
issued under the Agreement are Certificates designated as Multi-Class
Mortgage Pass-Through Certificates Series 1998-S2, Class A, Class M, Class B
Certificates. The Class A Certificates, the Class M Certificates and the
Class B Certificates are collectively referred to as the "Certificates".
The final distribution on this Certificate will be made after due
notice by the Trustee, or, if a Paying Agent has been appointed under
Section 4.05, the Paying Agent, of the pendency of such distribution and only
upon presentation and surrender of this Certificate at the office or agency
appointed by the Trustee, or, if a Paying Agent has been appointed under
Section 4.05, the Paying Agent, for that purpose and specified in such notice
of final distribution.
The Trustee will cause to be kept at its Corporate Trust Office in
New York, New York, or at the office of any Paying Agent appointed under the
Agreement, a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trustee (or any Paying Agent, as the
case may be) will provide for the registration of Certificates and of
transfers and exchanges of Certificates. Upon surrender for registration of
transfer of any Certificate at any office or agency of the Trustee, or, if a
Paying Agent has been appointed under Section 4.05, the Paying Agent,
maintained for such purpose, the Trustee, or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, will, subject to the
limitations set forth in the Agreement, authenticate and deliver, in the name
of the designated transferee or transferees, a Certificate of a like class
and dated the date of authentication by the Authenticating Agent.
No service charge will be made to the Holder for any transfer or
exchange of the Certificate, but the Trustee, or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate. Prior to due
presentation of a Certificate for registration of transfer, the Depositor,
the Servicer and the Trustee may treat the person in whose name any
Certificate is registered as the owner of such Certificate and the Ownership
Interest in the Trust Fund evidenced thereby for the purpose of receiving
distributions pursuant to the Agreement and for all other purposes
whatsoever, and neither the Depositor, the Servicer the Paying Agent nor the
Trustee will be affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor,
the Servicer and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity, to
<PAGE>
correct or supplement any provisions therein, which may be inconsistent with
any other provisions therein, to ensure continuing treatment of the Trust
Fund or its assets as a REMIC and to avoid the imposition of certain tax
liabilities, or to make any other provisions with respect to matters or
questions arising under the Agreement which are not materially inconsistent
with the provisions of the Agreement, provided that such action does not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect
the interests of any Certificateholder.
The Agreement may also be amended from time to time by the
Depositor, the Servicer and the Trustee with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66-2/3% of the
Percentage Interest of each Class of Certificates affected thereby for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Agreement or of modifying in any manner the
rights of the Holders of Certificates of such Class; provided, however, that
no such amendment may (i) reduce in any manner the amount of, or delay the
timing of, payments received on the Mortgage Loans which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) reduce the aforesaid percentage of Certificates of any
Class the Holders of which are required to consent to any such amendment or
(iii) change the percentage specified in clause (ii) of the first paragraph
of Section 11.01 of the Agreement, without the consent of the Holders of all
Certificates of such Class then outstanding.
An election will be made to treat the Trust Fund as a REMIC for
federal income tax purposes. The Class A Certificates, the Class M
Certificates, the Class B Certificates will represent regular interests in
the REMIC. The Class A-R Certificate constitutes the Residual Interest in
the REMIC.
The respective obligations and responsibilities of the Depositor,
the Servicer and the Trustee under the Agreement will terminate upon: (i)
the later of the final payment or other liquidation (or any Advance with
respect thereto) of the last Mortgage Loan or the disposition of all property
acquired upon foreclosure or deed in lieu of foreclosure of any Mortgage Loan
and the remittance of all funds due thereunder; or (ii) at the option of the
Servicer, on any Distribution Date which occurs in the month next following a
Due Date on which the aggregate unpaid Principal Balance of all Outstanding
Mortgage Loans is less than 10% of the aggregate unpaid Principal Balance of
the Mortgage Loans on the Cut-off Date, so long as the Servicer deposits or
causes to be deposited in the Certificate Account during the Principal
Prepayment Period related to such Distribution Date an amount equal to the
Purchase Price for each Mortgage Loan, less unreimbursed Advances made with
respect to any Mortgage Loan and, with respect to all property acquired in
respect of any Mortgage Loan remaining in the Trust Fund, an amount equal to
the fair market value of such property, as determined by an appraisal to be
conducted by an appraiser selected by the Trustee, less any Advances made
with respect to the Mortgage Loan with respect to which property has been
acquired; provided, however, that in no event shall the trust created hereby
continue beyond the earlier of (i) 32 years after the Closing Date and (ii)
the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late ambassador of the United States to
the Court of St. James's, living on the date hereof.
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be
duly executed.
Dated: June 25, 1998 CHASE MORTGAGE FINANCE CORPORATION
By:
--------------------------------
(Authorized Officer)
This is the Class A-R
Certificate referred to
in the within-mentioned
Agreement.
THE CHASE MANHATTAN BANK
as Authenticating Agent
By:
---------------------
Authorized Signatory
<PAGE>
REVERSE OF CERTIFICATE
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-S2
This Certificate is one of a duly authorized issue of Certificates,
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-S2,
issued in seventeen Classes of Class A Certificates, one Class of Class M
Certificates and five Classes of Class B Certificates, each evidencing an
interest in certain distributions with respect to a pool of adjustable rate
one- to four-family first Mortgage Loans formed and sold by the Depositor and
certain other property conveyed by the Depositor to the Trustee. The Class A
Certificates evidence in the aggregate the Class A Percentage of
distributions relating to repayments of principal and interest on such
Mortgage Loans. The Class M Certificates evidence in the aggregate the Class
M Percentage of distributions relating to repayments of principal and
interest on such Mortgage Loans. The Class B Certificates evidence in the
aggregate the Class B Percentage of distributions relating to repayments of
principal and interest on such Mortgage Loans.
Following the initial issuance of the Certificates, the Principal
Balance of this Certificate will be different from the Original Denomination
shown above. Anyone acquiring this Certificate may ascertain its current
Principal Balance by inquiry of the Trustee.
The Holder, by its acceptance of this Certificate, agrees that it
will look solely to the Trust Fund and certain amounts resulting from credit
enhancements for payment hereunder and that the Trustee is not liable to the
Holders for any amount payable under this Certificate or the Agreement or,
except as expressly provided in the Agreement, subject to any liability under
the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations
of rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Trustee will cause to be kept at its Corporate Trust Office in
New York, New York, or at the office of any Paying Agent appointed under the
Agreement, a Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Trustee (or any Paying Agent, as the
case may be) will provide for the registration of Certificates and of
transfers and exchanges of Certificates. Upon surrender for registration of
transfer of any Certificate at any office or agency of the Trustee, or, if a
Paying Agent has been appointed under Section 4.05, the Paying Agent,
maintained for such purpose, the Trustee, or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, will, subject to the
limitations set forth in the Agreement, authenticate and deliver, in the name
of the designated transferee or transferees, a Certificate of a like Class
and dated the date of authentication by the Authenticating Agent.
No service charge will be made to the Holder for any transfer or
exchange of the Certificate, but the Trustee, or, if a Paying Agent has been
appointed under Section 4.05, the Paying Agent, may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate. Prior to due
presentation of a Certificate for registration of transfer, the Depositor,
the Servicer and the Trustee may treat the person in whose name any
Certificate is registered as the owner of such
<PAGE>
Certificate and the Percentage Interest in the Trust Fund evidenced thereby
for the purpose of receiving distributions pursuant to the Agreement and for
all other purposes whatsoever, and neither the Depositor, the Servicer, the
Paying Agent nor the Trustee will be affected by notice to the contrary.
The Agreement may be amended from time to time by the Depositor,
the Servicer and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions therein which may be inconsistent with the other provisions
therein, to ensure continuing treatment of the Trust Fund as a REMIC, or to
make any other provisions with respect to matters or questions arising under
the Agreement which are not materially inconsistent with the provisions of
the Agreement, provided that such action does not, as evidenced by an Opinion
of Counsel, adversely affect in any material respect the interests of any
Certificateholder.
