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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): February 26, 1998
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DLJ MORTGAGE ACCEPTANCE CORP.
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(Exact name of Registrant as Specified in Charter)
Delaware 333-39325 13-3460894
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(State or Other (Commission (IRS Employer
Jurisdiction of Incorporation) File Number) Identification No.)
277 Park Avenue, New York, New York 10172
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 892-3000
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Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
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DLJ Mortgage Acceptance Corp., as depositor (the "Depositor") registered
issuances of Mortgage Pass-Through Certificates on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, as amended (the "Act"),
by a Registration Statement on Form S-3 (Registration File No. 333-39325) (as
amended, the "Registration Statement"). Pursuant to the Registration Statement,
the Depositor caused Centex Home Equity Loan Trust 1998-1 to issue $175,000,000
principal amount of Home Equity Loan Pass-Through Certificates, Series 1998-1
(the "Class A Certificates"), on February 26, 1998 (the "Closing Date").
The Class A Certificates were issued pursuant to a pooling and servicing
agreement (the "Pooling and Servicing Agreement"), dated as of February 1, 1998
(the "Initial Cut-Off Date"), among the Depositor, Centex, Credit Corporation
d/b/a Centex Home Equity Corporation, as Seller and Servicer, and Norwest Bank
Minnesota, National Association, as Trustee.
Capitalized terms not defined herein have the meanings assigned in the Pooling
and Servicing Agreement attached hereto as Exhibit 4.1.
Item 7. Financial statements, Pro Forma Financial Information and Exhibits.
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(c) Exhibits
Exhibit No.
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4.1 Pooling and Servicing Agreement
10.1 Loan Sale Agreement
99.1 Certificate Insurance Policy
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SIGNATURES
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.
DLJ MORTGAGE ACCEPTANCE CORP.
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(Registrant)
By: /s/ Paul Najarian
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Name: Paul Najarian
Title: Vice President
Date: March 13, 1998
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EXHIBIT INDEX
Sequentially
Exhibit Number Description Numbered Page
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4.1 Pooling and Servicing Agreement
10.1 Loan Sale Agreement
99.1 Certificate Insurance Policy
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EXECUTION COPY
POOLING AND SERVICING AGREEMENT
Relating to
CENTEX HOME EQUITY LOAN TRUST 1998-1
Among
DLJ MORTGAGE ACCEPTANCE CORP.
as Depositor,
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION,
as Seller,
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION,
as Servicer
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Trustee
Dated as of February 1, 1998
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TABLE OF CONTENTS
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CONVEYANCE .......................................................................................................1
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions...................................................................................2
Section 1.02 Use of Words and Phrases.....................................................................35
Section 1.03 Captions; Table of Contents..................................................................35
Section 1.04 Opinions.....................................................................................36
ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust...................................................................37
Section 2.02 Office.......................................................................................37
Section 2.03 Purposes and Powers..........................................................................37
Section 2.04 Appointment of the Trustee; Declaration of Trust.............................................37
Section 2.05 Expenses of the Trust........................................................................37
Section 2.06 Ownership of the Trust.......................................................................38
Section 2.07 Situs of the Trust...........................................................................38
Section 2.08 Miscellaneous REMIC Provisions...............................................................38
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE DEPOSITOR,
THE SERVICER AND THE SELLER; COVENANT OF
SELLER TO CONVEY HOME EQUITY LOANS
Section 3.01 Representations and Warranties of the Depositor..............................................40
Section 3.02 Representations and Warranties of the Servicer...............................................42
Section 3.03 Representations and Warranties of the Seller.................................................44
Section 3.04 Covenants of Seller to Take Certain Actions with Respect to the Home Equity Loans in
Certain Situations...........................................................................48
Section 3.05 Conveyance of the Initial Home Equity Loans and Qualified Replacement Mortgages.............58
Section 3.06 Acceptance by Trustee; Certain Substitutions of Home Equity Loans; Certification by
Trustee......................................................................................63
Section 3.07 Conveyance of the Subsequent Home Equity Loans...............................................64
Section 3.08 Custodian....................................................................................67
Section 3.09 Cooperation Procedures.......................................................................67
ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
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Section 4.01. Issuance of Certificates.....................................................................69
Section 4.02 Sale of Certificates.........................................................................69
ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms........................................................................................70
Section 5.02 Forms........................................................................................70
Section 5.03 Execution, Authentication and Delivery.......................................................70
Section 5.04 Registration and Transfer of Certificates....................................................71
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates............................................73
Section 5.06 Persons Deemed Owners........................................................................74
Section 5.07 Cancellation.................................................................................74
Section 5.08 Limitation on Transfer of Ownership Rights...................................................74
Section 5.09 Assignment of Rights.........................................................................76
ARTICLE VI
COVENANTS
Section 6.01 Distributions................................................................................77
Section 6.02 Money for Distributions to be Held in Trust; Withholding.....................................77
Section 6.03 Protection of Trust Estate...................................................................78
Section 6.04 Performance of Obligations...................................................................79
Section 6.05 Negative Covenants...........................................................................79
Section 6.06 No Other Powers..............................................................................80
Section 6.07 Limitation of Suits..........................................................................80
Section 6.08 Unconditional Rights of Owners to Receive Distributions......................................81
Section 6.09 Rights and Remedies Cumulative...............................................................81
Section 6.10 Delay or Omission Not Waiver.................................................................81
Section 6.11 Control by Owners............................................................................82
Section 6.12 Indemnification by the Seller................................................................82
ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money..........................................................................83
Section 7.02 Establishment of Accounts....................................................................83
Section 7.03 Flow of Funds................................................................................84
Section 7.04 Pre-Funding Account and Capitalized Interest Account.........................................88
Section 7.05 Investment of Accounts.......................................................................90
Section 7.06 Payment of Trust Expenses....................................................................90
Section 7.07 Eligible Investments.........................................................................90
Section 7.08 Accounting and Directions by Trustee.........................................................92
Section 7.09 Reports by Trustee to Owners and Certificate Insurer.........................................93
Section 7.10 Reports by Trustee...........................................................................96
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ARTICLE VIII
SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers...................................................................97
Section 8.02 Collection of Certain Home Equity Loan Payments..............................................98
Section 8.03 Sub-Servicing Agreements Between Servicer and Sub-Servicers..................................98
Section 8.04 Successor Sub-Servicers......................................................................99
Section 8.05 Liability of Servicer; Indemnification.......................................................99
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee or the Owners.....................100
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by Trustee.............................100
Section 8.08 Principal and Interest Account..............................................................100
Section 8.09 Delinquency Advances and Servicing Advances.................................................102
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans......................................103
Section 8.11 Maintenance of Insurance....................................................................104
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution Agreements.................................105
Section 8.13 Realization Upon Defaulted Home Equity Loans; Workout of Home Equity Loans..................106
Section 8.14 Trustee to Cooperate; Release of Files......................................................107
Section 8.15 Servicing Compensation......................................................................109
Section 8.16 Annual Statement as to Compliance...........................................................109
Section 8.17 Annual Independent Certified Public Accountants' Reports....................................109
Section 8.18 Access to Certain Documentation and Information Regarding the Home Equity Loans.............110
Section 8.19 Assignment of Agreement.....................................................................110
Section 8.20 Removal of Servicer; Retention of Servicer; Resignation of Servicer.........................110
Section 8.21 Inspections by Certificate Insurer Errors and Omissions Insurance...........................115
Section 8.22 Additional Servicing Responsibilities for Second Mortgage Loans.............................115
Section 8.23 The Adjustable Rate Group Home Equity Loans.................................................115
Section 8.24 Merger, Conversion, Consolidation or Succession to Business of Servicer.....................116
Section 8.25 Notices of Material Events..................................................................116
Section 8.26 Indemnification by the Servicer.............................................................117
ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust........................................................................118
Section 9.02 Termination Upon Option of the Servicer.....................................................118
Section 9.03 Termination Upon Loss of REMIC Status.......................................................119
Section 9.04 Disposition of Proceeds.....................................................................121
Section 9.05 Netting of Amounts..........................................................................121
ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.........................................................122
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Section 10.02 Removal of Trustee for Cause................................................................124
Section 10.03 Certain Rights of the Trustee...............................................................126
Section 10.04 Not Responsible for Recitals or Issuance of Certificates....................................127
Section 10.05 May Hold Certificates.......................................................................127
Section 10.06 Money Held in Trust.........................................................................128
Section 10.07 Compensation and Reimbursement..............................................................128
Section 10.08 Corporate Trustee Required: Eligibility.....................................................128
Section 10.09 Resignation and Removal; Appointment of Successor...........................................129
Section 10.10 Acceptance of Appointment by Successor Trustee..............................................130
Section 10.11 Merger, Conversion, Consolidation or Succession to Business of the Trustee..................131
Section 10.12 Reporting; Withholding......................................................................131
Section 10.13 Liability of the Trustee....................................................................131
Section 10.14 Appointment of Co-Trustee or Separate Trustee...............................................132
ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions........................................................134
Section 11.02 Form of Documents Delivered to the Trustee..................................................134
Section 11.03 Acts of Owners..............................................................................135
Section 11.04 Notices, etc. to Trustee...................................................................136
Section 11.05 Notices and Reports to Owners; Waiver of Notices............................................136
Section 11.06 Rules by Trustee............................................................................136
Section 11.07 Successors and Assigns......................................................................137
Section 11.08 Severability................................................................................137
Section 11.09 Benefits of Agreement.......................................................................137
Section 11.10 Legal Holidays..............................................................................137
Section 11.11 Governing Law; Submission to Jurisdiction...................................................137
Section 11.12 Counterparts................................................................................138
Section 11.13 Usury.......................................................................................138
Section 11.14 Amendment...................................................................................139
Section 11.15 Paving Agent; Appointment and Acceptance of Duties..........................................139
Section 11.16 REMIC Status................................................................................140
Section 11.17 Additional Limitation on Action and Imposition of Tax.......................................142
Section 11.18 Appointment of Tax Matters Person...........................................................143
Section 11.19 The Certificate Insurer.....................................................................143
Section 11.20 Reserved....................................................................................143
Section 11.21 Third Party Rights..........................................................................143
Section 11.22 Notices.....................................................................................143
Section 11.23 Rule 144A Information.......................................................................145
ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01 Trust Estate and Accounts Held for Benefit of the Certificate Insurer.......................146
Section 12.02 Claims Upon the Policy; Policy Payments Account.............................................146
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Section 12.03 Effect of Payments by the Certificate Insurer: Subrogation..................................147
Section 12.04 Notices to the Certificate Insurer..........................................................148
Section 12.05 Third-Party Beneficiary.....................................................................148
Section 12.06 Rights to the Certificate Insurer To Exercise Rights of Owners..............................148
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SCHEDULE I-A SCHEDULE OF THE FIXED RATE GROUP HOME EQUITY LOANS
SCHEDULE I-B SCHEDULE OF THE ADJUSTABLE RATE GROUP HOME EQUITY LOANS
EXHIBIT A-1 FORM OF CLASS A-1 CERTIFICATE
EXHIBIT A-2 FORM OF CLASS A-2 CERTIFICATE
EXHIBIT A-3 FORM OF CLASS A-3 CERTIFICATE
EXHIBIT A-4 FORM OF CLASS A-4 CERTIFICATE
EXHIBIT A-5 FORM OF CLASS A-5 CERTIFICATE
EXHIBIT B RESERVED
EXHIBIT C FORM OF CLASS R CERTIFICATE
EXHIBIT D FORM OF SUBSEQUENT TRANSFER AGREEMENT
EXHIBIT E FORM OF CERTIFICATE RE: HOME EQUITY LOANS PREPAID IN FULL
AFTER CUT-OFF DATE
EXHIBIT F-1 FORM OF TRUSTEE'S RECEIPT
EXHIBIT F-2 FORM OF CUSTODIAN'S RECEIPT
EXHIBIT G FORM OF POOL CERTIFICATION
EXHIBIT H FORM OF DELIVERY ORDER
EXHIBIT I FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
EXHIBIT J-1 FORM OF CERTIFICATE REGARDING TRANSFER (ACCREDITED INVESTOR)
EXHIBIT J-2 FORM OF CERTIFICATE OF TRANSFER (RULE 144)
EXHIBIT K HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
EXHIBIT L DEFINITION OF ADJUSTABLE RATE GROUP SPECIFIED
SUBORDINATED AMOUNT
EXHIBIT M DEFINITION OF FIXED RATE GROUP SPECIFIED SUBORDINATED AMOUNT
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POOLING AND SERVICING AGREEMENT, relating to CENTEX HOME EQUITY LOAN
TRUST 1998-1, dated as of February 1, 1998 by and among DLJ MORTGAGE ACCEPTANCE
CORP., a Delaware corporation, in its capacity as Depositor (the "Depositor"),
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION, a Nevada
corporation in its capacities as the Seller (in such capacity, the "Seller") and
as the Servicer (in such capacity, the "Servicer") and NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, a national banking association, in its capacity as the
trustee (the "Trustee").
WHEREAS, the Seller wishes to establish a trust and two subtrusts and
provide for the allocation and sale of the beneficial interests therein and the
maintenance and distribution of the trust estate;
WHEREAS, the Servicer has agreed to service the Home Equity Loans,
which constitute the principal assets of the trust estate;
WHEREAS, all things necessary to make the Certificates, when executed
and authenticated by the Trustee valid instruments, and to make this Agreement a
valid agreement, in accordance with their and its terms, have been done;
WHEREAS, Norwest Bank Minnesota, National Association, is willing to
serve in the capacity of Trustee hereunder; and
WHEREAS, MBIA Insurance Corporation (the "Certificate Insurer") is
intended to be a third party beneficiary of this Agreement and is hereby
recognized by the parties hereto to be a third-party beneficiary of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the Depositor, the Seller, the Servicer, and the
Trustee hereby agree as follows:
CONVEYANCE
To provide for the distribution of the principal of and/or interest on
the Class A Certificates and the Class R Certificates in accordance with their
terms, all of the sums distributable under this Agreement with respect to the
Certificates and the performance of the covenants contained in this Agreement,
the Depositor hereby bargains, sells, conveys, assigns and transfers to the
Trustee, in trust, without recourse and for the exclusive benefit of the Owners
of the Certificates and the Certificate Insurer, all of the its right, title and
interest in and to any and all benefits accruing from (a) the Initial Home
Equity Loans (other than any principal payments received and interest payments
due thereon prior to February 1, 1998) listed in Schedules I-A and I-B to this
Agreement which the Depositor is causing to be delivered to the Custodian on
behalf of the Trustee herewith and the Subsequent Home Equity Loans (other than
any principal payments received and interest payments due thereon prior to the
related Subsequent Cut-Off Date) listed in Schedule I-A and I-B to any
Subsequent Transfer Agreement, which the Seller will cause to be delivered to
the Custodian on behalf of the Trustee (and all substitutions for such Home
Equity Loans as provided by Sections 3.03, 3.04 and 3.06), together with the
related Home Equity Loan documents and the Depositor's interest in any Property,
and
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all payments thereon and proceeds of the conversion, voluntary or involuntary,
of the foregoing; (b) such amounts as may be held by the Trustee in the
Certificate Account, the Pre-Funding Account, the Capitalized Interest Account
together with investment earnings on such amounts and such amounts as may be
held in the name of the Trustee in the Principal and Interest Account, if any,
exclusive of investment earnings thereon (except as otherwise provided herein),
whether in the form of cash, instruments, securities or other properties
(including any Eligible Investments held by the Servicer), (c) the Depositor's
rights (except with respect to Sections 4.03 and 4.04 of the Loan Sale
Agreement), but none of its obligations under the Loan Sale Agreement and (d)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified herein ((a)-(d) above shall be collectively referred to herein as the
"Trust Estate"). In addition to the foregoing, the Seller shall cause the
Certificate Insurer to deliver two Certificate Insurance Policies to the Trustee
for the benefit of the Owners of the Class A Certificates.
The Trustee acknowledges such sale, accepts the trusts hereunder in
accordance with the provisions hereof and the Trustee agrees to perform the
duties herein to the best of its ability to the end that the interests of the
Owners may be adequately and effectively protected.
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Section 1.01 Definitions.
For all purposes of this Agreement, the following terms shall have the
meanings set forth below, unless the context clearly indicates otherwise:
"Account": Any account established in accordance with Section 7.02 or
8.08 hereof.
"Accrual Period": With respect to the Class A Certificates (other than
the Class A-5 Certificates) and any Payment Date, the calendar month immediately
preceding the month in which the Payment Date occurs. A "calendar month" shall
be deemed to be 30 days. With respect to the Class A-5 Certificates and any
Payment Date, the period commencing on the immediately preceding Payment Date
(or the Startup Day in the case of the first Payment Date) to and including the
day prior to the current Payment Date. All calculations of interest on the Class
A Certificates (other than the Class A-5 Certificates) will be made on the basis
of a 360-day year assumed to consist of twelve 30-day months. Calculations of
interest on the Class A-5 Certificates will be made on the basis of the actual
number of days elapsed in the related Accrual Period and a year of 360 days.
"Accrual Rate": With respect to any Accrual Period and any related
Payment Date, an amount equal to the lesser of (i) the amount of Class A-5
Current Interest payable on such
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Payment Date if clause (i) of the definition of "Class A-5 Pass-Through Rate"
were used to calculate such Class A-5 Current Interest and (ii) during the
related Remittance Period if all of the Home Equity Loans in the Adjustable Rate
Group accrue interest at their respective Maximum Rate, the amount of Class A-5
Current Interest payable on such Payment Date if the Class A-5 Maximum
Pass-Through Rate were used to calculate such Class A-5 Current Interest.
"Addition Notice": With respect to the transfer of Subsequent Home
Equity Loans to the Trust pursuant to Section 3.07 hereof, written notice given
not less than five Business Days prior to the related Subsequent Transfer Date
of the Depositor's designation of Subsequent Home Equity Loans to be sold to the
Trust and the aggregate Loan Balance of such Subsequent Home Equity Loans as of
the related Subsequent Cut-Off Date.
"Adjustable Rate Group": The pool of Home Equity Loans identified in
the related Schedule of Home Equity Loans as having been assigned to the
Adjustable Rate Group in Schedule I-B hereto or Schedule I-B of a Subsequent
Transfer Agreement, including any Qualified Replacement Mortgage delivered in
replacement thereof.
"Adjustable Rate Group Available Funds": As defined in Section 7.02(c)
hereof.
"Adjustable Rate Group Available Funds Shortfall": As defined in
Section 7.03(b)(ii)(A).
"Adjustable Rate Group Capitalized Interest Requirement": With respect
to any Pre-Funding Payment Date, the excess, if any, of (x) the sum of (a) the
interest due on the Class A-5 Certificates on such Payment Date plus (b) the
Premium Amount allocable to the Adjustable Rate Group over (y) the sum of (i)
one month's interest on the aggregate Loan Balance of the Home Equity Loans in
the Adjustable Rate Group (except for Home Equity Loans with a first Monthly
Payment after February 28, 1998) as of the first day of the immediately
preceding Remittance Period, calculated at the Class A-5 Pass-Through Rate as of
such Payment Date and (ii) any Adjustable Rate Group Pre-Funding Account
Earnings to be transferred to the Certificate Account on such Payment Date, if
any.
"Adjustable Rate Group Certificate Insurance Policy": The Certificate
Guaranty Insurance Policy (number 25813) dated February 26, 1998 issued by the
Certificate Insurer for the benefit of the Owners of the Class A-5 Certificates
pursuant to which the Certificate Insurer guarantees Insured Payments.
"Adjustable Rate Group Interest Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) all interest due during
the related Remittance Period with respect to the Home Equity Loans in the
Adjustable Rate Group, (ii) all Compensating Interest paid by the Servicer on
such Monthly Remittance Date with respect to the Adjustable Rate Group and (iii)
the portion of the Loan Purchase Prices and Substitution Amount relating to
interest on the Home Equity Loans in the Adjustable Rate Group paid by the
Seller or the Servicer on or prior to such Monthly Remittance Date and (iv) the
interest portion of all Net Liquidation Proceeds actually collected by the
Servicer with respect to such Home Equity Loans in the Fixed Rate Group during
the related Remittance Period.
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"Adjustable Rate Group Maximum Collateral Amount": $60,000,000.00.
"Adjustable Rate Group Monthly Remittance Amount": As of any Monthly
Remittance Date, the sum of (i) the Adjustable Rate Group Interest Remittance
Amount for such Monthly Remittance Date and (ii) the Adjustable Rate Group
Principal Remittance Amount for such Monthly Remittance Date.
"Adjustable Rate Group Pre-Funding Account Earnings": With respect to
each Pre-Funding Payment Date, the actual investment earnings earned during the
previous calendar month on the portion of the Pre-Funded Account allocated to
the Adjustable Rate Group during such period as determined by the Trustee
pursuant to Section 3.07(e) hereof.
