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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): November 24, 1998
-----------------
CHASE MORTGAGE FINANCE CORPORATION
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(Exact name of registrant specified in Charter)
Delaware 333-56081 52-1495132
--------------- ------------ -------------------
(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
343 Thornall Street, Edison, NJ 08837 08837
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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)
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ITEM 2. Acquisition or Disposition of Assets: General.
On November 24, 1998, Chase Mortgage Finance Corporation
issued its Multi-Class Mortgage Pass-Through Certificates, Series 1998-S7, such
series representing interests in a pool of fixed rate conventional one- to
four-family mortgage loans. Capitalized terms used herein and not otherwise
defined shall have the meanings assigned to them in the prospectus dated
November 23, 1998, as supplemented by the prospectus supplement dated November
23, 1998 (together, the "Prospectus").
The Class A Certificates consist of the Class IA-1
Certificates, Class IA-2 Certificates, Class IA-3 Certificates, Class IA-4
Certificates, Class IA-5 Certificates, Class IA-6 Certificates, Class IA-7
Certificates, Class IA-8 Certificates, Class IA-9 Certificates, Class IA-10
Certificates, Class IA-11 Certificates, Class IA-12 Certificates, Class IA-13
Certificates, Class IA-14 Certificates, Class IA-15 Certificates, Class IA-16
Certificates, Class IA-17 Certificates, Class IA-18 Certificates, Class IA-19
Certificates, Class IA-20 Certificates, Class IA-21 Certificates, Class IA-22
Certificates, Class IA-23 Certificates, Class IA-24 Certificates, Class IA-X
Certificates, the Class IIA-1 Certificates, the Class IIA-X Certificates, and
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.
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ITEM 7. Financial Statements and Exhibits.
(c) Exhibits
Item 601(a)
of Regulation S-K
Exhibit No. Description
- ----------- -----------
4 Pooling and Servicing Agreement among Chase
Mortgage Finance Corporation, Chase
Manhattan Mortgage Corporation, PNC Mortgage
Securities Corp., The Chase Manhattan Bank
and Citibank, N.A., as trustee, dated as of
November 1, 1998, for Multi-Class Mortgage
Pass-Through Certificates, Series 1998-S7.
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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
November 24, 1998
By: /s/Eileen Lindblom
-----------------------
Name: Eileen Lindblom
Title: Vice President
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INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
4 Pooling and Servicing Agreement among Chase
Mortgage Finance Corporation, Chase
Manhattan Mortgage Corporation, PNC Mortgage
Securities Corp., The Chase Manhattan Bank
and Citibank, N.A., as trustee, dated as of
November 1, 1998, for Multi-Class Mortgage
Pass-Through Certificates, Series 1998-S7.
<PAGE>
CHASE MORTGAGE FINANCE CORPORATION,
DEPOSITOR,
CHASE MANHATTAN MORTGAGE CORPORATION,
SERVICER,
PNC MORTGAGE SECURITIES CORP.,
SERVICER,
THE CHASE MANHATTAN BANK,
CERTIFICATE ADMINISTRATOR
and
CITIBANK, N.A.,
TRUSTEE
POOLING AND SERVICING AGREEMENT
Dated as of November 1, 1998
$459,809,763.44
Multi-Class Mortgage Pass-Through Certificates
Series 1998-S7
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS..............................................................................................1
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TRUST FUND................................................................42
Section 2.01. Conveyance of Mortgage Loans..........................................................42
Section 2.02. Acceptance by Trustee.................................................................45
Section 2.03. Trust Fund; Authentication of Certificates............................................46
Section 2.04. REMIC Election........................................................................46
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR AND
THE SERVICERS; REPURCHASE OF MORTGAGE LOANS.............................................................49
Section 3.01. Representations and Warranties of the Depositor with respect to
the Mortgage Loans....................................................................49
Section 3.02. Representations and Warranties of each Servicer.......................................56
Section 3.03. Option to Substitute..................................................................57
ARTICLE IV
THE CERTIFICATES........................................................................................58
Section 4.01. The Certificates......................................................................58
Section 4.02. Registration of Transfer and Exchange of Certificates.................................60
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates.....................................64
Section 4.04. Persons Deemed Owners.................................................................64
Section 4.05. Appointment of Paying Agent; Certificate Account......................................64
Section 4.06. Authenticating Agents.................................................................65
ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS..........................................................66
Section 5.01. Servicers to Service Mortgage Loans...................................................66
Section 5.02. Sub-Servicing Agreements Between Servicers and Sub-Servicers;
Enforcement of Sub-Servicer's Obligations.............................................67
Section 5.03. Successor Sub-Servicers...............................................................68
Section 5.04. Liability of the Servicers............................................................68
Section 5.05. No Contractual Relationship Between Sub-Servicer and Trustee or
Certificateholders....................................................................68
Section 5.06. Termination of Sub-Servicing Agreement................................................68
Section 5.07. Collection of Mortgage Loan Payments..................................................68
Section 5.08. Establishment of Collection Accounts; Deposit in Collection Account...................69
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Section 5.09. Permitted Withdrawals from the Collection Accounts....................................70
Section 5.10. Establishment of Escrow Account; Deposits in Escrow Account...........................71
Section 5.11. Permitted Withdrawals from Escrow Account.............................................71
Section 5.12. Payment of Taxes, Insurance and Other Charges.........................................72
Section 5.13. Transfer of Accounts..................................................................72
Section 5.14. [Reserved]............................................................................72
Section 5.15. Maintenance of the Primary Insurance Policies.........................................72
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........................................................74
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 Servicers......................................................................78
Section 5.28. REMIC-Related Covenants...............................................................79
Section 5.29. Maintenance of the Rounding Account; Collections Thereunder...........................80
Section 5.30. Maintenance of the Class IA-14/IA-15 Interest Supplement Account......................81
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS......................................................................81
Section 6.01. Distributions.........................................................................81
Section 6.02. Statements to the Certificateholders..................................................88
Section 6.03. Advances by the Servicers.............................................................90
Section 6.04. Allocation of Realized Losses.........................................................90
Section 6.05. Compensating Interest; Allocation of Certain Interest Shortfalls......................91
Section 6.06. Subordination.........................................................................92
Section 6.07. Determination of LIBOR................................................................93
Section 6.08. Principal Distributions on the Retail Certificates....................................93
ARTICLE VII
REPORTS TO BE PREPARED BY THE CERTIFICATE ADMINISTRATOR.................................................97
Section 7.01. Certificate Administrator and Each Servicer Shall Provide Information
as Reasonably Required................................................................97
Section 7.02. Federal Information Returns and Reports to Certificateholders.........................97
ARTICLE VIII
THE DEPOSITOR, THE SERVICERS AND THE CERTIFICATE ADMINISTRATOR..........................................98
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Section 8.01. Indemnification; Third Party Claims...................................................98
Section 8.02. Merger or Consolidation of the Depositor, the Servicers or the
Certificate Administrator.............................................................98
Section 8.03. Limitation on Liability of the Depositor, the Servicer, the Certificate
Administrator the Trustee and Others..................................................99
Section 8.04. Depositor, Servicers and Certificate Administrator Not to Resign.....................100
Section 8.05. Successor to the Servicers...........................................................100
Section 8.06. Maintenance of Ratings...............................................................101
Section 8.07. Compensation of the Certificate Administrator........................................101
ARTICLE IX
DEFAULT................................................................................................102
Section 9.01. Events of Default....................................................................102
Section 9.02. Waiver of Defaults...................................................................103
Section 9.03. Trustee to Act; Appointment of Successor.............................................103
Section 9.04. Notification to Certificateholders and the Rating Agencies...........................104
ARTICLE X
CONCERNING THE TRUSTEE.................................................................................104
Section 10.01. Duties of Trustee....................................................................104
Section 10.02. Certain Matters Affecting the Trustee................................................105
Section 10.03. Trustee Not Liable for Certificates or Mortgage Loans................................106
Section 10.04. Trustee May Own Certificates.........................................................106
Section 10.05. Fees and Expenses....................................................................106
Section 10.06. Eligibility Requirements for Trustee.................................................106
Section 10.07. Resignation and Removal of the Trustee...............................................107
Section 10.08. Successor Trustee....................................................................107
Section 10.09. Merger or Consolidation of Trustee...................................................108
Section 10.10. Appointment of Co-Trustee or Separate Trustee........................................108
Section 10.11. Appointment of Office or Agency......................................................109
ARTICLE XI
TERMINATION............................................................................................109
Section 11.01. Termination..........................................................................109
ARTICLE XII
MISCELLANEOUS PROVISIONS...............................................................................111
Section 12.01. Severability of Provisions...........................................................111
Section 12.02. Limitation on Rights of Certificateholders...........................................111
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Section 12.03. Amendment..............................................................................112
Section 12.04. Counterparts...........................................................................112
Section 12.05. Duration of Agreement..................................................................112
Section 12.06. Governing Law..........................................................................112
Section 12.07. Notices................................................................................112
EXHIBIT A-1 MORTGAGE LOAN SCHEDULE (CMMC SERVICED MORTGAGE LOANS)
EXHIBIT A-2 MORTGAGE LOAN SCHEDULE (PNC SERVICED MORTGAGE LOANS)
EXHIBIT B CONTENTS OF MORTGAGE FILE
EXHIBIT C FORMS OF CLASS A CERTIFICATES
EXHIBIT D FORM OF CLASS M CERTIFICATE
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
EXHIBIT M FORM OF ERISA REPRESENTATION
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This Pooling and Servicing Agreement, dated as of November 1,
1998, is executed among Chase Mortgage Finance Corporation, as depositor
(together with its permitted successors and assigns, the "Depositor"), Chase
Manhattan Mortgage Corporation ("CMMC"), as servicer, PNC Mortgage Securities
Corp. ("PNC"), as servicer (each of CMMC and PNC together with their respective
permitted successors and assigns, a "Servicer", and together, the "Servicers"),
The Chase Manhattan Bank, as certificate administrator (together with its
permitted successors and assigns, the "Certificate Administrator") 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, PNC, CMMC, the Certificate Administrator
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 December 2003, 0% and (ii) for any
Distribution Date on or after the Distribution Date in December 2003, the
Lock-out Percentage.
ADVANCE: The aggregate of the advances made by either 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 IA-1 Interest Accrual Amount, the
Class IA-2 Interest Accrual Amount, the Class IA-3 Interest Accrual Amount, the
Class IA-4 Interest Accrual Amount, the Class IA-5 Interest Accrual Amount, the
Class IA-6 Interest Accrual Amount, the Class IA-7 Interest Accrual Amount, the
Class IA-8 Interest Accrual Amount, the Class IA-9 Interest Accrual Amount, the
Class IA-10 Interest Accrual Amount, the Class IA-11 Interest Accrual Amount,
the Class IA-12 Interest Accrual Amount, the Class IA-13 Interest Accrual
Amount, the Class IA-14 Interest Accrual Amount, the Class IA-15 Interest
Accrual Amount, the Class IA-16 Interest Accrual Amount, the Class IA-17
Interest Accrual Amount, the Class IA-19 Interest Accrual Amount, the Class
IA-20 Interest Accrual Amount, the Class IA-21 Interest Accrual Amount, the
Class IA-22 Interest Accrual Amount, the Class IA-23 Interest Accrual Amount,
the Class IA-24 Interest Accrual Amount, the Class IIA-1 Interest Accrual
Amount, the Class IA-X Interest Accrual Amount, the Class IIA-X Interest Accrual
Amount and the Class A-R Interest Accrual Amount.
<PAGE>
AGGREGATE CLASS A INTEREST SHORTFALL: On any Distribution
Date, an amount equal to the sum of the Class IA-1 Shortfall, the Class IA-2
Shortfall, the Class IA-3 Shortfall, the Class IA-4 Shortfall, the Class IA-5
Shortfall, the Class IA-6 Shortfall, the Class IA-7 Shortfall, the Class IA-8
Shortfall, the Class IA-9 Shortfall, the Class IA-10 Shortfall, the Class IA-11
Shortfall, the Class IA-12 Shortfall, the Class IA-13 Shortfall, the Class IA-14
Shortfall, the Class IA-15 Shortfall, the Class IA-16 Shortfall, the Class IA-17
Shortfall, the Class IA-19 Shortfall, the Class IA-20 Shortfall, the Class IA-21
Shortfall, the Class IA-22 Shortfall, the Class IA-23 Shortfall, the Class IA-24
Shortfall, the Class IIA-1 Shortfall, the Class IA-X Shortfall, the Class IIA-X
Shortfall and the Class A-R 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: As to either Mortgage Group or,
as the context requires, both Mortgage Groups, on any Distribution Date, an
amount equal to the amount on deposit in the Collection Accounts with respect to
such Mortgage Group as of the close of business on the related Determination
Date except:
(a) amounts received on particular Mortgage Loans in such
Mortgage Group as late payments or other recoveries of principal or
interest (including Liquidation Proceeds, Insurance Proceeds and
condemnation awards) and respecting which the related Servicer
previously made an unreimbursed Advance of such amounts;
(b) reimbursement for Nonrecoverable Advances and other
amounts permitted to be withdrawn by either Servicer pursuant to
Section 5.09 from, or not required to be deposited in, either
Collection Account attributable, in each case, to Mortgage Loans in
such Mortgage Group;
(c) amounts representing the Servicing Fee and the Excess
Amounts attributable in each case, to Mortgage Loans in such Mortgage
Group with respect to such Distribution Date;
(d) amounts representing all or part of a Monthly Payment with
respect to a Mortgage Loan in such Mortgage Group 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 in such Mortgage
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Group 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
(f) all income from Eligible Investments held in either
Collection Account for the account of the related 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.
BENEFICIAL HOLDER: A Person holding a beneficial interest in
any Book-Entry Certificate as or through a Participant or an Indirect
Participant or a Person holding a beneficial interest in any Definitive
Certificate.
BOOK-ENTRY CERTIFICATES: The Class A Certificates (other than
the Class A-R), 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 the State of Illinois or (c) a day
on which banking institutions in the State of New York or the State of Illinois
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 either
Servicer with respect to the liquidation of any Mortgage Loan serviced by it,
including Insurance Proceeds and other payments or recoveries (whether made at
one time or over a period of time) which such 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 such 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.
CERTIFICATE ADMINISTRATION FEE: With respect to any Mortgage
Loan and any Distribution Date, the fee payable to the Certificate Administrator
pursuant to Section 8.07 equal to the product of (a) 1/12th of the Certificate
Administration Fee Rate and (b) the Principal Balance of such Mortgage Loan
immediately prior to such Distribution Date.
CERTIFICATE ADMINISTRATION FEE RATE: A per annum rate equal to
0.02%.
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CERTIFICATE ADMINISTRATOR: The Chase Manhattan Bank, a New
York State banking corporation, or its successor in interest or permitted
assigns.
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
Certificate Administrator, either 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
conclusively rely upon the certificate of the Depositor, the Certificate
Administrator or either Servicer as to the determination of which Certificates
are registered in the name of such affiliates.
CERTIFICATE GROUP: Any of the Class IA or Class IIA
Certificates.
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 IA-18 Certificates), which rate
shall equal (i) 6.25% with respect to the Class IA-1, Class IA-3, Class IA-4,
Class IA-5, Class IA-6, Class IA-7, Class IA-8, Class IA-9, Class IA-10, Class
IA-11, Class IA-12, Class IA-13 and Class A-R Certificates, (ii) 6.15% with
respect to the Class IA-2 Certificates, (iii) 7.00% with respect to the Class
IA-19 Certificates, (iv) 6.00% with respect to the Class IA-20, Class IA-22 and
Class IA-24 Certificates, (v) 6.50% with respect to the Class IA-21 and Class
IA-23 Certificates and (vi) 6.00% with respect to the Class IIA-1 Certificates.
In the case of the Class IA-14 Certificates, the Certificate Rate will be (a)
8.00% with respect to the first twelve Distribution Dates, (b) 7.00% with
respect to the thirteenth Distribution Date through the twenty-fourth
Distribution Date and (c) 6.25% with respect to each Distribution Date
thereafter. In the case of the Class IA-15 Certificates, the Certificate Rate
will be (a) 8.00% with respect to the first twelve Distribution Dates, (b) 7.50%
with respect to the thirteenth through the twenty-fourth Distribution Dates, (c)
7.00% with respect to the twenty-fifth through the thirty-sixth Distribution
Dates, and (d) 6.25% with respect to each Distribution Date thereafter. In the
case of the Class IA-16 Certificates, the Certificate Rate with respect to the
first Distribution Date will be 6.10000%, and as to any Distribution Date
thereafter, the Certificate Rate on the Class IA-16 Certificates will equal the
lesser of (A) 0.85% plus LIBOR and (B) 8.50%. In the case of the Class IA-17
Certificates, the Certificate Rate with respect to the first Distribution Date
will be 9.25714%, and as to any Distribution Date thereafter, the Certificate
Rate on the Class IA-17 Certificates will equal the lesser of (A) 29.507143%
minus the product of (i) 3.857143% and (ii) LIBOR, but not less than 0.00% and
(B) 29.507143%. In the case of the Class IA-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 Group One
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 Group
One Mortgage Loans, which Principal Balances shall be the Principal Balances of
the Group One 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). In the case of
the Class IIA-X Certificates, the Certificate Rate shall equal, with respect to
any Distribution Date, the weighted average,
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expressed as a percentage, of the Stripped Interest Rate on each Group Two
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 Group
Two Mortgage Loans, which Principal Balances shall be the Principal Balances of
the Group Two 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). With respect
to any Distribution Date, the Certificate Rate on each Class of Subordinated
Certificates will equal the fraction, expressed as a percentage, the numerator
of which will equal the sum of (i) the product of (x) 6.25% and (y) the Group
One Subordinated Amount and (ii) the product of (x) 6.00% and (y) the Group Two
Subordinated Amount and the denominator of which will equal the sum of the Group
One Subordinated Amount and the Group Two Subordinated Amount. Interest with
respect to each Class of Certificates (other than the Class IA-18 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.
CERTIFICATE REGISTRAR: The Chase Manhattan Bank, a New York
State banking corporation, or it successor in interest.
CHASE: The Chase Manhattan Bank, a New York State banking
corporation, or its successor in interest.
CLASS: Pertaining to the Class IA-1, Class IA-2, Class IA-3,
Class IA-4, Class IA-5, Class IA-6, Class IA-7, Class IA-8, Class IA-9, Class
IA-10, Class IA-11, Class IA-12, Class IA-13, Class IA-14, Class IA-15, Class
IA-16, Class IA-17, Class IA-19, Class IA-20, Class IA-21, Class IA-22, Class
IA-23, Class IA-24, Class IA-X, Class A-R, Class IIA-1, Class IIA-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 CERTIFICATES: The Class IA-1, Class IA-2, Class IA-3,
Class IA-4, Class IA-5, Class IA-6, Class IA-7, Class IA-8, Class IA-9, Class
IA-10, Class IA-11, Class IA-12, Class IA-13, Class IA-14, Class IA-15, Class
IA-16, Class IA-17, Class IA-18, Class IA-19, Class IA-20, Class IA-21, Class
IA-22, Class IA-23, Class IA-24, Class IA-X, Class IIA-1, Class IIA-X and Class
A-R Certificates, referred to collectively.
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 IA-12 ACCRETION TERMINATION DATE: The earlier to occur
of (i) the Credit Support Depletion Date and (ii) the Distribution Date on which
the Outstanding Certificate Principal Balance of the Class IA-11 Certificates
will be reduced to zero.
CLASS IA-1 CERTIFICATE: Any one of the Class IA-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.
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CLASS IA-2 CERTIFICATE: Any one of the Class IA-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 IA-3 CERTIFICATE: Any one of the Class IA-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 IA-4 CERTIFICATE: Any one of the Class IA-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.
CLASS IA-5 CERTIFICATE: Any one of the Class IA-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 IA-6 CERTIFICATE: Any one of the Class IA-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 IA-7 CERTIFICATE: Any one of the Class IA-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 IA-8 CERTIFICATE: Any one of the Class IA-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 IA-9 CERTIFICATE: Any one of the Class IA-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 IA-10 CERTIFICATE: Any one of the Class IA-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 IA-11 CERTIFICATE: Any one of the Class IA-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 IA-12 CERTIFICATE: Any one of the Class IA-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 IA-13 CERTIFICATE: Any one of the Class IA-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.
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CLASS IA-14 CERTIFICATE: Any one of the Class IA-14
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 IA-15 CERTIFICATE: Any one of the Class IA-15
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 IA-16 CERTIFICATE: Any one of the Class IA-16
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 IA-17 CERTIFICATE: Any one of the Class IA-17
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 IA-19 CERTIFICATE: Any one of the Class IA-19
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 IA-20 CERTIFICATE: Any one of the Class IA-20
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 IA-21 CERTIFICATE: Any one of the Class IA-21
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 IA-22 CERTIFICATE: Any one of the Class IA-22
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 IA-23 CERTIFICATE: Any one of the Class IA-23
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 IA-24 CERTIFICATE: Any one of the Class IA-24
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 IA-X CERTIFICATE: Any one of the Class IA-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 IIA-1 CERTIFICATE: Any one of the Class IIA-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.
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CLASS IIA-X CERTIFICATE: Any one of the Class IIA-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 IA CERTIFICATES: The Class IA-1, Class IA-2, Class IA-3,
Class IA-4, Class IA-5, Class IA-6, Class IA-7, Class IA-8, Class IA-9, Class
IA-10, Class IA-11, Class IA-12, Class IA-13, Class IA-14, Class IA-15, Class
IA-16, Class IA-17, Class IA-18, Class IA-19, Class IA-20, Class IA-21, Class
IA-22, Class IA-23, Class IA-24, and Class IA-X Certificates, referred to
collectively.
CLASS IIA CERTIFICATES: The Class IIA-1 and Class IIA-X
Certificates, referred to collectively.