The Agreement may also be amended from time to time by the
Depositor, the Servicer and the Trustee with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66-2/3% of the
Percentage Interests of each Class of Certificates affected thereby for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of the Agreement or of modifying in any manner the
rights of the Holders of Certificates of such Class; provided, however, that
no such amendment may (i) reduce in any manner the amount of, or delay the
timing of, payments received on Mortgage Loans which are required to be
distributed on any Certificate without the consent of the Holder of such
Certificate, (ii) reduce the aforesaid percentage of Certificates of any
Class the Holders of which are required to consent to any such amendment or
(iii) change the percentage specified in clause (ii) of the first paragraph
of Section 11.01 of the Agreement, without the consent of the Holders of all
Certificates of such Class then outstanding.
The respective obligations and responsibilities of the Depositor,
the Servicer and the Trustee under the Agreement will terminate upon (i) the
later of the final payment or other liquidation (or any Advance with respect
thereto) of the last Mortgage Loan or the disposition of all property
acquired upon the foreclosure or deed in lieu of foreclosure of any Mortgage
Loan and the remittance of all funds due thereunder; or (ii) at the option of
the Servicer, on any Distribution Date which occurs in the month following a
Due Date on which the aggregate unpaid Principal Balance of the Outstanding
Mortgage Loans is less than 10% of the aggregate unpaid Principal Balance of
the Mortgage Loans on the Cut-off Date, so long as the Servicer deposits or
causes to be deposited in the Certificate Account during the Principal
Prepayment Period related to such Distribution Date an amount equal to the
Purchase Price for each Mortgage Loan, less any unreimbursed Advances made
with respect to any Mortgage Loan, and with respect to all property acquired
in respect of any Mortgage Loan remaining in the Trust Fund, an amount equal
to the fair market value of such property, as determined by an appraisal to
be conducted by an appraiser selected by the Trustee, less unreimbursed
Advances made with respect to the Mortgage Loan with respect to which
property has been acquired; provided, however, that in no event shall the
trust created hereby continue beyond the earlier of (i) 32 years after the
Closing Date and (ii) the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late ambassador of the
United States to the Court of St. James's, living on the date hereof.
<PAGE>
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF
ASSIGNEE)
- ------------------------------------------
- -------------------------------------------------------------
(Please Print or Type Name and Address of Assignee)
- -------------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby does
irrevocably constitute and appoint
__________________________________________________Attorney to transfer the
within Certificate on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated:
(Signature guaranty)
-----------------------------------------
NOTICE: The signature to this assignment must
correspond with the name as it appears upon the
face of the within Certificate in every
particular, without alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
<PAGE>
EXHIBIT G
FORM OF TRUSTEE CERTIFICATION
[DATE]
Chase Mortgage Finance Corporation
300 Tice Boulevard
Woodcliff Lake, NJ 07675
Re: Pooling and Servicing Agreement dated as of June 1, 1998
among Chase Mortgage Finance Corporation, Chase Manhattan
Mortgage Corporation as servicer and Citibank, N.A., as
trustee, Multi-Class Mortgage Pass-Through Certificates,
Series 1998-S2
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that [,
except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid
in full or listed on the attachment hereto) it has reviewed the Mortgage File
and the Mortgage Loan Schedule and has determined that:
(i) All documents in the Mortgage File required to be delivered to
the Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement
are in its possession;
(ii) In connection with each Mortgage Loan or Assignment thereof
as to which documentary evidence of recording was not received on the Closing
Date, it has received evidence of such recording; and
(iii) Such documents have been reviewed by it and such documents
do not contain any material omissions or defects within the meaning of
Section 2.01 or 2.02.
The Trustee further certifies that as to each Mortgage Loan, the
Trustee holds the Mortgage Note without any Responsible Officer of the
Trustee having received written notice (a) of any adverse claims, liens or
encumbrances, (b) that any Mortgage Note was overdue or has been dishonored,
(c) of evidence on the face of any Mortgage Note or Mortgage of any security
interest therein, or (d) of any defense against or claim to the Mortgage Note
by any other party.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond confirming (i) that the Mortgage Loan
number and the name of the Mortgagor in each Mortgage File conform to the
respective Mortgage Loan number and name listed on the Mortgage Loan Schedule
and (ii) the existence in each Mortgage File of each of the documents listed
in subparagraphs (i)(A) through (G), inclusive, of Section 2.01 in the
Agreement. The Trustee makes no representations or warranties as to the
validity, legality,
<PAGE>
sufficiency, enforceability or genuineness of any of the documents contained
in each Mortgage Loan or the collectibility, insurability, effectiveness or
suitability of any such Mortgage Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
CITIBANK, N.A.,
as Trustee
By:
-----------------------------------
Name:
----------------------------
Title:
----------------------------
<PAGE>
EXHIBIT H
FORM OF INVESTMENT LETTER
(Accredited Investor)
[DATE]
Chase Manhattan Mortgage Corporation
343 Thornall Street
Edison, NJ 08834
Re: Chase Mortgage Finance Corporation
Multi-Class Mortgage Pass-Through
Certificates, Series 1998-S2, [Class B- ]
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from
_________________________ (the "Transferor") $_______ by original principal
balance (the "Transferred Certificates") of Multi-Class Mortgage Pass-Through
Certificates, Series 1998-S2, [Class B- ] (the "Certificates"), issued
pursuant to a pooling and servicing agreement, dated as of June 1, 1998 (the
"Pooling and Servicing Agreement"), among Chase Mortgage Finance Corporation
(the "Depositor"), Chase Manhattan Mortgage Corporation, as Servicer (the
"Servicer"), and Citibank, N.A., as trustee (the "Trustee"). [The Purchaser
intends to register the Transferred Certificate in the name of
____________________, as nominee for __________________.] All terms used and
not otherwise defined herein shall have the meanings set forth in the Pooling
and Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchaser certifies, represents and
warrants to, and covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not
been registered or qualified under the Securities Act of 1933, as amended
(the "Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends, to so
register or qualify the Certificates, (c) the Certificates cannot be resold
unless (i) they are registered and qualified under the Securities Act and the
applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement
contains restrictions regarding the transfer of the Certificates.
2. The Certificates will bear a legend to the following effect:
<PAGE>
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF
1940, AS AMENDED (THE "1940 ACT") OR ANY STATE SECURITIES OR "BLUE
SKY" LAWS, AND MAY NOT, DIRECTLY OR INDIRECTLY, BE SOLD OR
OTHERWISE TRANSFERRED, OR OFFERED FOR SALE, UNLESS SUCH TRANSFER IS
NOT SUBJECT TO REGISTRATION UNDER THE ACT, THE 1940 ACT AND ANY
APPLICABLE STATE SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES
WITH THE OTHER PROVISIONS OF SECTION 4.02 OF THE POOLING AND
SERVICING AGREEMENT. NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE
UNLESS THE TRUSTEE SHALL HAVE RECEIVED, IN FORM AND SUBSTANCE
SATISFACTORY TO THE SERVICER AND THE TRUSTEE (A) AN INVESTMENT
LETTER FROM THE PROSPECTIVE INVESTOR; AND (B) REPRESENTATIONS FROM
THE TRANSFEROR REGARDING THE OFFERING AND SALE OF THE CERTIFICATES.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE DEPOSITOR
SHALL HAVE RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE
TRANSFEREE OF THIS CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE
EITHER (A) IS NOT AN EMPLOYEE BENEFIT PLAN (A "PLAN") WITHIN THE
MEANING OF SECTION 406 OF THE EMPLOYEE RETIREMENT INCOME SECURITY
ACT OF 1974, AS AMENDED ("ERISA"), AND IS NOT DIRECTLY OR
INDIRECTLY PURCHASING ANY CERTIFICATE ON BEHALF OF, AS INVESTMENT
MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF OR WITH ASSETS OF
A PLAN OR, IN THE CASE OF AN INSURANCE COMPANY, THE ASSETS OF ANY
SEPARATE ACCOUNTS TO EFFECT SUCH ACQUISITION OR (B) THE SOURCE OF
FUNDS FOR THE PURCHASE OF THE CERTIFICATES IS AN "INSURANCE COMPANY
GENERAL ACCOUNT" WITHIN THE MEANING OF PROHIBITED TRANSACTION CLASS
EXEMPTION 95-60 ("PTCE 95-60"), 60 FED. REG. 35925 (JULY 12, 1995),
AND THE CONDITIONS SET FORTH IN SECTION I AND SECTION III OF PTCE
95-60 ARE SATISFIED WITH RESPECT TO THE PURCHASE AND HOLDING OF THE
CERTIFICATES, OR (ii) IF THIS CERTIFICATE IS PRESENTED FOR
REGISTRATION IN THE NAME OF A PLAN SUBJECT TO TITLE I OF ERISA, OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE
"CODE") (OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT ENACTMENTS), OR
A TRUSTEE OF ANY SUCH PLAN, OR ANY OTHER PERSON WHO IS USING THE
ASSETS OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION, AN OPINION OF
COUNSEL TO THE EFFECT THAT THE PURCHASE OR HOLDING OF THIS
CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" PURSUANT TO THE DEPARTMENT OF LABOR PLAN
ASSET REGULATIONS SET FORTH IN 29 C.F.R. Section 2510.3-101 AND TO
BE
<PAGE>
SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR
THE PROHIBITED TRANSACTION PROVISIONS OF THE CODE, WILL NOT
CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN THE MEANING
OF SECTION 406 OR SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE,
AND WILL NOT SUBJECT THE TRUSTEE, THE SERVICER, THE COMPANY OR ANY
OF THEIR AFFILIATES TO ANY OBLIGATION OR LIABILITY (INCLUDING
OBLIGATIONS OR LIABILITIES UNDER ERISA OR SECTION 4975 OF THE CODE)
RELATING TO THE CERTIFICATES.