"Adjustable Rate Group Principal Distribution Amount": With respect to
the Class A-5 Certificates for any Payment Date, the lesser of:
(a) the Adjustable Rate Group Total Available Funds plus any
Insured Payment with respect to the Class A-5 Certificates minus the sum of the
Class A-5 Current Interest, the related Premium Amount and the related Trustee
Fee allocable to the Adjustable Rate Group for such Payment Date; and
(b) the excess, if any, of (i) the sum of (without
duplication):
(A) the Preference Amount with respect to principal
owed to the Owners of the Class A-5 Certificates that remains
unpaid as of such Payment Date,
(B) the principal portion of all scheduled monthly
payments on the Home Equity Loans in the Adjustable Rate Group
due on or prior to the related Due Date thereof and received
by the Servicer during the related Remittance Period, and any
Prepayments made by the Mortgagors and actually received by
the Servicer during the related Remittance Period each to the
extent such amounts are received by the Trustee on or prior to
the related Monthly Remittance Date,
(C) the outstanding principal balance of each Home
Equity Loan in the Adjustable Rate Group that was repurchased
by the Seller or purchased by the Servicer on or prior to the
related Monthly Remittance Date, to the extent such
outstanding principal balance is actually received by the
Trustee on or prior to the related Monthly Remittance Date,
(D) any Substitution Amounts delivered by the Seller
on the related Monthly Remittance Date in connection with a
substitution of a Home Equity Loan in the Adjustable Rate
Group (to the extent such Substitution Amounts relate to
principal), to the extent such Substitution Amounts are
actually received by the Trustee on or prior to the related
Monthly Remittance Date,
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(E) all Net Liquidation Proceeds actually collected
by the Servicer with respect to the Home Equity Loans in the
Adjustable Rate Group during the related Remittance Period (to
the extent such Net Liquidation Proceeds relate to principal)
to the extent such Net Liquidation Proceeds are actually
received by the Trustee on or prior to the related Monthly
Remittance Date.
(F) the amount of any Subordination Deficit with
respect to the Adjustable Rate Group for such Payment Date,
(G) the principal portion of the proceeds received by
the Trustee with respect to the Adjustable Rate Group from any
termination of the Trust (to the extent such proceeds related
to principal),
(H) with respect to the Payment Date immediately
following the last day of the Funding Period, all amounts
remaining on deposit in the Pre-Funding Account allocated to
the Adjustable Rate Group to the extent not used to purchase
Subsequent Home Equity Loans for inclusion in the Adjustable
Rate Group during such Funding Period, and
(I) the amount of any Subordination Increase Amount
with respect to the Adjustable Rate Group for such Payment
Date, to the extent of any Total Monthly Excess Cashflow
available for such purpose,
over
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(ii) the amount of any Subordination Reduction Amount with
respect to the Adjustable Rate Group for such Payment Date.
"Adjustable Rate Group Principal Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) the principal actually
collected by the Servicer with respect to Home Equity Loans in the Adjustable
Rate Group during the related Remittance Period, (ii) the outstanding principal
balance of each such Home Equity Loan in the Adjustable Rate Group that was
purchased from the Trustee on or prior to such Monthly Remittance Date, to the
extent such outstanding principal balance was actually deposited in the
Principal and Interest Account, (iii) any Substitution Amounts relating to
principal delivered by the Seller in connection with a substitution of a Home
Equity Loan in the Adjustable Rate Group, to the extent such Substitution
Amounts were actually deposited in the Principal and Interest Account on or
prior to such Monthly Remittance Date, (iv) the principal portion of all Net
Liquidation Proceeds actually collected by the Servicer with respect to such
Home Equity Loans in the Adjustable Rate Group during the related Remittance
Period (to the extent such Net Liquidation Proceeds related to principal) and
(v) the amount of investment losses to be deposited pursuant to Section 8.08(b).
"Adjustable Rate Group Servicing Fee": With respect to any Home Equity
Loan in the Adjustable Rate Group, an amount retained by the Servicer as
compensation for servicing and administration duties relating to such Home
Equity Loan pursuant to Section 8.15 and equal to
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one month's interest at 0.50% per annum of the then outstanding principal
balance of such Home Equity Loan as of the first day of each Remittance Period
payable on a monthly basis, provided, however, that if a successor Servicer is
appointed pursuant to Section 8.20 hereof, the Adjustable Rate Group Servicing
Fee shall be such amount as agreed upon by the Trustee, the Certificate Insurer
and the successor Servicer, and such amount shall not to exceed 0.50% per annum.
"Adjustable Rate Group Specified Subordinated Amount": As defined in
Exhibit L.
"Adjustable Rate Group Subordinated Amount": As of any Payment Date,
the excess, if any, of (x) the sum of (i) the aggregate Loan Balances of the
Home Equity Loans in the Adjustable Rate Group as of the close of business on
the last day of the immediately proceeding Remittance Period and (ii) any amount
on deposit in the Pre-Funding Account relating to the Adjustable Rate Group at
such time exclusive of any Adjustable Rate Group Pre-Funding Account Earnings
over (y) the Class A-5 Certificate Principal Balance for such Payment Date
(after taking into account the payment of the Adjustable Rate Group Principal
Distribution Amount thereon (except for any Subordination Reduction Amount
relating to the Adjustable Rate Group or Subordination Increase Amount relating
to the Adjustable Rate Group) on such Payment Date).
"Adjustable Rate Group Total Available Funds": As defined in Section
7.02(c) hereof.
"Adjustable Rate Group Total Monthly Excess Spread": With respect to
the Adjustable Rate Group and any Payment Date, the excess of (i) the aggregate
of all interest which is collected on the Home Equity Loans in the Adjustable
Rate Group during the related Remittance Period (net of the Servicing Fee and
the Trustee Fee with respect to the Adjustable Rate Group and net of any
reimbursement for Nonrecoverable Advances) plus the sum of (x) any Delinquency
Advances and (y) Compensating Interest paid by the Servicer with respect to the
Adjustable Rate Group for such Remittance Period over (ii) the sum of the Class
A-5 Current Interest and the Premium Amount relating to the Adjustable Rate
Group for such Payment Date.
"Adjusted Pass-Through Rate": As of any date of determination thereof,
a rate equal to the sum of (a) the Weighted Average Pass-Through Rate and (b)
any portion of the Premium Amount and the Trustee Fee (calculated as a
percentage of the outstanding principal amount of the Certificates) then accrued
and outstanding.
"Affiliate": With respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement": This Pooling and Servicing Agreement, as it may be amended
from time to time, including the Exhibits and Schedules hereto.
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"Annual Loss Percentage (Rolling Twelve Month)": As of any date of
determination thereof, a fraction, expressed as a percentage, the numerator of
which is the aggregate of the Realized Losses as of the last day of the calendar
month of each Remittance Period for the twelve immediately preceding Remittance
Periods and the denominator of which is the Maximum Collateral Amount.
"Appraised Value": The appraised value of any Property based upon the
appraisal made at the time of the origination of the related Home Equity Loan,
or, in the case of a Home Equity Loan which is a purchase money mortgage, the
sales price of the Property at such time of origination, if such sales price is
less than such appraised value.
"Authorized Officer": With respect to any Person, any officer of such
Person who is authorized to act for such Person in matters relating to this
Agreement, and whose action is binding upon, such Person; with respect to the
Depositor, the Seller and the Servicer, initially including those individuals
whose names appear on the lists of Authorized Officers delivered at the Closing;
with respect to the Trustee, any officer assigned to the Corporate Trust
Division (or any successor thereto), including any Vice President, Assistant
Vice President, Trust Officer, any Assistant Secretary, any trust officer or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement.
"Available Funds": The Fixed Rate Group Available Funds or the
Adjustable Rate Group Available Funds, as the case may be.
"Available Funds Shortfall": The Fixed Rate Group Available Funds
Shortfall or the Adjustable Rate Group Available Funds Shortfall.
"Business Day": Any day other than a Saturday, Sunday or a day on which
commercial banking institutions in The City of New York, Dallas, Texas, the city
in which the Corporate Trust Office is located or the city in which the
Certificate Insurer is located are authorized or obligated by law or executive
order to be closed.
"Capitalized Interest Account": The Capitalized Interest Account
established in accordance with Section 7.02(a) hereof and maintained by the
Trustee. The Capitalized Interest Account shall be an Eligible Account.
"Carry-Forward Amount": With respect to any Class of the Class A
Certificates and any Payment Date, the sum of (x) the amount, if any, by which
(i) the Current Interest for such Class for the immediately preceding Payment
Date exceeded (ii) the amount of the actual distribution made to the Owners of
such Class of Class A Certificates on such immediately preceding Payment Date
pursuant to Section 7.03(b)(iii) hereof plus (y) 30 days' interest on such
excess at the Pass-Through Rate for the related Class of Class A Certificates.
"Certificate": Any one of the Class A Certificates or the Class R
Certificates, each representing the interests and the rights described in this
Agreement.
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"Certificate Account": The segregated certificate account established
in accordance with Section 7.02(a) hereof and maintained at the Corporate Trust
Office entitled "Norwest Bank Minnesota, National Association as Trustee on
behalf of the Owners of the Centex Home Equity Loan Trust 1998-1, Home Equity
Loan Pass-Through Certificates." The Certificate Account shall be an Eligible
Account.
"Certificate Insurance Policies": The Fixed Rate Group Certificate
Insurance Policy and the Adjustable Rate Group Certificate Insurance Policy.
"Certificate Insurer": MBIA Insurance Corporation, a New York stock
insurance company and any successor thereto, as issuer of the Certificate
Insurance Policies.
"Certificate Insurer Default": The existence and continuance of any of
the following:
(a) the Certificate Insurer fails to make a payment required
under either of the Insurance Policies in accordance with its terms; or
(b) the Certificate Insurer shall have (i) filed a petition or
commenced any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other similar
federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization, (ii) made a general assignment for the benefit
of its creditors or (iii) had an order for relief entered against it under the
United States Bankruptcy Code, the New York State Insurance law or any other
similar federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation, or reorganization that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department
of Insurance or any other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (i) appointing a custodian,
trustee, agent or receiver for the Certificate Insurer or for all or any
material portion of its property or (ii) authorizing the taking of possession by
a custodian, trustee, agent, or receiver of the Certificate Insurer of all or
any material portion of its property.
"Certificate Principal Balance": As of the Startup Day as to each of
the following Classes of Class A Certificates, the Certificate Principal
Balances thereof, as follows:
Class A-l Certificates - $44,500,000
Class A-2 Certificates - $46,000,000
Class A-3 Certificates - $13,000,000
Class A-4 Certificates - $11,500,000
Class A-5 Certificates - $60,000,000
As of any day after the Startup Day, the Class A-1 Certificate
Principal Balance, the Class A-2 Certificate Principal Balance, the Class A-3
Certificate Principal Balance, the Class A-4 Certificate Principal Balance and
the Class A-5 Certificate Principal Balance.
The Class R Certificates do not have a Certificate Principal Balance.
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"Civil Relief Interest Shortfalls": With respect to any Remittance
Period, for any Home Equity Loans as to which there has been a reduction in the
amount of interest collectible thereon for the most recently ended Remittance
Period as a result of the Soldiers' and Sailers' Civil Relief Act of 1940, as
amended, the amount, if any, by which (i) interest collectible on such Home
Equity Loans during the most recently ended Remittance Period is less than
interest accrued thereon for such Remittance Period pursuant to the Note at the
Coupon Rate.
"Class": Any Class of the Class A Certificates or the Class R
Certificates.
"Class A Certificate": Any one of the Fixed Rate Certificates or the
Class A-5 Certificates.
"Class A Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A Certificates less the aggregate of all amounts actually distributed on
account of the related Principal Distribution Amount pursuant to Section
7.03(b)(iii) hereof with respect to principal thereon on all prior Payment
Dates; provided, however, that solely for purposes of determining the
Certificate Insurer's rights, as subrogee, the Class A Certificate Principal
Balance shall not be reduced by any principal amount paid to the Owner thereof
from Insured Payments.
"Class A Certificate Termination Date": With respect to the Class A-l
Certificates, the Class A-l Certificate Termination Date, with respect to the
Class A-2 Certificates, the Class A-2 Certificate Termination Date, with respect
to the Class A-3 Certificates, the Class A-3 Certificate Termination Date, with
respect to the Class A-4 Certificates, the Class A-4 Certificate Termination
Date, with respect to the Class A-5 Certificates, the Class A-5 Certificate
Termination Date.
"Class A Distribution Amount": The Fixed Rate Group Distribution Amount
and the Class A-5 Distribution Amount.
"Class A-1 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-l Certificate, substantially in the form annexed
hereto as Exhibit A-1 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder for purposes
of the REMIC Provisions .
"Class A-l Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-l Certificates less the aggregate of all amounts actually distributed
with respect to the Class A-l Distribution Amount pursuant to Section
7.03(b)(iii) hereof with respect to principal thereon on all prior Payment
Dates; provided, however, that solely for the purposes of determining the
Certificate Insurer's rights, as subrogee, the Class A-l Certificate Principal
Balance shall not be reduced by any principal amounts paid to the Owners thereof
from Insured Payments.
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"Class A-l Certificate Termination Date": The Payment Date on which the
Class A-l Certificate Principal Balance is reduced to zero.
"Class A-l Current Interest": With respect to any Payment Date, an
amount equal to 30 days' interest accrued on the Class A-l Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-l Pass-Through Rate plus the Preference Amount owed and unpaid to
the Owners of the Class A-l Certificates as it relates to interest previously
paid on the Class A-l Certificates, plus the Carry Forward Amount, if any, with
respect to the Class A-l Certificates; provided, however, such amount will be
reduced by the Class A-l Certificates' pro rata share of any Civil Relief
Interest Shortfalls relating to Home Equity Loans in the Fixed Rate Group.
"Class A-l Distribution Amount": With respect to any Payment Date, the
sum of (x) the Class A-l Current Interest and (y) the Fixed Rate Group Principal
Distribution Amount payable to the Owners of the Class A-1 Certificates pursuant
to Section 7.03(b)(iii)(B)(II)(i) for such Payment Date.
"Class A-1 Pass-Through Rate": 6.41% per annum.
"Class A-2 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-2 Certificate, substantially in the form annexed
hereto as Exhibit A-2 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder for purposes
of the REMIC provisions.
"Class A-2 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-2 Certificates less the aggregate of all amounts actually distributed
with respect to the Class A-2 Distribution Amount pursuant to Section
7.03(b)(iii) hereof with respect to principal thereon on all prior Payment
Dates; provided, however, that solely for the purposes of determining the
Certificate Insurer's rights, as subrogee, the Class A-2 Certificate Principal
Balance shall not be reduced by any principal amounts paid to the Owners thereof
from the Insured Payments.
"Class A-2 Certificate Termination Date": The Payment Date on which the
Class A-2 Certificate Principal Balance is reduced to zero.
"Class A-2 Current Interest": With respect to any Payment Date, an
amount equal to 30 days' interest accrued on the Class A-2 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-2 Pass-Through Rate plus the Preference Amount owed and unpaid to
the Owners of the Class A-2 Certificates as it relates to interest previously
paid on the Class A-2 Certificates plus the Carry-Forward Amount, if any, with
respect to the Class A-2 Certificates; provided, however, such amount will be
reduced by the Class A-2 Certificates' pro rata share of any Civil Relief
Interest Shortfalls relating to Home Equity Loans in the Fixed Rate Group.
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"Class A-2 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-2 Current Interest and (y) the Fixed Rate Group Principal
Distribution Amount payable to the Owners of the Class A-2 Certificates pursuant
to Section 7.03(b)(iii)(B)(II)(ii) for such Payment Date.
"Class A-2 Pass-Through Rate": 6.40% per annum.
"Class A-3 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-3 Certificate, substantially in the form annexed
hereto as Exhibit A-3 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder for purposes
of the REMIC provisions.
"Class A-3 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-3 Certificates less the aggregate of all amounts actually distributed
with respect to the Class A-3 Distribution Amount pursuant to Section
7.03(b)(iii) hereof with respect to principal thereon on all prior Payment
Dates; provided, however, that solely for the purposes of determining the
Certificate Insurer's rights, as subrogee, the Class A-3 Certificate Principal
Balance shall not be reduced by any principal amounts paid to the Owners thereof
from the Insured Payments.
"Class A-3 Certificate Termination Date": The Payment Date on which the
Class A-3 Certificate Principal Balance is reduced to zero.
"Class A-3 Current Interest": With respect to any Payment Date, an
amount equal to 30 days' interest accrued on the Class A-3 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-3 Pass-Through Rate plus the Preference Amount owed and unpaid to
the Owners of the Class A-3 Certificates as it relates to interest previously
paid on the Class A-3 Certificates plus the Carry-Forward Amount, if any, with
respect to the Class A-3 Certificates; provided, however, such amount will be
reduced by the Class A-3 Certificates' pro rata share of any Civil Relief
Interest Shortfalls relating to Home Equity Loans in the Fixed Rate Group.
"Class A-3 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-3 Current Interest and (y) the Fixed Rate Group Principal
Distribution Amount payable to the Owners of the Class A-3 Certificates pursuant
to Section 7.03(b)(iii)(B)(II)(iii) for such Payment Date.
"Class A-3 Pass-Through Rate": 6.92% per annum.
"Class A-4 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-4 Certificate, substantially in the form annexed
hereto as Exhibit A-4 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder for purposes
of the REMIC provisions.
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"Class A-4 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-4 Certificates less the aggregate of all amounts actually distributed
with respect to the Class A-4 Distribution Amount pursuant to Section
7.03(b)(iii) hereof with respect to principal thereon on all prior Payment
Dates; provided, however, that solely for the purposes of determining the
Certificate Insurer's rights, as subrogee, the Class A-4 Certificate Principal
Balance shall not be reduced by any principal amounts paid to the Owners thereof
from Insured Payments.
"Class A-4 Certificate Termination Date": The Payment Date on which the
Class A-4 Certificate Principal Balance is reduced to zero.
"Class A-4 Current Interest": With respect to any Payment Date, an
amount equal to 30 days' interest accrued on the Class A-4 Certificate Principal
Balance immediately prior to such Payment Date during the related Accrual Period
at the Class A-4 Pass-Through Rate plus the Preference Amount owed and unpaid to
the Owners of the Class A-4 Certificates as it relates to interest previously
paid on the Class A-4 Certificates plus the Carry-Forward Amount, if any, with
respect to the Class A-4 Certificates; provided, however, such amount will be
reduced by the Class A-4 Certificates' pro rata share of any Civil Relief
Interest Shortfalls relating to Home Equity Loans in the Fixed Rate Group.
"Class A-4 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-4 Current Interest, (y) the Class A-4 Lockout Distribution
Amount payable to the owners of the Class A-4 Certificates pursuant to Section
7.03(b)(iii)(B)(I) and (z) the Fixed Rate Group Principal Distribution Amount
payable to the Owners of the Class A-4 Certificates pursuant to Section
7.03(b)(iii)(B)(II)(iv) for such Payment Date; provided, however, that the Class
A-4 Distribution Amount shall in no event be greater than the sum of (a) the
Class A-4 Current Interest and (b) lesser of (i) the Class A-4 Certificate
Principal Balance and (ii) the Fixed Rate Group Principal Distribution Amount
for such Payment Date.
"Class A-4 Lockout Distribution Amount": For any Payment Date, the
product of (i) the applicable Class A-4 Lockout Percentage for such Payment Date
and (ii) the Class A-4 Lockout Pro Rata Distribution Amount for such Payment
Date; provided, that the Class A-4 Lockout Distribution Amount shall not exceed
the Class A-4 Certificate Principal Balance.
"Class A-4 Lockout Percentage": For each Payment Date, the percentage
set forth below:
Class A-4
---------
Payment Date Lockout Percentage
------------ ------------------
March 1998 - February 2001 0%
March 2001 - February 2003 45%
March 2003 - February 2004 80%
March 2004 - February 2005 100%
March 2005 and thereafter 300%
"Class A-4 Lockout Pro Rata Distribution Amount": For any Payment Date,
an amount equal to the product of (x) a fraction, the numerator of which is the
Class A-4 Certificate
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Principal Balance immediately prior to such Payment Date and the denominator of
which is the aggregate of Certificate Principal Balances of the Fixed Rate
Certificates immediately prior to such Payment Date and (y) the Fixed Rate Group
Principal Distribution Amount for such Payment Date.
"Class A-4 Pass-Through Rate": 6.40% per annum.
"Class A-5 Available Funds Cap Rate": With respect to any Accrual
Period and any Payment Date, a rate per annum equal to the fraction, expressed
as a percentage, the numerator of which is (i) an amount equal to (A) 1/12 of
the weighted average of the Net Coupon Rates of the Home Equity Loans in the
Adjustable Rate Group (by outstanding principal balance) at the beginning of the
related Remittance Period, times the aggregate Loan Balance of the Home Equity
Loans in the Adjustable Rate Group as of the beginning of the Remittance Period
minus (B) the Premium Amount for the Adjustable Rate Group for such Payment
Date, and the denominator of which is (ii) the outstanding Class A-5 Certificate
Principal Balance at the beginning of such Accrual Period such rate, as
calculated on the basis of a 360 day year and the actual number of days elapsed
in the related Accrual Period.