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 IA-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 IA-1 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-1 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class IA-1 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS IA-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 IA-2 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-2 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class IA-2 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS IA-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 IA-3 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-3 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class IA-3 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS IA-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 IA-4 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-4 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class IA-4 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS IA-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 IA-5 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-5 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class IA-5 Certificates on such Distribution
Date pursuant to Section 6.05(c).
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CLASS IA-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 IA-6 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-6 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class IA-6 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS IA-7 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the Class
IA-7 Notional Balance minus (i) any Compensating Interest Shortfall allocated to
the Class IA-7 Certificates on such Distribution Date pursuant to Section
6.05(b) and (ii) any Realized Loss Interest Shortfall allocated to the Class
IA-7 Certificates on such Distribution Date pursuant to Section 6.05(c).
CLASS IA-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 IA-8 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-8 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class IA-8 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS IA-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 IA-9 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-9 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class IA-9 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS IA-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 IA-10 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-10
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IA-10 Certificates on
such Distribution Date pursuant to Section 6.05(c).
CLASS IA-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 IA-11 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-11
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IA-11 Certificates on
such Distribution Date pursuant to Section 6.05(c).
CLASS IA-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 IA-12 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-12
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IA-12 Certificates on
such Distribution Date pursuant to Section 6.05(c).
CLASS IA-13 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 IA-13 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-13
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IA-13 Certificates on
such Distribution Date pursuant to Section 6.05(c).
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CLASS IA-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 IA-14 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-14
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IA-14 Certificates on
such Distribution Date pursuant to Section 6.05(c).
CLASS IA-15 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 IA-15 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-15
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IA-15 Certificates on
such Distribution Date pursuant to Section 6.05(c).
CLASS IA-16 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 IA-16 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-16
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IA-16 Certificates on
such Distribution Date pursuant to Section 6.05(c).
CLASS IA-17 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 IA-17 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-17
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IA-17 Certificates on
such Distribution Date pursuant to Section 6.05(c).
CLASS IA-19 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 IA-19 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-19
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IA-19 Certificates on
such Distribution Date pursuant to Section 6.05(c).
CLASS IA-20 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 IA-20 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-20
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IA-20 Certificates on
such Distribution Date pursuant to Section 6.05(c).
CLASS IA-21 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 IA-21 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-21
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IA-21 Certificates on
such Distribution Date pursuant to Section 6.05(c).
CLASS IA-22 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 IA-22 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-22
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IA-22 Certificates on
such Distribution Date pursuant to Section 6.05(c).
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CLASS IA-23 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 IA-23 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-23
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IA-23 Certificates on
such Distribution Date pursuant to Section 6.05(c).
CLASS IA-24 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 IA-24 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IA-24
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IA-24 Certificates on
such Distribution Date pursuant to Section 6.05(c).
CLASS IIA-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 IIA-1 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class IIA-1
Certificates on such Distribution Date pursuant to Section 6.05(b) and (ii) any
Realized Loss Interest Shortfall allocated to the Class IIA-1 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 IA-X INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the Class
IA-X Notional Balance minus (i) any Compensating Interest Shortfall allocated to
the Class IA-X Certificates on such Distribution Date pursuant to Section
6.05(b) and (ii) any Realized Loss Interest Shortfall allocated to the Class
IA-X Certificates on such Distribution Date pursuant to Section 6.05(c).
CLASS IIA-X INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the Class
IIA-X Notional Balance minus (i) any Compensating Interest Shortfall allocated
to the Class IIA-X Certificates on such Distribution Date pursuant to Section
6.05(b) and (ii) any Realized Loss Interest Shortfall allocated to the Class
IIA-X Certificates on such Distribution Date pursuant to Section 6.05(c).
CLASS IA-14 INTEREST SUPPLEMENT AMOUNT: For each of the first
twenty-four Distribution Dates, an amount equal to the excess of (i) the Class
IA-14 Interest Accrual Amount over (ii) such amount calculated as if the
Certificate Rate for the Class IA-14 Certificates is 6.25% per annum.
CLASS IA-15 INTEREST SUPPLEMENT AMOUNT: For each of the first
thirty-six Distribution Dates, an amount equal to the excess of (i) the Class
IA-15 Interest Accrual Amount over (ii) such amount calculated as if the
Certificate Rate for the Class IA-15 Certificates is 6.25% per annum.
CLASS IA-14/IA15 INTEREST SUPPLEMENT ACCOUNT: The separate
trust account maintained by Certificate Administrator, which account shall bear
a designation clearly indicating that the funds deposited therein are held in
trust for the benefit of the Trustee on behalf of the
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Certificateholders, or any other account serving a similar function acceptable
to the Rating Agencies and the Trustee, and which account provides that the
Certificate Administrator may make, or cause to be made, withdrawals therefrom
in accordance with Section 5.30.
CLASS IA-7 NOTIONAL BALANCE: With respect to any Distribution
Date, an amount equal to the product of (x) the Outstanding Certificate
Principal Balance of the Class IA-2 Certificates and (y) a fraction, the
numerator of which is the difference between the Certificate Rate with respect
to the Class IA-7 Certificates and the Certificate Rate with respect to the
Class IA-2 Certificates and the denominator of which is the Certificate Rate
with respect to the Class IA-7 Certificates.
CLASS IA-X NOTIONAL BALANCE: With respect to any Distribution
Date, an amount equal to the aggregate Scheduled Principle Balance of the
Mortgage Loans in Mortgage Group One.
CLASS IIA-X NOTIONAL BALANCE: With respect to any Distribution
Date, an amount equal to the aggregate Scheduled Principle Balance of the
Mortgage Loans in Mortgage Group Two.
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 IA PERCENTAGE: As of any Distribution Date, the
percentage obtained by dividing the Class IA Principal Balance by the Group One
Mortgage Pool Principal Balance, but not more than 100%.
CLASS IIA PERCENTAGE: As of any Distribution Date, the
percentage obtained by dividing the Class IIA Principal Balance by the Group Two
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 Servicers 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 IA PRINCIPAL BALANCE: As of any Distribution Date, (a)
the Class IA Principal Balance for the immediately preceding Distribution Date
less (b) amounts distributed to the Class IA 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 IA Certificates pursuant to Section 6.04);
provided that the Class IA Principal Balance on the first Distribution Date
shall be the Original Class IA Principal Balance.
CLASS IIA PRINCIPAL BALANCE: As of any Distribution Date, (a)
the Class IIA Principal Balance for the immediately preceding Distribution Date
less (b) amounts distributed to the Class IIA 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
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allocated to the Class IIA Certificates pursuant to Section 6.04); provided that
the Class IIA Principal Balance on the first Distribution Date shall be the
Original Class IIA Principal Balance.
CLASS IA-1 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-1 Interest Accrual
Amount over the amount actually distributed to the Class IA-1 Certificateholders
on such Distribution Date pursuant to Section 6.01(b)(i)(A).
CLASS IA-2 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-2 Interest Accrual
Amount over the amount actually distributed to the Class IA-2 Certificateholders
on such Distribution Date pursuant to Section 6.01(b)(i)(B).
CLASS IA-3 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-3 Interest Accrual
Amount over the amount actually distributed to the Class IA-3 Certificateholders
on such Distribution Date pursuant to Section 6.01(b)(i)(C).
CLASS IA-4 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-4 Interest Accrual
Amount over the amount actually distributed to the Class IA-4 Certificateholders
on such Distribution Date pursuant to Section 6.01(b)(i)(D).
CLASS IA-5 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-5 Interest Accrual
Amount over the amount actually distributed to the Class IA-5 Certificateholders
on such Distribution Date pursuant to Section 6.01(b)(i)(E).
CLASS IA-6 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-6 Interest Accrual
Amount over the amount actually distributed to the Class IA-6 Certificateholders
on such Distribution Date pursuant to Section 6.01(b)(i)(F).
CLASS IA-7 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-7 Interest Accrual
Amount over the amount actually distributed to the Class IA-7 Certificateholders
on such Distribution Date pursuant to Section 6.01(b)(i)(G).
CLASS IA-8 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-8 Interest Accrual
Amount over the amount actually distributed to the Class IA-8 Certificateholders
on such Distribution Date pursuant to Section 6.01(b)(i)(H).
CLASS IA-9 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-9 Interest Accrual
Amount over the amount actually distributed to the Class IA-9 Certificateholders
on such Distribution Date pursuant to Section 6.01(b)(i)(I).
CLASS IA-10 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-10 Interest Accrual
Amount over the amount actually distributed to the Class IA-10
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(J).
CLASS IA-11 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-11 Interest Accrual
Amount over the amount actually distributed to the Class IA-11
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(K).
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CLASS IA-12 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-12 Interest Accrual
Amount over the amount actually distributed to the Class IA-12
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(L).
CLASS IA-13 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-13 Interest Accrual
Amount over the amount actually distributed to the Class IA-13
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(M).
CLASS IA-14 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-14 Interest Accrual
Amount over the amount actually distributed to the Class IA-14
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(N).
CLASS IA-15 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-15 Interest Accrual
Amount over the amount actually distributed to the Class IA-15
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(O).
CLASS IA-16 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-16 Interest Accrual
Amount over the amount actually distributed to the Class IA-16
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(P).
CLASS IA-17 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-17 Interest Accrual
Amount over the amount actually distributed to the Class IA-17
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(Q).
CLASS IA-19 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-19 Interest Accrual
Amount over the amount actually distributed to the Class IA-19
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(R).
CLASS IA-20 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-20 Interest Accrual
Amount over the amount actually distributed to the Class IA-20
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(S).
CLASS IA-21 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-21 Interest Accrual
Amount over the amount actually distributed to the Class IA-21
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(T).
CLASS IA-22 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-22 Interest Accrual
Amount over the amount actually distributed to the Class IA-22
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(U).
CLASS IA-23 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-23 Interest Accrual
Amount over the amount actually distributed to the Class IA-23
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(V).
CLASS IA-24 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-24 Interest Accrual
Amount over the amount actually distributed to the Class IA-24
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(W).
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CLASS IIA-1 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IIA-1 Interest Accrual
Amount over the amount actually distributed to the Class IIA-1
Certificateholders on such Distribution Date pursuant to Section 6.01(b)(i)(X).
CLASS IA-X SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IA-X Interest Accrual
Amount over the amount actually distributed to the Class IA-X Certificates on
such Distribution Date pursuant to Section 6.01(b)(i)(Y).
CLASS IIA-X SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class IIA-X Interest Accrual
Amount over the amount actually distributed to the Class IIA-X Certificates on
such Distribution Date pursuant to Section 6.01(b)(i)(Z).
CLASS IA OPTIMAL PRINCIPAL AMOUNT: With respect to any
Distribution Date, the lesser of (a) the Class IA Principal Balance and (b) the
sum of:
(i) the Class IA Percentage of the principal portion of all
Monthly Payments, whether or not received, which were due during the
related Due Period on Group One Mortgage Loans which were outstanding
during such Due Period;
(ii) the Class IA Prepayment 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 Class IA 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 with respect to a Group One Mortgage Loan, 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 Group One Mortgage Loan which has
become a Liquidated Mortgage Loan during the related Principal
Prepayment Period, the lesser of (A) the Class IA 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 Class IA Prepayment Percentage of
the Net Liquidation Proceeds with respect to such liquidated Mortgage
Loan (net of any unreimbursed Advances);
(v) with respect to each Group One 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 Class IA Prepayment
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 Class IA Certificateholders); and
(vi) on or after the Credit Support Depletion Date, the excess
of the Class IA Principal Balance (calculated after giving effect to
reductions thereof on such Distribution Date
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with respect to the amounts described in (i) - (v) above) over the
outstanding Principal Balance of the Group One Mortgage Loans, if any,
as of the preceding Distribution Date.
CLASS IIA OPTIMAL PRINCIPAL AMOUNT: With respect to any Distribution
Date, the lesser of (a) the Class IIA Principal Balance and (b) the sum of:
(i) the Class IIA Percentage of the principal portion of all
Monthly Payments, whether or not received, which were due during the
related Due Period on Group Two Mortgage Loans which were outstanding
during such Due Period;
(ii) the Class IIA Prepayment 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 Class IIA 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 with respect to Mortgage Group Two, 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 Class IIA 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 Class IIA Prepayment 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 Class IIA Prepayment 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 Class A Certificateholders); and
(vi) on or after the Credit Support Depletion Date, the excess
of the Class IIA 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 outstanding Principal
Balance of the Group Two Mortgage Loans, if any, as of the preceding
Distribution Date.
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 Class A Principal Balance and the denominator of which is the
outstanding Principal Balance of the Mortgage Loans as of the immediately
preceding Due Date.
CLASS IA PERCENTAGE : As of any Distribution Date, a fraction,
expressed as a percentage (which shall never exceed 100%), the numerator of
which is the Class IA Principal Balance
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and the denominator of which is the outstanding Principal Balance of the Group
Two Mortgage Loans as of the immediately preceding Due Date.
CLASS IIA PERCENTAGE : As of any Distribution Date, a
fraction, expressed as a percentage (which shall never exceed 100%), the
numerator of which is the Class IIA Principal Balance and the denominator of
which is the outstanding Principal Balance of the Group Two Mortgage Loans of
the immediately preceding Due Date.
CLASS IA PREPAYMENT PERCENTAGE: As of any Distribution Date
up to and including the Step-down Date, 100%; as of any Distribution Date in the
first year thereafter, the Class IA Percentage plus 70% of the Mortgage Group
One Subordinated Percentage for such Distribution Date; as of any Distribution
Date in the second year thereafter, the Class IA Percentage plus 60% of the
Mortgage Group One Subordinated Percentage for such Distribution Date; as of any
Distribution Date in the third year thereafter, the Class IA Percentage plus 40%
of the Mortgage Group One Subordinated Percentage for such Distribution Date; as
of any Distribution Date in the fourth year thereafter, the Class IA Percentage
plus 20% of the Mortgage Group One Subordinated Percentage for such Distribution
Date; and as of any Distribution Date after the fourth year thereafter, the
Class IA Percentage; provided that, if the Class IA Percentage as of any such
Distribution Date is greater than the Class IA Percentage on the first
Distribution Date, the Class IA Prepayment Percentage shall be 100%; and
provided further, however, that whenever the Class IA Percentage equals 0%, the
Class IA Prepayment Percentage shall equal 0%; and provided further that no
reduction of the Class IA Prepayment Percentage below the level in effect for
the most recent period shall occur with respect to any Distribution Date unless,
as of the last day of the month preceding such Distribution Date, (i) the
aggregate outstanding principal balance of Mortgage Loans with respect to both
Mortgage Groups, each taken individually, delinquent 60 days or more (including
for this purpose any Mortgage Loans in foreclosure and Mortgage Loans with
respect to which the related Mortgaged Property has been acquired by the Trust
Fund) does not exceed 50% of the Mortgage Group One Subordinated Percentage of
the Mortgage Pool Principal Balance with respect to Mortgage Group One as of
such date and (ii) cumulative Realized Losses with respect to both Mortgage
Groups, each taken individually, do not exceed (a) 30% of the related
Subordinated Percentage of the Mortgage Pool Principal Balance with respect to
the related Mortgage Group as of the date of issuance of the Certificates (the
related "Original Subordinated Principal Balance") if such Distribution Date
occurs between and including December 2003 and November 2004, (b) 35% of the
related Original Subordinated Principal Balance if such Distribution Date occurs
between and including December 2004 and November 2005, (c) 40% of the related
Original Subordinated Principal Balance if such Distribution Date occurs between
and including December 2005 and November 2006, (d) 45% of the related Original
Subordinated Principal Balance if such Distribution Date occurs between and
including December 2006 and November 2007, and (e) 50% of the related Original
Subordinated Principal Balance if such Distribution Date occurs during or after
December 2007.
CLASS IIA PREPAYMENT PERCENTAGE: As of any Distribution Date
up to and including the Step-down Date, 100%; as of any Distribution Date in the
first year thereafter, the Class IIA Percentage plus 70% of the Mortgage Group
Two Subordinated Percentage for such Distribution Date; as of any Distribution
Date in the second year thereafter, the applicable Class IIA Percentage plus 60%
of the Mortgage Group Two Subordinated Percentage for such Distribution Date; as
of any Distribution Date in the third year thereafter, the Class IIA Percentage
plus 40% of the Mortgage Group Two Subordinated Percentage for such Distribution
Date; as of any Distribution Date in the fourth year thereafter, the applicable
Class IIA Percentage plus 20% of the Mortgage Group Two Subordinated
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Percentage for such Distribution Date; and as of any Distribution Date after the
fourth year thereafter, the Class IIA Percentage; provided that, if the Class
IIA Percentage on the first Distribution Date is greater than the Class IIA
Percentage, the Class IIA Prepayment Percentage shall be 100%; and provided
further, however, that whenever the Class IIA Percentage equals 0%, the Class
IIA Prepayment Percentage shall equal 0%; and provided further that no reduction
of the Class IIA Prepayment Percentage below the level in effect for the most
recent period shall occur with respect to any Distribution Date unless, as of
the last day of the month preceding such Distribution Date, (i) the aggregate
outstanding principal balance of Mortgage Loans with respect to both Mortgage
Groups, each taken individually, delinquent 60 days or more (including for this
purpose any Mortgage Loans in foreclosure and Mortgage Loans with respect to
which the related Mortgaged Property has been acquired by the Trust Fund) does
not exceed 50% of the Mortgage Group Two Subordinated Percentage of the Mortgage
Pool Principal Balance with respect tot Mortgage Group Two as of such date and
(ii) cumulative Realized Losses with respect to both Mortgage Groups, each taken
individually, do not exceed (a) 30% of the related Subordinated Percentage of
the Mortgage Pool Principal Balance with respect to the related Mortgage Group
as of the date of issuance of the Certificates (the related "Original
Subordinated Principal Balance") if such Distribution Date occurs between and
including December 2003 and November 2004, (b) 35% of the related Original
Subordinated Principal Balance if such Distribution Date occurs between and
including December 2004 and November 2005, (c) 40% of the related Original
Subordinated Principal Balance if such Distribution Date occurs between and
including December 2005 and November 2006, (d) 45% of the related Original
Subordinated Principal Balance if such Distribution Date occurs between and
including December 2006 and November 2007, and (e) 50% of the related Original
Subordinated Principal Balance if such Distribution Date occurs during or after
December 2007.
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 (or deemed distributed) to the Class A
Certificateholders on such preceding Distribution Date allocable to principal
(including the principal portion of Advances 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 IA PRINCIPAL BALANCE: As of any Distribution Date, (a)
the Class IA Principal Balance for the preceding Distribution Date less (b)
amounts distributed (or deemed distributed) to the Class IA 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 IA Certificates pursuant to Section
6.04); provided that the Class IA Principal Balance on the first Distribution
Date shall be the Original Class IA Principal Balance.
CLASS IIA PRINCIPAL BALANCE: As of any Distribution Date, (a)
the Class IIA Principal Balance for the preceding Distribution Date less (b)
amounts distributed (or deemed distributed) to the Class IIA 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 IIA Certificates pursuant to Section
6.04); provided that the Class IIA Principal Balance on the first Distribution
Date shall be the Original Class IIA Principal Balance.
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<PAGE>
CLASS A PRINCIPAL PAYMENT RULES: (I) With respect to any
Distribution Date prior to the Credit Support Depletion Date, distributions to
the Class A Certificateholders pursuant to Section 6.01(b)(ii)(A) shall be made
in the following amounts and priority:
(A) the Class IA Principal Distribution Amount will be distributed as
follows:
first, to the Class IA-4 Certificates, up to the Lockout Principal
Distribution Amount, until the Outstanding Certificate Principal Balance of such
Class has been reduced to zero;
second, until the Outstanding Certificate Principal Balance of the
Class IA-1 Certificates has been reduced to zero, concurrently as follows:
(1) 65.5859446855% sequentially, as follows:
(a) to the Class A-R Certificates, until the Outstanding
Certificate Principal Balance of such Class has been
reduced to zero;
(b) to the Class IA-1 Certificates, until the Outstanding
Certificate Principal Balance of such Class has been
reduced to zero;
(2) 34.4140553145% sequentially, as follows:
(a) to the Class IA-2 Certificates until the Outstanding
Certificate Principal Balance of such Class has been
reduced to zero; and
(b) concurrently:
(i) 31.3824191574% sequentially, as follows:
(I) to the Class IA-8, Class IA-16, Class IA-17,
Class IA-18 and Class IA-19 Certificates, pro
rata, based upon their Outstanding Certificate
Principal Balances, until the Outstanding
Certificate Principal Balance of each such Class
has been reduced to zero; and
(II) to the Class IA-9, Class IA-13, Class IA-20,
Class IA-21, Class IA-22 and Class IA-23
Certificates, pro rata, based upon their
Outstanding Certificate Principal Balances, until
the Outstanding Certificate Principal Balance of
each such Class has been reduced to zero; and
(ii 68.6175808426% sequentially, as follows:
(I) to the Class IA-3 Certificates until the
Outstanding Certificate Principal Balance of such
Class has been reduced to zero;
(II) concurrently, 41.5090774987% to the Class
IA-5 Certificates and 58.4909225013%,
sequentially, to the Class IA-10, Class IA-11 and
Class
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IA-12 Certificates, until the Outstanding
Certificate Principal Balance of each such Class
has been reduced to zero; and
(III) to the Class IA-6, Class IA-14, Class IA-15
and Class IA-24 Certificates, pro rata, based
upon their Outstanding Certificate Principal
Balances until the Outstanding Certificate
Principal Balance of each such Class has been
reduced to zero;
third, after the Outstanding Certificate Principal Balance of the Class
IA-1 Certificates has been reduced to zero, concurrently as follows:
(1) 31.3824191574% sequentially as follows:
(a) to the Class IA-8, Class IA-16, Class IA-17, Class
IA-18 and Class IA-19 Certificates, pro rata, based
upon their outstanding principal balances, until the
Outstanding Certificate Principal Balance of each
such Class has been reduced to zero; and
(b) to the Class IA-9, Class IA-13, Class IA-20, Class
IA-21, Class IA-22 and Class IA-23 Certificates, pro
rata, based upon their outstanding principal
balances, until the Outstanding Certificate Principal
Balance of each such class has been reduced to zero;
(2) 68.6175808426% sequentially as follows:
(a) to the Class IA-3 Certificates, until the Outstanding
Certificate Principal Balance of such Class has been
reduced to zero;
(b) 41.5090774987% to the Class IA-5 Certificates until
the Outstanding Certificate Principal Balance of such
Class has been reduced to zero and 58.4909225013%,
sequentially, to the Class IA-10, Class IA-11 and
Class IA-12 Certificates until the Outstanding
Certificate Principal Balance of each such Class has
been reduced to zero; and
(c) to the Class IA-6, Class IA-14, Class IA-15 and Class
IA-24 Certificates, pro rata based upon their
Outstanding Certificate Principal Balances, until the
Outstanding Certificate Principal Balance of each
such Class has been reduced to zero; and
fourth, to the Class IA-4 Certificates until the Outstanding
Certificate Principal Balance of such Class has been reduced to zero.