3. The Purchaser is acquiring the Transferred Certificates for
its own account [for investment only](*) and not with a view to or for sale
or other transfer in connection with any distribution of the Transferred
Certificates in any manner that would violate the Securities Act or any
applicable state securities laws, subject, nevertheless, to the understanding
that disposition of the Purchaser's property shall at all times be and remain
within its control.
4. The Purchaser (a) is a substantial, sophisticated
institutional investor having such knowledge and experience in financial and
business matters, and in particular in such matters related to securities
similar to the Certificates, such that it is capable of evaluating the merits
and risks of investment in the Certificates, (b) is able to bear the economic
risks of such an investment and (c) is an "accredited investor" within the
meaning of Rule 501(a) promulgated pursuant to the Securities Act.
5. The Purchaser will not nor has it authorized nor will it
authorize any person to (a) offer, pledge, sell, dispose of or otherwise
transfer any Certificate, any interest in any Certificate or any other
similar security to any person in any manner, (b) solicit any offer to buy or
to accept a pledge, disposition or other transfer of any Certificate, any
interest in any Certificate or any other similar security from any person in
any manner, (c) otherwise approach or negotiate with respect to any
Certificate, any interest in any Certificate or any other similar security
with any person in any manner, (d) make any general solicitation by means of
general advertising or in any other manner, or (e) take any other action,
that would constitute a distribution of any Certificate under the Securities
Act or the Investment Company Act of 1940, as amended (the "1940 Act"), that
would render the disposition of any Certificate a violation of Section 5 of
the Securities Act or any state securities law, or that would require
registration or qualification pursuant thereto. Neither the Purchaser nor
anyone acting on its behalf has offered the Certificates for sale or made any
general solicitation by means of general advertising or in any other manner
with respect to the Certificates. The Purchaser will not sell or otherwise
transfer any of the Certificates, except in compliance with the provisions of
the Pooling and Servicing Agreement.
6. [This paragraph may be deleted if the Purchaser provides the
Opinion of Counsel referred to in clause (ii) of Section 4.02(d) of the
Pooling and Servicing Agreement.] The Purchaser either (A) is not an
employee benefit plan within the meaning of
_______________________
* Not required of a broker/dealer purchaser.
<PAGE>
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), or a plan within the meaning of Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code") (each, a "Plan"), and
is not directly or indirectly purchasing any Certificate on behalf of, as
investment manager of, as named fiduciary of, as trustee of or with assets of
a Plan or directly or indirectly purchasing any certificates with the assets
of any insurance company separate account or of any Plan or (B) is an
insurance company and the source of funds for the purchase of the
certificates is an "insurance company general account" within the meaning of
Prohibited Transaction Class Exemption 95-60 ("PTCE 95-60"), 60 Fed. Reg.
35925 (July 12, 1995), and the conditions set forth in Section I and III of
PTCE 95-60 are satisfied with respect to the purchase and holding of the
Certificates.
7. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and
covenants contained in the foregoing paragraphs and in this letter or a
letter substantially in the form of Exhibit I to the Pooling and Servicing
Agreement.
8. The Purchaser agrees to indemnify the Trustee, the Servicer
and the Depositor against any liability that may result from any
misrepresentation made herein.
Very truly yours,
[PURCHASER]
By:
-------------------------------
Name:
Title:
<PAGE>
EXHIBIT I
FORM OF RULE 144A INVESTMENT LETTER
(Qualified Institutional Buyer)
[DATE]
Chase Manhattan Mortgage Corporation
343 Thornall Street
Edison, NJ 08834
The Chase Manhattan Bank
Global Trust Services
15th Floor
450 West 33rd Street
New York, NY 10001
Re: Chase Mortgage Finance Corporation,
Multi-Class Mortgage Pass-Through
Certificates, Series 1998-S2, [Class B- ]
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from
_________________________ (the "Transferor") $_______ by original principal
balance (the "Transferred Certificates") of Multi-Class Mortgage Pass-Through
Certificates, Series 1998-S2, [Class B-] (the "Certificates"), issued
pursuant to a pooling and servicing agreement, dated as of June 1, 1998 (the
"Pooling and Servicing Agreement"), among Chase Mortgage Finance Corporation
(the "Depositor"), Chase Manhattan Mortgage Corporation, as Servicer (the
"Servicer"), and Citibank, N.A., as trustee (the "Trustee"). [The Purchaser
intends to register the Transferred Certificate in the name of
____________________, as nominee for __________________.] All terms used and
not otherwise defined herein shall have the meanings set forth in the Trust
Agreement.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchaser certifies, represents and
warrants to, and covenants with, the Depositor and the Trustee that:
In connection with our acquisition of the above Transferred
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction
that is exempt from the registration requirements of the Act and any such
laws, (b) we have such knowledge and experience in financial and business
matters that we are capable of
<PAGE>
Chase Manhattan Mortgage Corporation
Citibank, N.A.
[cad 157]DATE[cad 179]
Page 2
evaluating the merits and risks of investments in the Certificates, (c) we
have had the opportunity to ask questions of and receive answers from the
Depositor concerning the purchase of the Transferred Certificates and all
matters relating thereto or any additional information deemed necessary to
our decision to purchase the Transferred Certificates, (d) we are not an
employee benefit plan within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, or a plan within the
meaning of Section 4975 of the Internal Revenue Code of 1986, as amended
(each, a "Plan"), nor are we directly or indirectly purchasing any
Certificate on behalf of, as investment manager of, as named fiduciary of, as
trustee of or with assets of a Plan or directly or indirectly purchasing any
certificates with the assets of any insurance company separate account or of
any Plan [or alternatively, in the case of an insurance company, is an insurance
company and the source of funds for the purchase of the certificates]
is an "insurance company general account" within the meaning of Prohibited
Transaction Class Exemption 95-60 ("PTCE 95-60"), 50 Fed. Reg. 35925 (July
12, 1995), and the conditions set forth in Section I and Section III of PTCE
95-60 are satisfied with respect to the purchase and holding of the
Certificates, (e) we have not, nor has anyone acting on our behalf offered,
transferred, pledged, sold or otherwise disposed of the Certificates, any
interest in the Certificates or any other similar security to, or solicited
any offer to buy or accept a transfer, pledge or other disposition of the
Certificates, any interest in the Certificates or any other similar security
from, or otherwise approached or negotiated with respect to the Certificates,
any interest in the Certificates or any other similar security with, any
person in any manner, or made any general solicitation by means of general
advertising or in any other manner, or taken any other action, that would
constitute a distribution of the Certificates under the Securities Act or
that would render the disposition of the Certificates a violation of Section
5 of the Securities Act or require registration pursuant thereto, nor will
act, nor has authorized or will authorize any person to act, in such manner
with respect to the Certificates, (f) we are a "qualified institutional
buyer" as that term is defined in Rule 144A under the Securities Act and have
completed one of the forms of certification to that effect attached hereto as
Annex 1 or Annex 2. We are aware that the sale of the Transferred
Certificates to us is being made in reliance on Rule 144A. We are acquiring
the Transferred Certificates for our own account or for resale pursuant to
Rule 144A and further understand that such Certificates may be resold,
pledged or transferred only (i) to a person reasonably believed by us, based
upon certifications of such purchaser or information we have in our
possession, to be a qualified institutional buyer that purchases for its own
account or for the account of a qualified institutional buyer to whom notice
is given that the resale, pledge or transfer is being made in reliance on
Rule 144A, or (ii) pursuant to another exemption from registration under the
Securities Act.