"Class A-5 Certificate": Any one of the Certificates designated on the
face thereof as a Class A-5 Certificate, substantially in the form annexed
hereto as Exhibit A-5 authenticated and delivered by the Trustee, representing
the right to distributions as set forth herein and each evidencing an interest
designated as a "regular interest" in the REMIC created hereunder for purposes
of the REMIC provisions.
"Class A-5 Certificate Principal Balance": As of any time of
determination, the Certificate Principal Balance as of the Startup Day of all
Class A-5 Certificates less the aggregate of all amounts actually distributed
with respect to the Adjustable Rate Group Principal Distribution Amount pursuant
to Section 7.03(b)(iii) hereof on all prior Payment Dates; provided, however,
that solely for the purposes of determining the Certificate Insurer's rights, as
subrogee, the Class A-5 Certificate Principal Balance shall not be reduced by
any principal amounts paid to the Owners thereof from Insured Payments.
"Class A-5 Certificate Termination Date": The Payment Date on which the
Class A-5 Certificate Principal Balance is reduced to zero.
"Class A-5 Certificateholders' Interest Index Carryover": With respect
to any Accrual Period and any related Payment Date, an amount equal to the
excess, if any, of (i) the Accrual Rate over (ii) the amount of Class A-5
Current Interest for such Payment Date if clause (ii) of the definition of
"Class A-5 Pass-Through Rate" were to used to calculate such Class A-5 Current
Interest.
"Class A-5 Current Interest": With respect to any Payment Date, an
amount equal to the amount of interest accrued on the Class A-5 Certificate
Principal Balance immediately prior to such Payment Date during the related
Accrual Period at the Class A-5 Pass-Through Rate plus the Preference Amount
owed and unpaid to the Owners of the Class A-5 Certificates as it relates to
interest previously paid on the Class A-5 Certificates plus the Carry-Forward
Amount, if any,
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with respect to the Class A-5 Certificates; provided, however, such amount will
be reduced by the amount of any Civil Relief Interest Shortfalls relating to
Home Equity Loans in the Adjustable Rate Group.
"Class A-5 Distribution Amount": With respect to any Payment Date, the
sum of (x) Class A-5 Current Interest and (y) the Adjustable Rate Group
Principal Distribution Amount payable to the Owners of the Class A-5
Certificates pursuant to Section 7.03(b)(iii)(C) for such Payment Date.
"Class A-5 Pass-Through Rate": For any Payment Date, in any month up to
and including the month in which the Clean-Up Call Date occurs, the lesser of
(i) LIBOR plus 0.23% per annum and (ii) the Class A-5 Available Funds Cap Rate
for such Payment Date and for any month following the month in which the
Clean-Up Call Date occurs, the lesser of (i) LIBOR plus 0.46% per annum and (ii)
the Class A-5 Available Funds Cap Rate for such Payment Date.
"Class A-5 Maximum Pass-Through Rate": With respect to any Accrual
Period and any related Payment Date, a rate per annum equal to the fraction,
expressed as a percentage, the numerator of which is (i) an amount equal to (A)
1/12 of the weighted average of the Net Maximum Rates of the Home Equity Loans
in the Adjustable Rate Group as of the beginning of the related Remittance
Period (by outstanding principal balance), times the aggregate Loan Balance of
the Home Equity Loans in the Adjustable Rate Group as of the beginning of the
related Remittance Period minus (B) the Premium Amount related to the Adjustable
Rate Group for such Payment Date, and the denominator of which is the then
outstanding aggregate Loan Balance of the Home Equity Loans in the Adjustable
Rate Group as of the beginning of such Accrual Period, such rate as calculated
on the basis of a 360 day year and the actual number of days elapsed in the
related Accrual Period.
"Class R Certificate": Any one of the Certificates designated on the
face thereof as a Class R Certificate, substantially in the form annexed hereto
as Exhibit C, authenticated and delivered by the Trustee, representing the right
to distributions as set forth herein, and evidencing an interest designated as
the "residual interest" in the REMIC created hereunder for the purposes of the
REMIC Provisions.
"Clean-Up Call Date": The first Monthly Remittance Date on which the
aggregate outstanding principal balances of the Home Equity Loans as of the
close of business on the last day of the immediately preceding Remittance Period
has declined to 10% or less of the Maximum Collateral Amount.
"Closing": As defined in Section 4.02 hereof.
"Code": The Internal Revenue Code of 1986, as amended.
"Compensating Interest": As defined in Section 8.10(a) hereof.
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"Corporate Trust Office": The principal office of the Trustee at
Norwest Bank Minnesota, National Association, Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479-0070 or the principal office of any successor
Trustee hereunder.
"Coupon Rate": The rate of interest borne by each Note from time to
time.
"Cram Down Loss": With respect to a Home Equity Loan, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the Loan Balance or the Coupon Rate of such Home Equity Loan, the
amount of such reduction. A "Cram Down Loss" shall be deemed to have occurred on
the date of issuance of such order.
"Cumulative Loss Percentage": As of any date of determination thereof,
the aggregate of all Realized Losses since the Startup Day as a percentage of
the Maximum Collateral Amount.
"Current Interest": With respect to any Payment Date, the sum of (a)
the Class A-1 Current Interest, (b) the Class A-2 Current Interest, (c) the
Class A-3 Current Interest, (d) the Class A-4 Current Interest and (e) the Class
A-5 Current Interest for such Payment Date.
"Custodial Agreement": The Custodial Agreement dated as of February l,
1998 among the Custodian and the Trustee.
"Custodian": First Chicago National Processing, as Custodian on behalf
of the Trustee pursuant to the Custodial Agreement and any successor Custodian.
"Cut-Off Date": February 1, 1998.
"Daily Collections": As defined in Section 8.08(c) hereof.
"Delinquency Advance": As defined in Section 8.09(a) hereof.
"Delinquent": A Home Equity Loan is "Delinquent" if any payment due
thereon is not made by the Mortgagor by the close of business on the related Due
Date. A Home Equity Loan is "30 days Delinquent" if such payment has not been
received by the close of business on the corresponding day of the month
immediately succeeding the month in which such payment was due, or, if there is
no such corresponding day (e.g., as when a 30-day month follows a 31-day month
in which a payment was due on the 31st day of such month) then on the last day
of such immediately succeeding month. Similarly for "60 days Delinquent," "90
days Delinquent" and so on.
"Delivery Order": The delivery order in the form set forth as Exhibit H
hereto and delivered by the Depositor to the Trustee on the Startup Day pursuant
to Section 4.01 hereof.
"Depositor": DLJ Mortgage Acceptance Corp., a Delaware corporation, or
any successor thereto.
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"Depository": The Depository Trust Company, 7 Hanover Square, New York,
New York, 10004, and any successor Depository named herein.
"Designated Depository Institution": With respect to the Principal and
Interest Account, a trust account maintained by the trust department of a
federal or state chartered depository institution acceptable to the Certificate
Insurer, acting in its fiduciary capacity, having combined capital and surplus
of at least $100,000,000; provided, however, that if the Principal and Interest
Account is not maintained with the Trustee, (i) such institution shall have a
long-term debt rating of at least "A" by Standard & Poor's and "A2" by Moody's
and (ii) the Servicer shall provide the Trustee and the Certificate Insurer with
a statement, which the Trustee will send to the Owners, identifying the location
and account information of the Principal and Interest Account upon a change in
the location of such account.
"Determination Date": The 15th day of each month, or if such day is not
a Business Day, on the preceding Business Day, commencing in March 1998.
"Direct Participant" or "DTC Participant": Any broker-dealer, bank or
other financial institution for which the Depository holds Class A Certificates
from time to time as a securities depository.
"Disqualified Organization": "Disqualified Organization" shall have the
meaning set forth from time to time in the definition thereof at Section
860E(e)(5) of the Code (or any successor statute thereto) and applicable to the
Trust.
"Due Date": With respect to any Home Equity Loan, the date on which the
Monthly Payment with respect to such Home Equity Loan is required to be paid
pursuant to the related Note exclusive of any days of grace.
"Eligible Account": Either (A) a segregated account or accounts
maintained with an institution whose deposits are insured by the FDIC, the
unsecured and uncollateralized long term date obligations of which institution
shall be rated AA or higher by S&P and Aa2 or higher by Moody's and in the
highest short term rating category by each of the Rating Agencies, and which is
(i) a federal savings and loan association duly organized, validly existing and
in good standing under the federal banking laws, (ii) an institution duly
organized, validly existing and in good standing under the applicable banking
laws of any state, (iii) a national banking association duly organized, validly
existing and in good standing under the federal banking laws, (iv) a principal
subsidiary of a bank holding company, or (v) approved in writing by the
Certificate Insurer and each of the Rating Agencies or (B) a segregated trust
account or accounts maintained with the trust department of a federal or state
chartered depository institution acceptable to each Rating Agency and the
Certificate Insurer, having capital and surplus of not less than $100,000,000,
acting in its fiduciary capacity.
"Eligible Investments": Those investments so designated pursuant to
Section 7.07 hereof.
"Excess Subordinated Amount": With respect to either Home Equity Loan
Group and Payment Date, the excess, if any, of (x) the Subordinated Amount that
would apply to such
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Home Equity Loan Group on such Payment Date after taking into account the
payment of the related Principal Distribution Amount on such Payment Date
(except for any distributions of related Subordination Reduction Amounts on such
Payment Date), over (y) the related Specified Subordinated Amount for such
Payment Date.
"FDIC": The Federal Deposit Insurance Corporation, a corporate
instrumentality of the United States, or any successor thereto.
"FHLMC": The Federal Home Loan Mortgage Corporation, a corporate
instrumentality of the United States created pursuant to the Emergency Home
Finance Act of 1970, as amended, or any successor thereof.
"File": The documents delivered to the Custodian on behalf of the
Trustee pursuant to Section 3.05(b) hereof pertaining to a particular Home
Equity Loan and any additional documents required to be added to the File
pursuant to this Agreement.
"Final Certification": As defined in Section 3.06(c) hereof.
"Final Determination": As defined in Section 9.03(a) hereof.
"Final Recovery Determination": With respect to any defaulted Home
Equity Loan or REO Property (other than a Home Equity Loan purchased by the
Seller, the Depositor or the Servicer), a determination made by the Servicer
that all recoveries which the Servicer, in its reasonable business judgment
expects to be finally recoverable in respect thereof have been so recovered or
that the Servicer believes in its reasonable business judgment the cost of
obtaining any additional recoveries therefrom would exceed the amount of such
recoveries. The Servicer shall maintain records of each Final Recovery
Determination.
"Final Scheduled Payment Date": As set out in Section 2.08(a) hereof.
"First Mortgage Loan": A Home Equity Loan which constitutes a first
priority mortgage lien with respect to any Property.
"Fixed Rate Certificates": Any one of the Class A-l Certificates, Class
A-2 Certificates, Class A-3 Certificates and Class A-4 Certificates.
"Fixed Rate Group": The pool of Home Equity Loans identified in the
related Schedule of Home Equity Loans as having been assigned to the Fixed Rate
Group in Schedule I-A hereto or Schedule 1-A of a Subsequent Transfer Agreement,
including any Qualified Replacement Mortgage delivered in replacement thereof.
"Fixed Rate Group Available Funds": As defined in Section 7.02(b)
hereof.
"Fixed Rate Group Available Funds Shortfall": As defined in Section
7.03(b)(ii)(A).
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"Fixed Rate Group Capitalized Interest Requirement": As to any
Pre-Funding Payment Date, the excess, if any, of (x) the sum of (a) the interest
due on the Fixed Rate Certificates on such Payment Date plus (b) the Premium
Amount allocable to the Fixed Rate Group over (y) the sum of (i) one month's
interest on the aggregate Loan Balance of the Home Equity Loans in the Fixed
Rate Group (except for Home Equity Loans with a first Monthly Payment after
February 28, 1998) as of the beginning of business on the first day of the
immediately preceding Remittance Period, calculated at the weighted average of
the Pass-Through Rates of the Fixed Rate Certificates as of such Payment Date
and (ii) any Fixed Rate Group Pre-Funding Account Earnings to be transferred to
the Certificate Account on such Payment Date, if any.
"Fixed Rate Group Certificate Insurance Policy": The Certificate
Guaranty Insurance Policy (number 25814) dated February 26, 1998 issued by the
Certificate Insurer for the benefit of the Fixed Rate Certificates pursuant to
which the Certificate Insurer guarantees Insured Payments.
"Fixed Rate Group Distribution Amount": The sum of the Class A-1
Distribution Amount, Class A-2 Distribution Amount, Class A-3 Distribution
Amount and Class A-4 Distribution Amount.
"Fixed Rate Group Interest Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) all interest due during
the related Remittance Period with respect to the Home Equity Loans in the Fixed
Rate Group, (ii) all Compensating Interest paid by the Servicer on such Monthly
Remittance Date with respect to the Fixed Rate Group and (iii) the portions of
the Loan Purchase Prices and the Substitution Amount relating to interest on the
Home Equity Loans in the Fixed Rate Group paid by the Seller or Servicer on or
prior to such Monthly Remittance Date and (iv) the interest portion of all Net
Liquidation Proceeds actually collected by the Servicer with respect to such
Home Equity Loans in the Fixed Rate Group during the related Remittance Period.
"Fixed Rate Group Maximum Collateral Amount": $115,000,000.00.
"Fixed Rate Group Monthly Remittance Amount": As of any Monthly
Remittance Date, the sum of (i) the Fixed Rate Group Interest Remittance Amount
for such Monthly Remittance Date and (ii) the Fixed Rate Group Principal
Remittance Amount for such Monthly Remittance Date.
"Fixed Rate Group Pre-Funding Account Earnings": As to any Pre-Funding
Payment Date, the actual investment earnings earned during the previous
Remittance Period on that portion of the Pre-Funding Account allocated to the
Fixed Rate Group during such period as calculated by the Trustee pursuant to
Section 3.07(e) hereof.
"Fixed Rate Group Principal Distribution Amount": With respect to the
Fixed Rate Certificates for any Payment Date, the lesser of:
(a) the Fixed Rate Group Total Available Funds plus any
Insured Payment with respect to the Fixed Rate Certificates minus the sum of the
related Current Interest with
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respect to the Fixed Rate Certificates, the related Premium Amount and the
related Trustee Fee allocable to the Fixed Rate Group for such Payment Date; and
(b) the excess, if any, of (i) the sum of (without
duplication):
(A) the Preference Amount with respect to principal
owed to the Owners of the related Fixed Rate Certificates that
remains unpaid as of such Payment Date,
(B) the principal portion of all scheduled monthly
payments on the Home Equity Loans in the Fixed Rate Group due
on or prior to the related Due Date thereof and received by
the Servicer during the related Remittance Period, and any
Prepayments made by the Mortgagors and actually received by
the Servicer during the related Remittance Period, each to the
extent such amounts are received by the Trustee on or prior to
the related Monthly Remittance Date,
(C) the outstanding principal balance of each Home
Equity Loan in the Fixed Rate Group that was repurchased by
the Seller or purchased by the Servicer on or prior to the
related Monthly Remittance Date, to the extent such
outstanding principal balance is actually received by the
Trustee on or prior to the related Monthly Remittance Date,
(D) any Substitution Amounts delivered by the Seller
on the related Monthly Remittance Date in connection with a
substitution of a Home Equity Loan in the Fixed Rate Group (to
the extent such Substitution Amounts relate to principal), to
the extent such Substitution Amounts are actually received by
the Trustee on or prior to the related Monthly Remittance
Date,
(E) all Net Liquidation Proceeds actually collected
by the Servicer with respect to the Home Equity Loans in the
Fixed Rate Group during the related Remittance Period (to the
extent such Net Liquidation Proceeds relate to principal) to
the extent such Net Liquidation Proceeds are actually received
by the Trustee on or prior to the related Monthly Remittance
Date,
(F) the amount of any Subordination Deficit with
respect to the Fixed Rate Group for such Payment Date,
(G) the principal portion of the proceeds received by
the Trustee with respect to the Fixed Rate Group from any
termination of the Trust (to the extent such proceeds related
to principal),
(H) with respect to the Payment Date immediately
following the last day of the Funding Period, all amounts
remaining on deposit in the Pre-Funding Account allocated to
the Fixed Rate Group to the extent not used to purchase
Subsequent Home Equity Loans for inclusion in the Fixed Rate
Group during such Funding Period, and
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(I) the amount of any Subordination Increase Amount
with respect to the Fixed Rate Group for such Payment Date, to
the extent of any Total Monthly Excess Cashflow available for
such purpose,
over
----
(ii) the amount of any Subordination Reduction Amount
with respect to the Fixed Rate Group for such Payment Date.
"Fixed Rate Group Principal Remittance Amount": As of any Monthly
Remittance Date, the sum, without duplication, of (i) the principal actually
collected by the Servicer with respect to Home Equity Loans in the Fixed Rate
Group during the related Remittance Period, (ii) the outstanding principal
balance of each such Home Equity Loan in the Fixed Rate Group that was purchased
from the Trustee on or prior to such Monthly Remittance Date, to the extent such
outstanding principal balance was actually deposited in the Principal and
Interest Account, (iii) any Substitution Amounts relating to principal delivered
by the Seller in connection with a substitution of a Home Equity Loan in the
Fixed Rate Group, to the extent such Substitution Amounts were actually
deposited in the Principal and Interest Account on or prior to such Monthly
Remittance Date, (iv) the principal portion of all Net Liquidation Proceeds
actually collected by the Servicer with respect to such Home Equity Loans in the
Fixed Rate Group during the related Remittance Period (to the extent such Net
Liquidation Proceeds related to principal) and (v) the amount of investment
losses required to be deposited pursuant to Section 8.08(b).
"Fixed Rate Group Servicing Fee": With respect to any Home Equity Loan
in the Fixed Rate Group, an amount retained by the Servicer as compensation for
servicing and administration duties relating to such Home Equity Loan pursuant
to Section 8.15 and equal to one month's interest at 0.50% per annum of the then
outstanding principal balance of such Home Equity Loan as of the first day of
each Remittance Period payable on a monthly basis; provided, however, that if a
successor Servicer is appointed pursuant to Section 8.20 hereof, the Fixed Rate
Group Servicing Fee shall be the amount as agreed upon by the Trustee, the
Certificate Insurer and the successor Servicer, and such amount shall not exceed
.50% per annum.
"Fixed Rate Group Specified Subordinated Amount": As defined in Exhibit
M.
"Fixed Rate Group Subordinated Amount": As of any Payment Date, the
excess, if any, of (x) the sum of (i) the aggregate Loan Balances of the Home
Equity Loans in the Fixed Rate Group as of the close of business on the last day
of the immediately proceeding Remittance Period and (ii) any amount on deposit
in the Pre-Funding Account relating to the Fixed Rate Group at such time
exclusive of any the Fixed Rate Group Pre-Funding Account Earnings over (y) the
aggregate of Certificate Principal Balances of the Fixed Rate Certificates for
such Payment Date (after taking into account the payment of the Fixed Rate Group
Principal Distribution Amount thereon (except for any Subordination Reduction
Amount relating to the Fixed Rate Group and Subordination Increase Amount
relating to the Fixed Rate Group) on such Payment Date).
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"Fixed Rate Group Total Available Funds": As defined in Section 7.02(b)
hereof.
"Fixed Rate Group Total Monthly Excess Spread": With respect to the
Fixed Rate Group and any Payment Date, the excess of (i) the aggregate of all
interest which is collected on the Home Equity Loans in the Fixed Rate Group
during the related Remittance Period (net of the Servicing Fee and the Trustee
Fee with respect to the Fixed Rate Group and net of any reimbursement for
Nonrecoverable Advances) plus the sum of (x) any Delinquency Advances and (y)
Compensating Interest paid by the Servicer with respect to the Fixed Rate Group
for such Remittance Period over (ii) the sum of the Current Interest on the
Fixed Rate Certificates and the Premium Amount relating to the Fixed Rate Group
for such Payment Date.
"FNMA": The Federal National Mortgage Association, a
federally-chartered and privately-owned corporation existing under the Federal
National Mortgage Association Charter Act, as amended, or any successor thereof.
"FNMA Guide": FNMA's Servicing Guide, as the same may be amended by
FNMA from time to time, and the Servicer shall elect to apply such amendments in
accordance with Section 8.01 hereof.
"Funding Period": With respect to each Group, the period commencing on
the Startup Day and ending on the earliest to occur of (i) the date on which the
amount on deposit in the Pre-Funding Account (exclusive of any investment
earnings) allocable to such Group is less than $50,000, (ii) the date on which
the Servicer may be removed pursuant to Section 8.20(a) hereof and (iii) March
18, 1998.
"Highest Lawful Rate": As defined in Section 11.13 hereof.
"Home Equity Loan Group" or "Group": The Fixed Rate Group or the
Adjustable Rate Group, as the case may be. References herein to the related
Class of Class A Certificates, when used with respect to a Home Equity Loan
Group, shall mean (A) in the case of the Fixed Rate Group, the Fixed Rate
Certificates and (B) in the case of the Adjustable Rate Group, the Class A-5
Certificates.