(B) the Class IIA Principal Distribution Amount will be distributed to
the Class IIA-1 Certificates, until the Outstanding Certificate Principal
Balance of 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
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<PAGE>
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.
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 Certificates on such
Distribution Date pursuant to Section 6.01(b)(i)(AA).
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.
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).
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<PAGE>
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).
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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<PAGE>
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 (1) 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 Servicers 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: November 24, 1998.
CMMC: Chase Manhattan Mortgage Corporation, a New Jersey
corporation, or its successor in interest.
CMMC SERVICED MORTGAGE LOANS: The Mortgage Loans serviced by CMMC
and set forth on Exhibit A-1 attached hereto.
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.
COLLECTION ACCOUNT(S): The accounts created and maintained
pursuant to Section 5.08.
COMPENSATING INTEREST: The meaning specified in Section 6.05(a).
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COMPENSATING INTEREST SHORTFALL: The meaning specified in Section
6.05(b).
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. 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 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: November 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.
DECEASED HOLDER: A Beneficial Holder of a Retail Certificate who
was living at the time such Retail Certificate was acquired and whose authorized
personal representative, surviving tenant by the entirety, surviving joint
tenant or surviving tenant in common or other person empowered to act on behalf
of such Beneficial Holder causes to be furnished to the Depository evidence of
such Beneficial Holder's death satisfactory to the Certificate Administrator and
any tax waivers requested by the Certificate Administrator.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.
DEFINITIVE CERTIFICATES: 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.
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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).
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 December 28, 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 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 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
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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 sixty 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, the Certificate Administrator or either 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 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.
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EXCEPTION REPORT: The report of the Trustee referred to in Section
2.02.
EXCESS AMOUNT: With respect to each Mortgage Loan, the per annum
rate of interest set forth for such Mortgage Loan on the Mortgage Loan Schedule.
EXCESS AMOUNT DISTRIBUTION: With respect to any Distribution Date,
the product of (A) one-twelfth of the weighted average, expressed as a
percentage, of the Excess Amount for each Mortgage Loan having an Excess Amount
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 such Mortgage Loans, which Principal Balances shall be the
Principal Balances of such 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 initial Distribution
Date, at the close of business on the Cut-off Date) and (B) the aggregate
outstanding Principal Balance of the Mortgage Loans.
EXCESS AMOUNT INTEREST: The uncertificated REMIC regular interest
in the Trust Fund representing the entitlement to the Excess Amount
Distributions.
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
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: The fidelity bond and errors and omissions
insurance policies to be maintained by the Servicers pursuant to Section 5.19.
FNMA: The Federal National Mortgage Association, or any successor
organization.
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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, $9,196,196.00) 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.
GROUP ONE MORTGAGE LOANS: The Mortgage Loans in Mortgage Group
One.
GROUP ONE MORTGAGE POOL PRINCIPAL BALANCE: As of any date of
determination, the aggregate of the Principal Balances of each Outstanding
Mortgage Loan in Mortgage Group One 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.
GROUP ONE REMITTANCE RATE: 6.25% per annum.
GROUP ONE SUBORDINATED AMOUNT: For any Distribution Date, the
product of (x) 6.25% and (y) the excess of the aggregate Scheduled Principal
Balance of the Group One Mortgage Loans over the aggregate Outstanding Principal
Balance of the Class IA Certificates.
GROUP TWO MORTGAGE LOANS: The Mortgage Loans in Mortgage Group
Two.
GROUP ONE MORTGAGE POOL PRINCIPAL BALANCE: As of any date of
determination, the aggregate of the Principal Balances of each Outstanding
Mortgage Loan in Mortgage Group One 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.
GROUP TWO REMITTANCE RATE: 6.00% per annum.
GROUP TWO SUBORDINATED AMOUNT: The product of (x) 6.00% and (y)
the excess of the aggregate Scheduled Principal Balance of the Group Two
Mortgage Loans over the aggregate Outstanding Principal Balance of the Class IIA
Certificates.
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.
INTEREST ACCRUAL PERIOD: With respect to any Distribution Date and
the Class IA-16 and Class IA-17 Certificates, the calendar month preceding the
month in which the related Distribution Date occurs.
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.
LIBOR: With respect to any Distribution Date and the Certificate
Rates on the Class IA-16 and Class IA-17 Certificates, LIBOR as determined in
accordance with Section 6.07.
LIBOR BUSINESS DAY: Any day other than (i) a Saturday or a Sunday
or (ii) a day on which banking institutions in the city of London, England are
required or authorized by law to be closed.
LIQUIDATED MORTGAGE LOAN: Any Mortgage Loan (a) as to which the
related 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
applicable 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 applicable 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 PROCEEDS: Cash (including Insurance Proceeds) received
by the applicable 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.
LIVING HOLDER: A Beneficial Holder of a Retail Certificate who is
not a Deceased Holder.
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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 PERCENTAGE: With respect to any Distribution Date, the
lesser of (I) (A) the Outstanding Certificate Principal Balance of the Class
IA-4 Certificates divided by (B) the aggregate Principal Balance of the Group
One Mortgage Loans, 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 amount
with respect to Mortgage Group One which is referred to in clause (i) of (I) the
definition of Class IA Optimal Principal Amount and (II) the definition of
Subordinated Optimal Principal Amount and (ii) the Lock-out Prepayment
Percentage of the amounts with respect to Mortgage Group One which are referred
to in clauses (ii) through (v) of (I) the definition of Class IA Optimal
Principal Amount and (II) the definition of Subordinated Optimal Principal
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 related
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.
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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 GROUP: Pertaining to Mortgage Group One or Mortgage Group
Two, as the case may be.
MORTGAGE GROUP ONE: The Mortgage Loans in the Trust Fund that are
designated in the Mortgage Loan Schedule as comprising Mortgage Group One.
MORTGAGE GROUP ONE SUBORDINATED PERCENTAGE: As of any Distribution
Date, the difference between 100% and the Class IA Percentage.
MORTGAGE GROUP ONE SUBORDINATED PREPAYMENT PERCENTAGE: As of any
Distribution Date, the difference between 100% and the Class IA Prepayment
Percentage.
MORTGAGE GROUP TWO: The Mortgage Loans in the Trust Fund that are
designated in the Mortgage Loan Schedule as comprising Mortgage Group Two.
MORTGAGE GROUP TWO SUBORDINATED PERCENTAGE: As of any Distribution
Date, the difference between 100% and the Class IIA Percentage.
MORTGAGE GROUP TWO SUBORDINATED PREPAYMENT PERCENTAGE: As of any
Distribution Date, the difference between 100% and the Class IIA Prepayment
Percentage.
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 Schedules.
MORTGAGE LOAN SCHEDULE(S): The schedules of Mortgage Loans
attached hereto as Exhibit A-1 and Exhibit A-2 (or either schedule of Mortgage
Loans, as the context requires) as they 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) 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; (xii) the Excess Amount with respect to such Mortgage
Loan; and (xiii) the Mortgage Group within which such Mortgage Loan is
contained.
MORTGAGE NOTE: The note or other evidence of the indebtedness of a
Mortgagor secured by a Mortgage.
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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.
NONRECOVERABLE ADVANCE: Any Advance previously made or proposed to
be made in respect of a Mortgage Loan by the applicable Servicer pursuant to
Section 6.03 which, in the good faith judgment of such Servicer, will not or, in
the case of a proposed Advance, would not, ultimately be recoverable by such
Servicer from Late Collections or otherwise. The determination by such Servicer
that it has made, or would be making, a Nonrecoverable Advance shall be
evidenced by a certificate of a Servicing Officer of such Servicer delivered to
the Trustee, any co-trustee, the Certificate Administrator 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, the
Certificate Administrator or either Servicer, and delivered to the Trustee.
OPINION OF COUNSEL: A written opinion of counsel, who may be
counsel for the Depositor, the Certificate Administrator or either 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: $440,267,847.00
ORIGINAL CLASS IA PRINCIPAL BALANCE: $382,701,614.00
ORIGINAL CLASS IIA PRINCIPAL BALANCE: $57,566,233.00
ORIGINAL CLASS M PRINCIPAL BALANCE: $9,885,909.00
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ORIGINAL CLASS B PRINCIPAL BALANCE: $9,656,007.44
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: 0.50%
Class B-4: 0.25%
OUTSTANDING CERTIFICATE GROUP: With respect to any Distribution
Date, any Certificate Group which has not become a Retired Certificate Group on
any prior Distribution Date.
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE: With respect to any
Class (other than the Class IA-7, Class IA-X and Class IIA-X Certificates) of
Certificates and any Distribution Date, the Original Certificate Principal
Balance of such Class (plus, in the case of the Class IA-12 Certificates, the
Class IA-12 Accrual Amount with respect to each previous Distribution Date prior
to the Class IA-12 Accretion Termination Date) minus the sum of (i) any
distributions of principal made on such Class prior to such Distribution Date
and (ii) any Realized Losses allocated to such Class 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) 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.
PASS-THRU ENTITY: A "Pass-Thru Entity" as defined in Section
860E(e)(6) of the Code.
PASS-THROUGH RATE: With respect to any Mortgage Loan, the Net
Mortgage Rate minus the Excess Amount Rate.
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PAYING AGENT: The Person appointed by the Trustee as Paying Agent
pursuant to Section 4.05.
PAYOFF: Any Mortgagor payment of principal on a Mortgage Loan
equal to the entire outstanding Principal Balance of such Mortgage Loan, if
received in advance of the last scheduled Due Date for such Mortgage Loan and
accompanied by an amount of interest equal to accrued unpaid interest on the
Mortgage Loan to the date of payment-in-full.
PAYOFF EARNINGS: For any Distribution Date with respect to each
PNC Serviced Mortgage Loan on which a Payoff was received by the related
Principal Prepayment Period, the aggregate of the interest earned by the related
Servicer from investment in the Collection Account of such Payoff from the date
of receipt of such Payoff until the business Day immediately preceding the
related Distribution Date (net of investment losses).
PAYOFF INTEREST: For any Distribution Date with respect to a PNC
Serviced Mortgage Loan for which a Payoff was received on or after the first
calendar day of the month of such Distribution Date and before the fifteenth
calendar day of such month, an amount of interest thereon at the applicable
Pass-Through Rate from the first day of the month of such Distribution Date
through the day of receipt thereof.
PERCENTAGE INTEREST: As to any Certificate (other than a Class
IA-7, Class IA-X or Class IIA-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 Outstanding Certificate Principal Balance of such Certificate by the
aggregate of the Outstanding Certificate Principal Balances of all the
Certificates of such Class and with respect to all Certificates, the percentage
obtained by dividing the Outstanding Certificate Principal Balance of such
Certificate by the aggregate of the Outstanding Certificate Principal Balances
of all the Certificates. With respect to any Class IA-7, Class IA-X or Class
IIA-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.
PNC: PNC Mortgage Securities Corp., a Delaware corporation, or its
successor in interest.
PNC SERVICED MORTGAGE LOANS: The Mortgage Loans serviced by PNC
and set forth in the Mortgage Loan Schedule attached hereto as Exhibit A-2.
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
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payments of principal on such Mortgage Loan (including the principal portion of
Advances of the related 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 constitutes a Payoff or a
Curtailment; 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
and (i) each Principal Prepayment on any CMMC Serviced Mortgage Loan and (ii)
each Curtailment on any PNC Serviced Mortgage Loan, 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. With respect to any
Distribution Date and each Payoff on any PNC Serviced Mortgage Loan, the period
beginning on the fifteenth day of the month preceding the month in which such
Distribution Date occurs and ending on the fourteenth day of the month in which
such Distribution Date occurs.
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 applicable 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.
RANDOM LOT: With respect to any Distribution Date on which a
mandatory distribution is to be made on any Retail Certificates (as described in
Section 6.08(e)), the method by which the Depository will determine which Retail
Certificates will be paid principal, using its established random lot procedures
or, if such Certificates are no longer represented by a Book-Entry Certificate,
using the Certificate Administrator's procedures.
RATE ADJUSTMENT DATE: The LIBOR Business Day prior to the first
day of each Interest Accrual Period after the initial Interest Accrual Period.
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 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.
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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 applicable 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.
REFERENCE BANK RATE: As of 11:00 A.M. London time, on the day that
is two LIBOR Business Days prior to the immediately preceding Distribution Date,
the rate at which deposits are offered in U.S. Dollars by the reference banks
(which shall be three major banks engaged in transactions in the London
interbank market, selected by the Certificate Administrator) to prime banks in
the London interbank market for a period of one month in amounts approximately
equal to the aggregate Outstanding Certificate Principal Balance of the Class
IA-16 and Class IA-17 Certificates in accordance with the following procedures.
The Certificate Administrator will request the principal London office of each
of the reference banks to provide a quotation of its rate. If at least two such
quotations are provided, the rate will be the arithmetic mean of the quotations.
If on such date fewer than two quotations are provided as requested, the rate
will be the arithmetic mean of the rates quoted by one or more major banks in
New York City, selected by the Certificate Administrator as of 11:00 A.M., New
York City time, on such date for loans in U.S. Dollars to leading European banks
for a period of one month in amounts approximately equal to the aggregate
Outstanding Certificate Principal Balance of the Class IA-16 and Class IA-17
Certificates. In the event no such quotations can be obtained, the rate will be
LIBOR for the prior Distribution Date, or in the case of the first Rate
Adjustment Date, 5.25%.
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: The Group One Remittance Rate or the Group Two
Remittance Rate, as applicable.
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.
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RESIDUAL INTEREST: The interest in the Trust Fund 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 and the Class B
Certificateholders.
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 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.
RETAIL CERTIFICATES: The Class IA-13, Class IA-19, Class IA-20 and
Class IA-21 Certificates.
RETIRED CERTIFICATE GROUP: With respect to any Distribution Date,
any Certificate Group with respect to which the aggregate Outstanding
Certificate Principal Balance is reduced to zero on or before such Distribution
Date.
ROUNDING ACCOUNT: The separate trust account established by
deposit as of the Closing Date of $3,999.96 and maintained by the Certificate
Administrator pursuant to Section 5.29, which account shall bear a designation
clearly indicating that the funds deposited therein are held in trust for the
benefit of the Trustee on behalf of the Holders of Retail Certificates or any
other account serving a similar function acceptable to the Rating Agencies, and
which account provides that the Certificate Administrator may make, or cause to
be made, withdrawals as provided in Section 5.29 hereof.
ROUNDING AMOUNT: With respect to the Rounding Account, the amount
of funds, if any, needed to be withdrawn from such account and used to round the
amount of any principal distributions to any of the Class IA-13, Class IA-19,
Class IA-20 or Class IA-21 Certificates on any Distribution Date upward to the
next higher integral multiple of $1,000.
SALE AGREEMENT: The Mortgage Loan Sale Agreement dated as of
November 24, 1998 between the Depositor and CMMC.
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 (1st) 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(S): CMMC and PNC, or any of their respective successors
under this Agreement as herein provided.
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SERVICER REMITTANCE DATE: With respect to any Distribution Date,
the Business Day preceding such Distribution Date.
SERVICING ADVANCES: All customary, reasonable and necessary "out
of pocket" costs and expenses incurred in the performance by either 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 to the
applicable Servicer for the servicing of the Mortgage Loans, equal to, as of any
Distribution Date, the total of (i), with respect to each PNC Serviced Mortgage
Loan, one-twelfth of 0.25% 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 and (ii) with respect to any CMMC Serviced Mortgage Loan,
one-twelfth of 0.25% 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 related Servicer, or as otherwise provided under Section
5.09 or 5.23.
SERVICING OFFICER: Any officer of either 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 such Servicer on or prior to the
Closing Date, and signed on behalf of such 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, $4,839,068.00. 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 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.
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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 November
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
December 2003 and November 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
December 2004 and November 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
December 2005 and November 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
December 2006 and November 2007, 45% of the Subordinated
Percentage of the Mortgage Pool Principal Balance as of the
Cut-off Date; and
(v) if such Distribution Date occurs after November 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:
Distribution Date Occurring in Step Down Percentage
------------------------------ --------------------
December 1998 through November 2003..................... 0%
December 2003 through November 2004..................... 30%
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December 2004 through November 2005..................... 40%
December 2005 through November 2006..................... 60%
December 2006 through November 2007..................... 80%
December 2007 and thereafter............................ 100%
STRIPPED INTEREST RATE: For each Mortgage Loan, the excess, if
any, of the Pass-Through Rate for such Mortgage Loan over the applicable
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) the sum of: (i)
the applicable Subordinated 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
applicable Subordinated Prepayment Percentage of the 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 applicable
Subordinated 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 IA Optimal Principal Amount or Class IIA
Optimal Principal Amount with respect to such Distribution Date; and (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 applicable Subordinated Prepayment Percentage of the 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).
SUBORDINATED PERCENTAGE: The Mortgage Group One Subordinated
Percentage or the Mortgage Group Two Subordinated Percentage, as the case may
be.
SUBORDINATED PREPAYMENT PERCENTAGE: The Mortgage Group One
Subordinated Prepayment Percentage or the Mortgage Group Two Subordinated
Prepayment Percentage, as the case may be.
SUB-SERVICER: Any Person with whom either Servicer enters into a
Sub-Servicing Agreement.
SUB-SERVICING AGREEMENT: Any agreement between either 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 such
Servicer and the Depositor.
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SUBSIDIARY REGULAR INTEREST: There shall be thirteen Subsidiary
Regular Interests. The first subsidiary regular interest (the "First Subsidiary
Regular Interest") shall have the same characteristics as the Class IA-1, Class
IA-3, Class IA-4, Class IA-5, Class IA-8, Class IA-9, Class IA-10, Class IA-11,
Class IA-12, Class IA-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 second subsidiary
regular interest (the "Second Subsidiary Regular Interest") shall have the same
characteristics as the Class IA-2 and Class IA-7 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 third
subsidiary regular interest (the "Third Subsidiary Regular Interest") shall have
the same characteristics as the Class IA-6 and Class IA-24 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 IA-16, Class
IA-17, Class IA-18 and Class IA-19 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 IA-20, Class IA-21, Class IA-22 and Class IA-23
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 sixth subsidiary regular interest (the "Sixth Subsidiary
Regular Interest") shall have the same characteristics as the Class IA-14
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. The seventh subsidiary regular interest (the "Seventh Subsidiary
Regular Interest") shall have the same characteristics as the Class IA-15
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. The eighth subsidiary regular interest (the "Eighth Subsidiary
Regular Interest") shall have the same characteristics as the Class IA-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. The ninth subsidiary regular interest (the "Ninth
Subsidiary Regular Interest") shall have the same characteristics as the Class
IIA-1 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. The tenth subsidiary regular interest (the "Tenth
Subsidiary Regular Interest") shall have the same characteristics as the Class
IIA-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. The eleventh subsidiary regular interest (the "Eleventh
Subsidiary Regular Interest") and the twelfth subsidiary regular interest (the
"Twelfth Subsidiary Regular Interest") in the aggregate shall have the same
characteristics as the 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 thirteenth subsidiary regular interest (the
"Thirteenth Subsidiary Regular Interest") shall have the same characteristics as
the Excess Amount Interest shall have the right to receive distributions from
the Mortgage Pool in the amounts necessary to make all required distributions
with respect to such interest.
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
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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.
TELERATE SCREEN PAGE 3750: The display designated as page 3750 on
the Dow Jones Telerate Service or such other page as may replace page 3750 on
that service for the purpose of displaying London interbank offered rates of
major banks.
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
any Collection Account, the Certificate Account, the Class IA-14/Class IA-15
Interest Supplement Account and the Rounding 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 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."
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(B) The original Mortgage (including all riders thereto) with
evidence of recording thereon, or a copy thereof certified by the
public recording office in which such mortgage has been recorded or, if
the original Mortgage has not been returned from the applicable public
recording office, a true certified copy, certified by the Seller, of
the original Mortgage together with a certificate of the Seller
certifying that the original Mortgage has been delivered for recording
in the appropriate public recording office of the jurisdiction in which
the Mortgaged Property is located.
(C) The original Assignment of Mortgage to "Citibank, N.A., as
trustee," which assignment shall be in form and substance acceptable
for recording, or a copy certified by the Seller as a true and correct
copy of the original Assignment which has been sent for recordation.
Subject to the foregoing, such assignments may, if permitted by law, be
by blanket assignments for Mortgage Loans covering Mortgaged Properties
situated within the same county. If the Assignment of Mortgage is in
blanket form, a copy of the Assignment of Mortgage shall be included in
the related individual Mortgage File.