<PAGE>
Chase Manhattan Mortgage Corporation
Citibank, N.A.
[cad 157]DATE[cad 179]
Page 3
We agree to indemnify the Trustee, the Servicer and the Depositor
against any liability that may result from any misrepresentation made herein.
Very truly yours,
[PURCHASER]
By:
------------------------------------------
Name:
Title:
<PAGE>
ANNEX 1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with the purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under
the Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer
owned and/or invested on a discretionary basis $____________(*) in securities
(except for the excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated in accordance
with Rule 144A) and (ii) the Buyer satisfies the criteria in the category
marked below.
____ Corporation, etc. The Buyer is a corporation (other than a
bank, savings and loan association or similar institution),
Massachusetts or similar business trust, partnership, or
charitable organization described in Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended.
____ Bank. The Buyer (a) is a national bank or banking institution
organized under the laws of any State, territory or the
District of Columbia, the business of which is substantially
confined to banking and is supervised by Federal, State or
territorial banking commission or similar official or is a
foreign bank or equivalent institution, and (b) has an audited
net worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which is
attached hereto.
____ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association, cooperative bank,
homestead association or similar institution, which is
supervised and examined by a State or Federal authority having
supervision over such institution or is a foreign savings and
loan association or equivalent institution and (b) has an
audited net
- ---------------------
(*)
Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
<PAGE>
worth of at least $25,000,000 as demonstrated in its latest
annual financial statements, a copy of which is attached hereto.
____ Broker-dealer. The Buyer is a dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934, as amended.
____ Insurance Company. The Buyer is an insurance company whose
primary and predominant business activity is the writing of
insurance or the reinsuring of risks underwritten by insurance
companies and which is subject to supervision by the insurance
commissioner or a similar official or agency of the State,
territory or the District of Columbia.
____ State or Local Plan. The Buyer is a plan established and
maintained by a State, its political subdivisions, or any
agency or instrumentality of the State or its political
subdivisions, for the benefit of its employees.
____ ERISA Plan. The Buyer is an employee benefit plan within the
meaning of Title I of the Employee Retirement Income Security
Act of 1974, as amended.
____ Investment Advisor. The Buyer is an investment advisor
registered under the Investment Advisors Act of 1940, as
amended.
____ Small Business Investment Company. Buyer is a small business
investment company licensed by the U.S. Small Business
Administration under Section 301(c) or (d) of the Small
Business Investment Act of 1958, as amended.
____ Business Development Company. Buyer is a business development
company as defined in Section 202(a)(22) of the Investment
Advisors Act of 1940, as amended.
3. The term "securities" as used for purposes of the calculation
of the dollar amount in paragraph 2 excludes: (i) securities of issuers that
are affiliated with the Buyer, (ii) securities that are part of an unsold
allotment to or subscription by the Buyer, if the Buyer is a dealer, (iii)
securities issued or guaranteed by the U.S. or any instrumentality thereof,
(iv) bank deposit notes and certificates of deposit, (v) loan participations,
(vi) repurchase agreements, (vii) securities owned but subject to a
repurchase agreement and (viii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities
owned and/or invested on a discretionary basis by the Buyer, the Buyer used
the cost of such securities to the Buyer and did not include any of the
securities referred to in the preceding paragraph,
<PAGE>
except (i) where the Buyer reports its securities holdings in its financial
statements on the basis of their market value, and (ii) no current
information with respect to the cost of those securities has been published.
If clause (ii) in the preceding sentence applies, the securities may be
valued at market. Further, in determining such aggregate amount, the Buyer
may have included securities owned by subsidiaries of the Buyer, but only if
such subsidiaries are consolidated with the Buyer in its financial statements
prepared in accordance with generally accepted accounting principles and if
the investments of such subsidiaries are managed under the Buyer's direction.
However, such securities were not included if the Buyer is a majority-owned,
consolidated subsidiary of another enterprise and the Buyer is not itself a
reporting company under the Securities Exchange Act of 1934, as amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the
Certificates are relying and will continue to rely on the statements made
herein because one or more sales to the Buyer may be in reliance on Rule
144A.
6. Until the date of purchase of the Rule 144A Securities, the
Buyer will notify each of the parties to which this certification is made of
any changes in the information and conclusions herein. Until such notice is
given, the Buyer's purchase of the Certificates will constitute a
reaffirmation of this certification as of the date of such purchase. In
addition, if the Buyer is a bank or savings and loan as provided above, the
Buyer agrees that it will furnish to such parties updated annual financial
statements promptly after they become available.
By:
----------------------------------------
Name:
Title:
Date:
---------------------------------------
<PAGE>
ANNEX 2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the
President, Chief Financial Officer or Senior Vice President of the Buyer or,
if the Buyer is a "qualified institutional buyer" as that term is defined in
Rule 144A under the Securities Act of 1933, as amended ("Rule 144A"), because
Buyer is part of a Family of Investment Companies (as defined below), is such
an officer of the Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in Rule 144A because (i) the Buyer
is an investment company registered under the Investment Company Act of 1940,
as amended and (ii) as marked below, the Buyer alone, or the Buyer's Family
of Investment Companies, owned at least $100,000,000 in securities (other
than the excluded securities referred to below) as of the end of the Buyer's
most recent fiscal year. For purposes of determining the amount of
securities owned by the Buyer or the Buyer's Family of Investment Companies,
the cost of such securities was used, except (i) where the Buyer or the
Buyer's Family of Investment Companies reports its securities holdings in its
financial statements on the basis of their market value, and (ii) no current
information with respect to the cost of those securities has been published.
If clause (ii) in the preceding sentence applies, the securities may be
valued at market.
____ The Buyer owned $___________ in securities (other than the
excluded securities referred to below) as of the end of the
Buyer's most recent fiscal year (such amount being calculated
in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies which
owned in the aggregate $__________ in securities (other than
the excluded securities referred to below) as of the end of
the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue
of being majority owned subsidiaries of the same parent or because one
investment adviser is a majority owned subsidiary of the other).
<PAGE>
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed
by the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii)
currency, interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on
Rule 144A. In addition, the Buyer will only purchase for the Buyer's own
account.
6. Until the date of purchase of the Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
By:
---------------------------------------
Name:
Title:
IF AN ADVISER:
---------------------------------------
Print Name of Buyer
Date:
---------------------
<PAGE>
EXHIBIT J
FORM OF SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
This SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT (the
"Agreement") is made and entered into as of [DATE], between Chase Manhattan
Mortgage Corporation, (the "Company") and _____________________ (the
"Purchaser").
PRELIMINARY STATEMENT
__________________ (the "Owner") is the holder of the entire
interest in Chase Mortgage Finance Corporation Multi-Class Mortgage
Pass-Through Certificates, Series 1998-S2, Class B-5 (the "Class B-5
Certificates"). The Class B-5 Certificates were issued pursuant to a Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement") among Chase
Mortgage Finance Corporation, (the "Company"), Chase Manhattan Mortgage
Corporation as servicer thereunder (the "Servicer") and Citibank, N.A., as
trustee (the "Trustee").
The Owner intends to resell all of the Class B-5 Certificates
directly to the Purchaser on or promptly after the date hereof.
In connection with such sale, the parties hereto have agreed that
the Company, as Servicer, will engage in certain special servicing procedures
relating to foreclosures for benefit of the Purchaser, and that the Purchaser
will deposit funds in a collateral fund to cover any losses attributable to
such procedures as well as all advances and costs in connection therewith, as
set forth herein.
In consideration of the mutual agreements herein contained, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser agree to the following:
ARTICLE I.