"Home Equity Loans": Such home equity loans (including Initial Home
Equity Loans and Subsequent Home Equity Loans) transferred and assigned to the
Trust pursuant to Section 3.05(a) and 3.07(a) hereof, together with any
Qualified Replacement Mortgages substituted therefor in accordance with this
Agreement, as from time to time are held as a part of the Trust Estate, the Home
Equity Loans originally so held being identified in the Schedules of Home Equity
Loans. The term "Home Equity Loan" includes the terms "First Mortgage Loan" and
"Second Mortgage Loan." The term "Home Equity Loan" includes any Home Equity
Loan which is Delinquent, which relates to a foreclosure or which relates to a
Property which is REO Property prior to such Property's disposition by the
Trust. Any home equity loan which, although intended by the parties hereto to
have been, and which purportedly was, transferred and assigned to the Trust by
the Depositor, in fact was not transferred and assigned to the Trust for any
reason whatsoever, including, without limitation, the incorrectness of the
statement set forth
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in Section 3.04(b)(x) hereof with respect to such home equity loan, shall
nevertheless be considered a Home Equity Loan" for all purposes of this
Agreement.
"Indemnification Agreement": The Indemnification Agreement dated as of
February 23, 1998 among the Certificate Insurer, the Seller and the
Underwriters.
"Indirect Participant": Any financial institution for whom any Direct
Participant holds an interest in a Class A Certificate.
"Initial Home Equity Loans": The Home Equity Loans to be conveyed to
the Trust by the Depositor on the Startup Day.
"Insurance Agreement": The Insurance Agreement dated as of February 1,
1998, among the Depositor, the Seller, the Servicer, the Trustee and the
Certificate Insurer, as it may be amended from time to time.
"Insurance Policy": Any hazard, flood, title or primary mortgage
insurance policy relating to a Home Equity Loan plus any amount remitted under
Section 8.11 hereof.
"Insured Payment": As defined in the Fixed Rate Group Certificate
Insurance Policy or as defined in the Adjustable Rate Group Certificate
Insurance Policy.
"Interest Remittance Amount": The sum of the Fixed Rate Group Interest
Remittance Amount and the Adjustable Rate Group Interest Remittance Amount.
"Late Payment Rate": As defined in the Insurance Agreement.
"LIBOR": With respect to any Accrual Period for the Class A-5
Certificates, the rate determined by the Trustee on the related LIBOR
Determination Date on the basis of the offered rate for one-month U.S. dollar
deposits as such rate appears on Telerate Page 3750 as of 11:00 a.m. (London
time) on such date; provided that if such rate does not appear on Telerate Page
3750, the rate for such date will be determined on the basis of the rates at
which one-month U.S. dollar deposits are offered by the Reference Banks at
approximately 11:00 a.m. (London time) on such date to prime banks in the London
interbank market. In such event, the Trustee 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 for that date will be the
arithmetic mean of the quotations (rounded upwards if necessary to the nearest
whole multiple of 1/16%). If fewer than two quotations are provided as
requested, the rate for that date will be the arithmetic mean of the rates
quoted by major banks in New York City, selected by the Servicer, at
approximately 11:00 a.m. (New York City time) on such date for one-month U.S.
dollar loan to leading European banks.
"LIBOR Determination Date": With respect to any Accrual Period for the
Class A-5 Certificates, the second London Business Day preceding the
commencement of such Accrual Period.
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"Liquidated Loan": A Home Equity Loan as to which a Final Recovery
Determination has been made.
"Liquidation Proceeds": With respect to any Liquidated Loan, all
amounts (including the proceeds of any Insurance Policy) recovered by the
Servicer in connection with such Liquidated Loan, whether through trustee's
sale, foreclosure sale or otherwise.
"Loan Balance": With respect to each Home Equity Loan and as of any
date of determination, the actual outstanding principal balance thereof on the
Cut-Off Date with respect to the Initial Home Equity Loans or relevant
Subsequent Cut-Off Date with respect to the Subsequent Home Equity Loans or
relevant replacement Cut-Off Date with respect to the Qualified Replacement
Mortgages excluding payments of principal due prior to the Cut-Off Date,
Subsequent Cut-Off Date or Replacement Cut-Off Date, as the case may be, whether
or not received, less any principal payments relating to such Home Equity Loan
included in previous Monthly Remittance Amounts, provided, however, that the
Loan Balance for any Home Equity Loan that has become a Liquidated Loan shall be
zero as of the first day of the Remittance Period following the Remittance
Period in which such Home Equity Loan becomes a Liquidated Loan, and at all
times thereafter.
"Loan Purchase Price": With respect to any Home Equity Loan purchased
from the Trust on or prior to a Monthly Remittance Date pursuant to Section
3.03, 3.04, 3.06(b) or 8.10(b) hereof, an amount equal to the outstanding
principal balance of such Home Equity Loan as of the date of purchase (assuming
that the Monthly Remittance Amount remitted by the Servicer on such Monthly
Remittance Date has already been remitted), plus all accrued and unpaid interest
on such Home Equity Loan at the Coupon Rate to but not including the date of
such purchase together with (without duplication) the aggregate amounts of (i)
all unreimbursed Delinquency Advances and Servicing Advances theretofore made
with respect to such Home Equity Loan, (ii) all Delinquency Advances which the
Servicer has theretofore failed to remit with respect to such Home Equity Loan
and (iii) all reimbursed Delinquency Advances and Servicing Advances to the
extent that reimbursement is not made from the Mortgagor.
"Loan-to-Value Ratio": As of any particular date (i) with respect to
any First Mortgage Loan, the percentage obtained by dividing the Appraised Value
into the original principal balance of the Note relating to such First Mortgage
Loan and (ii) with respect to any Second Mortgage Loan, the percentage obtained
by dividing the Appraised Value as of the date of origination of such Second
Mortgage Loan into an amount equal to the sum of (a) the remaining principal
balance of the Senior Lien note relating to such First Mortgage Loan as of the
date of origination of the related Second Mortgage Loan and (b) the original
principal balance of the Note relating to such Second Mortgage Loan.
"Loan Sale Agreement": The Loan Sale Agreement dated as of February 1,
1998 between the Seller and the Depositor, as it may be amended from time to
time.
"London Business Day": Any day on which dealings in deposits of United
States dollars are transacted in the London interbank market.
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"Maximum Collateral Amount": $175,000,000.00.
"Maximum Rate": With respect to any Home Equity Loan in the Adjustable
Rate Group, means the maximum rate at which interest may accrue on such Home
Equity Loan.
"Minimum Spread": Shall be a percentage per annum equal to 0% for
Payment Dates which occur prior to March 1999 and equal to 0.50% for Payment
Dates which occur in March 1999 or thereafter.
"Monthly Payment": With respect to any Home Equity Loan and any
Remittance Period, the payment of principal, if any, and interest due on the Due
Date in such Remittance Period pursuant to the related Note.
"Monthly Remittance Amount": The sum of the Fixed Rate Group Monthly
Remittance Amount and the Adjustable Rate Group Monthly Remittance Amount.
"Monthly Remittance Date": The 18th day of each month, or if such day
is not a Business Day, on the preceding Business Day, commencing in March 1998.
"Moody's": Moody's Investors Service Inc. or any successor thereto.
"Mortgage": The mortgage, deed of trust or other instrument creating a
first or second lien on an estate in fee simple interest in real property
securing a Note.
"Mortgagor": The obligor on a Note.
"Net Coupon Rate": With respect to any Home Equity Loan in the
Adjustable Rate Group, means a rate per annum equal to the Coupon Rate of such
Home Equity Loan minus the sum of (i) the rate at which the Servicing Fee
accrues, (ii) the rate at which the Trustee Fee accrues, and (iii) the Minimum
Spread.
"Net Maximum Rate": With respect to any Home Equity Loan in the
Adjustable Rate Group, a rate per annum equal to the Maximum Rate of such Home
Equity Loan minus the sum of (i) the rate at which the Servicing Fee accrues,
(ii) the rate at which the Trustee Fee accrues, and (iii) the Minimum Spread.
"Net Liquidation Proceeds": As to any Liquidated Loan, Liquidation
Proceeds net of expenses incurred by the Servicer (including unreimbursed
Servicing Advances) in connection with the liquidation of such Home Equity Loan
and unreimbursed Delinquency Advances relating to such Home Equity Loan. In no
event shall Net Liquidation Proceeds with respect to any Liquidated Loan be less
than zero.
"90-Day Delinquent Loan": With respect to any Determination Date, all
REO Properties and each Home Equity Loan, with respect to which any portion of a
Monthly Payment is, as of the last day of the prior Remittance Period, three
months (calculated from Due Date with respect
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to such Home Equity Loan to Due Date) or more past due (without giving effect to
any grace period).
"90+ Delinquency Percentage (Rolling Three Month)": With respect to any
Determination Date, the average of the percentage equivalents of the fractions
determined for each of the three immediately preceding Remittance Periods the
numerator of each of which is equal to the sum of (without duplication) (i) the
aggregate Loan Balance of 90-Day Delinquent Loans, (ii) the aggregate
outstanding principal balance of Home Equity Loans in foreclosure and (iii) the
aggregate outstanding principal balance of Home Equity Loans relating to REO
Properties as of the end of such Remittance Period and the denominator of which
is the Loan Balance of all of the Home Equity Loans as of the end of such
Remittance Period.
"Nonrecoverable Advance" means with respect to any Home Equity Loan for
which a Final Recovery Determination has been made, any Delinquency Advance
previously made and not reimbursed from proceeds on the related Home Equity Loan
or under Section 7.03(b)(iii)(F) hereof which the Servicer has determined, in
good faith business judgment, as evidenced by an Officer's Certificate delivered
to the Certificate Insurer and the Trustee no later than the Business Day
following such determination, would not be ultimately recovered.
"Note": The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Home Equity Loan.
"Officer's Certificate": A certificate signed by any Authorized Officer
of any Person delivering such certificate and delivered to the Trustee and the
Certificate Insurer.
"Operative Documents": Collectively, this Agreement, the Loan Sale
Agreement, the Certificate Insurance Policies, the Certificates, the Custodial
Agreement, the Indemnification Agreement and the Insurance Agreement.
"Opinion of Counsel": A written Opinion of Counsel acceptable, in form
and substance, to the Trustee and the Certificate Insurer and delivered to the
Trustee and the Certificate Insurer.
"Original Adjustable Rate Group Capitalized Interest Deposit":
$31,562.50.
"Original Adjustable Rate Group Pre-Funded Amount": $3,065,588.93.
"Original Aggregate Loan Balance": The aggregate Loan Balances of all
Initial Home Equity Loans as of the Cut-Off Date, which is $157,346,325.30.
"Original Aggregate Pre-Funded Amount": The amount deposited in the
Pre-Funding Account on the Startup Day from the proceeds of the sale of the
Certificates, which amount is equal to $17,653,674.70.
"Original Fixed Rate Group Capitalized Interest Deposit": $74,813.54.
"Original Fixed Rate Group Pre-Funded Amount": $14,588,085.77.
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"Outstanding": With respect to all Certificates of a Class, as of any
date of determination, all such Certificates theretofore executed and delivered
hereunder except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Registrar for cancellation;
(ii) Certificates or portions thereof for which full and final
payment of money in the necessary amount has been theretofore deposited
with the Trustee or any Paying Agent in trust for the Owners of such
Certificates;
(iii) Certificates in exchange for or in lieu of which other
Certificates have been executed and delivered pursuant to this
Agreement, unless proof satisfactory to the Trustee is presented that
any such Certificates are held by a bona fide purchaser;
(iv) Certificates alleged to have been destroyed, lost or
stolen for which replacement Certificates have been issued as provided
for in Section 5.05 hereof; and
(v) Certificates as to which the Trustee has made the final
distribution thereon, whether or not such Certificate is ever returned
to the Trustee.
"Owner": The Person in whose name a Certificate is registered in the
Register, and the Certificate Insurer, to the extent described in Section 12.06
hereof.
"Pass-Through Rate": Means either the Class A-1 Pass-Through Rate, the
Class A-2 Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-4
Pass-Through Rate or the Class A-5 Pass-Through Rate.
"Paying Agent": Initially, the Trustee, and thereafter, the Trustee or
any other Person that meets the eligibility standards for the Paying Agent
specified in Section 11.15 hereof and is authorized by the Trustee and the
Depositor to make payments on the Certificates on behalf of the Trustee.
"Payment Date": Any date on which the Trustee is required to make
distributions to the Owners, which shall be the 25th day of each month or if
such day is not a Business Day, the next Business Day thereafter, commencing in
the month following the Startup Day. The first Payment Date will be March 25,
1998.
"Percentage Interest": With respect to a Class of Class A Certificates,
a fraction, expressed as a decimal, the numerator of which is the initial Class
A Certificate Principal Balance represented by such Class A Certificate and the
denominator of which is the aggregate initial Class A Certificate Principal
Balance represented by all the Class A Certificates of such Class. With respect
to the Class R Certificates, the portion of the Class evidenced thereby,
expressed as a percentage, as stated on the face of such Certificate, all of
which shall total 100% with respect to the related Class.
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"Person": Any individual, corporation, limited partnership, limited
liability company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Policy Payments Account": The policy payments account maintained by
the Trustee pursuant to Section 12.02(b) hereof. The Policy Payments Account
shall be an Eligible Account.
"Preference Amount": With respect to the Class A Certificates means any
amount previously distributed to the Owners of the Class A Certificates which
are recoverable and sought to be recovered as a voidable preference by a trustee
in bankruptcy pursuant to the United States Bankruptcy Code (11 U.S.C.) as
amended from time to time in accordance with a final, nonappealable order of a
court having competent jurisdiction.
"Preference Claim": As defined in Section 12.02(d) hereafter.
"Pre-Funded Amount": With respect to any Determination Date, the amount
remaining on deposit in the Pre-Funding Account.
"Pre-Funding Account": The Pre-Funding Account established in
accordance with Section 7.02(a) hereof and maintained by the Trustee. The
Pre-Funding Account shall be an Eligible Account.
"Pre-Funding Account Earnings": The Fixed Rate Group Pre-Funding
Account Earnings or the Adjustable Rate Group Pre-Funding Account Earnings as
the case may be.
"Pre-Funding Payment Date": The March 1998 Payment Date.
"Premium Amount": As defined in the Insurance Agreement.
"Prepayment": Any payment of principal of a Home Equity Loan which is
received by the Servicer in advance of the scheduled due date for the payment of
such principal and which is not accompanied by an amount of interest
representing the full amount of scheduled interest due on any Due Date in any
month or months subsequent to the month of prepayment, Substitution Amounts, the
portion of the purchase price of any Home Equity Loan purchased from the Trust
pursuant to Section 3.03, 3.04, 3.06(b) or 8.10(b) hereof representing principal
and the proceeds of any Insurance Policy which are to be applied as a payment of
principal on the related Home Equity Loan shall be deemed to be Prepayments for
all purposes of this Agreement.
"Preservation Expenses": Expenditures made by the Servicer in
connection with a foreclosed Home Equity Loan prior to the liquidation thereof,
including, without limitation, expenditures for real estate property taxes,
hazard insurance premiums, property restoration or preservation.
"Principal Distribution Amount": The Fixed Rate Group Principal
Distribution Amount or the Adjustable Rate Group Principal Distribution Amount.
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"Principal and Interest Account": The principal and interest account
created by the Servicer pursuant to Section 8.08(a) hereof. The Principal and
Interest Account shall be an Eligible Account.
"Principal Remittance Amount": The Fixed Rate Group Principal
Remittance Amount or the Adjustable Rate Group Principal Remittance Amount.
"Prohibited Transaction": "Prohibited Transaction" shall have the
meaning set forth from time to time in the definition thereof at Section
860F(a)(2) of the Code (or any successor statute thereto) and applicable to the
Trust.
"Property": The underlying property securing a Home Equity Loan.
"Prospectus": The Depositor's Prospectus dated December 3, 1997
constituting part of the Registration Statement.
"Prospectus Supplement": The Centex Home Equity Loan Trust 1998-1
Prospectus Supplement dated February 23, 1998 to the Prospectus.
"Purchase Option Period": As defined in Section 9.03(a) hereof.
"Qualified Liquidation": The meaning set forth from time to time in the
definition thereof at Section 860F(a)(4) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Mortgage": The meaning set forth from time to time in the
definition thereof at Section 860G(a)(3) of the Code (or any successor statute
thereto) and applicable to the Trust.
"Qualified Replacement Mortgage": A Home Equity Loan substituted for
another pursuant to Section 3.03, 3.04 and 3.06(b) hereof, which (i) has a
Coupon Rate at least equal to the Coupon Rate of the Home Equity Loan being
replaced; (ii) is of the same or better property type or is a single family
dwelling and the same or better occupancy status or is a primary residence as
the Home Equity Loan being replaced, (iii) shall mature no later than the Final
Scheduled Payment Date with respect to the related Home Equity Loan Group, (iv)
has a Loan-to-Value Ratio as of the Replacement Cut-Off Date no higher than the
Loan-to-Value Ratio of the replaced Home Equity Loan at such time, (v) shall be
of the same or higher credit quality classification (determined in accordance
with the Seller's credit underwriting guidelines set forth in the Seller's
underwriting manual) as the Home Equity Loan which such Qualified Replacement
Mortgage replaces, (vi) shall be a First Mortgage Loan if the Home Equity Loan
which such Qualified Replacement Mortgage replaces was a First Mortgage Loan and
shall be a First Mortgage Loan or Second Mortgage Loan if the Home Equity Loan
which such Qualified Replacement Mortgage replaces was a Second Mortgage Loan,
(vii) has an outstanding principal balance as of the related Replacement Cut-Off
Date equal to or less than the outstanding principal balance of the replaced
Home Equity Loan as of such Replacement Cut-Off Date, (viii) shall not provide
for a "balloon" payment if the related Home Equity Loan did not provide for a
"balloon" payment (and if such related Home Equity Loan provided for a "balloon"
payment,
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such Qualified Replacement Mortgage shall have an original maturity of not less
than the original maturity of such related Home Equity Loan), (ix) shall be a
fixed rate Home Equity Loan if the Home Equity Loan being replaced is in the
Fixed Rate Group or an adjustable rate Home Equity Loan if the Home Equity Loan
being replaced is in the Adjustable Rate Group, (x) satisfies the criteria set
forth from time to time in the definition thereof at Section 860G(a)(4) of the
Code (or any successor statute thereto) and applicable to the Trust, (xi)
satisfies the representations and warranties set forth in Section 3.04(b)
hereof, (xii) shall not be 30 days or more delinquent and (xiii) if such Home
Equity Loan being replaced is in the Adjustable Rate Group, shall adjust based
on the same index, have no lower margin, have the same interval between
adjustment dates and have a maximum Coupon Rate no lower than, and a minimum
Coupon Rate no lower than the Home Equity Loan being replaced. In the event that
one or more home equity loans are proposed to be substituted for one or more
Home Equity Loans, the Certificate Insurer may allow the foregoing tests to be
met on a weighted average basis or other aggregate basis acceptable to the
Certificate Insurer, as evidenced by a written approval delivered to the Trustee
by the Certificate Insurer, except that the requirements of clauses (i), (iii),
(iv), (ix), (x), (xi) and (xii) hereof must be satisfied as to each Qualified
Replacement Mortgage.
"Rating Agencies": Collectively, Moody's and Standard & Poor's or any
successors thereto.
"Realized Loss": As to any Liquidated Loan (or, in the case of a Cram
Down Loss a Home Equity Loan that is not a Liquidated Loan), the amount (not
less than zero), if any, by which (A) the sum of (x) the Loan Balance thereof as
of the date of liquidation, (y) the amount of accrued but unpaid interest
thereon and (z) the amount of any Cram Down Loss with respect thereto is in
excess of (B) the Net Liquidation Proceeds realized thereon applied in reduction
of such Loan Balance.
"Record Date": With respect to the Fixed Rate Certificates and each
Payment Date, the last Business Day of the calendar month immediately preceding
the calendar month in which such Payment Date occurs and with respect to the
Class A-5 Certificates, the Business Day immediately preceding such Payment
Date.
"Reference Banks": Bankers Trust Company, Barclays Bank PLC, The Bank
of Tokyo and National Westminster Bank PLC, provided that if any of the
foregoing banks are not suitable to serve as a Reference Bank, then any leading
banks selected by the Seller which are engaged in transactions in Eurodollar
deposits in the international Eurocurrency market (i) with an established place
of business in London, (ii) not controlling, under the control of or under
common control with the Seller or any affiliate thereof, (iii) whose quotations
appear on Telerate Page 3750 on the relevant LIBOR Determination Date and (iv)
which have been designated as such by the Seller.
"Register": The register maintained by the Registrar in accordance with
Section 5.04 hereof, in which the names of the Owners are set forth.
"Registrar": The Trustee, acting in its capacity as Registrar appointed
pursuant to Section 5.04 hereof, or any duly appointed and eligible successor
thereto.