(D) The original policy of title insurance, including riders and
endorsements thereto, or if the policy has not yet been issued, a
written commitment or interim binder or preliminary report of title
issued by the title insurance or escrow company.
(E) Originals of all recorded intervening Assignments of Mortgage,
or copies thereof, certified by the public recording office in which
such Assignments or Mortgage have been recorded showing a complete
chain of title from the originator to the Depositor, with evidence of
recording, thereon, or a copy thereof certified by the public recording
office in which such Assignment of Mortgage has been recorded or, if
the original Assignment of Mortgage has not been returned from the
applicable public recording office, a true certified copy, certified by
the Seller of the original Assignment of Mortgage together with a
certificate of the Seller certifying that the original Assignment of
Mortgage has been delivered for recording in the appropriate public
recording office of the jurisdiction in which the Mortgaged Property is
located.
(F) Originals, or copies thereof certified by the public recording
office in which such documents have been recorded, of each assumption,
extension, modification, written assurance or substitution agreements,
if applicable, or if the original of such document has not been
returned from the applicable public recording office, a true certified
copy, certified by the Seller, of such original document together with
certificate of Seller certifying the original of such document has been
delivered for recording in the 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
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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 Depositor 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 Depositor shall deliver to the
Trustee a photocopy of such document. If any such Assignment of Mortgage is
returned unrecorded to the Depositor because of any defect therein, the
Depositor shall cause such defect to be cured and such document to be recorded
in accordance with this paragraph. The Depositor shall deliver or cause to be
delivered each original recorded Assignment of Mortgage and intermediate
assignment to the Trustee within 270 days of the Closing Date or shall deliver
to the Trustee on or before such date an Officer's Certificate stating that such
document has been delivered to the appropriate public recording office for
recordation, but has not been returned solely because of a delay caused by such
recording office. In any event, the Depositor shall use all reasonable efforts
to cause each such document with evidence of recording thereon to be delivered
to the Trustee within 300 days of the Closing Date.
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
either Servicer shall take any action inconsistent with such ownership and shall
not claim any ownership interest therein. The Depositor and each 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 related Servicers
or any Sub-Servicer, for the benefit of the Trustee as the owner thereof, and
the related 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 related 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 related Servicer and its customers. The
Trustee, the Certificate Administrator and the Depositor agree that they will
not use such information for business purposes without the express written
consent of the related Servicer and that all such information shall be kept
strictly confidential.
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It is the intention of this Agreement that the conveyance of the
Depositor's right, title and interest in and to the Trust Fund pursuant to this
Agreement shall constitute a purchase and sale and not a loan. If a conveyance
of Mortgage Loans from the Seller to the Depositor is characterized as a pledge
and not a sale, then the Depositor shall be deemed to have transferred to the
Trustee all of the Depositor's right, title and interest in, to and under the
obligations of the Seller deemed to be secured by said pledge; and it is the
intention of this Agreement that the Depositor shall also be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title, and interest in, to and under the obligations of the
Seller to the Depositor deemed to be secured by said pledge and that the Trustee
shall be deemed to be an independent custodian for purposes of perfection of the
security interest granted to the Depositor. If the conveyance of the Mortgage
Loans from the Depositor to the Trustee is characterized as a pledge, it is the
intention of this Agreement that this Agreement shall constitute a security
agreement under applicable law, and that the Depositor shall be deemed to have
granted to the Trustee a first priority security interest in all of the
Depositor's right, title and interest in, to and under the Mortgage Loans, all
payments of principal of or interest on such Mortgage Loans, all other rights
relating to and payments made in respect of the Trust Fund, and all proceeds of
any thereof. If the trust created by this Agreement terminates prior to the
satisfaction of the claims of any Person in any Certificates, the security
interest created hereby shall continue in full force and effect and the Trustee
shall be deemed to be the collateral agent for the benefit of such Person.
In addition to the conveyance made in the first paragraph of this
Section 2.01, the Depositor does hereby convey, assign and set over to the
Trustee all of its right, title and interest 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-1 and Exhibit A-2 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 related Servicer, the
Seller and the Depositor. In addition, the Trustee shall also notify the related
Servicer, the Seller and the Depositor, if (a) in examining the Mortgage Files,
the documentation shows on its face (i) any adverse
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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 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
related Servicer and deposited by the related Servicer in the related 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 each 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
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Class B Certificates, and the "residual interest" (within the meaning of Section
860G(a)(2) of the Code) in the Master 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 IA-1, Class IA-3, Class
IA-4, Class IA-5, Class IA-8, Class IA-9, Class IA-10, Class IA-11, Class IA-12
and Class IA-13 Certificates, shall be considered to have been made solely from
the First Subsidiary Regular Interest. All payments with respect to the Class
IA-2 and Class IA-7 Certificates shall be considered to have been made solely
from the Second Subsidiary Regular Interest. All payments with respect to the
Class IA-6 and Class IA-24 Certificates shall be considered to have been made
solely from the Third Subsidiary Regular Interest. All payments with respect to
the Class IA-16, Class IA-17, Class IA-18 and Class IA-19 Certificates shall be
considered to have been made solely from the Fourth Subsidiary Regular Interest.
All payments with respect to the Class IA-20, Class IA-21, Class IA-22 and Class
IA-23 Certificates shall be considered to have been made solely from the Fifth
Subsidiary Regular Interest. All payments with respect to the Class IA-14
Certificates shall be considered to have been made solely from the Sixth
Subsidiary Regular Interest. All payments with respect to Class IA-15
Certificates shall be considered to have been made solely from the Seventh
Subsidiary Regular Interest. All payments with respect to the Class IA-X
Certificates shall be considered to have been made solely from the Eighth
Subsidiary Regular Interest. All payments with respect to Class IIA-1
Certificates shall be considered to have been made solely from the Ninth
Subsidiary Regular Interest. All payments with respect to Class IIA-X
Certificates shall be considered to have been made solely from the Tenth
Subsidiary Regular Interest. All payments with respect to the Subordinated
Certificates shall be considered to have been made solely from the Eleventh
Subsidiary Regular Interest (in the case of amounts in respect of Mortgage Group
One) or the Twelfth Subsidiary Regular Interest (in the case of amounts in
respect of Mortgage Group Two). All payments with respect to the Excess Amount
Interest shall be considered to have been made solely from the Thirteenth
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 IA-1, Class IA-3, Class IA-4, Class
IA-5, Class IA-8, Class IA-9, Class IA-10, Class IA-11, Class IA-12 and Class
IA-13 Certificates. The original principal balance of the Second Subsidiary
Regular Interest is equal to the aggregate principal balance of the Class IA-2
Certificates. The original principal balance of the Third Subsidiary Regular
Interest is equal to the aggregate principal balance of the Class IA-6 and Class
IA-24 Certificates. The original principal balance of the Fourth Subsidiary
Regular Interest is equal to the aggregate principal balance of the Class IA-16,
Class IA-17, Class IA-18 and Class IA-19 Certificates. The original principal
balance of the Fifth Subsidiary Regular Interest is equal to the principal
balance of the Class IA-20, Class IA-21, Class IA-22 and Class IA-23
Certificates. The original principal balance of the Sixth Subsidiary Regular
Interest is equal to the principal balance of the Class IA-14 Certificates. The
original principal balance of the Seventh Subsidiary Regular Interest is equal
to the principal balance of the Class IA-15 Certificates. The original principal
balance of the Eighth Subsidiary Regular Interest is equal to zero. The original
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principal balance of the Ninth Subsidiary Regular Interest is equal to the
principal balance of the Class IIA-1 Certificates. The original principal
balance of the Tenth Subsidiary Regular Interest is zero. The original principal
balance of the Eleventh Subsidiary Regular Interest is $16,981,925.39. The
original principal balance of the Twelfth Subsidiary Regular Interest is
$2,559,991.05. The original principal balance of the Thirteenth Subsidiary
Regular Interest is zero.
The interest rate on each of the First Subsidiary Regular
Interest, the Second Subsidiary Regular Interest, the Third Subsidiary Regular
Interest, the Fourth Subsidiary Regular Interest, the Fifth Subsidiary Regular
Interest and the Eleventh Subsidiary Regular Interest is 6.25%. The interest
rate on the Sixth Subsidiary Regular Interest and the Seventh Subsidiary Regular
Interest is the Certificate Rate on the Class IA-14 and Class IA-15
Certificates, respectively. The interest rate on the Ninth Subsidiary Regular
Interest and the Twelfth Subsidiary Regular Interest is 6.00%. The interest rate
on the Eighth Subsidiary Regular Interest and the Tenth Subsidiary Regular
Interest is equal to the aggregate of the Stripped Interest Rates for Mortgage
Group One and Mortgage Group Two, respectively. The interest rate on the
Thirteenth Subsidiary Regular Interest is equal to the aggregate of the Excess
Amount 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 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 its acceptance thereof, irrevocably
appoints Certificate Administrator 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
Certificate Administrator covenants and agrees that it shall act as agent (and
the Certificate Administrator 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
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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 Certificate
Administrator 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;
(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 SERVICERS; REPURCHASE OF MORTGAGE LOANS
Section 3.01. Representations and Warranties of the Depositor with
respect to the Mortgage Loans.
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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 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 fire, hazards of extended coverage and such other hazards
as are provided for in the FNMA Guides or by FHLMC. All such
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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;
(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.
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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 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
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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;
(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)
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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;
(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
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<PAGE>
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 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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<PAGE>
(oo) The Mortgage Loan is a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code (without regard to Treasury
Regulations ss. 1.860G-2(f) or any similar rule that provides that a defective
obligation is a qualified mortgage for a temporary period);
Upon discovery by any of the Depositor, either 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 related Servicer and shall be deposited by such
Servicer in the related 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 related 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 each Servicer.
Each Servicer represents and warrants to, and covenants with, the Trustee for
the benefit of the Certificateholders that as of the Closing Date:
(a) Such Servicer is a corporation duly chartered and validly
existing in good standing under the laws of the state of its incorporation, and
such Servicer is duly qualified or registered as a foreign corporation in good
standing in such 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 such Servicer
and its performance and compliance with the terms of this Agreement will not
violate such Servicer's corporate charter or by-laws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in the breach of, any material contract, agreement or
other instrument to which such Servicer is a party or which may be applicable to
such 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 such 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;
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<PAGE>
(d) Such Servicer is 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 such 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 such Servicer's
knowledge, threatened against such 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
related Servicer in the related 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 related 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 determination of the Seller, 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 Seller 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
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<PAGE>
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 November 24, 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 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.
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<PAGE>
(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 Certificate
Administrator, the Servicers, 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 (or, in the case of the
Class IA-7, Class IA-X and Class IIA-X Certificates, in the minimum
denominations based on the Class IA-7 Notional Balance, Class IA-X Notional
Balance or Class IIA-X Notional Balance, respectively) as set forth in the
following table (except that one Certificate of each Class may be issued in a
different denomination).
<TABLE>
<CAPTION>
Aggregate Original Certificate
Minimum Principal Balance of all
Original Certificates of the CUSIP
Class Denomination Indicated Class Number
----- ------------ --------------- ------
<S> <C> <C> <C>
Class IA-1............... $ 25,000.00 $199,844,084.00 16162T BN5
Class IA-2............... $ 25,000.00 $96,827,043.00 16162T BP0
Class IA-3............... $ 1,000.00 12,756,054.00 16162T BQ8
Class IA-4............... $ 25,000.00 38,270,162.00 16162T BR6
Class IA-5............... $ 1,000.00 5,677,336.00 16162T BS4
Class IA-6............... $ 1,000.00 1,169,260.00 16162T BT2
Class IA-7............... (1) (1) 16162T BU9
Class IA-8............... $ 1,000.00 3,242,599.00 16162T BV7
Class IA-9............... $ 1,000.00 1,145,715.00 16162T BW5
Class IA-10.............. $ 1,000.00 1,000,000.00 16162T BX3
Class IA-11.............. $ 1,000.00 5,000,000.00 16162T BY1
Class IA-12.............. $ 1,000.00 2,000,000.00 16162T BZ8
Class IA-13.............. $ 1,000.00 940,000.00 16162T CA2
Class IA-14.............. $ 1,000.00 3,000,000.00 16162T CB0
Class IA-15.............. $ 1,000.00 1,000,000.00 16162T CC8
Class IA-16.............. $ 25,000.00 2,256,015.00 16162T CD6
Class IA-17.............. $ 25,000.00 584,894.00 16162T CE4
</TABLE>
59
<PAGE>
<TABLE>
<CAPTION>
Aggregate Original Certificate
Minimum Principal Balance of all
Original Certificates of the CUSIP
Class Denomination Indicated Class Number
----- ------------ --------------- ------
<S> <C> <C> <C>
Class IA-18(2)........... $ 25,000.00 568,182.00 16162T CF1
Class IA-19.............. $ 1,000.00 2,840,909.00 16162T CG9
Class IA-20.............. $ 1,000.00 530,000.00 16162T CH7
Class IA-21.............. $ 1,000.00 530,000.00 16162T CJ3
Class IA-22.............. $ 1,000.00 1,175,000.00 16162T CK0
Class IA-23.............. $ 1,000.00 1,175,000.00 16162T CL8
Class IA-24.............. $ 1,000.00 1,169,261.00 16162T CM6
Class IA-X............... (1) (1) 16162T CP9
Class IIA-1.............. $ 25,000.00 57,566,233.00 16162T CQ7
Class IIA-X.............. (1) (1) 16162T CS3
Class A-R(3)............. $ 100.00 100.00 16162T CT1
Class M.................. $100,000.00 9,885,909.00 16162T CU8
Class B-1................ $100,000.00 3,908,382.00 16162T CV6
Class B-2................ $100,000.00 2,069,143.00 16162T CW4
Class B-3................ $100,000.00 1,379,429.00 16162T CX2
Class B-4................ $100,000.00 1,149,525.00 16162T CY0
Class B-5................ $100,000.00 1,149,528.44 16162T CZ7
</TABLE>
- ---------------
(1) The Class IA-7, Class IA-X and Class IIA-X Certificates are
interest-only certificates, have no principal balance and will bear
interest on their respective notional amounts (initially approximately
$1,549,232, $18,669,783 and $3,265,742, respectively).
(2) The Class IA-18 Certificates are entitled to payments of principal only.
(3) The Class A-R Certificate represents the Master Residual Interest and
the Subsidiary Residual Interest.
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 Certificate Administrator, 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
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<PAGE>
Certificates and of transfers and exchanges of Certificates and the Excess
Amount Interest as herein provided.
(b) Upon surrender for registration of transfer of any Certificate
at any office or agency of the Certificate Administrator 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 B-3, Class B-4 or Class B-5 Certificate
or the Excess Amount Interest 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 Donaldson, Lufkin & Jenrette
Securities Corporation and except if the transferee executes a certificate
substantially in the form of Exhibit H 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, the Certificate
Administrator or either Servicer, and (ii) the Depositor shall require the
transferee to execute a certification substantially in the form of Exhibit H or
Exhibit I.
(d) No transfer of a Subordinated Certificate or the Excess Amount
Interest 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 or the
Excess Amount Interest shall be made unless the Depositor shall have received
either (i) a representation letter from the transferee of such Certificate or
interest acceptable to and in form and substance satisfactory to the Depositor,
substantially in the form of Exhibit M (or paragraph 6. of Exhibit H or Exhibit
I, if the transferee is required to deliver the certification provided for in
Section 4.02(c)) 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 or interest 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 or interest, which representation
letter shall not be an expense of the Trustee, the Depositor, the Certificate
Administrator or either Servicer, or (ii) in the case of any such Certificate or
interest 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 or interest 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. ss.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, the
Certificate
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Administrator or either 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, the Certificate Administrator or either 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 Certificate Administrator 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 Certificate Administrator 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.
(g) All Certificates surrendered for transfer or exchange shall be
destroyed by the Certificate Administrator, 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 and the Certificate Administrator
receive 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), 4.02(d), 4.02(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 by 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 Certificate Administrator 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 Certificate Registrar or, if no Certificate Registrar is
appointed, the Trustee, which consent is to be granted by the Certificate
Registrar or, if no Certificate Registrar is appointed, the Trustee only upon
compliance with the requirements of this Section. As a condition to granting its
consent to a transfer of a Class A-R Certificate, the Certificate Registrar or,
if no Certificate Registrar is appointed, the Trustee, shall require the
proposed transferee of such Certificate (including, in the case of the initial
issuance of
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<PAGE>
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
Certificate Registrar or, if no Certificate Registrar is appointed, the Trustee
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.
ss.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 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 Certificate
Registrar or, if no Certificate Registrar is appointed, the Trustee 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 Certificate Registrar or, if
no Certificate Registrar is appointed, the Trustee 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 Certificate
Registrar or, if no Certificate Registrar is appointed, the Trustee 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 Certificate Administrator 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 Certificate Registrar
or, if no Certificate Registrar is appointed, the Trustee 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 Certificate Administrator 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 Certificate
Administrator to ensure that the Class A-R Certificate is not transferred to a
Disqualified Organization and that any transfer of such Class A-R
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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 Certificate Registrar or, if no Certificate Registrar is
appointed, the Trustee 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 Certificate Administrator shall make available upon
written request to each Holder and each proposed transferee of a 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.
(k) The owner of the Excess Amount Interest as of the Closing Date
shall be PNC. The Excess Amount Interest shall not be transferable, except to
PNC Mortgage Corp. of America, an Ohio corporation (subject to satisfaction of
the requirements of Section 4.02(e) and 4.02(d)). On the Closing Date, the
Certificate Administrator shall register the Excess Amount Interest in the name
of PNC in the Certificate Register.
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Certificate Administrator
or the Certificate Administrator receives evidence to its satisfaction of the
destruction, loss or theft of any Certificate, and (b) there is delivered to
Certificate Administrator, such security or indemnity as may be required by it
to save it harmless, then, in the absence of notice to the Certificate
Administrator, that such Certificate has been acquired by a bona fide purchaser,
the Certificate Administrator, 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 Certificate Administrator, 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
Certificate Administrator, 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 Certificate
Administrator 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 each Servicer Remittance Date, each Servicer shall
deposit or
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cause to be deposited with the Paying Agent from funds on deposit in the related
Collection Account a sum up to the portion of the Available Distribution Amount
relating to the Mortgage Loans serviced by such Servicer, 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-S7 - Certificate Account". The
Certificate Administrator 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 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 Certificate
Administrator 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 Servicers 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 Certificate Administrator shall cause each Paying Agent other
than the Trustee to execute and deliver to the Certificate Administrator 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 Certificate Administrator 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
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business of any Authenticating Agent, shall continue to be the Authenticating
Agent without the execution or filing of any paper or any further act on the
part of the Trustee or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at
least 30 days' advance written notice of resignation to the Trustee and the
Depositor. The Trustee may at any time terminate the agency of any
Authenticating Agent by giving written notice of termination to such
Authenticating Agent and the Depositor. Upon receiving a notice of resignation
or upon such a termination, or in case at any time any Authenticating Agent
shall cease to be eligible in accordance within the provisions of this Section
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 Servicers or the
Trust Fund.
[END OF ARTICLE IV]
ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01. Servicers to Service Mortgage Loans. Each of CMMC
and PNC shall service and administer the CMMC Serviced Mortgage Loans and the
PNC Serviced Mortgage Loans, respectively, and each 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, each
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 such
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 serviced by it and
with respect to the related Mortgaged Properties; provided, however, that
subject to the provisions of this paragraph, each Servicer may allow a
modification with respect to a Mortgage Loan serviced by it if such Servicer
would take such action in the ordinary course of its business if it were the
owner of the Mortgage Loan. Either Servicer may agree to a modification of any
Mortgage Loan serviced by it (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 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
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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) such 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 related 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 such Servicer. To confirm such
transfer and assignment, the related Servicer, as a servicer hereunder, as soon
as practicable shall execute an instrument of assignment of the Modified
Mortgage Loan without recourse in customary form to such Servicer in its
individual capacity. The related Servicer shall deposit the Purchase Price for
any Modified Mortgage Loan in the related 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 applicable
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 such Servicer any Modified Mortgage Loan
previously transferred and assigned pursuant thereto.
Each Servicer shall furnish to the Trustee for execution and
redelivery to such Servicer or, at the request of such Servicer, a Sub-Servicer,
such documents necessary or appropriate to enable such Servicer to service and
administer the Mortgage Loans and the Trustee shall not be responsible for such
Servicer's application thereof. Each Servicer agrees to remain eligible as
either a FNMA or FHLMC seller/servicer, or both, for so long as it is a
Servicer.
All Servicing Advances made by the Servicers 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 applicable
Servicer to the extent permitted by Sections 5.09 and 5.23.
Section 5.02. Sub-Servicing Agreements Between Servicers and
Sub-Servicers; Enforcement of Sub-Servicer's Obligations.
(a) Each Servicer may enter into Sub-Servicing Agreements with
Sub-Servicers for the servicing and administration of all or part of the
Mortgage Loans serviced by it. References in this Agreement to actions taken or
to be taken by either Servicer in servicing the Mortgage Loans serviced by it
include actions taken or to be taken by a Sub-Servicer on behalf of such
Servicer. Each Sub-Servicing Agreement will be upon such terms and conditions as
are not inconsistent with this Agreement and as applicable Servicer and the
Sub-Servicer have agreed. Each Servicer hereby agrees to notify the Trustee in
writing promptly upon the appointment of any Sub-Servicer. For purposes of this
Agreement, the receipt by a 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 related
Servicer of such amount. Any Sub-Servicer shall deposit all such funds in an
Eligible Account.