DEFINITIONS
Section 1.01. Defined Terms.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York are
required or authorized by law or executive order to be closed.
<PAGE>
Collateral Fund: The fund established and maintained pursuant to
Section 3.01 hereof.
Collateral Fund Permitted Investments: Either: (i) obligations
of, or obligations fully guaranteed as to 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 money market fund rated in the highest rating category by a nationally
recognized rating agency selected by the Company, (iii) cash, (iv) mortgage
pass-through certificates issued or guaranteed by GNMA, FNMA or FHLMC, (v)
commercial paper (including both non-interest bearing discount obligations
and interest bearing obligations payable on demand or on a specified date),
the issuer of which may be an affiliate of the Company, having at the time of
such investment a rating of at least Prime-1 by Moody's Investors Service,
Inc. ("Moody's") or at least D-1 by Duff & Phelps Credit Rating Co. ("DCR")
and (vi) demand and time deposits in, certificates of deposit of, any
depository institution or trust company (which may be an affiliate of the
Company) incorporated under the laws of the United States of America or any
state thereof and subject to supervision and examination by federal and/or
state banking authorities, so long as at the time of such investment either
(x) the long-term debt obligations of such depository institution or trust
company have a rating of at least Aa by Moody's or at least AA by DCR or (y)
the certificate of deposit or other unsecured short-term debt obligations of
such depository institution or trust company have a rating of at least D-1 by
DCR or Prime-1 by Moody's and, for each of the preceding clauses (i), (iv),
(v) and (vi), the maturity thereof shall be not later than the earlier to
occur of (A) 30 days from the date of the related investment and (B) the next
succeeding Distribution Date.
Commencement of Foreclosure: The first official action required
under local law in order to commence foreclosure proceedings or to schedule a
trustee's sale under a deed of trust, including (i) in the case of a
mortgage, any filing or service of process necessary to commence an action to
foreclose, or (ii) in the case of a deed of trust, the posting, publishing,
filing or delivery of a notice of sale, but not including in either case (x)
any notice of default, notice of intent to foreclose or sell or any other
action prerequisite to the actions specified in (i) or (ii) above and upon
the consent of the Purchaser which will be deemed given unless expressly
withheld within two Business Days of notification, (y) the acceptance of a
deed-in-lieu of foreclosure (whether in connection with a sale of the related
property or otherwise) or (z) initiation and completion of a short pay-off.
Current Appraisal: With respect to any Mortgage Loan as to which
the Purchaser has made an Election to Delay Foreclosure, an appraisal of the
related Mortgaged Property obtained by the Purchaser at its expense from an
appraiser (which shall not be an affiliate of the Purchaser) acceptable to
the Company as nearly contemporaneously as practicable to the time of the
Purchaser's election, prepared based on the Company's customary requirements
for such appraisals.
<PAGE>
Election to Delay Foreclosure: Any election by the Purchaser to
delay the Commencement of Foreclosure, made in accordance with Section
2.02(b).
Election to Foreclose: Any election by the Purchaser to proceed
with the Commencement of Foreclosure, made in accordance with Section
2.03(a).
Required Collateral Fund Balance: As of any date of determination,
an amount equal to the aggregate of all amounts previously required to be
deposited in the Collateral Fund pursuant to Section 2.02(d) (after
adjustment for all withdrawals and deposits pursuant to Section 2.02(e)) and
Section 2.03(b) (after adjustment for all withdrawals and deposits pursuant
to Section 2.03(c)) and Section 3.02 to be reduced by all withdrawals
therefrom pursuant to Section 2.02(g) and Section 2.03(d).
Section 1.02. Definitions Incorporated by Reference.
All capitalized terms not otherwise defined in this Agreement shall
have the meanings assigned in the Pooling and Servicing Agreement.
ARTICLE II.
SPECIAL SERVICING PROCEDURES
Section 2.01. Reports and Notices.
(a) In connection with the performance of its duties under
the Pooling and Servicing Agreement relating to the realization upon
defaulted Mortgage Loans, the Company, as Servicer, shall provide to the
Purchaser the following notices and reports:
(i) Within five Business Days after each Distribution Date (or
included in or with the monthly statement to Certificateholders pursuant
to the Pooling and Servicing Agreement), the Company shall provide to
the Purchaser a report indicating for the Trust the number of Mortgage
Loans that are (A) thirty days, (B) sixty days, (C) ninety days or more
delinquent or (D) in foreclosure, and indicating for each such Mortgage
Loan the outstanding principal balance.
(ii) Prior to the Commencement of Foreclosure in connection
with any Mortgage Loan, the Company shall provide the Purchaser with a
notice (sent by telecopier) of such proposed and imminent foreclosure,
stating the loan number and the aggregate amount owing under the
Mortgage Loan.
(b) If requested by the Purchaser, the Company shall make its
servicing personnel available (during their normal business hours) to respond
to reasonable
<PAGE>
inquiries by the Purchaser in connection with any Mortgage Loan
identified in a report under subsection (a)(i)(B), (a)(i)(C), (a)(i)(D) or
(a)(ii) which has been given to the Purchaser; provided, that (1) the Company
shall only be required to provide information that is readily accessible to
its servicing personnel and is non-confidential and (2) the Company shall not
be required to provide any written information under this subsection.
(c) In addition to the foregoing, the Company shall provide
to the Purchaser such information as the Purchaser may reasonably request
concerning each Mortgage Loan that is at least sixty days delinquent and each
Mortgage Loan which has become real estate owned, through the final
liquidation thereof; provided that the Company shall only be required to
provide information that is readily accessible to its servicing personnel and
is non-confidential.
(d) With respect to all Mortgage Loans which are serviced at
any time by the Company through a Subservicer, the Company shall be entitled
to rely for all purposes hereunder, including for purposes of fulfilling its
reporting obligations under this Section 2.01 on the accuracy and
completeness of any information provided to it by the applicable Subservicer.
Section 2.02. Purchaser's Election to Delay Foreclosure
Proceedings.
(a) The Purchaser directs the Company that in the event that
the Company does not receive written notice of the Purchaser's election
pursuant to subsection (b) below within 24 hours (exclusive of any
intervening non-Business Days) of transmission of the notice provided by the
Company under Section 2.01(a)(ii), subject to extension as set forth in
Section 2.02(b), the Company shall proceed with the Commencement of
Foreclosure in respect of such Mortgage Loan in accordance with its normal
foreclosure policies without further notice to the Purchaser. Any
foreclosure that has been initiated may be discontinued (i) without notice to
the Purchaser, if the Mortgage Loan has been brought current or if a
refinancing or prepayment occurs with respect to the Mortgage Loan (including
by means of a short payoff approved by the Company) (ii) with notice to the
Purchaser if the Company has reached the terms of a forbearance agreement
with the borrower. In such latter case the Company may complete such
forbearance agreement unless instructed otherwise by the Purchaser within one
Business Day of notification.
(b) In connection with any Mortgage Loan with respect to
which a notice under Section 2.01(a)(ii) has been given to the Purchaser, the
Purchaser may elect, for reasonable cause as determined by the Purchaser, to
instruct the Company to delay the Commencement of Foreclosure until such term
as the Purchaser determines that the Company may proceed with the
Commencement of Foreclosure. Such election must be evidenced by written
notice received within 24 hours (exclusive of any intervening non-Business
Days) of transmission of the notice provided by the Company under Section
2.01(a)(ii). Such 24 hour period shall be extended for no longer than an
additional four Business Days after the receipt of the information if the
Purchaser requests additional information related to such foreclosure;
provided, however that the Purchaser will have at least one Business Day to
respond to any
<PAGE>
requested additional information. Any such additional information shall (i)
not be confidential in nature and (ii) be obtainable by the Company from
existing reports, certificates or statements or otherwise be readily
accessible to its servicing personnel. The Purchaser agrees that it has no
right to deal with the mortgagor. If the Company's normal foreclosure policy
includes acceptance of a deed-in-lieu of foreclosure or short payoff, the
Purchaser will be notified and given one Business Day to respond.
(c) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the Purchaser shall
obtain a Current Appraisal as soon as practicable, and shall provide the
Company with a copy of such Current Appraisal.