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"Registration Statement": The Registration Statement filed by the
Depositor with the Securities and Exchange Commission (Registration Number
333-39325), including all amendments thereto and including the Prospectus and
Prospectus Supplement relating to the Class A Certificates.
"Reimbursement Amount": With respect to each Home Equity Loan Group and
any Payment Date, the sum of (x)(i) all Insured Payments previously paid to the
Trustee by the Certificate Insurer and not previously repaid to the Certificate
Insurer pursuant to Section 7.03(b)(iii) hereof plus (ii) interest accrued on
each such Insured Payment not previously repaid calculated at the Late Payment
Rate and (y)(i) any amounts then due and owing to the Certificate Insurer under
the Insurance Agreement (including, without limitation, any unpaid Premium
Amount relating to such Payment Date or an earlier Payment Date) plus (ii)
interest on such amounts at the Late Payment Rate. The Certificate Insurer shall
notify the Trustee, the Depositor and the Seller in writing of the amount of any
Reimbursement Amount.
"REMIC": A "real estate mortgage investment conduit" within the meaning
of Section 860D of the Code.
"REMIC Estate": The segregated pool of assets referred to as the Trust
Estate (other than the Pre-Funding Account and the Capitalized Interest Account)
constituting the REMIC created hereunder.
"REMIC Opinion": As defined in Section 3.03 hereof.
"REMIC Provisions": Provisions of the federal income tax law relating
to real estate mortgage investment conduits, which appear at Section 860A
through 860G of Subchapter M of Chapter 1 of the Code, and related provisions,
and regulations and revenue rulings promulgated thereunder, as the foregoing may
be in effect from time to time.
"Remittance Period": With respect to each Monthly Remittance Date, the
calendar month immediately preceding such Monthly Remittance Date.
"REO Property": A Property acquired by the Servicer on behalf of the
Trust through foreclosure or deed-in-lieu of foreclosure in connection with a
defaulted Home Equity Loan.
"Replacement Cut-Off Date": With respect to any Qualified Replacement
Mortgage, the first day of the calendar month in which such Qualified
Replacement Mortgage is conveyed to the Trust.
"Representation Letter": Letters to, or agreements with, the Depository
to effectuate a book entry system with respect to the Class A Certificates
registered in the Register under the nominee name of the Depository.
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"Residual Net Monthly Excess Cashflow": With respect to any Payment
Date, the aggregate Total Monthly Excess Cashflow, if any, remaining after the
making of all applications, transfers and disbursements described in Sections
7.03(b)(i), 7.03(b)(ii) and 7.03(b)(i)(iii) hereof.
"Schedule of Home Equity Loans": The schedules of Home Equity Loans
with respect to the Initial Home Equity Loans listing each Initial Home Equity
Loan to be conveyed on the Startup Day and with respect to Subsequent Home
Equity Loans listing each Subsequent Home Equity Loan conveyed to the Trust as
of each Subsequent Transfer Date. Such Schedules of Home Equity Loans shall
identify each Home Equity Loan by the Servicer's loan number, borrower's name
and address (including the state and zip code) of the Property and shall set
forth as to each Home Equity Loan the lien status thereof, the Loan-to-Value
Ratio and the Loan Balance as of the Cut-Off Date, the Coupon Rate thereof, the
original Loan Balance thereof, the current scheduled monthly payment of
principal and interest and the maturity date of the related Note, the property
type, occupancy status, Appraised Value and the original term-to-maturity
thereof and whether or not such Home Equity Loan (including related Note) has
been modified.
"Scheduled Principal Payment": As of any date of calculation, with
respect to a Home Equity Loan, the then stated scheduled monthly installment of
principal payable thereunder which, if timely paid, would result in the full
amortization of principal over the term thereof (or, in the case of a "balloon"
Note, the term to the nominal maturity date for amortization purposes, without
regard to the actual maturity date), without taking into account any Prepayment
made on such Home Equity Loan during the then-current Remittance Period.
"Second Mortgage Loan": A Home Equity Loan which constitutes a second
priority mortgage lien with respect to the related Property.
"Securities Act": The Securities Act of 1933, as amended.
"Seller": Centex Credit Corporation d/b/a Centex Home Equity
Corporation, a Nevada corporation.
"Senior Lien": With respect to any Second Mortgage Loan, the home
equity loan relating to the corresponding Property having a first priority lien.
"Servicer": Centex Credit Corporation d/b/a Centex Home Equity
Corporation, a Nevada corporation, and its pertained successors and assigns.
"Servicer Affiliate": A Person (i) controlling, controlled by or under
common control with the Servicer and (ii) which is qualified to service
residential home equity loans.
"Servicer Loss Test": The Servicer Loss Test for any period set out
below is satisfied, if the Cumulative Loss Percentage for such period does not
exceed the percentage set out for such period below (provided, that for purposes
of the calculation of the Servicer Loss Test, Realized Losses attributable
solely to Cram Down Losses should be excluded from the calculation of Cumulative
Loss Percentage):
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Cumulative Loss
Period Percentage
------ ----------
March 1998 - February 1999 1.50%
March 1999 - February 2000 2.50%
March 2000 - February 2001 3.50%
March 2001 - February 2002 4.50%
March 2002 - February 2003 5.50%
March 2003 and Thereafter 6.50%
"Servicer Termination Event": As defined in Section 8.20(a) hereof.
"Servicer Termination Test": The Servicer Termination Test is satisfied
for any date of determination thereof, if (w) the Servicer's Tangible Net Worth
is at least $15 million, (x) the 90+ Delinquency Percentage (Rolling Three
Month) is less than 13.00%, (y) the Servicer Loss Test is satisfied and (z) the
Annual Loss Percentage (Rolling Twelve Month) for the twelve month period
immediately preceding the date of determination thereof is not greater than
1.25%.
"Servicing Advance": As defined in Section 8.09(b) and Section 8.13(a)
hereof.
"Servicing Fee": The Fixed Rate Group Servicing Fee or the Adjustable
Rate Group Servicing Fee, as the context may require.
"Specified Subordinated Amount": The Fixed Rate Group Specified
Subordinated Amount or the Adjustable Rate Group Specified Subordinated Amount.
"Standard & Poor's": Standard & Poor's Ratings Services, a division of
The McGraw-Hill Companies or any successor thereto.
"Startup Day": February 26, 1998.
"Subordinated Amount": The Fixed Rate Group Subordinated Amount or the
Adjustable Rate Group Subordinated Amount, as the case may be.
"Subordination Deficiency Amount": With respect to either Home Equity
Loan Group and Payment Date, the excess, if any, of (i) the Specified
Subordinated Amount applicable to such Home Equity Loan Group and Payment Date
over (ii) the Subordinated Amount applicable to such Home Equity Loan Group and
Payment Date prior to taking into account the payment of any related
Subordination Increase Amounts on such Payment Date.
"Subordination Deficit": With respect to either Home Equity Loan Group
and Payment Date, the amount, if any, by which (x) the related aggregate of the
Certificate Principal Balances with respect to such Group, after taking into
account the payment of the related Class A Distribution Amount with respect to
such Group on such Payment Date (without regard to any Insured Payment to be
made on such Payment Date and except for any Subordination Deficit with respect
to such Group), exceeds (y) the sum of (a) the aggregate Loan Balances of the
Home Equity Loans in such Home Equity Loan Group as of the close of business on
the last day of the
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related Remittance Period and (b) the amount, if any, on deposit in the
Pre-Funding Account with respect to such Group on the last day of the related
Remittance Period exclusive of any Pre-Funding Account Earnings with respect to
such Group.
"Subordination Increase Amount": With respect to any Home Equity Loan
Group and Payment Date, the lesser of (i) the related Subordination Deficiency
Amount as of such Payment Date (after taking into account the payment of the
related Class A Distribution Amount on such Payment Date (except for any
Subordination Increase Amount with respect to such Group)) and (ii) the
aggregate amount of Total Monthly Excess Cashflow allocated to such Home Equity
Loan Group pursuant to Section 7.03(b)(ii)(E) or (G) on such Payment Date.
"Subordination Reduction Amount": With respect to any Home Equity Loan
Group and Payment Date, an amount equal to the lesser of (x) the Excess
Subordinated Amount for such Home Equity Loan Group and Payment Date and (y) the
Principal Remittance Amount with respect to such Group for the related
Remittance Period.
"Subsequent Cut-Off Date": The later of (x) the opening of business of
the first day of the month in which such Subsequent Home Equity Loan was
transferred to the Trust and (y) the date of origination of any such Home Equity
Loan which is originated in the month of the related Subsequent Transfer Date.
"Subsequent Home Equity Loans": The Home Equity Loans sold to the Trust
pursuant to Section 3.07 hereof, which shall be listed on the Schedule of Home
Equity Loans attached to a Subsequent Transfer Agreement.
"Subsequent Transfer Agreement": Each Subsequent Transfer Agreement
dated as of a Subsequent Transfer Date executed by the Trustee, the Depositor
and the Seller substantially in the form of Exhibit D hereto, by which
Subsequent Home Equity Loans are sold and assigned to the Trust.
"Subsequent Transfer Date": The date specified in each Subsequent
Transfer Agreement.
"Sub-Servicer": Any Person with whom the Servicer has entered into a
Sub-Servicing Agreement and who satisfies any requirements set forth in Section
8.03 hereof in respect of the qualification of a Sub-Servicer.
"Sub-Servicing Agreement": The written contract between the Servicer
and any Sub-Servicer relating to servicing and/or administration of certain Home
Equity Loans as permitted by Section 8.03.
"Substitution Amount": As defined in Section 3.03 hereof.
"Tangible Net Worth": Shall mean the difference between: (A) the
tangible assets of the Seller or Servicer, as applicable, and its affiliates and
subsidiaries calculated in accordance with GAAP, as reduced by adequate reserves
in each case where a reserve is appropriate; and (B) all indebtedness, including
subordinated debt, of the Seller or Servicer, as applicable, and its
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affiliates and subsidiaries; provided, however, that (i) intangible assets such
as patents, trademarks, trade names, copyrights, licenses, good will,
organization costs, advances or loans to, or receivables from directors,
officers, employees or affiliates, prepaid assets, amounts relating to covenants
not to compete, pension assets, deferred charges or treasury stock of any
securities unless the same are readily marketable in the United States of
America or are entitled to be used as a credit against federal income tax
liabilities, shall not be included in the calculation of (A) above, (ii)
securities included as tangible assets shall be valued at their current market
price or costs, whichever is lower and (iii) any write-up in book value of any
assets shall not be taken into account.
"Tax Matters Person": The Person designated pursuant to Section 11.18
hereof to act as the Tax Matters Person under the Code.
"Tax Matters Person Residual Interest": The 0.001% interest in the
Class R Certificates which shall be issued to and held by Norwest Bank
Minnesota, National Association throughout the term hereof unless another person
shall accept an assignment of either such interest and the designation of Tax
Matters Person pursuant to Section 11.18 hereof.
"Telerate Page 3750": The display designated as page "3750" on the Dow
Jones Telerate Capital Markets Report (or such other page as may replace page
3750 on that report for the purpose of displaying London interbank offered rates
of major banks).
"Termination Notice": As defined in Section 9.03(a) hereof.
"Termination Price": Means, with respect to Sections 9.02 and 9.03
hereof, and on any date of determination thereof, an amount equal to the sum of
(w) the greater of (i) 100% of the aggregate outstanding principal balances of
the Home Equity Loans as of such date of determination less amounts remitted to
the Principal and Interest Account representing collections of principal on the
Home Equity Loans during the current Remittance Period, and (ii) the greater of
(A) the outstanding Class A Certificate Principal Balance and (B) the fair
market value of such Home Equity Loans (disregarding accrued interest), (x) one
month's interest on such amount computed at the Adjusted Pass-Through Rate, (y)
all Reimbursement Amounts and (z) the sum of the aggregate amount of any
unreimbursed Delinquency Advances, Servicing Advances, Compensating Interest and
any Delinquency Advances which the Servicer has theretofore failed to remit.
"Total Available Funds": The Fixed Rate Group Total Available Funds and
the Adjustable Rate Group Total Available Funds.
"Total Monthly Excess Cashflow": As defined in Section 7.03(b)(ii)
hereof.
"Total Monthly Excess Spread": The Fixed Rate Group Total Monthly
Excess Spread and the Adjustable Rate Group Total Monthly Excess Spread.
"Trust": Centex Home Equity Loan Trust 1998-1, the trust created under
this Agreement which shall be comprised of two sub-trusts; one for the
Adjustable Rate Group and any Trust
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assets allocable to such Adjustable Rate Group and the other for the Fixed Rate
Group and any Trust assets allocable to such Fixed Rate Group.
"Trust Estate": As defined in the conveyance clause under this
Agreement.
"Trustee": Norwest Bank Minnesota, National Association, a national
banking association, the Corporate Trust Department of which is located on the
date of execution of this Agreement at Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479, not in its individual capacity but solely as
Trustee under this Agreement, and any successor hereunder.
"Trustee Fee": The fee payable monthly to the Trustee on each Payment
Date in an amount equal to 0.01% per annum, on the sum of the outstanding
aggregate Loan Balances of the Home Equity Loans as of the first day of the
related Remittance Period plus the Pre-Funded Amount as of the first day of the
related Remittance Period.
"Trustee Reimbursable Expenses": Any amounts payable pursuant to
Section 11.16(a)(v) and Section 11.16(g) and pursuant to the second sentence of
Section 10.07.
"Underwriter": Donaldson, Lufkin & Jenrette.
"Unpaid Class A-5 Certificateholders' Interest Index Carryover": With
respect to any Payment Date, any unpaid Class A-5 Certificateholders' Interest
Index Carryover from prior Payment Dates plus any accrued interest thereon at
the percentage at which the applicable Accrual Rate accrues.
"Weighted Average Pass-Through Rate": As to the Class A Certificates
and any Payment Date, the weighted average of the Class A-l Pass-Through Rate,
the Class A-2 Pass-Through Rate, the Class A-3 Pass-Through Rate, the Class A-4
Pass-Through Rate and the Class A-5 Pass-Through Rate, weighted by,
respectively, the Class A-l Certificate Principal Balance, the Class A-2
Certificate Principal Balance, the Class A-3 Certificate Principal Balance, the
Class A-4 Certificate Principal Balance and the Class A-5 Certificate Principal
Balance as of such Payment Date prior to taking into account any distributions
to be made on such Payment Date.
Section 1.02 Use of Words and Phrases.
"Herein," "hereby," "hereunder," "hereof," "hereinbefore,"
"hereinafter" and other equivalent words refer to this Agreement as a whole and
not solely to the particular section of this Agreement in which any such word is
used. The definitions set forth in Section 1.01 hereof include both the singular
and the plural. Whenever used in this Agreement, any pronoun shall be deemed to
include both singular and plural and to cover all genders.
Section 1.03 Captions; Table of Contents.
The captions or headings in this Agreement and the Table of Contents
are for convenience only and in no way define, limit or describe the scope and
intent of any provisions of this Agreement.
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Section 1.04 Opinions.
Each opinion with respect to the validity, binding nature and
enforceability of documents or Certificates may be qualified to the extent that
the same may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity (whether considered in a
proceeding or action in equity or at law) and may state that no opinion is
expressed on the availability of the remedy of specific enforcement, injunctive
relief or any other equitable remedy. Any opinion required to be furnished by
any Person hereunder must be delivered by counsel upon whose opinion the
addressee of such opinion may reasonably rely, and such opinion may state that
it is given in reasonable reliance upon an opinion of another, a copy of which
must be attached, concerning the laws of a foreign jurisdiction. Any opinion
delivered hereunder shall be addressed to the Rating Agencies, the Certificate
Insurer and the Trustee.
END OF ARTICLE I
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ARTICLE II
ESTABLISHMENT AND ORGANIZATION OF THE TRUST
Section 2.01 Establishment of the Trust.
The parties hereto do hereby create and establish, pursuant to the laws
of the State of New York and this Agreement, the Trust, which, for convenience,
shall be known as "Centex Home Equity Loan Trust 1998-1" and which shall contain
two subtrusts.
Section 2.02 Office.
The office of the Trust shall be in care of the Trustee, addressed to
Norwest Bank Minnesota, National Association, Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479, or at such other address as the Trustee may
designate by notice to the Depositor, the Seller, the Servicer, the Owners and
the Certificate Insurer.
Section 2.03 Purposes and Powers.
The purpose of the Trust is to engage in the following activities and
only such activities: (i) the issuance of the Certificates and the acquiring,
owning and holding of Home Equity Loans and the Trust Estate in connection
therewith; (ii) activities that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected therewith,
including the investment of moneys in accordance with this Agreement; and (iii)
such other activities as may be required in connection with conservation of the
Trust Estate and distributions to the Owners; provided, however, that nothing
contained herein shall permit the Trustee to take any action which would
adversely affect the status of the REMIC Estate as a REMIC.
Section 2.04 Appointment of the Trustee; Declaration of Trust.
The Seller and the Depositor hereby appoint the Trustee as trustee of
the Trust effective as of the Startup Day, to have all the rights, powers and
duties set forth herein. The Trustee hereby acknowledges and accepts such
appointment, represents and warrants its eligibility as of the Startup Day to
serve as Trustee pursuant to Section 10.08 hereof and declares that it will hold
the Trust Estate in trust upon and subject to the conditions set forth herein
for the benefit of the Owners and the Certificate Insurer.
Section 2.05 Expenses of the Trust.
All expenses of the Trust, including (i) the fees and reimbursable
expenses of the Trustee in connection with the performance of its duties
hereunder, (including, but not limited to, any portion of the Trustee Fee and
Trustee Reimbursable Expenses not paid pursuant to Sections 7.03(b)(i)(A) and
7.03(b)(iii)(G), respectively, hereof) and (ii) to the extent not set forth
herein, any other expenses of the Trustee that have been reviewed and approved
by the Seller, which review shall not be required in connection with the
enforcement of a remedy by the Trustee
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resulting from a default under this Agreement shall be paid directly by the
Seller. Failure by the Seller to pay any such fees or other expenses shall not
relieve the Trustee of its obligations hereunder.
Section 2.06 Ownership of the Trust.
On the Startup Day the ownership interests in the Trust shall be
transferred as set forth in Section 4.02 hereof, such transfer to be evidenced
by sale of the Certificates as described therein. Thereafter, transfer of any
ownership interest shall be governed by Sections 5.04 and 5.08 hereof.
Section 2.07 Situs of the Trust.
It is the intention of the parties hereto that the Trust constitute a
trust under the laws of the State of New York. The Trust will be created in the
State of New York. The Trust's only office will be at the office of the Trustee
as set forth in Section 2.02 hereof.
Section 2.08 Miscellaneous REMIC Provisions.
(a) The beneficial ownership interest in the REMIC created hereunder
shall be evidenced by the interests having the following characteristics and
terms as follows, including for federal income tax purposes the months in which
the Final Scheduled Payment Dates occur:
Initial Certificate Final Scheduled
Class Designation Principal Balance Payment Date
----------------- ----------------- ------------
Class A-1 $44,500,000 December 25, 2012
Class A-2 $46,000,000 May 25, 2017
Class A-3 $13,000,000 March 25, 2029
Class A-4 $11,500,000 March 25, 2029
Class A-5 $60,000,000 March 25, 2029
R (1)
----------------
(1) Class R does not have a Certificate Principal Balance
(b) The Depositor hereby designates the Class A-l, Class A-2, Class
A-3, Class A-4 and Class A-5 Certificates as "regular interests," and the Class
R Certificates as the single class of "residual interests" in the REMIC created
hereunder for purposes of the REMIC Provisions.
(c) The Startup Day is hereby designated as the "startup day" of the
REMIC created hereunder within the meaning of Section 860G(a)(9) of the Code.
(d) The Owner of the Tax Matters Person Residual Interest in the REMIC
created hereunder is hereby designated as "tax matters person" as defined in the
REMIC Provisions with respect to the REMIC.
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(e) The Trust and the REMIC created hereunder shall, for federal income
tax purposes, maintain books on a calendar year basis and report income on an
accrual basis.
(f) The Trustee shall cause the REMIC created hereunder to elect to be
treated as a REMIC under Section 860D of the Code. Any inconsistencies or
ambiguities in this Agreement or in the administration of the Trust shall be
resolved in a manner that preserves the validity of such election to be treated
as a REMIC. The Trustee shall report all expenses of the Trust Estate to the
REMIC created hereunder.
(g) For all federal tax law purposes, amounts transferred by the
Trustee to the Owners of the Class R Certificates shall be treated as
distributions by the REMIC created hereunder.
(h) The Trustee shall provide to the Internal Revenue Service and to
the person described in Section 860(E)(e)(3) and (6) of the Code the information
described in Treasury Regulation Section 1.860D-l(b)(5)(ii), or any successor
regulation thereto with respect to the REMIC created hereunder. Such information
will be provided in the manner described in Treasury Regulation Section
1.860E-2(a)(5), or any successor regulation thereto.