(b) As part of its servicing activities hereunder, each Servicer,
for the benefit of the Trustee and the Certificateholders, shall enforce the
obligations of each Sub-Servicer appointed by it under the
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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 applicable
Servicer, in its good faith business judgment, would require were it the owner
of the related Mortgage Loans. The applicable 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. Each 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 Servicers. Notwithstanding any
Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between either Servicer and a Sub-Servicer or
reference to actions taken through a Sub-Servicer or otherwise, the applicable
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 such Servicer alone were servicing and administering
the Mortgage Loans. Each Servicer shall be entitled to enter into any agreement
with a Sub-Servicer for indemnification of such 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 applicable Servicer alone, and
the Trustee, the Certificate Administrator, the other Servicer and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to the Sub-Servicer.
Section 5.06. Termination of Sub-Servicing Agreement. If either
Servicer shall for any reason no longer be a Servicer hereunder (including by
reason of any Event of Default), such 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 such Servicer's interest therein or to have replaced such
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, each Servicer will proceed diligently to collect all payments due
under each of the related 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
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own portfolio. Any such arrangements shall not diminish or otherwise affect
either Servicer's obligation to make Advances pursuant to Section 6.03.
Section 5.08. Establishment of Collection Accounts; Deposit in
Collection Account. With respect to all of the Mortgage Loans, each 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 (each, a "Collection Account" and collectively, the
"Collection Accounts") 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-S7 - Collection
Account." Such Collection Accounts shall be established with a commercial bank,
a savings bank or a savings and loan association. Each Servicer may invest, or
cause the institution maintaining its Collection Account to invest, moneys in
such 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 related 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 applicable Collection Account
by the related Servicer out of its own funds immediately as realized; provided,
however, that if the Trustee becomes a Servicer, the Trustee shall not be
required to deposit the amount of any loss incurred prior to it becoming a
Servicer.
Each Servicer shall deposit or cause to be deposited in its
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 serviced by such Servicer
(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;
(ii) All payments which were received after the Cut-off Date on
account of interest on the Mortgage Loans serviced by such Servicer
(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 with respect to the Mortgage Loans
serviced by such Servicer;
(iv) All Insurance Proceeds with respect to the Mortgage Loans
serviced by such Servicer received by such 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
such 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 with respect to any
Mortgage Loan serviced by such Servicer which are not released to the
Mortgagor in accordance with the Servicer's normal servicing
procedures;
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(vi) All Repurchase Proceeds with respect to the Mortgage Loans
serviced by such Servicer;
(vii) All Advances made by such Servicer pursuant to Section 6.03;
(viii) All amounts representing revenues under the insurance
maintained by such Servicer provided pursuant to Section 5.19 to the
extent of any losses borne by any Certificateholder;
(ix) All revenues from any Mortgaged Property with respect to any
Mortgage Loan serviced by such Servicer acquired by such 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.
Each Servicer shall maintain accounting records on a loan-by-loan
basis with respect to its Collection Account. Each Servicer shall give notice to
the Trustee, the Certificate Administrator and the Depositor and each Rating
Agency of any change in the location of its 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 any Collection Account for
more than 12 months. Any Monthly Payment or any portion thereof that has
remained in any 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 Accounts.
Each Servicer may, from time to time, withdraw funds from its Collection Account
for the following purposes:
(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), such
Servicer's and the related Sub-Servicer's right to receive
reimbursement pursuant to this subclause (i) being limited to amounts
received on particular Mortgage Loans serviced by such Servicer which
represent Late Collections (net of the Servicing Fees) with respect to
those particular Mortgage Loans;
(ii) to pay itself the Servicing Fee relating to the Mortgage
Loans serviced by it;
(iii) to reimburse itself for unreimbursed Servicing Advances, or
to pay the related Sub-Servicer any unreimbursed Servicing Advances,
such Servicer's right to receive reimbursement or make payments to the
Sub-Servicer pursuant to this subclause (iii) with respect to any
Mortgage Loan serviced by such Servicer 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;
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(vi) to pay to itself (or the related Sub-Servicer) income earned
on the investment of funds deposited in such 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 such Collection
Account upon the termination of this Agreement;
(ix) to pay to the owner of the Excess Amount Interest, on each
Servicer Remittance Date, the Excess Amount Distribution; and
(x) 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 either Servicer or any
Sub-Servicer collects Escrow Payments, if any, such Servicer shall, and shall
cause any 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 applicable Servicer. Each Servicers 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 either
Servicer to collect Escrow Payments in the absence of a provision in the related
Mortgage requiring such collection.
Each 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 serviced by such Servicer,
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 related Mortgaged Property. Each 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. Each Servicer shall be entitled
to retain any interest paid on funds deposited in any 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
applicable 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 a 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 such Servicer for any Servicing Advance
made by such 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
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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 such 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, each 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. Each 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. Each Servicer may transfer the
Collection Accounts or Escrow Accounts to an Eligible Account maintained with a
different depository institution from time to time.
Section 5.14. [Reserved].
Section 5.15. Maintenance of the Primary Insurance Policies.
Neither Servicer shall take, or permit any related 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 such 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%, each 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. Neither Servicer shall
cancel or refuse to renew any such Primary Insurance Policy or consent to any
related 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) Each Servicer shall cause to be maintained for each Mortgage
Loan serviced by it 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 applicable Servicer will cause to
be maintained a flood insurance policy meeting the requirements of the current
guidelines of the Federal Insurance Administration with a
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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. Each
Servicer shall also maintain on property acquired upon foreclosure, or by deed
in lieu of foreclosure, of any Mortgage Loan serviced by it, 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 a 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 such Servicer's
normal servicing procedures) shall be deposited, subject to applicable law, in
the applicable Collection Account. It is understood and agreed that no
earthquake or other additional insurance need be required by either 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 related 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 such Servicer shall be obligated, in the case of
blanket insurance policies, to deposit in the applicable 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. Neither
Servicer shall interfere with the Mortgagor's freedom of choice in selecting
either his insurance carrier or agent; provided, however, that neither Servicer
shall accept any such insurance policies from insurance companies unless such
companies are acceptable insurers in the discretion of the related Servicer.
(b) Any cost incurred by either 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
related Mortgage Loan, notwithstanding that the terms of the related 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 applicable 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.
Each 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 such
Servicer in any capacity with regard to the Mortgage Loans serviced by it to
handle funds, money, documents and papers relating to such Mortgage Loans. Any
such fidelity bond and errors and omissions insurance shall protect and insure
such 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
either Servicer from its duties and obligations as set forth in this Agreement.
Upon request of the Trustee, each Servicer shall cause to be delivered to the
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Trustee a certification evidencing coverage under such fidelity bond and
insurance policy. Promptly upon receipt by either Servicer 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, such Servicer shall
notify the Trustee, the Certificate Administrator and each Rating Agency of any
such termination or modification.
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, each 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, each Servicer shall deposit Insurance Proceeds in its Collection
Account.
(b) When any Mortgaged Property is conveyed by the Mortgagor, the
related 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, each
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 applicable
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, neither Servicer shall 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 applicable Servicer in good faith determines it may
be restricted by law from preventing, for any reason whatsoever.
(c) Subject to each 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 applicable 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 either Servicer for
entering into an assumption or substitution of liability agreement with respect
to such Mortgage Loan shall be retained by such Servicer as additional servicing
compensation.
Section 5.21. Income and Realization from Defaulted Mortgage
Loans. Each Servicer, on behalf of the Trustee, shall foreclose upon or
otherwise comparably convert the ownership of Mortgaged Properties securing such
of the Mortgage Loans serviced by it as come into and continue in default and
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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 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. Each 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, each 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 neither Servicer shall 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 applicable 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 such 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 applicable 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 such Collection Account.
Each 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 relating to a
Mortgage Loan Serviced by it in determining whether to foreclose upon or
otherwise comparably convert the ownership of such property. To the extent that
the applicable Servicer has actual knowledge of any such substance or waste, it
shall consult with the Trustee regarding the appropriate course of action.
Neither Servicer shall 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 such Servicer manage, operate or take any other action with respect
thereto which such 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.
Each 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
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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 related 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 such 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 serviced by it, or upon the receipt by either Servicer of a notification
that payment in full will be made in a manner customary for such purposes, such
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 applicable 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 applicable Servicer and execute
and deliver to such 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 such 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 applicable 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 such 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
such 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 serviced by it, the related Servicer shall
deliver to the Trustee a certificate of a Servicing Officer requesting that
possession of the Mortgage File be released to such 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 Agreement. With such certificate, such
Servicer shall require that the Trustee release the Mortgage File, and, within
five (5) Business Days, the Trustee shall deliver the Mortgage File or any
document therein to such Servicer. Such Servicer shall cause each Mortgage File
so released to be returned to the Trustee when the need therefor by such
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
such Servicer has delivered to the Trustee a certificate of a Servicing Officer
in the form of Exhibit L hereto certifying as to the name
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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 either Servicer, the Trustee shall
execute and deliver to such Servicer any court pleadings, requests for trustee's
sale or other documents prepared by and delivered by such 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, such 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. Each 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
with respect to Mortgage Loans serviced by it and as reimbursement for
Nonrecoverable Advances, Servicing Advances and reimbursement for Advances with
respect to Mortgage Loans serviced by it, 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 each Servicer with
respect to Mortgage Loans serviced by it, to the extent permitted by applicable
law. Each 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 Certificate Administrator shall, on behalf of the Trust,
make all filings ("Periodic Reports") required to be made by the Depositor or
the Trust (other 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 thirty (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 Certificate
Administrator 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 Certificate Administrator
shall be under no obligation to prepare such notice if the number of
Certificateholders exceeds 300. The Certificate Administrator shall file any
notice on Form 15 with the Commission in accordance with the provisions of Rule
15d-6 under the Exchange Act.
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Section 5.25. Annual Statement as to Compliance.
Each Servicer will deliver to the Depositor and the Trustee on or
before April 30 of each year, beginning with April 30 in the year which begins
not less than three (3) months after the Closing Date, an Officers' Certificate
stating, as to each signer thereof, that (i) a review of the activities of such
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, such 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 the Certificate
Administrator and to each Rating Agency by such Servicer. Copies of such
statement shall also be provided by such Servicer to any Certificateholder upon
request. If such Servicer shall fail to provide such copies and a Responsible
Officer of the Trustee is aware that such Servicer has not so provided copies,
the Trustee shall provide such copies at such Servicer's expense if the Trustee
has received such statement.
Section 5.26. Annual Independent Public Accountants' Servicing
Report. On or before April 30 of each year, beginning with April 30 in the year
which begins not less than three (3) months after the Closing Date, each
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 (A) with
respect to CMMC, such firm has examined certain documents and records relating
to the servicing of the related 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) such other exceptions as shall be
set forth in such statement and (B) in the case of PNC, in connection with the
firm's examination of the financial statements as of the previous December 31 of
PNC's parent corporation which shall include a limited examination of PNC's
financial statement (in the case of PNC) or [Chase] , as applicable, nothing
came to such firm's attention that indicated that the applicable Servicer was
not in compliance with Section 5.08, Section 5.09, Section 5.10, Section 5.11,
Section 5.23 and Section 5.25 of this Agreement, except for (i) such exceptions
as such firm believes to be immaterial, and (ii) such other exceptions as set
forth in such statement. Copies of such statement shall be provided to the
Certificate Administrator and to each Rating Agency, and, upon request, to the
Certificateholders, by such Servicer, or by the Trustee at such Servicer's
expense if the Trustee has received such statement and such Servicer shall fail
to provide such copies and the Trustee is aware that such Servicer has not so
provided copies.
Section 5.27. Access to Certain Documentation; Rights of the
Depositor in Respect of the Servicers. Each Servicer shall provide access to the
Trustee, the Certificate Administrator, 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 such Servicer designated by it. The Depositor may, but is not
obligated to, enforce the obligations of each Servicer under this Agreement and
may, but is not
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obligated to, appoint and cause a designee to perform, any defaulted obligations
of each Servicer hereunder or exercise the rights of each Servicer hereunder;
provided that neither Servicer shall be relieved 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 either Servicer and is not obligated to supervise the
performance of either Servicer under this Agreement or otherwise.
Section 5.28. REMIC-Related Covenants. For as long as the Trust
Fund shall exist, the Servicers, the Certificate Administrator and the Trustee
shall act in accordance herewith to assure continuing treatment of each REMIC
Pool as a REMIC. In particular:
(a) Neither Servicer nor the Certificate Administrator shall
create, or permit the creation of, any "interests" in each 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, each Servicer
and the Certificate Administrator 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 Certificate Administrator and the Trustee, upon the
direction of the Certificate Administrator, 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, neither Servicer shall
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 neither Servicer shall, in any case, permit substitution later
than two (2) years from the Closing Date unless such 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;
(c) Each Servicer and the Certificate Administrator 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
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(f) Notwithstanding anything to the contrary in this Agreement,
the Certificate Administrator and the Trustee, at the direction of the
Certificate Administrator, shall take any other action or refuse to take any
action otherwise required (including adjusting the Purchase Price for any
Mortgage Loan) where the Certificate Administrator deems such action or inaction
reasonably necessary to ensure the REMIC status of either 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 Certificate Administrator shall withdraw
from the Certificate 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 Certificate Administrator 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 Certificate Administrator is hereby
authorized to and shall segregate, into a separate non-interest bearing account,
the net income from any "prohibited transaction" under Code 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 Certificate Administrator 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, the Certificate
Administrator nor either 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.
Section 5.29. Maintenance of the Rounding Account; Collections
Thereunder. On or prior to the Closing Date, the Certificate Administrator shall
establish the Rounding Account and Donaldson, Lufkin and Jenrette Securities
Corporation shall deposit $3,999.96 therein. The Certificate Administrator shall
maintain such account to provide, if needed, the applicable Rounding Amount on
any Distribution Date. On the first Distribution Date with respect to which the
Certificate Administrator determines that amounts are available out of the
Available Distribution Amount for distributions of principal on the Retail
Certificates, and the aggregate amount allocable to such distributions of
principal is not an amount equal to an integral multiple of $1,000, the
Certificate Administrator shall withdraw from the Rounding Account the
applicable Rounding Amount. On each succeeding Distribution Date, prior to the
earlier of (i) the Credit Support Depletion Date and (ii) the date on which any
Realized Loss is allocated to the Retail Certificates pursuant to Section 6.04,
with respect to which the Certificate Administrator determines that amounts are
available out of the Available Distribution Amount for distributions of
principal on the Retail Certificates, the aggregate amount allocable to each
such Class will be applied first to replenish any funds withdrawn from the
Rounding Account on prior Distribution Dates which have not been repaid. If the
remainder of the aggregate amount allocable to distributions of principal on
each such Class is not an amount equal to an integral multiple of $1,000, the
Certificate Administrator
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shall withdraw from the Rounding Account, to the extent funds are available
therein, the applicable Rounding Amount.
Any amounts withdrawn by the Certificate Administrator from the
Rounding Account shall be deposited in the Certificate Account for distribution
to the Holders of Retail Certificates as described in the immediately preceding
paragraph. Funds held in the Certificate Account shall be invested as described
in Section 4.05.
On or promptly after the earlier of (i) the Credit Support Depletion
Date and (ii) the date on which any Realized Loss is allocated to the Retail
Certificates pursuant to Section 6.04, the Certificate Administrator shall be
entitled to withdraw and pay to itself as additional compensation any remaining
amounts on deposit in the Rounding Account.
Section 5.30. Maintenance of the Class IA-14/IA-15 Interest
Supplement Account. On or prior to the Closing Date, the Certificate
Administrator shall cause to be established and maintained the Class IA-14/IA-15
Interest Supplement Account into which an amount equal to $112,500.00 shall be
deposited on the Closing Date to provide coverage with respect to the Class
IA-14 Interest Supplement Amount and the Class IA-15 Interest Supplement Amount.
For each of the first twenty-four Distribution Dates (or, in the case of the
Class IA-15 Interest Supplement Amount, the first thirty-six Distribution
Dates), the Certificate Administrator shall calculate the Class IA-14 Interest
Supplement Amount and the Class IA-15 Interest Supplement Amount. On each such
Distribution Date, the Certificate Administrator shall then withdraw from the
Class IA-14/IA-15 Interest Supplement Account, to the extent funds are available
therein, the Class IA-14 Interest Supplement Amount and the Class IA-15 Interest
Supplement Amount and deposit such amount in the Certificate Account for payment
to the Class IA-14 and Class IA-15 Certificateholders. After the thirty-sixth
Distribution Date, the Certificate Administrator shall withdraw from the Class
IA-14/IA-15 Interest Supplement Account and pay to the Class A-R
Certificateholder any amount then remaining therein.
Amounts on deposit in the Class IA-14/IA-15 Interest Supplement Account
shall not be invested and shall not be held in an interest-bearing account.
[END OF ARTICLE V]
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01. Distributions.
(a) On each Distribution Date, the Paying Agent shall apply an
amount on deposit in the Certificate Account equal to the sum of (1) the
Available Distribution Amount (net of the Certificate Administration Fee) (2)
any Rounding Amount, (3) the Class IA-14 Interest Supplement Amount and (4) the
Class IA-15 Interest Supplement Amount in the following order of priority:
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(i) to the 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 distributed (A) to the Class IA Certificateholders in the
amounts distributable pursuant to (b)(ii)(A) and (b)(iii) below,
up to the Class IA Optimal Principal Amount and (B) to the Class
IIA-1 Certificateholders in the amounts distributable pursuant to
(b)(ii)(B) and (b)(iv) below, up to the Class IIA Optimal
Principal Amount;
(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 IA-1 Certificateholders, (1) the Class
IA-1 Interest Accrual Amount plus (2) the Class IA-1 Shortfall
from the preceding Distribution Date;
(B) to the Class IA-2 Certificateholders, (1) the Class
IA-2 Interest Accrual Amount plus (2) the Class IA-2 Shortfall
from the preceding Distribution Date;
(C) to the Class IA-3 Certificateholders, (1) the Class
IA-3 Interest Accrual Amount plus (2) the Class IA-3 Shortfall
from the preceding Distribution Date;
(D) to the Class IA-4 Certificateholders, (1) the Class
IA-4 Interest Accrual Amount plus (2) the Class IA-4 Shortfall
from the preceding Distribution Date;
(E) to the Class IA-5 Certificateholders, (1) the Class
IA-5 Interest Accrual Amount plus (2) the Class IA-5 Shortfall
from the preceding Distribution Date;
(F) to the Class IA-6 Certificateholders, (1) the Class
IA-6 Interest Accrual Amount plus (2) the Class IA-6 Shortfall
from the preceding Distribution Date; and
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(G) to the Class IA-7 Certificateholder, (1) the Class
IA-7 Interest Accrual Amount plus (2) the Class IA-7 Shortfall
from the preceding Distribution Date;
(H) to the Class IA-8 Certificateholders, (1) the Class
IA-8 Interest Accrual Amount plus (2) the Class IA-8 Shortfall
from the preceding Distribution Date;
(I) to the Class IA-9 Certificateholders, (1) the Class
IA-9 Interest Accrual Amount plus (2) the Class IA-9 Shortfall
from the preceding Distribution Date;
(J) to the Class IA-10 Certificateholders, (1) the Class
IA-10 Interest Accrual Amount plus (2) the Class IA-10
Shortfall from the preceding Distribution Date;
(K) to the Class IA-11 Certificateholders, (1) the Class
IA-11 Interest Accrual Amount plus (2) the Class IA-11
Shortfall from the preceding Distribution Date;
(L) to the Class IA-12 Certificateholders, (1) the Class
IA-12 Interest Accrual Amount plus (2) the Class IA-12
Shortfall from the preceding Distribution Date; provided,
however, that on each Distribution Date prior to the Class
IA-12 Accretion Termination Date, amounts calculated pursuant
to this clause (L) will be added to the Outstanding
Certificate Principal Balance of the Class IA-12 Certificates
and distributed, as principal, in accordance with Section
6.01(b)(i)(BB);
(M) to the Class IA-13 Certificateholders, (1) the Class
IA-13 Interest Accrual Amount plus (2) the Class IA-13
Shortfall from the preceding Distribution Date;
(N) to the Class IA-14 Certificateholders, (1) the Class
IA-14 Interest Accrual Amount plus (2) the Class IA-14
Shortfall from the preceding Distribution Date;
(O) to the Class IA-15 Certificateholders, (1) the Class
IA-15 Interest Accrual Amount plus (2) the Class IA-15
Shortfall from the preceding Distribution Date;
(P) to the Class IA-16 Certificateholders, (1) the Class
IA-16 Interest Accrual Amount plus (2) the Class IA-16
Shortfall from the preceding Distribution Date;
(Q) to the Class IA-17 Certificateholders, (1) the Class
IA-17 Interest Accrual Amount plus (2) the Class IA-17
Shortfall from the preceding Distribution Date;
(R) to the Class IA-19 Certificateholders, (1) the Class
IA-19 Interest Accrual Amount plus (2) the Class IA-19
Shortfall from the preceding Distribution Date;
(S) to the Class IA-20 Certificateholders, (1) the Class
IA-20 Interest Accrual Amount plus (2) the Class IA-20
Shortfall from the preceding Distribution Date;
(T) to the Class IA-21 Certificateholders, (1) the Class
IA-21 Interest Accrual Amount plus (2) the Class IA-21
Shortfall from the preceding Distribution Date;
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(U) to the Class IA-22 Certificateholders, (1) the Class
IA-22 Interest Accrual Amount plus (2) the Class IA-22
Shortfall from the preceding Distribution Date;
(V) to the Class IA-23 Certificateholders, (1) the Class
IA-23 Interest Accrual Amount plus (2) the Class IA-23
Shortfall from the preceding Distribution Date; and
(W) to the Class IA-24 Certificateholders, (1) the Class
IA-24 Interest Accrual Amount plus (2) the Class IA-24
Shortfall from the preceding Distribution Date;
(X) to the Class IIA-1 Certificateholders, (1) the Class
IIA-1 Interest Accrual Amount plus (2) the Class IIA-1
Shortfall from the preceding Distribution Date;
(Y) to the Class IA-X Certificateholders, (1) the Class
IA-X Interest Accrual Amount plus (2) the Class IA-X Shortfall
from the preceding Distribution Date;
(Z) to the Class IIA-X Certificateholders, (1) the Class
IIA-X Interest Accrual Amount plus (2) the Class IIA-X
Shortfall from the preceding Distribution Date;
(AA) to the Class A-R Certificateholders, (1) the Class
A-R Interest Accrual Amount plus (2) the Class A-R Shortfall
from the preceding Distribution Date;
(BB) on each Distribution Date prior to the Class A-12
Accretion Termination Date, the Class A-12 Interest Accrual
Amount will be distributed to the Class IA-10, Class IA-11 and
Class IA-12 Certificates, sequentially, until the Outstanding
Certificate Principal Balance of each such Class has been
reduced to zero.