(d) Within two Business Days of making any Election to Delay
Foreclosure, the Purchaser shall remit by wire transfer to the Company, for
deposit in the Collateral Fund, an amount, as calculated by the Company,
equal to the sum of (i)
125% of the greater of the outstanding Principal Balance of the Mortgage Loan
and the value shown in the Current Appraisal referred to in subsection (c)
above (or, if such Current Appraisal has not yet been obtained, the Company's
estimate thereof, in which case the required deposit under this subsection
shall be adjusted upon obtaining of such Current Appraisal), and (ii) three
months' interest on the Mortgage Loan at the applicable Mortgage Rate. If
any Election to Delay Foreclosure extends for a period in excess of three
months (such excess period being referred to herein as the "Excess Period"),
the Purchaser shall remit by wire transfer in advance to the Company for
deposit in the Collateral Fund the amount, as calculated by the Company,
equal to interest on the Mortgage Loan at the applicable Mortgage Rate for
the Excess Period. The terms of this Agreement shall no longer apply to the
servicing of any Mortgage Loan upon the failure of the Purchaser to deposit
the above amounts relating to the Mortgage Loan within two Business Days of
the Election to Delay Foreclosure.
(e) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the Company may withdraw
from the Collateral Fund from time to time amounts necessary to reimburse the
Company for all Advances and Liquidation Expenses thereafter made by the
Company as Servicer in accordance with the Pooling and Servicing Agreement.
To the extent that the amount of any such Liquidation Expense is determined
by the Company based on estimated costs, and the actual costs are
subsequently determined to be higher, the Company may withdraw the additional
amount from the Collateral Fund. In the event that the Mortgage Loan is
brought current by the Mortgagor and the foreclosure action is discontinued,
the amounts so withdrawn from the Collateral Fund shall be redeposited
therein as and to the extent that reimbursement therefor from amounts paid by
the Mortgagor is not prohibited pursuant to the Pooling and Servicing
Agreement. Except as provided in the preceding sentence, amounts withdrawn
from the Collateral Fund to cover Advances and Liquidation Expenses shall not
be redeposited therein or otherwise reimbursed to the Purchaser. If and when
any such Mortgage Loan is brought current by the Mortgagor, all amounts
remaining in the Collateral Fund in respect of such Mortgage Loan (after
adjustment for all withdrawals and deposits pursuant to this subsection)
shall be released to the Purchaser.
<PAGE>
(f) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the Company shall
continue to service the Mortgage Loan in accordance with its customary
procedures (other than the delay in Commencement of Foreclosure as provided
herein). If and when the Purchaser shall notify the Company that it believes
that it is appropriate to do so, the Company shall proceed with the
Commencement of Foreclosure. In any event, if the Mortgage Loan is not
brought current by the mortgagor by the time the loan becomes 6 months
delinquent, the Purchaser's election shall no longer be effective and at the
Purchaser's option, either (i) the Purchaser shall purchase the Mortgage Loan
from the Trust Fund at a purchase price equal to the fair market value as
shown on the Current Appraisal, to be paid by (x) applying any balance in the
Collateral Fund to such purchase price, and (y) to the extent of any
deficiency, by wire transfer of immediately available funds to the Company or
Trustee; or (ii) the Company shall proceed with the Commencement of
Foreclosure.
(g) Upon the occurrence of a liquidation with respect to any
Mortgage Loan as to which the Purchaser made an Election to Delay Foreclosure
and as to which the Company proceeded with the Commencement of Foreclosure in
accordance with subsection (f) above, the Company shall calculate the amount,
if any, by which the value shown on the Current Appraisal obtained under
subsection (c) exceeds the actual sales price obtained for the related
Mortgaged Property (net of Liquidation Expenses and accrued interest related
to the extended foreclosure period), and the Company shall withdraw the
amount of such excess from the Collateral Fund, shall remit the same to the
Trust Fund and in its capacity as Servicer shall apply such amount as
additional Liquidation Proceeds pursuant to the Pooling and Servicing
Agreement. After making such withdrawal, all amounts remaining in the
Collateral Fund in respect of such Mortgage Loan (after adjustment for all
withdrawals and deposits pursuant to subsection (e)) shall be released to the
Purchaser.
Section 2.03. Purchaser's Election to Commence Foreclosure
Proceedings.
(a) In connection with any Mortgage Loan identified in a
report under Section 2.01(a)(i)(B), the Purchaser may elect, for reasonable
cause as determined by the Purchaser, to instruct the Company to proceed with
the Commencement of Foreclosure as soon as practicable. Such election must
be evidenced by written notice received by the Company by 5:00 p.m., New York
City time, on the third Business Day following the delivery of such report
under Section 2.01(a)(i).
(b) Within two Business Days of making any Election to
Foreclose, the Purchaser shall remit to the Company, for deposit in the
Collateral Fund, an amount, as calculated by the Company, equal to 125% of
the current Principal Balance of the Mortgage Loan and three months' interest
on the Mortgage Loan at the applicable Mortgage Rate. If and when any such
Mortgage Loan is brought current by the Mortgagor, all amounts in the
Collateral Fund in respect of such Mortgage Loan shall be released to the
Purchaser. The terms of this Agreement shall no longer apply to the
servicing of any Mortgage Loan upon the failure of the
<PAGE>
Purchaser to deposit the above amounts relating to the Mortgage Loans within
two Business Days at the Election to Foreclose.
(c) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Foreclose, the Company shall continue to
service the Mortgage Loan in accordance with its customary procedures (other
than to proceed with the Commencement of Foreclosure as provided herein). In
connection therewith, the Company shall have the same rights to make
withdrawals for Advances and Liquidation Expenses from the Collateral Fund as
are provided under Section 2.02(e), and the Company shall make reimbursements
thereto to the limited extent provided under such subsection. The Company
shall not be required to proceed with the Commencement of Foreclosure if (i)
the same is stayed as a result of the Mortgagor's bankruptcy or is otherwise
barred by applicable law, or to the extent that all legal conditions
precedent thereto have not yet been complied with or (ii) the Company
believes there is a breach of representation or warranties by the Company,
which may result in a repurchase or substitution of such Mortgage Loan, or
(iii) the Company reasonably believes the Mortgaged Property may be
contaminated with or affected by hazardous wastes or hazardous substances
(and the Company supplies the Purchaser with information supporting such
belief). The Company will repurchase or substitute a Mortgage Loan pursuant
to the preceding clause (ii) within the time period specified in the Pooling
and Servicing Agreement. Any foreclosure that has been initiated may be
discontinued (i) without notice to the Purchaser if the Mortgage Loan has
been brought current or if a refinancing or prepayment occurs with respect to
the Mortgage Loan (including by means of a short payoff approved by the
Company), or (ii) with notice to the Purchaser if the Company has reached the
terms of a forbearance agreement unless instructed otherwise by the Purchaser
within two Business Days of notification.
(d) Upon the occurrence of a liquidation with respect to any
Mortgage Loan as to which the Purchaser made an Election to Foreclose and as
to which the Company proceeded with the Commencement of Foreclosure in
accordance with subsection (c) above, the Company shall calculate the amount,
if any, by which the Principal Balance of the Mortgage Loan at the time of
liquidation (plus all unreimbursed Advances and Liquidation Expenses in
connection therewith other than those paid from the Collateral Fund) exceeds
the actual sales price obtained for the related Mortgaged Property, and the
Company shall withdraw the amount of such excess from the Collateral Fund,
shall remit the same to the Trust Fund and in its capacity as Servicer shall
apply such amount as additional Liquidation Proceeds pursuant to the Pooling
and Servicing Agreement. After making such withdrawal, all amounts remaining
in the Collateral Fund (after adjustment for all withdrawals and deposits
pursuant to subsection (c)) in respect of such Mortgage Loan shall be
released to the Purchaser.
Section 2.04. Termination.