END OF ARTICLE II
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
DEPOSITOR, THE SERVICER AND THE SELLER; COVENANT OF
SELLER TO CONVEY HOME EQUITY LOANS
Section 3.01 Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Trustee,
the Seller and the Certificate Insurer that as of the Startup Day:
(a) The Depositor is a corporation duly organized, validly existing and
in good standing under the laws governing its creation and existence and is in
good standing as a foreign corporation in each jurisdiction in which the nature
of its business, or the properties owned or leased by it make such qualification
necessary. The Depositor has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement by the Depositor and
its performance and compliance with the terms of this Agreement and the other
Operative Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Depositor and will not violate the
Depositor's Charter, or Bylaws or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or result
in a breach of, any material contract, agreement or other instrument to which
the Depositor is a party or by which the Depositor is bound or violate any
statute or any order, rule or regulation of any court, governmental agency or
body or other tribunal having jurisdiction over the Depositor or any of its
properties.
(c) Each of this Agreement and the other Operative Documents to which
the Depositor is a party, assuming due authorization, execution and delivery by
the other parties hereto and thereto, constitutes a valid, legal and binding
obligation of the Depositor, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by (x)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally, (y) general principles of equity
(whether considered in a proceeding or action in equity or at law) and (z) with
respect to rights of indemnity or contribution under this Agreement, the
Insurance Agreement and the Indemnification Agreement, to limitations of public
policy or applicable laws.
(d) The Depositor is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which default could materially and adversely affect the
condition (financial or other) or operations of the Depositor or its properties
or the consequences of which could materially and adversely affect its
performance hereunder and under the other Operative Documents to which the
Depositor is a party.
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(e) No litigation, proceeding or investigation is pending with respect
to which the Depositor has received service of process or, to the best of the
Depositor's knowledge, threatened against the Depositor which litigation,
proceeding or investigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Documents to which it is a
party or that would materially and adversely affect the condition (financial or
otherwise) or operations of the Depositor or its properties or might have
consequences that would materially and adversely affect the validity or
enforceability of the Home Equity Loans or the Depositor's performance hereunder
and under the other Operative Documents to which the Depositor is a party.
(f) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Depositor contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the certificate, statement or report not misleading.
(g) The statements contained in the Registration Statement which
describe the Depositor or matters or activities for which the Depositor is
responsible in accordance with the Operative Documents or which are attributable
to the Depositor therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement of a material fact
with respect to the Depositor required to be stated therein or necessary to make
the statements contained therein with respect to the Depositor, in light of the
circumstances under which they were made, not misleading.
(h) Neither the Trustee nor the Depositor has any obligation to
register the Trust as an investment company under the Investment Company Act of
1940, as amended.
(i) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Depositor makes no such representation or warranty),
that are necessary or advisable in connection with the issuance and sale of the
Certificates and the execution and delivery by the Depositor of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Depositor and the performance by the Depositor of its
obligations under this Agreement and such of the other Operative Documents to
which it is a party.
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of the Depositor.
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It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Home Equity
Loans to the Trustee.
Upon discovery by any of the Depositor, the Seller, the Servicer, the
Custodian, any Sub-Servicer, the Certificate Insurer, any Owner or the Trustee
(each, for purposes of this paragraph, a party) of a breach of any of the
representations and warranties set forth in this Section 3.01 which materially
and adversely affects the interests of the Owners or of the Certificate Insurer,
the party discovering such breach shall give prompt written notice to the other
parties. As promptly as practicable, but in any event, within 60 days of its
discovery or its receipt of notice of breach, the Depositor shall cure such
breach in all material respects; provided, however, that if the Depositor can
establish to the reasonable satisfaction of the Certificate Insurer that it is
diligently pursuing remedial action, then the cure period may be extended with
the written approval of the Certificate Insurer.
Section 3.02 Representations and Warranties of the Servicer.
The Servicer hereby represents, warrants and covenants to the
Depositor, the Trustee, the Certificate Insurer and the Owners that as of the
Startup Day:
(a) The Servicer is a corporation duly formed and validly existing
under the laws governing its creation and existence, is in compliance with the
laws of each state in which any Property is located to the extent necessary to
enable it to perform its obligations hereunder and is in good standing in each
jurisdiction in which the nature of its business, or the properties owned or
leased by it make such qualification necessary. The Servicer has all requisite
corporate power and authority to own and operate its or their properties, to
carry out its or their business as presently conducted and as proposed to be
conducted and to enter into and discharge its or their obligations under this
Agreement and the other Operative Documents to which the Servicer is a party.
(b) The execution and delivery of this Agreement and any other
Operative Document to which it is a party by the Servicer and its performance
and compliance with the terms hereof and thereof have been duly authorized by
all necessary action on the part of the Servicer and will not violate the
Servicer's Certificate of Incorporation or by-laws or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or result in the breach of, any material contract, agreement or
other instrument to which the Servicer is a party or by which the Servicer is
bound or violate any statute or any order, rule or regulation of any court,
governmental agency or body or other tribunal having jurisdiction over the
Servicer or any of its properties.
(c) This Agreement and the Operative Documents which the Servicer is a
party, assuming due authorization, execution and delivery by the other parties
hereto and thereto, each constitutes a valid, legal and binding obligation of
the Servicer, enforceable against it in accordance with the terms hereof and
thereof, except as the enforcement hereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
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(d) The Servicer is not in default with respect to any order or decree
of any court or any order, regulation or demand of any federal, state, municipal
or governmental agency, which might have consequences that would materially and
adversely affect the condition (financial or otherwise) or operations of the
Servicer or its properties or might have consequences that would materially and
adversely affect its performance hereunder or under the other Operative
Documents to which the Servicer is a party.
(e) No litigation, proceeding or investigation is pending with respect
to which the Servicer has received service of process or, to the best of the
Servicer's knowledge, threatened against the Servicer which litigation,
proceeding or investigation might have consequences that would prohibit its
entering into this Agreement or any other Operative Document or that would
materially and adversely affect the condition (financial or otherwise) or
operations of the Servicer or its properties or might have consequences that
would materially and adversely affect the validity or the enforceability of the
Home Equity Loans or its performance hereunder and the other Operative Documents
to which the Servicer is a party.
(f) The statements contained in the Registration Statement which
describe the Servicer or matters or activities for which the Servicer is
responsible in accordance with the Operative Documents or which are attributed
to the Servicer therein are true and correct in all material respects, and the
Registration Statement does not, contain any untrue statement of a material fact
with respect to the Servicer or omit to state a material fact required to be
stated therein or necessary to make the statements contained therein with
respect to the Servicer not misleading.
(g) The Servicing Fee is a "current (normal) servicing fee rate" as
that term is used in Statement of Financial Accounting Standards No. 65 issued
by the Financial Accounting Standards Board. Neither the Servicer nor any
affiliate thereof will report on any financial statements any part of the
Servicing Fee as an adjustment to the sales price of the Home Equity Loans.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Servicer makes no such representation or warranty),
that are necessary or advisable in connection with the execution and delivery by
the Servicer of the Operative Documents to which it is a party, have been duly
taken, given or obtained, as the case may be, are in full force and effect on
the date hereof, are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time within which any
appeal therefrom may be taken or review thereof may be obtained has expired or
no review thereof may be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by this Agreement
and the other Operative Documents on the part of the Servicer and the
performance by the Servicer of its obligations under this Agreement and such of
the other Operative Documents to which it is a party.
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(i) The collection practices used by the Servicer with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the home equity mortgage servicing business.
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of the Servicer.
(k) The Servicer is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition or operations of the Servicer or legal
documents associated with the transaction contemplated by this Agreement.
(l) There are no Sub-Servicers as of the Startup Day.
(m) The Servicer covenants that it will terminate any Sub-Servicer
within ninety (90) days after being directed by the Certificate Insurer to do
so.
(n) The Servicer represents and warrants that its computer and other
systems used in servicing the Home Equity Loans currently are capable of
operating in a manner so that on and after January 1, 2000 (i) the Servicer can
service the Home Equity Loans in accordance with the terms of this Agreement and
(ii) the Servicer can operate its business in the same manner as it is operating
on the date hereof.
It is understood and agreed that the representations and warranties set
forth in this Section 3.02 shall survive delivery of the Home Equity Loans to
the Trustee.
Upon discovery by any of the Depositor, the Seller, the Servicer, the
Custodian, any Sub-Servicer, the Certificate Insurer, any Owner or the Trustee
(each, for purposes of this paragraph, a party) of a breach of any of the
representations and warranties set forth in this Section 3.02 which materially
and adversely affects the interests of the Owners or of the Certificate Insurer,
the party discovering such breach shall give prompt written notice to the other
parties. As promptly as practicable, but in any event, within 60 days of its
discovery or its receipt of notice of breach, the Servicer shall cure such
breach in all material respects and, upon the Servicer's continued failure to
cure such breach, may thereafter be removed by the Certificate Insurer or by the
Trustee with the written consent of the Certificate Insurer pursuant to Section
8.20 hereof; provided, however, that if the Servicer can establish to the
reasonable satisfaction of the Certificate Insurer that it is diligently
pursuing remedial action, then the cure period may be extended for an additional
90 days with the written approval of the Certificate Insurer.
Section 3.03 Representations and Warranties of the Seller.
The Seller hereby represents, warrants and covenants to the Depositor,
the Trustee, the Certificate Insurer and the Owners that as of the Startup Day:
(a) The Seller is a corporation duly formed and validly existing under
the laws governing its creation and existence, is in compliance with the laws of
each state in which any
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Property or the Seller is located or doing business and is in good standing in
each jurisdiction in which the nature of its business, or the properties owned
or leased by it make such qualification necessary. The Seller has all requisite
authority to own and operate its properties, to carry out its business as
presently conducted and as proposed to be conducted and to enter into and
discharge its obligations under this Agreement and the other Operative Documents
to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which it is a party by the Seller and its performance and
compliance with the terms of this Agreement and the other Operative Documents to
which it is a party have been duly authorized by all necessary corporate action
on the part of the Seller and will not violate the Seller's Charter or Bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in a breach of, any material
contract, agreement or other instrument to which the Seller is a party or by
which the Seller is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Seller or any of its properties.
(c) This Agreement and the other Operative Documents to which the
Seller is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, each constitutes a valid, legal and binding
obligation of the Seller, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and by general principles of equity
(whether considered in a proceeding or action in equity or at law).
(d) The Seller is not in default with respect to any order or decree of
any court or any order, regulation or demand of any federal, state, municipal or
governmental agency, which default could materially and adversely affect the
condition (financial or other) or operations of the Seller or its properties or
the consequences of which could materially and adversely affect its performance
hereunder and under the other Operative Documents to which the Seller is a
party.
(e) No litigation, proceeding or investigation is pending with respect
to which the Seller has received service of process or, to the best of the
Seller's knowledge, threatened against the Seller which litigation, proceeding
or investigation might have consequences that would prohibit its entering into
this Agreement or any other Operative Documents to which it is a party or that
would materially and adversely affect the condition (financial or otherwise) or
operations of the Seller or its properties or might have consequences that would
materially and adversely affect the validity or enforceability of the Home
Equity Loans or the Seller's performance hereunder and under the other Operative
Documents to which the Seller is a party.
(f) The statements contained in the Registration Statement which
describe the Seller or matters or activities for which the Seller is responsible
in accordance with the Operative Documents or which are attributed to the Seller
therein are true and correct in all material respects, and the Registration
Statement does not contain any untrue statement of a material fact with respect
to the Seller or omit to state a material fact required to be stated therein or
necessary in order to make the statements contained therein with respect to the
Seller not misleading.
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(g) Upon the receipt of each Home Equity Loan (including the related
Note) and other items of the Trust Estate by the Trustee under this Agreement,
the Trust will have good title to such Home Equity Loan (including the related
Note) and such other items of the Trust Estate free and clear of any lien,
charge, mortgage, encumbrance or rights of others, except as set forth in
Section 3.04 (b) (ix) (other than liens which will be simultaneously released).
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller makes no such representation or warranty), that
are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Seller of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Seller and the performance by the Seller of its obligations
under this Agreement and such of the other Operative Documents to which it is a
party.
(i) The origination practices used by the Seller with respect to the
Home Equity Loans have been, in all material respects, legal, proper, prudent
and customary in the mortgage lending business.
(j) The transactions contemplated by this Agreement are in the ordinary
course of business of the Seller.
(k) Neither the Trustee nor the Seller has any obligation to register
the Trust as an investment company under the Investment Company Act of 1940, as
amended.
(l) The Seller is not insolvent, nor will it be made insolvent by the
transfer of the Home Equity Loans, nor is the Seller aware of any pending
insolvency.
(m) The Seller received fair consideration and reasonably equivalent
value in exchange for the sale of the interests in the Home Equity Loans.
(n) The Seller did not sell any interest in any Home Equity Loan with
any intent to hinder, delay or defraud any of its creditors.
(o) No material adverse change affecting any security for the Class A
Certificates has occurred prior to delivery of and payment for the Class A
Certificates.
(p) The Seller is not in default under any agreement involving
financial obligations or on any outstanding obligation which would materially
adversely impact the financial condition
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or operations of the Seller or legal documents associated with the transaction
contemplated by this Agreement.
(q) To the best knowledge of the Seller, there has been no material
adverse change in any information submitted by the Seller in writing to the
Certificate Insurer with respect to the transactions contemplated by this
Agreement (unless such information was subsequently supplemented in writing to
the Certificate Insurer).
(r) The sale, transfer, assignment and conveyance of Home Equity Loans
by the Seller pursuant to the Loan Sale Agreement is not subject to and will not
result in any tax, fee or governmental charge payable by the Seller, the
Depositor or the Trustee to any federal, state or local government ("Transfer
Taxes") other than Transfer Taxes which have or will be paid by the Seller as
due. The Seller shall pay, and otherwise indemnify and hold the Certificate
Insurer harmless, on an after-tax basis, from and against any and all such
Transfer Taxes (it being understood that the Certificate Insurer shall have no
obligation to pay such Transfer Taxes).
(s) No certificate of an officer, statement furnished in writing or
report delivered pursuant to the terms hereof by the Seller contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the certificate, statement or report not misleading.
It is understood and agreed that the representations and warranties set
forth in this Section 3.03 shall survive delivery of the respective Home Equity
Loans to the Trustee.
Upon discovery by any of the Depositor, the Servicer, the Custodian,
any Sub-Servicer, any Owner, the Seller, the Certificate Insurer or the Trustee
(each, for purposes of this paragraph, a "party") of a breach of any of the
representations and warranties set forth in this Section 3.03 which materially
and adversely affects the interests of the Owners or the interests of the
Certificate Insurer, the party discovering such breach shall give prompt written
notice to the other parties. The Seller hereby covenants and agrees that within
60 days of its discovery or its receipt of notice of breach, it shall cure such
breach in all material respects or, with respect to a breach of clause (g)
above, the Seller may (or may cause an affiliate of the Seller to) on or prior
to the second Monthly Remittance Date next succeeding such discovery or receipt
of notice (i) substitute in lieu of any Home Equity Loan not in compliance with
clause (g) a Qualified Replacement Mortgage and, if the outstanding principal
amount of such Qualified Replacement Mortgage as of the applicable Replacement
Cut-Off Date is less than the outstanding principal balance of such Home Equity
Loan as of such Replacement Cut-Off Date, deliver an amount (a "Substitution
Amount") equal to such difference together with the aggregate amount of (A) all
Delinquency Advances and Servicing Advances theretofore made with respect to
such Home Equity Loan and (B) all accrued and unpaid interest with respect to
such Home Equity Loan to the Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Home Equity Loan from the Trust at the Loan
Purchase Price, which purchase price shall be delivered to the Servicer for
deposit in the Principal and Interest Account. Notwithstanding any provision of
this Agreement to the contrary, with respect to any Home Equity Loan which is
not in default or as to which no default is imminent, no repurchase or
substitution pursuant to Section 3.03, 3.04 or 3.06 shall be made unless the
Seller obtains for the Trustee and the Certificate Insurer at the
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Seller's expense an Opinion of Counsel experienced in federal income tax matters
to the effect that such a repurchase or substitution would not constitute a
Prohibited Transaction for the Trust or the REMIC created hereunder or otherwise
subject the Trust or the REMIC created hereunder to tax and would not jeopardize
the status of the REMIC created hereunder as a REMIC (a "REMIC Opinion")
addressed to the Trustee and the Certificate Insurer and acceptable to the
Certificate Insurer and the Trustee. The Seller shall also deliver an Officer's
Certificate to the Trustee and the Certificate Insurer concurrently with the
delivery of a Qualified Replacement Mortgage pursuant to Sections 3.03, 3.04 and
3.06(b) stating that such Home Equity Loan meets the requirements of the
definition of a Qualified Replacement Mortgage and that all other conditions to
the substitution thereof have been satisfied. Any Home Equity Loan as to which
repurchase or substitution was delayed pursuant to this Section shall be
repurchased or substituted for (subject to compliance with Section 3.03, 3.04 or
3.06(b), as the case may be) upon the earlier of (a) the occurrence of a default
or imminent default with respect to such Home Equity Loan and (b) receipt by the
Trustee and the Certificate Insurer of a REMIC Opinion.
Section 3.04 Covenants of Seller to Take Certain Actions with Respect
to the Home Equity Loans in Certain Situations.
(a) Upon the discovery by the Depositor, the Seller, the Servicer, the
Certificate Insurer, any Sub-Servicer, any Owner, the Custodian or the Trustee
that the representations and warranties set forth in clause (b) below were
untrue in any material respect, without regard to any limitation set forth
therein concerning the knowledge of the Seller as to the facts stated therein as
of the Startup Day (or in the case of the Subsequent Home Equity Loans, as of
the respective Subsequent Transfer Date or in the case of a Qualified
Replacement Mortgage, as of the respective replacement date) with the result
that the interests of the Owners or of the Certificate Insurer in the related
Home Equity Loan, are or may be, materially and adversely affected, the party
discovering such breach shall give prompt written notice to the other parties.
Upon the earliest to occur of the Seller's discovery, its receipt of notice of
breach from any one of the other parties or such time as a situation resulting
from an existing statement which is untrue materially and adversely affects the
interests of the Owners or of the Certificate Insurer, without regard to any
limitation set forth therein concerning the knowledge of the Seller as to the
facts stated therein, the Seller hereby covenants and warrants that it shall
promptly cure such breach in all material respects or subject to the last three
sentences of Section 3.03 it shall on or before the second Monthly Remittance
Date next succeeding such discovery, receipt of notice or such time (i)
substitute in lieu of each Home Equity Loan which has given rise to the
requirement for action by the Seller a Qualified Replacement Mortgage and
deliver the Substitution Amount to the Servicer for deposit in the Principal and
Interest Account or (ii) purchase such Home Equity Loan from the Trust at a
purchase price equal to the Loan Purchase Price thereof, which purchase price
shall be delivered to the Servicer for deposit in the Principal and Interest
Account; provided, however, that if the Seller can establish to the reasonable
satisfaction of the Certificate Insurer that it is diligently pursuing remedial
action, the period of time in which the Seller must substitute a Qualified
Replacement Mortgage or purchase such Home Equity Loan may be extended with the
written approval of the Certificate Insurer. It is understood and agreed that
the obligation of the Seller so to substitute or purchase any Home Equity Loan
as to which such a statement set forth below is untrue in any
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material respect and has not been remedied shall constitute the sole remedy
respecting a discovery of any such statement which is untrue in any material
respect in this Section 3.04 available to the Owners and the Trustee on behalf
of the Owners.
(b) The Seller hereby represents, warrants and covenants to the
Trustee, the Depositor, the Servicer, the Certificate Insurer and the Owners
that as of the Startup Day (with respect to the Initial Home Equity Loans) and
as of the respective Subsequent Transfer Date (with respect to the Subsequent
Home Equity Loans):
(i) The information with respect to each Initial Home Equity
Loan and Subsequent Home Equity Loan set forth in the related Schedule
of Home Equity Loans is true and correct as of the Cut-Off Date (or in
the case of the Subsequent Home Equity Loans, as of the related
Subsequent Transfer Date);
(ii) All the original or certified documentation set forth in
Section 3.05 (including all material documents related thereto) with
respect to each Initial Home Equity Loan has been or will be delivered
to the Custodian on behalf of the Trustee on the Startup Day (or in the
case of the Subsequent Home Equity Loans, on the related Subsequent
Transfer Date) or as otherwise provided in Section 3.05. To the
Seller's best knowledge, no documentation contains any untrue statement
of a material fact or omits to state a fact necessary to make the
statements contained therein not misleading.