(ii)concurrently, (A) to the Class IA Certificateholders,
solely from the Available Distribution Amount with respect to
Mortgage Group One up to the Class IA Optimal Principal Amount,
allocated among the Class IA Certificates in accordance with the
Class IA Principal Payment Rules and (B) to the Class IIA-1
Certificateholders, solely from the Available Distribution Amount
with respect to Mortgage Group Two, up to the Class IIA Optimal
Principal Amount;
(iii) to the extent that the Available Distribution Amount
with respect to Mortgage Group One remaining after giving effect
to the distributions in (b)(i) above is insufficient to distribute
in full amounts described in (b)(ii)(A) and (B) above (such
shortfall, the "Class IA Deficiency Amount") and the Available
Distribution Amount with respect to Mortgage Group Two remaining
after giving effect to the distributions in (b)(i) above exceeds
the amount required to distribute in full the amounts described in
(b)(ii)(B) above, such excess shall be distributed in reduction of
the Class IA Deficiency Amount;
(iv) to the extent that the Available Distribution Amount with
respect to Mortgage Group Two remaining after giving effect to the
distributions in (b)(i) above is insufficient to distribute in
full amounts described in (b)(ii)(B) above (such shortfall, the
"Class IIA Deficiency Amount") and the Available Distribution
Amount with respect to Mortgage Group One remaining after giving
effect to the distributions in (b)(i) above exceeds the
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amount required to distribute in full the amounts described in
(b)(ii)(A) above, such excess shall be distributed in reduction of
the Class IIA Deficiency Amount;
(v) 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 Class A
Certificateholders pro rata in accordance with the amounts
otherwise distributable to them pursuant to (b)(i)(A)-(BB) above;
and
(vi) In addition to the foregoing distributions, the Class IA
or Class IIA Certificates may receive additional principal
distributions on any Distribution Date prior to the Credit Support
Depletion Date under the circumstances specified in (A) and (B)
below:
(A) On any Distribution Date on or after the date on
which the aggregate Outstanding Certificate Principal Balance
of the Class IA Certificates or the Outstanding Certificate
Principal Balance of the Class IIA-1 Certificates has been
reduced to zero, all principal (in excess of that needed to
reduce the aggregate Outstanding Certificate Principal Balance
of the Class IA Certificates or the Outstanding Certificate
Principal Balance of the Class IIA-1 Certificates to zero) on
the Mortgage Loans in the Mortgage Group relating to such
Class A Certificates that are no longer outstanding in
accordance with Section 6.01(b)(ii)(A) or 6.01(b)(ii)(C), as
applicable, in reduction of the Outstanding Certificate
Principal Balances thereof, provided that on such Distribution
Date either (a) the Aggregate Subordinated Percentage for such
Distribution Date is less than 200% of the initial Aggregate
Subordinate Percentage, or (b) the average outstanding
principal balance of the Mortgage Loans in either Mortgage
Group delinquent 60 days or more over the prior six months, as
a percentage of the corresponding Group One or Group Two
Subordinated Amount, is greater than or equal to 50%. For
purposes of the foregoing, the "Aggregate Subordinated
Percentage" for any Distribution Date is equal to the
aggregate Outstanding Certificate Principal Balance of the
Subordinated Certificates immediately prior to such
Distribution Date divided by the aggregate Scheduled Principal
Balance of all of the Mortgage Loans immediately prior to such
Distribution Date.
(B) If on any Distribution Date on which the aggregate
Outstanding Certificate Principal Balance of the Class IA or
Class IIA Certificates would be greater than the related
Mortgage Pool Principal Balance (the "Undercollateralized
Group"), after giving effect to distributions to be made on
such Distribution Date, the portion of the Available
Distribution Amount in respect of principal on the Mortgage
Loans in other Mortgage Group (the "Overcollateralized Group")
otherwise allocable to the Subordinated Certificates will be
distributed to the Classes of Class A Certificates relating to
the Undercollateralized Group (in accordance with the
priorities set forth herein), in reduction of the principal
balances thereof, until the aggregate principal balance of the
Certificates included in the Undercollateralized Group is
equal to the related Mortgage Pool Principal Balance.
Moreover, the Available Distribution Amount with respect to
the Overcollateralized Group will be further reduced (after
distributions of interest to the Class A Certificates included
in the Overercollateralized Group) in an amount equal to one
month's interest on the amount by which the
Undercollateralized Group is undercollateralized at 6.25% per
annum (if Mortgage Group One is the
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Undercollateralized Group) or 6.00% per annum (if Mortgage
Group Two is the Undercollateralized Group), plus any
shortfall of such amounts from prior Distribution Dates;
provided, however, that in no event shall the Available
Distribution Amount with respect to the Overcollateralized
Group on any Distribution Date be reduced by more than the sum
of (i) the overcollateralized amount with respect to the
Overcollateralized Group and (ii) interest thereon at the
applicable Remittance Rate. Such amounts will be distributed
to the applicable Classes of Certificates in the priority of
interest payable on such Distribution Date.
(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 Carryover 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;
(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
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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) Based upon the information received from the Servicers as
provided in Section 6.02, the Certificate Administrator 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 Certificate
Administrator 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 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 Certificate
Administrator 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.
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Section 6.02. Statements to the Certificateholders.
(a) Not later than the Business Day following each
Determination Date, each Servicer shall send to the Certificate Administrator,
the Paying Agent and the Trustee (in such format as may be mutually agreed) the
relevant information for purposes of this Section 6.02. Not later than each
Distribution Date, the Certificate Administrator shall send to each
Certificateholder, the Depositor, the Paying Agent (if other than the
Certificate Administrator), the Trustee, each 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 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, in each case both in the
aggregate and by Mortgage Group;
(iv) the aggregate amount of any Advances by each
Servicer pursuant to Section 6.03, both in the aggregate and
by Mortgage Group;
(v) the number of Outstanding Mortgage Loans and the
Mortgage Pool Principal Balance, both in the aggregate and by
Mortgage Group, 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 Accounts by each Servicer;
(vii) the related amount of the Certificate
Administration Fees withdrawn from the Certificate Account by
the Certificate Administrator;
(viii) the number and aggregate principal amounts of
Mortgage Loans (A) delinquent one Monthly Payment, two Monthly
Payments and three or more Monthly Payments and (B) in
foreclosure, in each case, as of the end of the related
Principal Prepayment Period, in each case, both in the
aggregate and by Mortgage Group;
(ix) 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, in each
case, both in the aggregate and by Mortgage Group;
(x) the aggregate amount of all Advances recovered
during the related Due Period;
(xi) 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
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Class M Principal Balance, the Class B Principal Balance, the
Class A Percentage, the Class A Prepayment Percentage, and the
level of Credit Support, if any, with respect to each class of
Subordinated Certificates;
(xii) the aggregate amount of Realized Losses during
the related Due Period and the aggregate amount of Realized
Losses since the Cut-off Date, both in the aggregate and by
Mortgage Group;
(xiii) the allocation to each Class of Certificates of
any Realized Losses during the related Due Period;
(xiv) the Outstanding Certificate Principal Balance of
each Class of Certificates after giving effect to the
distributions to each Class on such Distribution Date; and
(xv) the amount of any Compensating Interest
Shortfalls on such Distribution Date.
The Certificate Administrator'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 Certificate Administrator or either 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
Certificate Administrator or either Servicer shall be entitled to be reimbursed
by each such Certificateholder for the Certificate Administrator's actual
expenses incurred in providing such reports and access.
(b) The Certificate Administrator shall cause to be prepared,
and the Certificate Administrator 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 Certificate Administrator 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 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 Certificate
Administrator 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 Certificate Administrator 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 Certificate Administrator; and
provided further that if an organization is employed, as described above, to
prepare and file any such filings, neither the Trustee nor the Certificate
Administrator shall be liable for any errors by such organization.
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Section 6.03. Advances by the Servicers. If, on any
Determination Date, either Servicer determines that any Monthly Payments with
respect to any Mortgage Loans serviced by it due on the immediately preceding
Due Date have not been received, such 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
Business Day prior to the related Distribution Date in an amount equal to the
amount of such delinquent Monthly Payments, after adjustment of any delinquent
interest payment for its 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 such Servicer acquired and continues to own the Mortgaged
Properties on behalf of the Certificateholders. If such Servicer makes an
Advance, it shall on or prior to the Servicer Remittance Date for such
Distribution Date either (i) deposit in its Collection Account an amount equal
to such Advance, (ii) cause to be made an appropriate entry in the records of
its 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
such 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 a Collection Account for future distribution to
Certificateholders and so used pursuant to clause (ii) or (iii) above shall be
replaced by the related Servicer from its own funds by deposit into the
Collection Account on or before any subsequent Distribution Date to the extent
that funds in such 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 such Servicer
determines not to make a Nonrecoverable Advance, it shall on the related
Determination Date furnish to the Trustee, any co-trustee, the Certificate
Administrator and each Rating Agency notice of such determination. Each Servicer
shall be entitled to be reimbursed from its Collection Account for all Advances
and Nonrecoverable Advances as provided in Section 5.09.
Section 6.04. Allocation of Realized Losses.
(a) Not later than the Business Day following each
Determination Date, each 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 and forward such information to the Certificate
Administrator in accordance with Section 6.02.
(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, (X) if the Realized Loss has occurred with respect to a Group One
Mortgage Loan, to the Class IA Certificates on a pro rata basis until the
Outstanding Certificate Principal Balance of the Class IA Certificates has been
reduced to zero or (Y) if
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the Realized Loss has occurred with respect to a Group Two Mortgage Loan, to the
Class IIA-1 Certificates, until the aggregate Outstanding Certificate Principal
Balance of the Class IIA-1 Certificates has been reduced to zero. The principal
portion of any Excess Losses shall be allocated without priority among (i) all
Classes of Subordinated Certificates and (ii) (a) the Classes of Class IA
Certificates (if the Excess Loss occurred with respect to a Group One Mortgage
Loan), or (b) the Class IIA-1 Certificates (if the Excess Loss occurred with
respect to a Group Two Mortgage Loan), pro rata based upon their respective
Outstanding Certificate Principal Balances. For purposes of the foregoing
sentence, each Class of Subordinated Certificates will be deemed to have an
Outstanding Certificate Principal Balance (and to accrue interest thereon) equal
to the actual Outstanding Certificate Principal Balance thereof times a
fraction, the numerator of which is the Group One Subordinated Amount (for a
loss on a Group One Mortgage Loan) or the Group Two Subordinated Amount (for a
loss on a Group Two Mortgage Loan), and the denominator of which is the
aggregate of the Group One Subordinated Amount and the Group Two Subordinated
Amount.
(c) As used herein, an allocation of a Realized Loss on a "pro
rata basis" among two or more specified Classes of Certificates means an
allocation on a pro rata basis, among the various Classes so specified, to each
such Class of Certificates on the basis of their Outstanding Certificate
Principal Balances (or, in the case of the Class IA-12 Certificates, the lesser
of (i) the Original Certificates Principal Balance of such certificates and (ii)
the Outstanding Certificate Principal Balance of such Certificates) 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.
(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 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) (I) With respect to a Principal Prepayment of a CMMC
Serviced Mortgage Loan, the related Servicer shall, on the Servicer Remittance
Date relating to the Principal Prepayment Period during which such Principal
Prepayment occurred, deposit into the Certificate 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 Pass-Through Rate exceeds the amount of the interest (adjusted to
the Pass-Through Rate) collected from the Mortgagor with respect to such period
(such amount, "Compensating Interest"); provided, however, that with respect to
any Distribution Date, such 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 serviced by it
with respect to such Distribution Date.
(II) With respect to any Payoff of a PNC Serviced Mortgage
Loan which occurs between the fifteenth day of such month and the last day of a
month, the related Servicer shall, on the Servicer Remittance Date relating to
the Principal Prepayment Period during which such Payoff occurred, deposit into
the Certificate Account from its own funds, as a reduction of its servicing
compensation hereunder, an amount equal to Compensating Interest; provided,
however, that with respect to any Distribution Date, such Servicer's obligation
to deposit any such amount is limited to an amount equal to the sum of (A) the
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product of (i) one-twelfth of 0.03% and (ii) the aggregate Scheduled Principal
Balance of the Mortgage Loans serviced by it with respect to such Distribution
Date, (B) the aggregate Payoff Earnings with respect to the PNC Serviced
Mortgage Loans and (C) the aggregate Payoff Interest with respect to the PNC
Serviced Mortgage Loans.
(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 Certificate 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 IA-12 Certificates) on
such Distribution Date had there been no such Compensating Interest Shortfall.
(c) On any Distribution Date, the interest portion of any
Realized Losses ("Realized Loss Interest Shortfall") (other than the interest
portion of Excess Losses) 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 Class A Certificates
pro rata among the outstanding Classes of 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 IA-12 Certificates) on such Distribution Date had there been
no such Realized Loss Interest Shortfall. On any Distribution Date, the interest
portion of any Excess Losses shall be allocated among all Classes of
Certificates pro rata based upon the amount of interest to which each such Class
would otherwise be paid on such Distribution Date had there been no such Excess
Losses allocable to interest.
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 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
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Certificates and each Class of Class B Certificates having a lower numerical
class designation than such Class of Class B Certificates. The rights of each
Servicer, as servicer, to receive funds from the Collection Account, pursuant to
Section 5.09, on account of its 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
and the rights of the Certificate Administrator to receive the Certificate
Administration Fee shall not be subordinated to the rights of the Class A, Class
M or Class B Certificateholders. Amounts held by the Servicers, the Certificate
Administrator or the Trustee for future distribution to the Class M or Class B
Certificate holders, including, without limitation, in the Collection Accounts
or the Certificate 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.
Section 6.07. Determination of LIBOR. LIBOR applicable to the
calculation of the Certificate Rates on the Class IA-16 and Class IA-17
Certificates for any Interest Accrual Period (other than the initial Interest
Accrual Period) will be determined by the Certificate Administrator on each Rate
Adjustment Date as follows:
For any Interest Accrual Period other than the first Interest
Accrual Period, the rate for United States dollar deposits for one month which
appears on the Telerate Screen Page 3750 as of 11:00 A.M., London, England time,
on the second LIBOR Business Day prior to the first day of such Interest Accrual
Period. For the first Interest Accrual Period, LIBOR shall equal 5.25% with
respect to the Class IA-16 and Class IA-17 Certificates. If such rate does not
appear on such page (or such other page as may replace that page on that
service, or if such service is no longer offered, such other service for
displaying LIBOR or comparable rates as may be reasonably selected by the
Certificate Administrator), the rate will be the Reference Bank Rate. If no such
quotations can be obtained and no Reference Bank Rate is available, LIBOR will
be LIBOR applicable to the preceding Distribution Date.
The establishment of LIBOR by the Certificate Administrator on
any Rate Adjustment Date and the Certificate Administrator's subsequent
calculation of the Certificate Rates applicable to the Class IA-16 and Class
IA-17 Certificates for the relevant Interest Accrual Period, in the absence of
manifest error, will be final and binding.
Section 6.08. Principal Distributions on the Retail
Certificates. (a) Prior to the earlier of (i) the Credit Support Depletion Date
and (ii) the date on which any Realized Loss is allocated to the Retail
Certificates pursuant to Section 6.04, distributions in reduction of the
Outstanding Certificate Principal Balance of each such Class will be made in
integral multiples of $1,000 at the request of the appropriate representatives
of Deceased Holders of Certificates of each such Class and at the request of
Living Holders of Certificates of each such Class or by mandatory distributions,
pursuant to Section 6.08(b) and Section 6.08(e). On and after the earlier of (i)
the Credit Support Depletion Date and (ii) the date on which any Realized Loss
is allocated to the Retail Certificates pursuant to Section 6.04, distributions
in reduction of the Outstanding Certificate Principal Balances of each such
Class will be made on a pro rata basis pursuant to Section 6.08(f).
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(b) On each Distribution Date on which principal distributions
to the Retail Certificates are made pursuant to Section 6.01(b)(ii)(A) and
(b)(iii), such distributions shall be made distributed to the Beneficial Holders
of such Certificates by the Depository pursuant to the Depository Agreement in
the following priority:
(i) first, to requesting Deceased Holders, in the
order in which such requests are received by the Depository, but not
exceeding an aggregate amount of $25,000 for each requesting Deceased
Holder; and
(ii) second, to requesting Living Holders, in the
order in which such requests are received by the Depository, but not
exceeding an aggregate amount of $10,000 for each requesting Living
Holder.
Thereafter, the Depository shall make distributions with respect to the Retail
Certificates as provided in clauses (i) and (ii) above up to a second $25,000
and $10,000, respectively. This sequence of priorities shall be repeated until
the Depository has honored all requests for principal distributions by Deceased
Holders and Living Holders of each such Class to the extent of amounts available
for principal distributions to each such Class.
All requests for principal distributions to the Retail Certificates
will be accepted in accordance with the provisions set forth in Section 6.08(d).
Requests for principal distributions that are received by the Certificate
Administrator after the related Record Date and requests for principal
distributions received in a timely manner but not accepted with respect to any
Distribution Date, will be treated as requests for principal distributions by
the Beneficial Holder(s) making such requests on the next succeeding
Distribution Date, and each succeeding Distribution Date thereafter, until each
such request is accepted or is withdrawn as provided in Section 6.08(d). Such
requests as are not so withdrawn shall retain their order of priority without
the need for any further action on the part of the appropriate Beneficial Holder
of the relevant Retail Certificate, all in accordance with the procedures of the
Depository and the Certificate Administrator. Upon the transfer of beneficial
ownership of any Retail Certificate, any distribution request previously
submitted with respect to each such Retail Certificate shall be deemed to have
been withdrawn only upon the receipt by the Certificate Administrator on or
before the Record Date for any applicable Distribution Date of notification of
such withdrawal in the manner set forth in Section 6.08(d) using a form required
by the Depository.
Distributions in reduction of the Outstanding Certificate Principal
Balance of any Class of Retail Certificates shall be applied by the Certificate
Administrator in an amount equal to the portion of the Class IA Optimal
Principal Amount allocable to each such Class pursuant to Section 6.01, plus any
amounts available for distribution from the Rounding Account established as
provided in Section 5.29, provided that the aggregate distribution of principal
to each such Class on any Distribution Date shall be made in an integral
multiple of $1,000.
To the extent that the portion of the Class IA Optimal Principal Amount
allocable to a Retail Certificate on any Distribution Date exceeds the
Outstanding Certificate Principal Balance of such Retail Certificate with
respect to which principal distribution requests, as set forth above, have been
received, principal distributions in reduction of the Outstanding Certificate
Principal Balance of each such Class will be made by mandatory distribution
pursuant to Section 6.08(e).
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(c) A Retail Certificate shall be deemed to be held by a
Deceased Holder for purposes of this Section 6.08 if the death of the Beneficial
Holder thereof is deemed to have occurred by the Certificate Administrator.
Retail Certificates beneficially owned by tenants by the entirety, joint tenants
or tenants in common shall be considered to be beneficially owned by a single
owner. The death of a tenant by the entirety, joint tenant or tenant in common
shall be deemed to be the death of the Beneficial Holder, and the Retail
Certificates so beneficially owned shall be eligible for priority with respect
to principal distributions, subject to the limitations stated above. Retail
Certificates beneficially owned by a trust shall be considered to be
beneficially owned by each beneficiary of the trust to the extent of such
beneficiary's beneficial interest therein, but in no event will a trust's
beneficiaries collectively be deemed to be Beneficial Holders of a number of
Retail Certificates greater than the number of Retail Certificates of which such
trust is the owner. The death of a beneficiary of a trust shall be deemed to be
the death of a Beneficial Holder of the Retail Certificates beneficially owned
by the trust to the extent of such beneficiary's beneficial interest in such
trust. The death of an individual who was a tenant by the entirety, joint tenant
or tenant in common in a tenancy which is the beneficiary of a trust shall be
deemed to be the death of the beneficiary of such trust. The death of a person
who, during his or her lifetime, was entitled to substantially all of the
beneficial ownership interests in a Retail Certificate shall be deemed to be the
death of the Holder of such Retail Certificate regardless of the registration of
ownership, if such beneficial ownership interest can be established to the
satisfaction of the Certificate Administrator. Such beneficial interest shall be
deemed to exist in typical cases of street name or nominee ownership, ownership
by a trustee, ownership under the Uniform Gifts to Minors Act and community
property or other joint ownership arrangements between a husband and wife.
Beneficial interest shall include the power to sell, transfer or otherwise
dispose of a Retail Certificate and the right to receive the proceeds therefrom,
as well as interest and principal distributions, as applicable, payable with
respect thereto. Neither the Trustee nor the Certificate Administrator shall be
under any duty to determine independently the occurrence of the death of any
Deceased Holder. The Certificate Administrator may rely entirely upon
documentation delivered to it pursuant to Section 6.08(d) in establishing the
eligibility of any Holder to receive the priority accorded Deceased Holders in
Section 6.08(b).