(a) With respect to all Mortgage Loans included in the Trust Fund,
the Purchaser's rights to make any Election to Delay Foreclosure or any
Election to Foreclose and the Company's obligations under Section 2.01 shall
terminate (i) at such time as the Certificate
<PAGE>
Principal Balance of the Class B-5 Certificates has been reduced to zero,
(ii) if the greater of (x) 43% (or such lower or higher percentages that
represents the Company's actual historical loss experience with respect to
the Mortgage Loans in the related pool) of the aggregate principal balance of
all Mortgage Loans that are in foreclosure or are more than 90 days
delinquent on a contractual basis and REO properties or if the aggregate
amount that the Company estimates will be required to be withdrawn from the
Collateral Fund with respect to Mortgage Loans as to which the Purchaser has
made an Election to Delay Foreclosure or an Election to Foreclose exceeds (z)
the Outstanding Certificate Principal Balance of the Class B-5 Certificates,
or (iii) upon any transfer by the Purchaser of any interest (other than the
minority interest therein, but only if the transferee provides written
acknowledgment to the Company of the Purchaser's right hereunder and that
such transferee will have no rights hereunder) in the Class B-5 Certificates
(whether or not such transfer is registered under the Pooling and Servicing
Agreement), including any such transfer in connection with a termination of
the Trust Fund. Except as set forth above, this Agreement and the respective
rights, obligations and responsibilities of the Purchaser and the Company
hereunder shall terminate upon the later to occur of (i) the final
liquidation of the last Mortgage Loan as to which the Purchaser made any
Election to Delay Foreclosure or any Election to Foreclose and the withdrawal
of all remaining amounts in the Collateral Fund as provided herein and (ii)
ten (10) Business Day's notice.
(b) Purchaser's rights pursuant to Section 2.02 or 2.03 of this
Agreement shall terminate with respect to a Mortgage loan as to which the
Purchaser has exercised its rights under Section 2.02 or 2.03 hereof, upon
Purchaser's failure to deposit any amounts required pursuant to Section
2.02(d) or 2.03(b).
(c) Neither the Servicer nor any of its directors, officers,
employees or agents shall be under any liability for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Servicer or any such Person against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or
gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Servicer and any
director, officer, employee or agent thereof may rely in good faith on any
document of any kind prima facie properly executed and submitted by an Person
respecting any matters arising hereunder.
ARTICLE III.
COLLATERAL FUND; SECURITY INTEREST
Section 3.01. Collateral Fund.
Upon receipt from the Purchaser of the initial amount required to
be deposited in the Collateral Fund pursuant to Article 11, the Company shall
establish and maintain with itself
<PAGE>
as a segregated account on its books and records an account (the "Collateral
Fund"), entitled "Chase Manhattan Mortgage Corporation, as Servicer, for the
benefit of registered holders of Chase Mortgage Finance Corporation
Multi-Class Mortgage Pass-Through Certificates, Series 1998-S2, Class B-5."
Amounts in the Collateral Fund shall continue to be the property of the
Purchaser, subject to the first priority security interest granted hereunder
for the benefit of the Certificate holders, until withdrawn from the
Collateral Fund pursuant to Section 2.02 or 2.03 hereof.
Upon the termination of this Agreement and the liquidation of all
Mortgage Loans as to which the Purchaser has made any Election to Delay
Foreclosure or any Election to Foreclose pursuant to Section 2.04 hereof, the
Company shall distribute to the Purchaser all amounts remaining in the
Collateral Fund together with any investment earnings thereon.
The Collateral Fund shall be an "outside reserve fund" within the
meaning of the REMIC Provisions, beneficially owned by the Purchaser. In no
event shall the Purchaser (i) take or cause the Trustee or the Company to
take any action that could cause any REMIC established under the Trust
Agreement to fail to qualify as a REMIC or cause the imposition on any such
REMIC of any "prohibited transaction" or "prohibited contribution" taxes or
(ii) cause the Trustee or the Company to fail to take any action necessary to
maintain the status of any such REMIC as a REMIC.
Section 3.02. Collateral Fund Permitted Investments.
The Company shall, at the written direction of the Purchaser invest
the funds in the Collateral Fund in Collateral Fund Permitted Investments.
Such direction shall not be changed more frequently than quarterly. In the
absence of any direction, the Company shall select such investments in
accordance with the definition of Collateral Fund Permitted Investments in
its discretion.
All income and gain realized from any investment as well as any
interest earned on deposits in the Collateral Fund (net of any losses on such
investments) and any payments of principal made in respect of any Collateral
Fund Permitted Investment shall be deposited in the Collateral Fund upon
receipt. All costs and realized losses associated with the purchase and sale
of Collateral Fund Permitted Investments shall be borne by the Purchaser and
the amount of net realized losses shall be deposited by the Purchaser in the
Collateral Fund. The Company shall periodically (but not more frequently
than monthly) distribute to the Purchaser upon request an amount of cash, to
the extent cash is available therefor in the Collateral Fund, equal to the
amount by which the balance of the Collateral Fund, after giving effect to
all other distributions to be made from the Collateral Fund on such date,
exceeds the Required Collateral Fund Balance. Any amounts so distributed
shall be released from the lien and security interest of this Agreement.
<PAGE>
Section 3.03. Grant of Security Interest.
The Purchaser grants to the Company and the Trustee for the benefit
of the Certificateholders a security interest in and lien on all of the
Purchaser's right, title and interest, whether now owned or hereafter
acquired, in and to: (1) the Collateral Fund, (2) all amounts deposited in
the Collateral Fund and Collateral Fund Permitted Investments in which such
amounts are invested (and the distributions and proceeds of such investments)
and (3) all cash and non-cash proceeds of any of the foregoing, including
proceeds of the voluntary or involuntary conversion thereof (all of the
foregoing collectively, the "Collateral").
The Purchaser acknowledges the lien on and security interest in the
Collateral for the benefit of the Certificateholders. The Purchaser shall
take all actions requested by the Company or the Trustee as may be reasonably
necessary to perfect the security interest created under this Agreement in
the Collateral and cause it to be prior to all other security interests and
liens, including the execution and delivery to the Company for filing of
appropriate financing statements in accordance with applicable law. The
Company shall file appropriate continuation statements, or appoint an agent
on its behalf to file such statements, in accordance with applicable law.
Section 3.04. Collateral Shortfalls.
In the event that amounts on deposit in the Collateral Fund at any
time are insufficient to cover any withdrawals therefrom that the Company or
the Trustee is then entitled to make hereunder, the Purchaser shall be
obligated to pay such amounts to the Company or the Trustee immediately upon
demand. Such obligation shall constitute a general corporate obligation of
the Purchaser.
ARTICLE IV.
MISCELLANEOUS PROVISIONS
Section 4.01. Amendment.
This Agreement may be amended from time to time by the Company and
the Purchaser by written agreement signed by the Company and the Purchaser.
Section 4.02. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original,
and such counterparts shall constitute but one and the same instrument.
<PAGE>
Section 4.03. Governing Law.
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.
Section 4.04. Notices.
All demands, notices and direction hereunder shall be in writing or
by telecopy and shall be deemed effective upon receipt to:
(a) in the case of the Company,
Chase Manhattan Mortgage Corporation
343 Thornall Street
Edison, NJ 08834
or such other address as may hereafter be furnished in writing by the
Company, or
(b) in the case of the Purchaser, with respect to notices
pursuant to Section 2.01,
[PURCHASER]
[ADDRESS]
Attn:
-------------------
Phone:
-------------------
Fax:
-------------------
with respect to all other notices pursuant to this
Agreement,
------------------------
[ADDRESS]
Attn:
-------------------
Phone:
------------------
Fax:
-------------------
or such other address as may hereafter be furnished in writing by the
Purchaser.
Section 4.05. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever, including
regulatory, held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining
<PAGE>
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.
Section 4.06. Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto,
and all such provisions shall inure to the benefit of the Certificateholders;
provided, however, that the rights under this Agreement cannot be assigned by
the Purchaser without the consent of the Company.
Section 4.07. Article and Section Headings.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
Section 4.08. Confidentiality.
The Purchaser agrees that all information supplied by or on behalf
of the Company pursuant to Sections 2.01 or 2.02, including individual
account information, is the property of the Company and the Purchaser agrees
to hold such information confidential and not to disclose such information.
<PAGE>
IN WITNESS WHEREOF, the Company and the Purchaser 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.