(iii) Each Home Equity Loan being transferred to the Trust is
a Qualified Mortgage and is a Mortgage;
(iv) Each Property is a fee simple estate in a single parcel
of real property improved by a single (one-to-four) family residential
dwelling (except for 99 and 34 Initial Home Equity Loans in the Fixed
Rate Group and the Adjustable Rate Group, respectively, in the amount
of $6,019,596.43 and $3,655,141,27, respectively, that are
condominiums, townhouses, manufactured housing, cooperative or PUDs),
provided that no more than 2.53% and 0.88%, respectively, of the
Properties are secured by manufactured homes, each of which is
considered to be real property under the applicable local law;
(v) As of the Cut-Off Date, Subsequent Cut-Off Date or
Replacement Cut-Off Date, as applicable no Home Equity Loan has a
combined Loan-to-Value Ratio in excess of 90%;
(vi) Each Home Equity Loan is being serviced by the Servicer
in accordance with the terms of this Agreement;
(vii) The Note related to each Initial Home Equity Loan in the
Fixed Rate Group bears a current Coupon Rate of at least 7.600% per
annum and the Note related to each Initial Home Equity Loan in the
Adjustable Rate Group bears a current Coupon Rate of at least 7.450%;
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(viii) Each Note with respect to the Home Equity Loans will
provide for a schedule of substantially level and equal Monthly
Payments (or periodic rate adjustments in the case of the Home Equity
Loans in the Adjustable Rate Group), which are sufficient to amortize
fully the principal balance of such Note on or before its maturity
date, except for 613 Initial Home Equity Loans in the Fixed Rate Group,
in the amount of $41,090,409.06, representing 40.92% of the aggregate
Loan Balance of the Initial Home Equity Loans in the Fixed Rate Group
as of the Cut-Off Date which may provide for a "balloon" payment due at
the end of the 15th year and no Initial Home Equity Loan is a graduated
payment loan;
(ix) As of the Startup Day (with respect to the Initial Home
Equity Loans) and any Subsequent Transfer Date (with respect to the
Subsequent Home Equity Loans), each Mortgage is a valid and enforceable
first or second lien of record (or is in the process of being recorded)
on the Property subject in the case of any Second Mortgage Loan only to
a Senior Lien on such Property and subject in all cases to the
exceptions to title set forth in the title insurance policy or
attorney's opinion of title, with respect to the related Home Equity
Loan, which exceptions are generally acceptable to banking institutions
in connection with their regular mortgage lending activities, and such
other exceptions to which similar properties are commonly subject and
which do not individually, or in the aggregate, materially and
adversely affect the benefits of the security intended to be provided
by such Mortgage;
(x) Immediately prior to the transfer and assignment of the
Home Equity Loans by the Seller to the Depositor and by the Depositor
to the Trustee herein contemplated, the Seller and the Depositor, as
the case may be, held good and indefeasible title to, and was the sole
owner of, each Home Equity Loan (including the related Note) conveyed
by the Seller subject to no liens, charges, mortgages, encumbrances or
rights of others except as set forth in clause (ix) or other liens
which will be released simultaneously with such transfer and
assignment; and immediately upon the transfer and assignment herein
contemplated, the Trustee will hold good and indefeasible title to, and
be the sole owner of, each Home Equity Loan subject to no liens,
charges, mortgages, encumbrances or rights of others except as set
forth in paragraph (ix) or other liens which will be released
simultaneously with such transfer and assignment;
(xi) As of the Cut-Off Date, no Initial Home Equity Loan is 30
days or more Delinquent except that 0.36% of the Initial Home Equity
Loans in the Fixed Rate Group have an outstanding aggregate Loan
Balance of $363,247.82 in the Fixed Rate Group and are 30 or more days
Delinquent but not more than 59 days Delinquent and there are no
Initial Home Equity Loans in the Fixed Rate Group that are 60 or more
days delinquent but not more than 89 days delinquent;
(xii) There is no delinquent tax or assessment lien on any
Property, and each Property is free of substantial damage and is in
good repair;
(xiii) There is no valid and enforceable right of offset,
claim, defense or counterclaim to any Note or Mortgage, including the
obligation of the related Mortgagor
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to pay the unpaid principal of or interest on such Note nor has any
such claim, defense, offset or counterclaim been asserted;
(xiv) There is no mechanics' lien or claim for work, labor or
material affecting any Property which is or may be a lien prior to, or
equal with, the lien of the related Mortgage except those which are
insured against by any title insurance policy referred to in paragraph
(xvi) below;
(xv) Each Home Equity Loan at the time it was made complied in
all material respects with applicable state and federal laws and
regulations, including, without limitation, the federal
Truth-in-Lending Act (as amended by the Riegle Community Development
and Regulatory Improvement Act of 1994) and other consumer protection
laws, usury, equal credit opportunity, disclosure and recording laws;
(xvi) With respect to each Home Equity Loan either (a) if a
title insurance policy is not available in the applicable state, an
attorney's opinion of title has been obtained but no title policy has
been obtained, or (b) a lender's title insurance policy, issued in
standard American Land Title Association form by a title insurance
company authorized to transact business in the state in which the
related Property is situated, in an amount at least equal to the
original balance of such Home Equity Loan together, in the case of a
Second Mortgage Loan, with the then-original principal amount of the
mortgage note relating to the Senior Lien, insuring the mortgagee's
interest under the related Home Equity Loan as the holder of a valid
first or second mortgage lien of record on the real Property described
in the related Mortgage, as the case may be, subject only to exceptions
of the character referred to in paragraph (ix) above, was effective on
the date of the origination of such Home Equity Loan, and, as of the
Startup Day, such policy is valid and thereafter such policy shall
continue in full force and effect;
(xvii) The improvements upon each Property are covered by a
valid and existing hazard insurance policy with a carrier generally
acceptable to the Servicer that provides for fire and extended coverage
representing coverage not less than the least of (A) the outstanding
principal balance of the related Home Equity Loan (together, in the
case of a Second Mortgage Loan, with the outstanding principal balance
of the Senior Lien), (B) the minimum amount required to compensate for
damage or loss on a replacement cost basis or (C) the full insurable
value of the Property;
(xviii) If any Property is in an area identified in the
Federal Register by the Federal Emergency Management Agency as having
special flood hazards, a flood insurance policy in a form meeting the
requirements of the current guidelines of the Flood Insurance
Administration is in effect with respect to such Property with a
carrier generally acceptable to the Servicer in an amount representing
coverage not less than the least of (A) the outstanding principal
balance of the related Home Equity Loan (together, in the case of a
Second Mortgage Loan, with the outstanding principal balance of the
Senior Lien), (B) the minimum amount required to compensate for damage
or loss on a replacement cost basis or (C) the maximum amount of
insurance that is available under the Flood Disaster Protection Act of
1973;
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(xix) Each Mortgage and Note are the legal, valid and binding
obligation of the maker thereof and are enforceable in accordance with
their terms, except only as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity (whether considered in a proceeding or
action in equity or at law), and all parties to each Home Equity Loan
had full legal capacity to execute all documents relating to such Home
Equity Loan and convey the estate therein purported to be conveyed;
(xx) The Seller has caused and will cause to be performed any
and all acts required to be performed to preserve the rights and
remedies of the Trustee in any Insurance Policies applicable to any
Home Equity Loans delivered by the Seller including, without
limitation, any necessary notifications of insurers, assignments of
policies or interests therein, and establishments of co-insured, joint
loss payee and mortgagee rights in favor of the Trustee;
(xxi) As of the Startup Day, no more than 0.32% of the
aggregate Loan Balance of the Home Equity Loans will be secured by
Properties located within any single zip code area;
(xxii) Each original Mortgage was recorded or is in the
process of being recorded, and all subsequent assignments of the
original Mortgage have been delivered for recordation or have been
recorded in the appropriate jurisdictions wherein such recordation is
necessary to perfect the lien thereof as against creditors of or
purchasers from the Seller (or, subject to Section 3.05 hereof, are in
the process of being recorded); each Mortgage and assignment of
Mortgage is in recordable form and is acceptable for recording under
the laws of the jurisdiction in which the property securing such
Mortgage is located;
(xxiii) The terms of each Note and each Mortgage have not been
impaired, waived, altered or modified in any respect, except by a
written instrument which has been recorded, if necessary, to protect
the interest of the Owners and the Certificate Insurer and which has
been delivered to the Trustee. The substance of any such waiver,
alteration or modification is reflected on the related Schedule of Home
Equity Loans;
(xxiv) The proceeds of each Home Equity Loan have been fully
disbursed, and there is no obligation on the part of the mortgagee to
make future advances thereunder. 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. All
costs, fees and expenses incurred in making or closing or recording
such Home Equity Loans were paid and the Mortgagor is not entitled to
any refund of any amounts paid or due under the related Note or
Mortgage;
(xxv) The related Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
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(xxvi) No Home Equity Loan has a shared appreciation feature,
or other contingent interest feature;
(xxvii) Each Property is located in the state identified in
the respective Schedule of Home Equity Loans and consists of one or
more parcels of real property with a residential dwelling erected
thereon;
(xxviii) Each Mortgage contains a provision for the
acceleration of the payment of the unpaid principal balance of the
related Home Equity Loan in the event the related Property is sold
without the prior consent of the mortgagee thereunder;
(xxix) Any advances made after the date of origination of a
Home Equity Loan but prior to the Cut-Off Date with respect to the
Initial Home Equity Loans (or the relevant Subsequent Cut-Off Date with
respect to the Subsequent Home Equity Loans) have been consolidated
with the outstanding principal amount secured by the related Mortgage,
and the secured principal amount, as consolidated, bears a single
interest rate and single repayment term reflected on the respective
Schedule of Home Equity Loans. The consolidated principal amount does
not exceed the original principal amount of the related Home Equity
Loan. No Note permits or obligates the Servicer to make future advances
to the related Mortgagor at the option of the Mortgagor;
(xxx) There is no proceeding pending or threatened for the
total or partial condemnation of any Property, nor is such a proceeding
currently occurring, and each Property is undamaged by waste, fire,
water, flood, earthquake, earth movement or other casualty;
(xxxi) All of the improvements which were included for the
purposes of determining the Appraised Value of any Property lie wholly
within the boundaries and building restriction lines of such Property,
and no improvements on adjoining properties encroach upon such
Property, and are stated in the title insurance policy and
affirmatively insured;
(xxxii) No improvement located on or being part of any
Property is in violation of any applicable zoning law or regulation.
All inspections, licenses and certificates required to be made or
issued with respect to all occupied portions of each Property and, with
respect to the use and occupancy of the same, including but not limited
to certificates of occupancy and fire underwriting certificates, have
been made or obtained from the appropriate authorities and such
Property is lawfully occupied under the applicable law;
(xxxiii) With respect to each Mortgage constituting a deed of
trust, a trustee, duly qualified under applicable law to serve as such,
has been properly designated and currently so serves and is named in
such Mortgage, and no fees or expenses are or will become payable by
the Owners or the Trust to the trustee under the deed of trust, except
in connection with a trustee's sale after default by the related
Mortgagor;
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(xxxiv) Each Mortgage contains customary and enforceable
provisions which render the rights and remedies of the holder thereof
adequate for the realization against the related Property of the
benefits of the security, including (A) in the case of a Mortgage
designated as a deed of trust, by trustee's sale and (B) otherwise by
judicial foreclosure. There is no homestead or other exemption other
than any applicable Mortgagor redemption rights available to the
related Mortgagor which would materially interfere with the right to
sell the related Property at a trustee's sale or the right to foreclose
the related Mortgage;
(xxxv) There is no default, breach, violation or event of
acceleration existing under any Mortgage or the related 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 of acceleration; and neither the Servicer nor the
Seller has waived any default, breach, violation or event of
acceleration or advanced funds, directly or indirectly for the payment
of any amount required under any Home Equity Loan;
(xxxvi) No instrument of release or waiver has been executed
in connection with any Home Equity Loan, and no Mortgagor has been
released, in whole or in part, except in connection with an assumption
agreement which has been approved by the primary mortgage guaranty
insurer, if any, and which has been delivered to the Trustee;
(xxxvii) [Reserved]
(xxxviii) Each Home Equity Loan was underwritten in accordance
with the credit underwriting guidelines of the Seller as set forth in
the Seller's Policies and Procedures Manual, as in effect on the date
hereof and such Manual conforms in all material respects to the
description thereof set forth in the Prospectus Supplement;
(xxxix) Each Home Equity Loan was originated based upon a full
appraisal, which included an interior inspection of the subject
property;
(xl) The Home Equity Loans were not selected for inclusion in
the Trust by the Seller on any basis intended to adversely affect the
Trust or the Certificate Insurer;
(xli) No more than 4.94% and 4.19% of the aggregate Loan
Balance of the Initial Home Equity Loans in the Fixed Rate Group and
the Adjustable Rate Group, respectively, are secured by Properties that
are non-owner occupied Properties (i.e., investor-owned and vacation);
(xlii) The Seller has no actual knowledge that there exist any
hazardous substances, hazard wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and
Liability Act, the Resource Conservation and Recovery Act of 1976, or
other federal, state or local environmental legislation on any
Property, and no violations of any local, state or federal
environmental law, rule or regulation exist with respect to any
Property;
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(xliii) The Seller (and the originator, if not the Seller) was
properly licensed or otherwise authorized, to the extent required by
applicable law, to originate or purchase each Home Equity Loan; and the
consummation of the transactions herein contemplated, including,
without limitation, the receipt of interest by the Owners and the
ownership of the Home Equity Loans by the Trustee as trustee of the
Trust will not involve the violation of such laws;
(xliv) With respect to each Property subject to a ground lease
(i) the current ground lessor has been identified and all ground rents
which have previously become due and owing have been paid; (ii) the
ground lease term extends, or is automatically renewable, for at least
five years beyond the maturity date of the related Home Equity Loan;
(iii) the ground lease has been duly executed and recorded; (iv) the
amount of the ground rent and any increases therein are clearly
identified in the lease and are for predetermined amounts at
predetermined times; (v) the ground rent payment is included in the
borrower's monthly payment as an expense item in determining the
qualification of the borrower for such Home Equity Loan; (vi) the Trust
has the right to cure defaults on the ground lease; and (vii) the terms
and conditions of the leasehold do not prevent the free and absolute
marketability of the Property. As of the Cut-Off Date, the Loan Balance
of the Initial Home Equity Loans with related Properties subject to
ground leases does not exceed 1% of the Original Aggregate Loan
Balance;
(xlv) As of the Startup Day, with respect to any Second
Mortgage Loan, the Seller has not received a notice of default of any
Senior Lien secured by any Property which has not been cured by a party
other than the Seller;
(xlvi) No Home Equity Loan is subject to a rate reduction
pursuant to a buydown program;
(xlvii) Reserved;
(xlviii) The Coupon Rate on each Home Equity Loan is
calculated on the basis of a year of 360 days with twelve 30-day
months;
(xlix) Each Home Equity Loan was originated by the Seller or
its affiliate. As of the Startup Day, each Subsequent Home Equity Loan
to be transferred to the Trust during the Funding Period has been
originated or purchased and identified by the Seller;
(l) Neither the operation of any of the terms of each Note and
each Mortgage nor the exercise of any right thereunder will render
either the Note or the Mortgage unenforceable, in whole or in part, nor
subject it to any right of rescission, claim set-off, counterclaim or
defense, including, without limitation, the defense of usury;
(li) Any adjustment to the Coupon Rate on a Home Equity Loan
in the Adjustable Rate Group has been legal, proper and in accordance
with the terms of the related Note; and
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(lii) No Home Equity Loan in the Adjustable Rate Group is
subject to negative amortization.
(liii) As of the Cut-Off Date (or the Subsequent Cut-Off Date
with respect to the Subsequent Home Equity Loans), the FTC holder
regulation provided in 16 C.F.R. Part 433 applies to none of the Home
Equity Loans.
(liv) As of the Cut-Off Date with respect to the Initial Home
Equity Loans, the Replacement Cut-Off Date with respect to the
Qualified Replacement Mortgages or the Subsequent Cut-Off Date with
respect to the Subsequent Home Equity Loans, a portion of the Home
Equity Loans are "mortgages" as defined in 15 U.S.C. 1602(aa), and with
respect to each such Home Equity Loan, no Mortgagor has or will have a
claim or defense under such Home Equity Loan.
(lv) To the knowledge of the Seller, there does not exist any
circumstances or conditions with respect to the Mortgage, the Property,
the Mortgagor or the Mortgagor's credit standing that reasonably can be
expected to cause private institutional investors to regard the related
Home Equity Loan as an unacceptable investment, cause the Home Equity
Loan to become delinquent, or adversely affect the value or
marketability of the Home Equity Loan.
(lvi) The rights with respect to each Home Equity Loan are
assignable by the Seller without the consent of any Person other than
consents which will have been obtained on or before the Startup Day or
Subsequent Transfer Date, as applicable.
(lvii) The Seller has duly fulfilled all obligations to be
fulfilled on the lender's part under or in connection with the
origination, acquisition and assignment of the Home Equity Loans and
the related Mortgage and Note, and has done nothing to impair the
rights of the Trustee, the Certificate Insurer or the Owners in
payments with respect thereto.
(lviii) To the Seller's knowledge, the documents, instruments
and agreements submitted by each Mortgagor for loan underwriting were
not falsified and contain no untrue statement of a material fact and do
not omit to state a material fact required to be stated therein or
necessary to make the information and statements contained therein not
misleading.
(lix) No Home Equity Loan matures later than March 1, 2028.
(lx) The first date on which the applicable Mortgagor must
make a payment on each Initial Home Equity Loan is due no later than
February 28, 1998, except with respect to 401 Initial Home Equity
Loans, which represent 19.18% of the Original Aggregate Loan Balance as
of the Cut-Off Date, that provide for a first payment in March 1998 and
23 Initial Home Equity Loans, which represent 1.43% of the Original
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Aggregate Loan Balance as of the Cut-Off Date, that provide for a first
payment in April 1998.
(lxi) With respect to each Home Equity Loan that is a Second
Mortgage Loan:
(a) The related Senior Lien does not provide for
negative amortization.
(b) The Seller has not received, and is not aware of,
a notice of default of any Senior Lien which has not been
cured.
(c) To the best of the knowledge of the Seller, no
funds provided to the Mortgagor from a Second Mortgage Loan
were concurrently used as a down payment for the Senior Lien.
(lxii) Each Subsequent Home Equity Loan conforms to the
conditions in Section 3.07(c) (including the conditions in Section
4.09(a) of the Insurance Agreement) with respect to the Home Equity
Loans in the Fixed Rate Group and in Section 3.07(d) (including the
conditions in Section 4.09(b) of the Insurance Agreement) with respect
to the Home Equity Loans in the Adjustable Rate Group, except for
conditions explicitly consented to in writing by the Certificate
Insurer.
(c) In the event that any such repurchase pursuant to this Section
results in a prohibited transaction tax as specified in the REMIC Opinion
delivered pursuant to Section 3.03, the Trustee shall immediately notify the
Seller in writing thereof and the Seller will, within 10 days of receiving
notice thereof from the Trustee, deposit the amount due from the Trust with the
Trustee for the payment thereof, including any interest and penalties, in
immediately available funds. In the event that any Qualified Replacement
Mortgage is delivered by the Seller to the Trust pursuant to Section 3.03,
Section 3.04 or Section 3.06 hereof, the Seller shall be obligated to take the
actions described in Section 3.04(a) with respect to such Qualified Replacement
Mortgage upon the discovery by any of the Owners, the Seller, the Servicer, the
Certificate Insurer, any Sub-Servicer, the Custodian or the Trustee that the
statements set forth in subsection (b) above are untrue in any material respect,
without regard to any limitation set forth therein concerning the knowledge of
the Seller as to facts stated therein, on the date such Qualified Replacement
Mortgage is conveyed to the Trust such that the interests of the Owners or the
Certificate Insurer in the related Qualified Replacement Mortgage are, or may
be, materially and adversely affected; provided, however, that for the purposes
of this subsection (c) the statements in subsection (b) above referring to items
"as of the Cut-Off Date" or "as of the Startup Day" shall be deemed to refer to
such items as of the date such Qualified Replacement Mortgage is conveyed to the
Trust. Notwithstanding the fact that a representation contained in subsection
(b) above may be limited to the Seller's knowledge, such limitation shall not
relieve the Seller of its repurchase obligation under this Section and Section
3.05 hereof.
(d) It is understood and agreed that the covenants set forth in this
Section 3.04 shall survive delivery of the respective Home Equity Loans
(including Qualified Replacement Mortgage) to the Trustee or the Custodian, on
behalf of the Trustee.
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(e) The Trustee shall have no duty to conduct any affirmative
investigation other than as specifically set forth in this Agreement as to the
occurrence of any condition requiring the repurchase or substitution of any Home
Equity Loan pursuant to this Article III or the eligibility of any Home Equity
Loan for the purpose of this Agreement.
Section 3.05 Conveyance of the Initial Home Equity Loans and Qualified
Replacement Mortgages.
(a) On the Startup Day the Depositor, concurrently with the execution
and delivery hereof, transfers, assigns, sets over and otherwise conveys without
recourse, to the Trustee for the benefit of the Owners and the Certificate
Insurer, all of the Depositor's respective right, title and interest in and to
the Initial Home Equity Loans (other than payments of principal received and
interest due on the Home Equity Loans before the Cut-Off Date). The transfer by
the Seller and the Depositor of the Initial Home Equity Loans set forth on the
Schedule of Home Equity Loans to the Trustee is absolute and is intended by the
Owners and all parties hereto to be treated as a sale by the Seller and the
Depositor. On the Startup Day, the Depositor will also deposit $27,824.21 into
the Certificate Account, $7,441.28 of which will be allocable to the Fixed Rate
Group and $20,382.93 of which will be allocable to the Adjustable Rate Group.