(d) Requests for principal distributions to any Retail
Certificate shall be made by delivering a written request therefor to the
Depository Participant or Indirect Participant that maintains the account
evidencing such Beneficial Holder's interest in such Certificate. In the case of
a request on behalf of a Deceased Holder, appropriate evidence of death and any
tax waivers are required to be forwarded to the Certificate Administrator under
separate cover. The Depository Participant shall in turn make the request of the
Depository (or, in the case of an Indirect Participant, such Indirect
Participant shall notify the related Depository Participant of such request,
which Depository Participant should make the request of the Depository) on a
form required by the Depository and provided to the Depository Participant. Upon
receipt of such request, the Depository will date and time stamp such request
and forward such request to the Certificate Administrator. The Depository may
establish such procedures as it deems fair and equitable to establish the order
of receipt of requests for such distributions received by it on the same day.
None of the Company, either Servicer, the Certificate Administrator or the
Trustee shall be liable for any delay in delivery of requests for distributions
or withdrawals of such requests by the Depository, a Depository Participant or
any Indirect Participant.
The Certificate Administrator shall maintain a list of those
Participants representing the appropriate Holders of Retail Certificates that
have submitted requests for principal distributions, together with the order of
receipt and the amounts of such requests. The Certificate Administrator shall
notify the Depository as to which requests should be honored on each
Distribution Date at least two Business Days prior to such
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Distribution Date and shall notify the Depository as to the portion of the Class
IA Optimal Principal Amount (together with any amounts available for
distribution from the Rounding Account) to be distributed to the Retail
Certificates by mandatory distribution pursuant to Section 6.08(e). Requests
shall be honored by the Depository in accordance with the procedures, and
subject to the priorities and limitations, described in this Section 6.08. The
exact procedures to be followed by the Certificate Administrator and the
Depository for purposes of determining such priorities and limitations will be
those established from time to time by the Certificate Administrator or the
Depository, as the case may be. The decisions of the Certificate Administrator
and the Depository concerning such matters will be final and binding on all
affected persons.
Retail Certificates that have been accepted for a distribution shall
receive distributions on the applicable Distribution Date. Such Certificates
shall cease to bear interest on the amount of principal to be distributed on any
Distribution Date after the last calendar day of the month preceding the month
in which such Distribution Date occurs.
Any Beneficial Holder of a Retail Certificate that has requested a
principal distribution may withdraw its request by so notifying in writing the
Depository Participant or Indirect Participant that maintains such Beneficial
Holder's account. In the event that such account is maintained by an Indirect
Participant, such Indirect Participant must notify the related Depository
Participant which in turn must forward the withdrawal of such request, on a form
required by the Depository, to the Depository to be forwarded to the Certificate
Administrator. If such notice of withdrawal of a request for distribution has
not been received by the Depository and forwarded to the Certificate
Administrator on or before the Record Date for the next Distribution Date, the
previously made request for a principal distribution shall be irrevocable with
respect to the making of principal distributions on such Distribution Date.
In the event any requests for principal distributions are rejected by
the Certificate Administrator for failure to comply with the requirements of
this Section 6.08, the Certificate Administrator shall return such request to
the appropriate Depository Participant with a copy to the Depository with an
explanation as to the reason for such rejection.
(e) To the extent, if any, that principal distributions to be
made to the applicable Retail Certificates on a Distribution Date exceed the
aggregate amount of principal distribution requests for such Class which have
been received on or before the applicable Record Date, as provided in Section
6.08(b) above, additional Certificates of such Class will be selected to receive
mandatory principal distributions in lots equal to $1,000 in accordance with the
then-applicable Random Lot procedures of the Depository, and the then-applicable
procedures of the Depository Participants and Indirect Participants representing
the Beneficial Holders (which procedures may or may not be by random lot). The
Certificate Administrator shall notify the Depository of the aggregate amount of
the mandatory principal distribution to be made on the next Distribution Date.
The Depository shall then allocate such aggregate amount among the Depository
Participants on a Random Lot basis. Each Participant and, in turn, each Indirect
Participant shall then select, in accordance with its own procedures, the
applicable Retail Certificates from among those held in its accounts to receive
mandatory principal distributions, such that the total amount of principal
distributed to the so selected is equal to the aggregate amount of such
mandatory distributions allocated to such Participant by the Depository and to
such Indirect Participant by its related Participant, as the case may be.
Depository Participants and Indirect Participants that hold Retail Certificates
selected for mandatory principal distributions are required to provide notice of
such mandatory distributions to the affected Beneficial Holders.
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(f) Notwithstanding any provisions herein to the contrary, on
each Distribution Date on and after the earlier of (i) the Credit Support
Depletion Date and (ii) the date on which any Realized Loss is allocated to the
Retail Certificates pursuant to Section 6.04, distributions in reduction of the
Outstanding Certificate Principal Balance of such Class of Retail Certificates
will be made pro rata (based upon their respective Outstanding Certificate
Principal Balances) among the Beneficial Holders of the Certificates of such
Class and shall not be made in integral multiples of $1,000 nor pursuant to
requests for distribution as permitted by Section 6.08(a) or by mandatory
distributions as provided for by Section 6.08(e).
In the event that Definitive Certificates representing the Retail
Certificates are issued pursuant to Section 4.01, an amendment to this
Agreement, which may be approved without the consent of any Certificateholders,
shall establish procedures relating to the manner in which distributions in
reduction of the Outstanding Certificate Principal Balance of the Retail
Certificates are to be made.
[END OF ARTICLE VI]
ARTICLE VII
REPORTS TO BE PREPARED BY THE CERTIFICATE ADMINISTRATOR
Section 7.01. Certificate Administrator and Each Servicer
Shall Provide Information as Reasonably Required. The Certificate Administrator
and each 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 Certificate Administrator shall
maintain or cause the maintenance of the books of the Trust Fund on the accrual
method of accounting.
(b) The Certificate Administrator shall prepare and file or
cause to be filed with the Internal Revenue Service federal tax or information
returns with respect to each REMIC Pool 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
Certificate Administrator 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 Certificate Administrator 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 Certificate Administrator 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
sixty (60) days after becoming aware of the transfer to a Disqualified
Organization
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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 Certificate Administrator 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 the Certificate Administrator to serve as the REMIC
Reporting Agent. The Certificate Administrator shall indicate the election to
treat each REMIC Pool 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 Certificate Administrator. Any Holder of a Class
A-R Certificate will by acceptance thereof so appoint the Certificate
Administrator 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 Certificate Administrator from acting as tax matters person
(as an agent or otherwise), the Trustee or the Certificate Administrator, 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]
ARTICLE VIII
THE DEPOSITOR, THE SERVICERS AND THE CERTIFICATE ADMINISTRATOR
Section 8.01. Indemnification; Third Party Claims. Each
Servicer agrees to indemnify the Depositor, the Certificate Administrator and
the Trustee and hold the Depositor, the Certificate Administrator 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, the
Certificate Administrator or the Trustee may sustain in any way related to
failure of such 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. Each
Servicer shall immediately notify the Depositor, the Certificate Administrator
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, the
Certificate Administrator 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, the Certificate Administrator 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, the
Servicers or the Certificate Administrator. The Depositor, each Servicer and the
Certificate Administrator will each keep in full effect its existence, rights
and franchises as a corporation, and will obtain and preserve its qualification
to do
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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. Neither Servicer will 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, either Servicer or the
Certificate Administrator may be merged or consolidated, or to whom the
Depositor, either Servicer or the Certificate Administrator has sold
substantially all of its assets, or any corporation resulting from any merger,
conversion or consolidation to which the Depositor, either Servicer or the
Certificate Administrator shall be a party, or any Person succeeding to the
business of the Depositor, either Servicer or the Certificate Administrator,
shall be the successor of the Depositor, either Servicer or the Certificate
Administrator 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 either Servicer or the Certificate Administrator shall satisfy the
requirements of Section 8.05 with respect to the qualifications of a successor
to the Certificate Administrator.
Notwithstanding anything else in this Section 8.02 and Section
8.04 to the contrary, either Servicer and the Certificate Administrator may
assign its rights and delegate its duties and obligations under this Agreement;
provided that the Person accepting such assignment or delegation shall execute
and deliver 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 Person of the due and punctual performance and observance of
each covenant and condition to be performed or observed by either Servicer or
the Certificate Administrator 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 applicable Servicer and
the Certificate Administrator shall be released from its obligations as Servicer
or Certificate Administrator, as applicable under this Agreement, except that
each Servicer and the Certificate Administrator shall remain liable for all
liabilities and obligations incurred by it as Servicer or Certificate
Administrator, as applicable 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 Certificate Administrator the Trustee and Others. Neither the
Depositor, the Servicer, the Certificate Administrator nor any of the directors,
officers, employees or agents of the Depositor, the Servicers or the Certificate
Administrator 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, the
Servicers or the Certificate Administrator 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 Certificate Administrator, the Trustee, and any director,
officer, employee or agent of the Depositor, the Certificate Administrator 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 Certificate Administrator nor the Trustee
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, either
Servicer, the Certificate Administrator or the Trustee may in its discretion
(and,
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in the case of the Depositor, the Servicers or the Certificate Administrator,
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
Certificate Account and the Depositor, the applicable Servicer, the Certificate
Administrator or the Trustee shall be entitled to be reimbursed therefor out of
the Certificate Account and such amounts shall, on the following Distribution
Date or Distribution Dates, be allocated in reduction of distributions on the
Certificates in the same manner as Realized Losses are allocated hereunder.
Section 8.04. Depositor, Servicers and Certificate
Administrator Not to Resign. Except as described in Section 8.02, neither the
Depositor, either Servicer nor the Certificate Administrator shall assign this
Agreement or resign from the obligations and duties hereby imposed on it except
by mutual consent of the Depositor, each Servicer, the Certificate Administrator
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, either Servicer or the Certificate
Administrator. Any such determination permitting the resignation of the
Depositor, either Servicer or the Certificate Administrator 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, either Servicer
or the Certificate Administrator, 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 the applicable Servicer's
or the Certificate Administrator'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 Servicers. In connection with
the termination of either 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 such 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 such 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 such 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 a
Servicer, which obligation shall be joint and several with that of the Trustee
as Servicer. If the Trustee has become the successor to a 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 a Servicer hereunder in the assumption of all of
the responsibilities, duties or liabilities of a Servicer hereunder. In
connection with any such appointment and assumption, the Trustee may make such
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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 either Servicer's duties, responsibilities and
liabilities under this Agreement should be terminated pursuant to Section 8.02,
8.04 or 9.01, such 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 Trust Fund. The resignation or removal of a 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 such 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 it is succeeding 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 such Servicer, with like effect as if originally named as a
party to this Agreement and the Certificates. Any termination or resignation of
either 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 such Servicer for
events or actions taken or not taken by such Servicer arising prior to any such
termination or resignation.
A Servicer succeeded hereunder shall timely deliver to the
successor the funds that were, or were required to be, in its Collection Account
and the Escrow Account, if any, and all Mortgage Files and related documents,
statements and recordkeeping held by it hereunder and such 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 such Servicer.
Upon a successor's acceptance of appointment as such, the
succeeded Servicer shall notify, in writing, the Trustee, the Certificate
Administrator, the Certificateholders and each Rating Agency of such
appointment.
Section 8.06. Maintenance of Ratings. The Servicers shall
cooperate with the Depositor and the Certificate Administrator and take any
action that may be reasonably necessary to maintain the current rating or
ratings on the Certificates.
Section 8.07. Compensation of the Certificate Administrator.
The Certificate Administrator shall be entitled to receive the Certificate
Administration Fee as compensation for services rendered by the Certificate
Administrator under this Agreement. The Certificate Administrator shall pay
itself such Certificate Administration Fee monthly from amounts on deposit in
the Certificate Account.
Section 8.08. Certain Matters Affecting the Certificate
Administrator. Except as otherwise provided in Section 8.03:
(a) The Certificate Administrator may rely upon and shall be
protected in acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other
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paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) The Certificate Administrator 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) Neither the Certificate Administrator 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 Certificate Administrator by this Agreement;
(d) Nothing in this Agreement shall be construed to require
the Certificate Administrator to expend its own funds; and
(e) The Certificate Administrator undertakes to, and is
empowered to, perform such duties and only such duties as are specifically set
forth in this Agreement.
[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 either 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 (3) Business Days
after the date upon which written notice of such failure, requiring the
same to be remedied, shall have been given to such Servicer by the
Trustee, the Certificate Administrator or the Depositor or to such
Servicer, the Trustee, the Certificate Administrator and the Depositor
by the Holders of Certificates of any Class evidencing, as to such
Class, Percentage Interests aggregating not less than 25%; or
(ii) a breach by either Servicer in a material respect of any
representation or warranty set forth in Section 3.02, or failure on the
part of such Servicer duly to observe or perform in any material
respect any other of the covenants or agreements on the part of such
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
such Servicer by the Trustee, the Certificate Administrator or the
Depositor or to such Servicer, the Trustee, the Certificate
Administrator 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) either 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;
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(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 either Servicer and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 days; or
(v) either 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 such Servicer or of or relating to all or
substantially all of such Servicer's property; or
(vi) either 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, the
Certificate Administrator 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 defaulting Servicer, terminate all the rights and obligations of
such Servicer under this Agreement and in and to the Mortgage Loans and the
proceeds thereof. On or after the receipt by either Servicer of such written
notice, all authority and power of such 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, such 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 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 such Servicer's sole expense. Each Servicer agrees to cooperate
with the Trustee and any co-trustee in effecting the termination of such
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 such
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 either Servicer in the performance of such Servicer's 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 either 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.
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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 sixty (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
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
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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, 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 Servicers, if an Event of Default shall have
occurred and is continuing, and otherwise by the Certificateholder requesting
the investigation;
(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
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(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 Servicers, 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, the Certificate
Administrator or the Servicers 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, the Certificate Administrator or the Servicers in respect of the
Mortgage Loans or deposited in or withdrawn from the Collection Account by the
Depositor, the Certificate Administrator 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 Certificate
Administrator 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 Certificate Administrator 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
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, the Certificate Administrator 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.
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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
Certificate Administrator, the Servicers 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 thirty (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 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 Certificate Administrator, the Servicers and
the predecessor trustee shall execute and deliver such instruments and do such
other things as
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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 Certificate Administrator 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 Servicers, any
Sub-Servicer and to each Rating Agency. If the Depositor fails to mail such
notice within ten (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
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 fifteen (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 either of the Servicers 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.
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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
TERMINATION
Section 11.01. Termination. The respective obligations and
responsibilities of the Depositor, the Servicers, the Certificate Administrator
(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 PNC (or any successor thereto under this
Agreement), 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 5% of the aggregate unpaid Principal Balance of the
Mortgage Loans on the Cut-off Date, so long as PNC (or any such successor)
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 and the Certificate Administrator of its intention to so
deposit on or before 20th day of such Principal Prepayment Period) an amount
equal to the greater of (A) 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 either
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 and (B) the aggregate Outstanding Principal
Balance of the Class A, Class M, Class B-1, and Class B-2 Certificates plus any
accrued and unpaid interest therein at the Remittance Rate; provided, however,
that prior to taking such action under this Section 11.01, PNC shall provide
notice of its intention to repurchase the Mortgage Loans to CMMC and CMMC will
have the option, but not the obligation to repurchase the CMMC Serviced Mortgage
Loans, as described above; provided, further, 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
109
<PAGE>
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 each REMIC Pool 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 ten (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
Servicers 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 PNC's election to purchase the Outstanding Mortgage Loans, PNC shall
deposit in its 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 Certificate Administrator 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 PNC
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 applicable 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 3 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 (3)
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.
110
<PAGE>
[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 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 sixty (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.
111
<PAGE>
Section 12.03. Amendment. This Agreement may be amended from
time to time by the Depositor, the Certificate Administrator, the Servicers and
the Trustee, without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein which may be
inconsistent with any other provisions herein, to ensure continuing treatment of
each REMIC Pool as a REMIC to avoid or minimize the risk of imposition of any
tax on either REMIC Pool 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 either REMIC Pool to fail to qualify as a REMIC.
This Agreement may also be amended from time to time by the
Depositor, the Certificate Administrator, the Servicers 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.
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,
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300 Tice Boulevard, 3rd Floor North, Woodcliff Lake, New Jersey 07675,
Attention: Structured Finance, (ii) in the case of Chase Manhattan Mortgage
Corporation, as servicer, 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 PNC Mortgage Securities Corp., as servicer, 75 North Fairway
Drive, Vernon Hills, Illinois 60061, Attention: General Counsel (iv) in the case
of the Certificate Administrator, The Chase Manhattan Bank, 450 W. 33rd Street,
New York, New York 1001, Attention: Global Trust Services), (v) 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, (vi) in the case of
Moody's, Moody's Investors Service, Inc., 99 Church Street, New York, New York
10007, (vii) in the case of DCR, Duff & Phelps Credit Rating Co., 17 State
Street, New York 10004, and (viii) 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]
113
<PAGE>
IN WITNESS WHEREOF, the Depositor, the Certificate
Administrator, the Servicers 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:
PNC MORTGAGE SECURITIES CORP.
By: _______________________________
Name:
Title:
THE CHASE MANHATTAN BANK
By: _______________________________
Name:
Title:
CITIBANK, N.A.,
as Trustee
By: _______________________________
Name:
Title:
114
<PAGE>
EXHIBIT A-1
MORTGAGE LOAN SCHEDULE
(CMMC SERVICED MORTGAGE LOANS)
A-1
<PAGE>
EXHIBIT A-2
MORTGAGE LOAN SCHEDULE
(PNC SERVICED MORTGAGE LOANS)
A-2-1
<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.
(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.
B-1
<PAGE>
(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.
B-2
<PAGE>
EXHIBIT C
FORM OF CLASS A CERTIFICATE
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 SERVICERS, THE CERTIFICATE
ADMINISTRATOR 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, PNC MORTGAGE SECURITIES CORP., 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 IA-1 CERTIFICATE
Number 98-S7-IA-1-1 Original Denomination:
$___________
Cut-off Date: November 1, 1998 Final Scheduled Distribution Date:
_______ __, 2028
First Distribution Date: Aggregate Original Principal
December 28, 1998 Balance of all Class IA-1
Certificates: $____________
Certificate Rate: ___% CUSIP: 161626
C-1
<PAGE>
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
Series 1998-S7
evidencing an ownership interest in distributions allocable to the Class IA-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 (the "Ownership Interest") evidenced by this Certificate
(obtained by dividing the Original Denomination of this Certificate by the
aggregate Original Denomination of all Class IA-1 Certificates) in certain
distributions with respect to a pool of conventional one- to four-family first
lien 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 and PNC Mortgage Securities Corp. (each, a "Servicer and
collectively, the "Servicers") 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 November 1, 1998 among the Depositor,
the Servicers, the Certificate Administrator 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-S7, Class IA-1 (the "Class IA-1 Certificates") and is issued under
and is subject to the terms, provisions and conditions of the Agreement, to
which Agreement the Holder of this Certificate by virtue of the acceptance
hereof assents and by which Agreement such Holder is bound. Also issued under
the Agreement are Certificates designated as Multi-Class Mortgage Pass-Through
Certificates, Series 1998-S7, Class M Certificates (the "Class M Certificates")
and Class B Certificates (the "Class B Certificates"). The Class A Certificates,
the Class M Certificates and the Class B Certificates are collectively referred
to herein as the "Certificates".
Pursuant to the terms of the Agreement, the Trustee, or, if a Paying
Agent has been appointed under Section 4.05 thereof, the Paying Agent, will
distribute from funds in the Certificate Account the amount as described on the
reverse hereof on the twenty-fifth (25th) day of each month or, if such
twenty-fifth (25th) day is not a Business Day, the Business Day immediately
following (the "Distribution Date"), commencing on December 28, 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.
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
C-2
<PAGE>
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 ten (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.
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. 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 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.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
C-3
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate to be duly
executed.
Dated: November __, 1998 CHASE MORTGAGE FINANCE CORPORATION
By: ______________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class IA-1
Certificates referred to
in the within-mentioned
Agreement.
THE CHASE MANHATTAN BANK
as Authenticating Agent
By: ______________________________
Authorized Signatory
C-4
<PAGE>
REVERSE OF CERTIFICATE
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-S7
This Certificate is one of a duly authorized issue of
Certificates, designated as Multi-Class Mortgage Pass-Through Certificates,
Series 1998-S7, issued in thirty 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 fixed rate one-
to four-family first lien 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
Certificate Administrator, the Servicers 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 Servicers, the Paying Agent nor the
Trustee will be affected by notice to the contrary.
C-5
<PAGE>
The Agreement may be amended from time to time by the
Depositor, the Servicers 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 Servicers 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 Depositor intends to cause an election to be made to treat
the segregated pool comprising the assets of the Trust Fund (the "Subsidiary
REMIC") as a real estate mortgage investment conduit (a "REMIC") for federal
income tax purposes. The Depositor intends to cause an election to be made to
treat the pool of assets represented by the "regular interests" in the
Subsidiary REMIC as a separate REMIC (the "Master REMIC"). The Class A
Certificates, the Class M Certificates and the Class B Certificates (other than
the Class A-R Certificate) will constitute "regular interests" in the Master
REMIC. The Class A-R Certificate will represent the sole class of "residual
interests" in each of the Subsidiary REMIC and the Master REMIC.
The respective obligations and responsibilities of the Depositor, the
Servicers 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 PNC Mortgage
Securities Corp., as 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 5% of the aggregate unpaid Principal
Balance of the Mortgage Loans on the Cut-off Date, so long as PNC Mortgage
Securities Corp., as 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) thirty-two
(32) years after the Closing Date and (ii) the expiration of twenty-one (21)
years from the death of the last survivor of the descendants of Joseph P.
Kennedy, the late ambassador of the United States to the Court of St. James,
living on the date hereof.