CHASE MANHATTAN MORTGAGE CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
_________________________
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
<PAGE>
EXHIBIT K
FORM OF TRANSFEREE'S LETTER
CHASE MORTGAGE FINANCE CORPORATION SERIES 1998-S2
[DATE]
Chase Mortgage Finance Corporation
300 Tice Boulevard
Woodcliff Lake, NJ 07675
Ladies and Gentlemen:
We propose to purchase Chase Mortgage Finance Corporation's
Multi-Class Mortgage Pass-Through Certificates, Series 1998-S2, Class A-R,
described in the Prospectus Supplement, dated June __, 1998, and Prospectus,
dated June __, 1998.
1. We certify that (a) we are not a disqualified organization and
(b) we are not purchasing such Class A-R Certificates on behalf of a
disqualified organization; for this purpose the term "disqualified
organization" means the United States, any state or political subdivision
thereof, any foreign government, any international organization, any agency
or instrumentality of any of the foregoing (except any entity treated as
other than an instrumentality of the foregoing for purposes of Section
168(h)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code")),
any organization (other than a cooperative described in Section 521 of the
Code) that is exempt from taxation under the Code (unless such organization
is subject to tax on excess inclusions) and any organization that is
described in Section 1381(a)(2)(C) of the Code. We understand that any
breach by us of this certification may cause us to be liable for an excise
tax imposed upon transfers to disqualified organizations.
2. We certify that (a) we have historically paid our debts as
they became due, (b) we intend, and believe that we will be able, to continue
to pay our debts as they become due in the future, (c) we understand that, as
beneficial owner of the Class A-R Certificates, we may incur tax liabilities
in excess of any cash flows generated by the Class A-R Certificates, and (d)
we intend to pay any taxes associated with holding the Class A-R Certificates
as they become due.
3. We acknowledge that we will be the beneficial owner of the
Class A-R Certificates and:(*)
- ------------------
(*) Check appropriate box and if necessary fill in the name of the
Transferee's nominee.
<PAGE>
______ The Class A-R Certificates will be registered in our
name.
______ The Class A-R Certificates will be held in the name
of our nominee,
____________________, which is not a disqualified
organization.
4. Unless Chase Mortgage Finance Corporation ("CMFC") has
consented to the transfer to us by executing the form of Consent affixed
hereto as Appendix B, we certify that we are a U.S. person; for this purpose
the term "U.S. person" means a citizen or resident of the United States, a
corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, an estate
that is subject to United States federal income tax regardless of the source
of its income, or any trust if a court within the United States is able to
exercise primary supervision over the administration of the trust and one or
more United States fiduciaries have the authority to control all substantial
decisions of the trust. We agree that any breach by us of this certification
shall render the transfer of any interest in the Class A-R Certificates to us
absolutely null and void and shall cause no rights in the Class A-R
Certificates to vest in us.
5. We agree that in the event that at some future time we wish to
transfer any interest in the Class A-R Certificates, we will transfer such
interest in the Class A-R Certificates only (a) to a transferee that (i) is
not a disqualified organization and is not purchasing such interest in the
Class A-R Certificates on behalf of a disqualified organization, (ii) is a
U.S. person and (iii) has delivered to CMFC a letter in the form of this
letter (including the affidavit appended hereto) and, if requested by CMFC,
an opinion of counsel (in a form acceptable to CMFC) that the proposed
transfer will not cause the interest in the Class A-R Certificates to be held
by a disqualified organization or a person who is not a U.S. person or (b)
with the written consent of CMFC.
6. We hereby designate Chase Manhattan Mortgage Corporation as
our fiduciary to act as the tax matters person for the Series 1998-S2 REMIC.
Very truly yours,
[PURCHASER]
By:
---------------------------------------
Name:
Title:
Accepted as of __________ __, 199_
CHASE MORTGAGE FINANCE CORPORATION
By:-------------------------------
Name:
Title:
<PAGE>
APPENDIX A
Affidavit pursuant to (i) Section 860E(e)(4) of
the Internal Revenue Code of 1986, as amended,
and (ii) certain provisions of the Pooling and
Servicing Agreement
Under penalties of perjury, the undersigned declares that the following
is true:
(1) He or she is an officer of _________________________ (the
"Transferee"),
(2) the Transferee's Employee Identification number is __________,
(3) the Transferee is not a "disqualified organization" (as defined
below), has no plan or intention of becoming a disqualified
organization, and is not acquiring any of its interest in the Chase
Mortgage Finance Corporation, Multiclass Mortgage Pass-Through
Certificates, Series 1998-S2, Class A-R on behalf of a disqualified
organization or any other entity,
(4) unless Chase Mortgage Finance Corporation ("CMFC") has consented to
the transfer to the Transferee by executing the form of Consent
affixed as Appendix B to the Transferee's Letter to which this
Certificate is affixed as Appendix A, the Transferee is a "U.S.
person" (as defined below),
(5) that no purpose of the transfer is to avoid or impede the
assessment or collection of tax,
(6) the Transferee has historically paid its debts as they became due,
(7) the Transferee intends, and believes that it will be able, to
continue to pay its debts as they become due in the future,
(8) the Transferee understands that, as beneficial owner of the Class
A-R Certificates, it may incur tax liabilities in excess of any
cash flows generated by the Class A-R Certificates,
(9) the Transferee intends to pay any taxes associated with holding the
Class A-R Certificates as they become due, and
(10) The Transferee consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by CMFC (upon
advice of counsel) to constitute a reasonable arrangement to ensure
that the Class A-R Certificates will not be owned directly or
indirectly by a disqualified organization;
<PAGE>
For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of
any of the foregoing (except any entity treated as other than an
instrumentality of the foregoing for purposes of Section 168(h)(2)(D) of the
Internal Revenue Code of 1986, as amended (the "Code")), any organization
(other than a cooperative described in Section 521 of the Code) that is
exempt from taxation under the Code (unless such organization is subject to
tax on excess inclusions) and any organization that is described in Section
1381(a)(2)(C) of the Code and the term "U.S. person" means a citizen or
resident of the United States, a corporation, partnership or other entity
created or organized in or under the laws of the United States or any
political subdivision thereof, an estate that is subject to United States
federal income tax regardless of the source of its income, or any trust if a
court within the United States is able to exercise primary supervision over
the administration of the trust and one or more United States fiduciaries
have the authority to control all substantial decisions of the trust
-- ----------------------------------
By:
----------------------
-------------------------------------
Address of Investor for receipt of distribution:
Address of Investor for receipt of tax information:
(Corporate Seal)
Attest:
------------------------
, Secretary
---------------------------
<PAGE>
Personally appeared before me the above-named ______________, known or
proved to me to be the same person who executed the foregoing instrument
and to be the _______ of the Investor, and acknowledged to me that he
executed the same as his free act and deed and the free act and deed of
the Investor.
Subscribed and sworn before me this day of , 19 .
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Notary Public
County of
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State of
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My commission expires the day of
By:
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Name:
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Title:
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Dated:
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APPENDIX B
CONSENT
(Transferee)
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- -------------------------
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Ladies and Gentlemen:
Chase Mortgage Finance Corporation ("CMFC") hereby consents to the
transfer to, and registration in the name of, the Transferee (or, if
applicable, registration in the name of such Transferee's nominee of the
Multiclass Mortgage Pass-Through Certificates, Series 1998-S2, Class A-R
described in the Transferee's Letter to which this Consent is appended,
notwithstanding CMFC's knowledge that the Transferee is not a U.S. person (as
defined in such Transferee's Letter).
CHASE MORTGAGE FINANCE CORPORATION
Dated: By:
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EXHIBIT L
REQUEST FOR RELEASE OF DOCUMENTS
To: Citibank, N.A.
111 Wall Street
5th Floor, Zone 1
New York, NY 10043 Citibank, N.A.
Re:
In connection with the administration of the Mortgage Loans held by you,
as Trustee, pursuant to the above-captioned Pooling and Servicing Agreement,
we request the release, and hereby acknowledge receipt, of the Mortgage File
for the Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
_______ 1. Mortgage Paid in Full
_______ 2. Foreclosure
_______ 3. Substitution
_______ 4. Other Liquidation
_______ 5. Nonliquidation Reason: _________________________
By:
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(authorized signer)
Issuer:
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Address:
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Date:
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Trustee
Citibank, N.A.
Please acknowledge the execution of the above request by your signature and
date below:
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Signature Date
Documents returned to Trustee:
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Trustee Date