C-6
<PAGE>
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ________________________________________________________________
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
____________________________________________
______________________________________________________________
(Please Print or Type Name and Address of Assignee)
______________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
__________________________________________________ Attorney to transfer the
within Certificate on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated:
(Signature guaranty)
_______________________________
NOTICE: The signature to
this assignment must
correspond with the name as
it appears upon the face of
the within Certificate in
every particular, without
alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
C-7
<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.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
MORTGAGE FINANCE CORPORATION ("CMFC"), THE SERVICERS 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, PNC MORTGAGE SECURITIES
CORP., 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 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. ss.2510.3-101
AND TO BE SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR THE
PROHIBITED TRANSACTION PROVISIONS OF THE CODE, WILL NOT CONSTITUTE OR RESULT IN
A PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION 406 OR SECTION 407 OF
ERISA OR SECTION 4975 OF THE CODE, AND WILL NOT SUBJECT THE TRUSTEE, THE
SERVICER, THE COMPANY OR ANY OF THEIR AFFILIATES TO
D-1
<PAGE>
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
BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL
BALANCE BY INQUIRY OF THE TRUSTEE.
CLASS M CERTIFICATE
Number 98-S7-M-1 Original Denomination
$_________
Cut-off Date: November 1, 1998 Final Scheduled
Distribution
Date: ________ __, 2028
First Distribution Date: Aggregate Original Principal
December 28, 1998 Balance of all Class M
Certificates:$___________
Certificate Rate: _____% CUSIP: 161626
D-2
<PAGE>
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
Series 1998-S7
evidencing an ownership 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 ____________ 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 M Certificates) in certain
distributions with respect to a pool of conventional one- to four-family first
lien 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 and PNC Mortgage Securities Corp. (each, a "Servicer" and
collectively, the "Servicers") 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 November 1, 1998 among the Depositor,
the Servicers, the Certificate Administrator 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-S7, 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 Agreement such Holder is bound. Also issued under the
Agreement are Certificates designated as Multi-Class Mortgage Pass-Through
Certificates, Series 1998-S7, 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, the Class M Certificates and the Class B Certificates are
collectively referred to herein as the "Certificates". Amounts properly
distributed to the Class M Certificateholders pursuant to the Agreement will be
deemed released from the Trust Fund, and the Class M Certificateholders will not
in any event be required to refund any such distributed amounts.
Pursuant to the terms of the Agreement, the Trustee, or, if a
Paying Agent has been appointed under Section 4.05 thereof, the Paying Agent,
will distribute from funds in the Certificate Account the amount as described on
the reverse hereof on the twenty-fifth (25th) day of each month or, if such
twenty-fifth (25th) day is not a Business Day, the Business Day immediately
following (the "Distribution Date"), commencing on December 28, 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.
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
D-3
<PAGE>
institution having appropriate facilities therefor, if such Holder has so
notified the Paying Agent in writing at least ten (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.
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. 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 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.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
D-4
<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be duly executed.
Dated: November __, 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
D-5
<PAGE>
REVERSE OF CERTIFICATE
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-S7
This Certificate is one of a duly authorized issue of
Certificates, designated as Multi-Class Mortgage Pass-Through Certificates,
Series 1998-S7, issued in thirty 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 fixed rate one-
to four-family first lien 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
Certificate Administrator, the Servicers 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.
D-6
<PAGE>
The Agreement may be amended from time to time by the
Depositor, the Servicers 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 Servicers 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 Depositor intends to cause an election to be made to treat
the segregated pool comprising the assets of the Trust Fund (the "Subsidiary
REMIC") as a real estate mortgage investment conduit (a "REMIC") for federal
income tax purposes. The Depositor intends to cause an election to be made to
treat the pool of assets represented by the "regular interests" in the
Subsidiary REMIC as a separate REMIC (the "Master REMIC"). The Class A
Certificates, the Class M Certificates and the Class B Certificates (other than
the Class A-R Certificate) will constitute "regular interests" in the Master
REMIC. The Class A-R Certificate will represent the sole class of "residual
interests" in each of the Subsidiary REMIC and the Master REMIC.
The respective obligations and responsibilities of the
Depositor, the Servicers 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
PNC Mortgage Securities Corp., as 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 5% of the aggregate
unpaid Principal Balance of the Mortgage Loans on the Cut-off Date, so long as
PNC Mortgage Securities Corp., as 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) thirty-two
(32) years after the Closing Date and (ii) the expiration of twenty-one (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.
D-7
<PAGE>
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto ______________________________________________________________
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
__________________________________________
_____________________________________________________________
(Please Print or Type Name and Address of Assignee)
_____________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
__________________________________________________ Attorney to transfer the
within Certificate on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated:
(Signature guaranty)
_______________________________
NOTICE: The signature to
this assignment must
correspond with the name as
it appears upon the face of
the within Certificate in
every particular, without
alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
D-8
<PAGE>
EXHIBIT E
FORM OF CLASS B CERTIFICATE
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 SERVICERS 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, PNC MORTGAGE SECURITIES CORP., 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 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. ss.2510.3-101
AND TO BE SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR THE
PROHIBITED TRANSACTION PROVISIONS OF THE CODE, WILL NOT CONSTITUTE OR RESULT IN
A PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION 406 OR SECTION 407 OF
ERISA OR SECTION 4975 OF THE CODE, AND WILL NOT SUBJECT THE TRUSTEE, THE
SERVICER, THE COMPANY OR ANY OF THEIR AFFILIATES TO
E-1
<PAGE>
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
BELOW. ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL
BALANCE BY INQUIRY OF THE TRUSTEE.
CLASS B-1 CERTIFICATE
Number 98-S7-B-1-1 Original Denomination
$__________-
Cut-off Date: November 1, 1998 Final Scheduled
Distribution Date:_________ __, 2028
First Distribution Date: Aggregate Original Principal
December 28, 1998 Balance of all Class B-1
Certificates:$_________
Certificate Rate: ___% CUSIP: 161626
E-2
<PAGE>
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
Series 1998-S7
evidencing an ownership interest in distributions allocable to the Class B-1
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 ___________ 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
lien 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 PNC Mortgage Securities Corp.
and Chase Manhattan Mortgage Corporation (each, a "Servicer" and collectively,
the "Servicers") 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 November 1, 1998 among the Depositor, the Certificate
Administrator, the Servicers 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-S7, 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. Also issued under the
Agreement are Certificates designated as Multi-Class Mortgage Pass-Through
Certificates, Series 1998-S7, Class A Certificates (the "Class A Certificates")
and Class M (the "Class M Certificates"). The rights of the Class B-1
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 to receive distributions in respect of
the Class A and Class M Certificates to the extent, and only to the extent, set
forth in the Agreement. The Class A Certificates, the Class M Certificates and
the Class B Certificates are collectively referred to herein as the
"Certificates". 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.
Pursuant to the terms of the Agreement, the Trustee, or, if a
Paying Agent has been appointed under Section 4.05 thereof, the Paying Agent,
will distribute from funds in the Certificate Account the amount as described on
the reverse hereof on the twenty-fifth (25th) day of each month or, if such
twenty-fifth (25th) day is not a Business Day, the Business Day immediately
following (the "Distribution Date"), commencing on December 28, 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.
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<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 ten (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.
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. 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 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.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
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<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be duly executed.
Dated: November __, 1998 CHASE MORTGAGE FINANCE CORPORATION
By: ________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
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
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<PAGE>
REVERSE OF CERTIFICATE
MULTI-PASS MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-S7
This Certificate is one of a duly authorized issue of
Certificates, designated as Multi-Class Mortgage Pass-Through Certificates,
Series 1998-S7, issued in thirty 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 fixed rate one-
to four-family first lien 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
Certificate Administrator, the Servicers 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.
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<PAGE>
The Agreement may be amended from time to time by the
Depositor, the Servicers 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 Servicers 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 Depositor intends to cause an election to be made to treat
the segregated pool comprising the assets of the Trust Fund (the "Subsidiary
REMIC") as a real estate mortgage investment conduit (a "REMIC") for federal
income tax purposes. The Depositor intends to cause an election to be made to
treat the pool of assets represented by the "regular interests" in the
Subsidiary REMIC as a separate REMIC (the "Master REMIC"). The Class A
Certificates, the Class M Certificates and the Class B Certificates (other than
the Class A-R Certificate) will constitute "regular interests" in the Master
REMIC. The Class A-R Certificate will represent the sole class of "residual
interests" in each of the Subsidiary REMIC and the Master 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 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
PNC Mortgage Securities Corp., as 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 5% of the aggregate
unpaid Principal Balance of the Mortgage Loans on the Cut-off Date, so long as
PNC Mortgage Securities Corp., as 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) thirty-two
(32) years after the Closing Date and (ii) the expiration of twenty-one (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.
E-7
<PAGE>
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _______________________________________________________________
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
__________________________________________
_____________________________________________________________
(Please Print or Type Name and Address of Assignee)
_____________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
__________________________________________________ Attorney to transfer the
within Certificate on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated:
(Signature guaranty)
_______________________________
NOTICE: The signature to
this assignment must
correspond with the name as
it appears upon the face of
the within Certificate in
every particular, without
alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
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<PAGE>
EXHIBIT F
FORM OF CLASS A-R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "RESIDUAL
INTEREST" IN EACH OF TWO "REAL ESTATE MORTGAGE INVESTMENT CONDUITS," AS THOSE
TERMS ARE DEFINED, RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN CHASE
MORTGAGE FINANCE CORPORATION ("CMFC"), THE SERVICERS 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, PNC MORTGAGE SECURITIES CORP., 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 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. ss.2510.3-101
AND TO BE SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR THE
PROHIBITED TRANSACTION PROVISIONS OF THE CODE, WILL NOT CONSTITUTE OR RESULT IN
A PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION 406 OR SECTION 407 OF
ERISA OR SECTION 4975 OF THE CODE, AND WILL NOT SUBJECT THE TRUSTEE, THE
SERVICER, THE COMPANY OR ANY OF THEIR AFFILIATES TO ANY OBLIGATION OR LIABILITY
(INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA OR SECTION 4975 OF THE CODE)
RELATING TO THE CERTIFICATES.
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<PAGE>
TRANSFERABILITY OF THIS CERTIFICATE IS RESTRICTED UNDER THE PROVISIONS OF
SECTION 4.02 OF THE AGREEMENT.
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-R CERTIFICATE
Number 98-S7-A-R-1 Original Denomination
$100.00
Cut-off Date: November 1, 1998 Final Scheduled
Distribution Date: _____ __, 2028
First Distribution Date: Aggregate Original Principal
December 28, 1998 Balance of all Class A-R
Certificates: $100.00
Certificate Rate: ____% CUSIP: 161626
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<PAGE>
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
Series 1998-S7
evidencing an ownership interest in distributions allocable to the Class A-R
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 ________________________ 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 A-R Certificates) in certain
distributions with respect to a pool of conventional one- to four-family first
lien 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 (each, a "Servicer" and collectively, the "Servicers") 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
November 1, 1998 among the Depositor, the Servicers, the Certificate
Administrator 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-S7, Class A-R (the "Class A-R Certificates") and is issued under and
is subject to the terms, provisions and conditions of the Agreement, to which
Agreement the Holder of this Certificate by virtue of the acceptance hereof
assents and by which Agreement such Holder is bound. Also issued under the
Agreement are Certificates designated as Multi-Class Mortgage Pass-Through
Certificates, Series 1998-S7, Class M Certificates (the "Class M Certificates")
and Class B Certificates (the "Class B Certificates"). The Class A Certificates,
the Class M Certificates and the Class B Certificates are collectively referred
to herein as the "Certificates".
Pursuant to the terms of the Agreement, the Trustee, or, if a Paying
Agent has been appointed under Section 4.05 thereof, the Paying Agent, will
distribute from funds in the Certificate Account the amount as described on the
reverse hereof on the twenty-fifth (25th) day of each month or, if such
twenty-fifth (25th) day is not a Business Day, the Business Day immediately
following (the "Distribution Date"), commencing on December 28, 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.
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 ten (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
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<PAGE>
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.
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. 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 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.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication has been executed by
the Authenticating Agent, by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
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<PAGE>
IN WITNESS WHEREOF, the Depositor has caused this Certificate
to be duly executed.
Dated: November __, 1998 CHASE MORTGAGE FINANCE CORPORATION
By:___________________________________
Authorized Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-R
Certificates referred to
in the within-mentioned
Agreement.
THE CHASE MANHATTAN BANK
as Authenticating Agent
By: ________________________________
Authorized Signatory
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<PAGE>
REVERSE OF CERTIFICATE
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-S7
This Certificate is one of a duly authorized issue of
Certificates, designated as Multi-Class Mortgage Pass-Through Certificates,
Series 1998-S7, issued in thirty 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 fixed rate one-
to four-family first lien 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
Certificate Administrator, the Servicers 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.
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<PAGE>
The Agreement may be amended from time to time by the
Depositor, the Servicers 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 Servicers 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 Depositor intends to cause an election to be made to treat
the segregated pool comprising the assets of the Trust Fund (the "Subsidiary
REMIC") as a real estate mortgage investment conduit (a "REMIC") for federal
income tax purposes. The Depositor intends to cause an election to be made to
treat the pool of assets represented by the "regular interests" in the
Subsidiary REMIC as a separate REMIC (the "Master REMIC"). The Class A
Certificates, the Class M Certificates and the Class B Certificates (other than
the Class A-R Certificate) will constitute "regular interests" in the Master
REMIC. The Class A-R Certificate will represent the sole class of "residual
interests" in each of the Subsidiary REMIC and the Master 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 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
PNC Mortgage Securities Corp., as 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 5% of the aggregate
unpaid Principal Balance of the Mortgage Loans on the Cut-off Date, so long as
PNC Mortgage Securities Corp., as 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) thirty-two
(32) years after the Closing Date and (ii) the expiration of twenty-one (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.
F-7
<PAGE>
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _________________________________________________________________
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
__________________________________________
_____________________________________________________________
(Please Print or Type Name and Address of Assignee)
_____________________________________________________________
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
__________________________________________________ Attorney to transfer the
within Certificate on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated:
(Signature guaranty)
_______________________________
NOTICE: The signature to
this assignment must
correspond with the name as
it appears upon the face of
the within Certificate in
every particular, without
alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
F-8
<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 November 1, 1998
among Chase Mortgage Finance Corporation, Chase Manhattan
Mortgage Corporation as servicer, PNC Mortgage Securities
Corp. as servicer and Citibank, N.A., as trustee,
Multi-Class Mortgage Pass-Through Certificates, Series
1998-S7
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, sufficiency, enforceability or genuineness of any of the
documents
G-1
<PAGE>
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: __________________________
G-2
<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-S7, [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-S7, [Class B- ] (the "Certificates"), issued pursuant
to a pooling and servicing agreement, dated as of November 1, 1998 (the "Pooling
and Servicing Agreement"), among Chase Mortgage Finance Corporation (the
"Depositor"), Chase Manhattan Mortgage Corporation, as Servicer and PNC Mortgage
Securities Corp., as Servicer (the "Servicers"), The Chase Manhattan Bank, as
Certificate Administrator (the "Certificate Administrator") 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:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), THE
INVESTMENT COMPANY ACT OF 1940,
H-1
<PAGE>
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.
ss.2510.3-101 AND TO BE SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF ERISA OR THE PROHIBITED
TRANSACTION PROVISIONS OF THE CODE, WILL NOT CONSTITUTE OR
RESULT IN A PROHIBITED TRANSACTION WITHIN THE MEANING OF
SECTION 406 OR SECTION 407 OF ERISA OR SECTION 4975 OF THE
CODE, AND WILL NOT SUBJECT THE TRUSTEE, THE SERVICER, THE
COMPANY OR ANY OF THEIR AFFILIATES TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA OR
SECTION 4975 OF THE CODE) RELATING TO THE CERTIFICATES.
H-2
<PAGE>
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 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.
- --------
*/ Not required of a broker/dealer purchaser.
H-3
<PAGE>
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
Certificate Administrator, the Servicers and the Depositor against any liability
that may result from any misrepresentation made herein.
Very truly yours,
[PURCHASER]
By: ___________________________
Name:
Title:
H-4
<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-S7, [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-S7, [Class B-] (the "Certificates"), issued pursuant
to a pooling and servicing agreement, dated as of November 1, 1998 (the "Pooling
and Servicing Agreement"), among Chase Mortgage Finance Corporation (the
"Depositor"), Chase Manhattan Mortgage Corporation, as Servicer, PNC Mortgage
Securities Corp., as Servicer (the "Servicers"), The Chase Manhattan Bank, as
Certificate Administrator (the "Certificate Administrator") 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 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
I-1
<PAGE>
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.
We agree to indemnify the Trustee, the Certificate Administrator, the
Servicers and the Depositor against any liability that may result from any
misrepresentation made herein.
Very truly yours,
[PURCHASER]
By: ___________________________
Name:
Title:
I-2
<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 worth of at least $25,000,000 as
demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
- --------
* Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
I-3
<PAGE>
____ 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, 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.
I-4
<PAGE>
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:
I-5
<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).
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.
I-1
<PAGE>
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:
I-2
<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] [PNC Mortgage Securities 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-S7, 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
and PNC Mortgage Securities Corp., as servicer thereunder (the "Servicers") 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.
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,
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(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) thirty (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
(2) 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.
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.
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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 (5) 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 (30) days, (B)
sixty (60) days, (C) ninety (90) 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 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 (60) 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
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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 (1) 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 (1) Business Day to respond to any 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 (1) 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 (2) 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 (3) 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 (3) 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 (2) 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
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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.
(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 six (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 (3rd) Business Day following the delivery of such report
under Section 2.01(a)(i).
(b) Within two (2) 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 (3) 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
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Mortgage Loan upon the failure of the Purchaser to deposit the above amounts
relating to the Mortgage Loans within two (2) 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
(2) 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 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 ninety (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
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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 as a segregated account on its books and
records an account (the "Collateral Fund"), entitled "[Chase Manhattan Mortgage
Corporation] [PNC Mortgage Securities Corp.], as Servicer, for the benefit of
registered holders of Chase Mortgage Finance Corporation Multi-Class Mortgage
Pass-Through Certificates, Series 1998-S7, 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
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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.
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.
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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.
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]
[PNC Mortgage Securities Corp.
75 North Fairway Drive
Vernon Hills, IL 60061]
or such other address as may hereafter be furnished in writing by the Company, o
(b) in the case of the Purchaser, with respect to
notices pursuant to Section 2.01,
[PURCHASER]
[ADDRESS]
Attn: ________________
Phone: ________________
Fax: ________________
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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 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.
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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] [PNC MORTGAGE
SECURITIES CORP.]
By: ________________________
Name: ______________________
Title: _____________________
_________________________
By: ________________________
Name: ______________________
Title: _____________________
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EXHIBIT K
FORM OF TRANSFEREE'S LETTER
CHASE MORTGAGE FINANCE CORPORATION SERIES 1998-S7
[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-S7, Class A-R,
described in the Prospectus Supplement, dated November __, 1998, and Prospectus,
dated November __, 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:*/
______ 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.
- --------
*/ Check appropriate box and if necessary fill in the name of the Transferee's
nominee.
K-1
<PAGE>
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 such U.S.
persons 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-S7 REMIC.
Very truly yours,
[PURCHASER]
By: _________________________
Name:
Title:
Accepted as of __________ __, 199_
CHASE MORTGAGE FINANCE CORPORATION
By: _______________________________
Name:
Title:
K-2
<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-S7, 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;
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
K-3
<PAGE>
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 such U.S. persons 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
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<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 .
___________________________________
Notary Public
County of ______
State of _______
My commission expires the ___ day of __________________
By: ________________________
Name: ________________
Title: ________________
Dated: _____________
K-5
<PAGE>
APPENDIX B
CONSENT
_________________________ (Transferee)
_________________________
_________________________
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-S7, 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: ___________________________
K-6
<PAGE>
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: _____________________________
(authorized signer)
Issuer: ___________________________
Address: ___________________________
___________________________
Date: ___________________________
Trustee
Citibank, N.A.
Please acknowledge the execution of the above request by your signature and date
below:
___________________________ _____________________________
Signature Date
Documents returned to Trustee:
___________________________ _____________________________
Trustee Date
L-1
<PAGE>
EXHIBIT M
FORM OF ERISA REPRESENTATION
[DATE]
Chase Manhattan Mortgage Corporation
343 Thornall Street
Edison, NJ 08834
Re: Chase Mortgage Finance Corporation
Multi-Class Mortgage Pass-Through
Certificates, Series 1998-S7, [Class ]
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-S7, [Class __ ] (the "Certificates"), issued pursuant
to a pooling and servicing agreement, dated as of November 1, 1998 (the "Pooling
and Servicing Agreement"), among Chase Mortgage Finance Corporation (the
"Depositor"), The Chase Manhattan Bank as Certificate Administrator (the
"Certificate Administrator") Chase Manhattan Mortgage Corporation, as Servicer
and PNC Mortgage Securities Corp., as Servicer (the "Servicers"), 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 Certificates will bear a legend to the following t:
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
M-1
<PAGE>
"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. ss.2510.3-101 AND TO BE SUBJECT TO THE
FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR THE PROHIBITED
TRANSACTION PROVISIONS OF THE CODE, WILL NOT CONSTITUTE OR
RESULT IN A PROHIBITED TRANSACTION WITHIN THE MEANING OF
Section 406 OR Section 407 OF ERISA OR Section 4975 OF THE
CODE, AND WILL NOT SUBJECT THE TRUSTEE, THE SERVICER, THE
COMPANY OR ANY OF THEIR AFFILIATES TO ANY OBLIGATION OR
LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA OR
Section 4975 OF THE CODE) RELATING TO THE CERTIFICATES.
2. [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 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.
3. The Purchaser agrees to indemnify the Trustee, the
Certificate Administrator, the Servicers and the Depositor against any liability
that may result from any misrepresentation made herein.
Very truly yours,
[PURCHASER]
By: _________________________
Name:
Title:
M-2