In the event that either such conveyance or a conveyance pursuant to
Section 3.07 and any Subsequent Transfer Agreement is deemed to be a loan, the
parties intend that the Seller shall be deemed to have granted to the Depositor
and the Depositor shall be deemed to have granted to the Trustee a security
interest in the Trust Estate, and that this Agreement shall constitute a
security agreement under applicable law.
In connection with such sale, transfer, assignment, and conveyance from
the Seller to the Depositor, the Seller has filed, in the appropriate office or
offices in the State of Texas, a UCC-1 financing statement executed by the
Seller as debtor, naming the Depositor as secured party and the Trustee as
assignee and listing the Initial Home Equity Loans and the other property
described above as collateral and on or prior to the final Subsequent Transfer
Date the Seller will file in such offices a similar UCC-1 financing statement
listing the Subsequent Home Equity Loans so transferred as collateral. The
characterization of the Seller as a debtor and the Depositor as the secured
party and the Trustee as assignee in such financing statements is solely for
protective purposes and shall in no way be construed as being contrary to the
intent of the parties that this transaction be treated as a sale of the Seller's
entire right, title and interest in the Trust Estate. In connection with such
filing, the Seller agrees that it shall cause to be filed all necessary
continuation statements thereof and to take or cause to be taken such actions
and execute such documents as are necessary to perfect and protect the Trustee's
interest in the Trust Estate.
In connection with such sale, transfer, assignment, and conveyance from
the Depositor to the Trustee, the Depositor has filed, in the appropriate office
or offices in the State of New York a UCC-1 financing statement executed by the
Depositor as debtor, naming the Trustee as secured party and listing the Initial
Home Equity Loans and the other property described above as collateral and on or
prior to the final Subsequent Transfer Date the Depositor will file in such
offices a similar UCC-1 financing statement listing the Subsequent Home Equity
Loans so
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transferred as collateral. The characterization of the Depositor as a debtor and
the Trustee as the secured party in such financing statements is solely for
protective purposes and shall in no way be construed as being contrary to the
intent of the parties that this transaction be treated as a sale of the
Depositor's entire right, title and interest in the Trust Estate. In connection
with such filing, the Depositor agrees that it shall cause to be filed all
necessary continuation statements thereof and to take or cause to be taken such
actions and execute such documents as are necessary to perfect and protect the
Trustee's, the Owners' and the Certificate Insurer's interest in the Trust
Estate.
(b) In connection with the transfer and assignment of the Initial Home
Equity Loans, or on each Subsequent Transfer Date with respect to the Subsequent
Home Equity Loan, the Seller agrees to:
(i) deliver without recourse to the Custodian, on behalf of
the Trustee, on the Startup Day with respect to each Initial Home
Equity Loan or on each Subsequent Transfer Date with respect to the
Subsequent Home Equity Loans, (A) the original Notes endorsed in blank
or to the order of the Trustee ("Pay to the order of Norwest Bank
Minnesota, National Association, as Trustee for Centex Home Equity Loan
Trust 1998-1, without recourse") and signed by manual signature of the
Seller, (B) (I) if the original title insurance policy is not
available, the original title insurance commitment or a copy thereof
certified as a true copy by the closing agent or the Seller, and when
available, the original title insurance policy or a copy certified by
the issuer of the title insurance policy or (II) if title insurance is
not available in the applicable state, the attorney's opinion of title,
(C) originals or copies of all intervening assignments certified as
true copies by the closing agent or the Seller, showing a complete
chain of title from origination to the Trustee, if any, including
warehousing assignments, if recorded, (D) originals of all assumption
and modification agreements, if any, (E) either: (1) the original
Mortgage, with evidence of recording thereon (if such original Mortgage
has been returned to the Seller from the applicable recording office)
or a copy of the Mortgage certified as a true copy by the closing
attorney or an Authorized Officer of the Seller, or (2) a copy of the
Mortgage certified by the public recording office in those instances
where the original recorded Mortgage has been lost and (F) the original
assignments of Mortgages (as described in clause (b)(ii)) in recordable
form and acceptable for recording in the state or other jurisdiction
where the Property is located.
(ii) cause, within 60 days following the Startup Day with
respect to the Initial Home Equity Loans or on each Subsequent Transfer
Date with respect to the Subsequent Home Equity Loans, assignments of
the Mortgages to "Norwest Bank Minnesota, National Association, as
Trustee of Centex Home Equity Loan Trust 1998-1 under the Pooling and
Servicing Agreement dated as of February 1, 1998" to be submitted for
recording in the appropriate jurisdictions; provided, further, that the
Seller shall not be required to record an assignment of a Mortgage if
the Seller furnishes to the Trustee and the Certificate Insurer, on or
before the Startup Day, with respect to the Initial Home Equity Loans
or on each Subsequent Transfer Date with respect to the Subsequent Home
Equity Loans, at the Seller's expense, an Opinion of Counsel with
respect to the relevant jurisdiction that such recording is not
necessary to perfect the Trustee's interest in the
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related Home Equity Loans (in form and substance satisfactory to the
Trustee, the Certificate Insurer and the Rating Agencies); provided
further, however, notwithstanding the delivery of any legal opinions,
each assignment of Mortgage shall be recorded by the Trustee or the
Custodian on behalf of the Trustee upon the earliest to occur of: (i)
reasonable direction by the Certificate Insurer, (ii) the occurrence of
a Servicer Termination Event, (iii) the occurrence of a bankruptcy,
insolvency or foreclosure relating to the Seller or (iv) if the Seller
is not the Servicer and with respect to any one assignment of Mortgage,
the occurrence of a bankruptcy, insolvency or foreclosure relating to
the Mortgagor under the related Mortgage;
(iii) deliver the title insurance policy or title searches,
the original Mortgages and such recorded assignments, together with
originals or duly certified copies of any and all prior assignments
(other than unrecorded warehouse assignments), to the Custodian, on
behalf of the Trustee, within 15 days of receipt thereof by the Seller
(but in any event, with respect to any Mortgage as to which original
recording information has been made available to the Seller, within one
year after the Startup Day with respect to the Initial Home Equity
Loans or on each Subsequent Transfer Date with respect to the
Subsequent Home Equity Loans); and
(iv) furnish to the Trustee, the Certificate Insurer and the
Rating Agencies at the Seller's expense, an Opinion of Counsel with
respect to the sale and perfection of the Home Equity Loans delivered
to the Trust in form and substance satisfactory to the Certificate
Insurer.
In instances where the original recorded Mortgage cannot be delivered
by the Seller to the Custodian on behalf of the Trustee prior to or concurrently
with the execution and delivery of this Agreement due to a delay in connection
with recording, the Seller may in lieu of delivering such original recorded
Mortgage, deliver to the Custodian on behalf of the Trustee a copy thereof,
provided that the Seller certifies that the original Mortgage has been delivered
to a title insurance company for recordation after receipt of its policy of
title insurance or binder therefor. In all such instances, the Seller will
deliver or cause to be delivered the original recorded Mortgage to the Custodian
on behalf of the Trustee promptly upon receipt of the original recorded Mortgage
but in no event later than one year after the Closing Date.
The Seller hereby confirms to the Trustee that it has made the
appropriate entries in its general accounting records, to indicate that such
Home Equity Loans have been transferred to the Custodian on behalf of Trustee
and constitute part of the Trust in accordance with the terms of the trust
created hereunder.
Notwithstanding anything to the contrary contained in this Section
3.05, in those instances where the public recording office retains the original
Mortgage, the assignment of a Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Depositor and Seller shall be deemed to
have satisfied its obligations hereunder upon delivery to the Custodian, on
behalf of the Trustee of a copy of such Mortgage, such assignment or assignments
of Mortgage certified by the public recording office to be a true copy of the
recorded original thereof.
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Not later than ten days following the end of the 60-day period referred
in clause (ii) of the preceding paragraph, the Seller shall deliver to the
Custodian, on behalf of the Trustee a list of all Mortgages for which no
Mortgage assignment has yet been submitted for recording by the Seller, which
list shall state the reason why the Seller has not yet submitted such Mortgage
assignments for recording. With respect to any Mortgage assignment disclosed on
such list as not yet submitted for recording for a reason other than a lack of
original recording information, the Custodian, on behalf of the Trustee, shall
make an immediate demand on the Seller to prepare such Mortgage assignments, and
shall inform the Certificate Insurer, in writing, of the Seller's failure to
prepare such Mortgage assignments. Thereafter, the Custodian, on behalf of the
Trustee shall cooperate in executing any documents prepared by the Certificate
Insurer and submitted to the Custodian, on behalf of the Trustee in connection
with this provision. Following the expiration of the 60-day period referred to
in clause (b)(ii) above, the Seller shall promptly prepare a Mortgage assignment
for any Mortgage for which original recording information is subsequently
received by the Seller, and shall promptly deliver a copy of such Mortgage
assignment to the Custodian, on behalf of the Trustee. The Seller agrees that it
will follow its normal servicing procedures and attempt to obtain the original
recording information necessary to complete a Mortgage assignment. In the event
that the Seller is unable to obtain such recording information with respect to
any Mortgage prior to the end of the 18th calendar month following the Startup
Day with respect to the Initial Home Equity Loans and the relevant Subsequent
Transfer Date with respect to Subsequent Home Equity Loans and has not provided
to the Custodian, on behalf of the Trustee a Mortgage assignment with evidence
of recording thereon relating to the assignment of such Mortgage to the Trustee,
the Custodian, on behalf of the Trustee shall notify the Seller of the Seller's
obligation to provide a completed assignment (with evidence of recording
thereon) on or before the end of the 20th calendar month following the Startup
Day with respect to the Initial Home Equity Loans and the relevant Subsequent
Transfer Date with respect to Subsequent Home Equity Loans. A copy of such
notice shall be sent by the Custodian, on behalf of the Trustee to the
Certificate Insurer. If no such completed assignment (with evidence of recording
thereon) is provided before the end of such 20th calendar month, the related
Home Equity Loan shall be deemed to have breached the representation contained
in clause (xxii) of Section 3.04(b) hereof; provided, however, that if as of the
end of such 20th calendar month the Seller demonstrates to the satisfaction of
the Certificate Insurer that it is exercising its best efforts to obtain such
completed assignment and, during each month thereafter until such completed
assignment is delivered to the Custodian, on behalf of the Trustee, the Seller
continues to demonstrate to the satisfaction of the Certificate Insurer that it
is exercising its best efforts to obtain such completed assignment, the related
Home Equity Loan will not be deemed to have breached such representation. The
requirement to deliver a completed assignment with evidence of recording thereon
will be deemed satisfied upon delivery of a copy of the completed assignment
certified by the applicable public recording office.
Copies of all Mortgage assignments received by the Custodian, on behalf
of the Trustee shall be retained in the related File.
All recording required pursuant to this Section 3.05 shall be
accomplished at the expense of the Seller.
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(c) In the case of Initial Home Equity Loans which have been prepaid in
full on or after the Cut-Off Date and prior to the Startup Day, the Seller, in
lieu of the foregoing, will deliver within six (6) days after the Startup Day to
the Trustee a certification of an Authorized Officer in the form set forth in
Exhibit E.
(d) The Seller shall transfer, assign, set over and otherwise convey
without recourse, to the Trustee all right, title and interest of the Seller in
and to any Qualified Replacement Mortgage delivered to the Custodian, on behalf
of the Trustee on behalf of the Trust by the Seller pursuant to Section 3.03,
3.04 or 3.06 hereof and all its right, title and interest to principal and
interest due on such Qualified Replacement Mortgage on and after the applicable
Replacement Cut-Off Date; provided, however, that the Seller shall reserve and
retain all right, title and interest in and to payments of principal and
interest due on such Qualified Replacement Mortgage prior to the applicable
Replacement Cut-Off Date.
(e) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage therefor, the Trustee
will transfer, assign, set over and otherwise convey without recourse or
representation, on the Seller's order, all of its right, title and interest in
and to such released Home Equity Loan and all the Trust's right, title and
interest to principal and interest due on such released Home Equity Loan after
the applicable Replacement Cut-Off Date; provided, however, that the Trust shall
reserve and or and retain all right, title and interest in and to payments of
principal and interest due on such released Home Equity Loan prior to the
applicable Replacement Cut-Off Date.
(f) In connection with any transfer and assignment of a Qualified
Replacement Mortgage to the Trustee on behalf of the Trust, the Seller agrees to
(i) deliver without recourse to the Custodian, on behalf of the Trustee on the
date of delivery of such Qualified Replacement Mortgage the original Note
relating thereto, endorsed in blank or to the order of the Trustee, (ii) cause
promptly to be recorded an assignment in the appropriate jurisdictions, (iii)
deliver the original Qualified Replacement Mortgage and such recorded
assignment, together with original or duly certified copies of any and all prior
assignments, to the Custodian, on behalf of the Trustee within 15 days of
receipt thereof by the Seller (but in any event within 120 days after the date
of conveyance of such Qualified Replacement Mortgage) and (iv) deliver the title
insurance policy, or where no such policy is required to be provided under
Section 3.05(b)(i)(B), the other evidence of title required in Section
3.05(b)(i)(B).
(g) As to each Home Equity Loan released from the Trust in connection
with the conveyance of a Qualified Replacement Mortgage the Custodian, on behalf
of the Trustee shall deliver on the date of conveyance of such Qualified
Replacement Mortgage and on the order of the Seller (i) the original Note
relating thereto, endorsed without recourse or representation, in blank or to
the order of, to the Seller, (ii) the original Mortgage so released and all
assignments relating thereto and (iii) such other documents as constituted the
File with respect thereto.
(h) If a Mortgage assignment is lost during the process of recording,
or is returned from the recorder's office unrecorded due to a defect therein,
the Seller shall prepare a substitute assignment or cure such defect, as the
case may be, and thereafter cause each such assignment to be duly recorded.
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Section 3.06 Acceptance by Trustee; Certain Substitutions of Home
Equity Loans; Certification by Trustee.
(a) The Trustee agrees to execute and deliver and to cause the
Custodian to execute and deliver on the Startup Day an acknowledgment of receipt
of the items delivered by the Seller or the Depositor in the forms attached as
Exhibit F-1 and Exhibit F-2 hereto, and declares through the Custodian that it
will hold such documents and any amendments, replacement or supplements thereto,
as well as any other assets included in the definition of Trust Estate and
delivered to the Custodian, on behalf of the Trustee, as Trustee in trust upon
and subject to the conditions set forth herein for the benefit of the Owners and
the Certificate Insurer. The Trustee agrees, for the benefit of the Owners and
the Certificate Insurer, to cause the Custodian to review such items within 45
days after the Startup Day (or, with respect to any document delivered after the
Startup Day, within 45 days of receipt and with respect to any Subsequent Home
Equity Loan or Qualified Replacement Mortgage, within 45 days after the
assignment thereof) and to deliver to the Depositor, the Seller, the Servicer
and the Certificate Insurer a certification in the form attached hereto as
Exhibit G (a "Pool Certification") to the effect that, as to each Home Equity
Loan listed in the Schedule of Home Equity Loans (other than any Home Equity
Loan paid in full or any Home Equity Loan specifically identified in such Pool
Certification as not covered by such Pool Certification), (i) all documents
required to be delivered to it pursuant to Section 3.05(b)(i) of this Agreement
have been executed and are in its possession and that the Notes have been
endorsed as set forth in Section 3.05(b)(i) hereof, (ii) such documents have
been reviewed by it and have not been mutilated, damaged or torn and relate to
such Home Equity Loan and (iii) based on its examination and only as to the
foregoing documents, the information set forth on the Schedule of Home Equity
Loans accurately reflects the information set forth in the File. The Trustee
shall have no responsibility for reviewing any File except as expressly provided
in this subsection 3.06(a). Without limiting the effect of the preceding
sentence, in reviewing any File, the Trustee shall have no responsibility for
determining whether any document is valid and binding, whether the text of any
assignment is in proper form (except to determine if the Trustee is the
assignee), whether any document has been recorded in accordance with the
requirements of any applicable jurisdiction or whether a blanket assignment is
permitted in any applicable jurisdiction, but shall only be required to
determine whether a document has been executed, that it appears to be what it
purports to be, and, where applicable, that it purports to be recorded. The
Trustee shall be under no duty or obligation to inspect, review or examine any
such documents, instruments, certificates or other papers to determine that they
are genuine, enforceable, or appropriate for the represented purpose or that
they are other than what they purport to be on their face, nor shall the Trustee
be under any duty to determine independently whether there are any intervening
assignments or assumption or modification agreements with respect to any Home
Equity Loan.
(b) If the Custodian, on behalf of the Trustee during such 45-day
period finds any document constituting a part of a File which is not executed,
has not been received, or is unrelated to the Home Equity Loans identified in
the Schedule of Home Equity Loans, or that any Home Equity Loan does not conform
to the description thereof as set forth in the Schedule of Home Equity Loans,
the Custodian, on behalf of the Trustee shall promptly so notify the Depositor,
the Seller, the Owners and the Certificate Insurer. In performing any such
review, the
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Custodian, on behalf of the Trustee may conclusively rely on the Seller as to
the purported genuineness of any such document and any signature thereon. It is
understood that the scope of the review of the items delivered by the Seller
pursuant to Section 3.05(b)(i) is limited solely to confirming that the
documents listed in Section 3.05(b)(i) have been executed and received, relate
to the Files identified in the Schedule of Home Equity Loans and conform to the
description thereof in the Schedule of Home Equity Loans. The Seller agrees to
use reasonable efforts to remedy a material defect in a document constituting
part of a File of which it is so notified by the Custodian, on behalf of the
Trustee. If, however, within 90 days after such notice to it respecting such
defect the Seller has not remedied the defect and the defect materially and
adversely affects the interest in the related Home Equity Loan of the Owners or
the Certificate Insurer, the Seller will (or will cause an affiliate of the
Seller to) on the next succeeding Monthly Remittance Date (i) substitute in lieu
of such Home Equity Loan a Qualified Replacement Mortgage and deliver the
Substitution Amount to the Servicer for deposit in the Principal and Interest
Account or (ii) purchase such Home Equity Loan at a purchase price equal to the
Loan Purchase Price thereof, which purchase price shall be delivered to the
Servicer for deposit in the Principal and Interest Account. In connection with
any proposed purchase or substitution of a Home Equity Loan, the Seller shall
cause at the Seller's expense to be delivered to the Trustee and to the
Certificate Insurer an Opinion of Counsel experienced in federal income tax
matters stating whether or not such a proposed purchase or substitution would
constitute a Prohibited Transaction for the Trust or would jeopardize the status
of the Trust as a REMIC, and the Seller shall only be required to take either
such action to the extent such action would not constitute a Prohibited
Transaction for the Trust or would not jeopardize the status of the Trust as a
REMIC. Any required purchase or substitution, if delayed by the absence of such
opinion, shall nonetheless occur upon the earlier of (i) the occurrence of a
default or imminent default with respect to the Home Equity Loan or (ii) the
delivery of such opinion.
(c) In addition to the foregoing, the Custodian, on behalf of the
Trustee also agrees to make a review during the 12th month after the Startup Day
indicating the current status of the exceptions previously indicated on the Pool
Certification (the "Final Certification"). After delivery of the Final
Certification, the Custodian, on behalf of the Trustee and the Servicer shall
provide to the Certificate Insurer no less frequently than monthly updated
certifications indicating the then current status of exceptions, until all such
exceptions have been eliminated.
Section 3.07 Conveyance of the Subsequent Home Equity Loans.
(a) Subject to the satisfaction of the conditions set forth in Section
3.05 and paragraphs (b), (c) and (d) below (based on the Custodian's review of
such conditions) in consideration of the Trustee's delivery on the relevant
Subsequent Transfer Dates to or upon the order of the Seller of all or a portion
of the balance of funds in the Pre-Funding Account, the Seller shall indirectly
(through the Depositor) and the Depositor on any Subsequent Transfer Date sell,
transfer, assign, set over and otherwise convey without recourse, to the
Trustee, and the Trustee shall purchase on behalf of the Trust all of the
Seller's and Depositor's right, title and interest in and to any and all
benefits accruing to the Seller and the Depositor from the Subsequent Home
Equity Loans (other than any principal received and interest due prior to the
relevant Subsequent Cut-Off Date) which the Seller (through the Depositor) is
causing to be delivered to the Custodian, on behalf of the Trustee herewith (and
all substitutions therefor as
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provided by Section 3.03, 3.04 and 3.06), together with the related Subsequent
Home Equity Loan documents and the Seller's and Depositor's interest in any
Property which secures a Subsequent Home Equity Loan and all payments thereon
and proceeds of the conversion, voluntary or involuntary, of the foregoing and
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Subsequent Home Equity Loans, cash proceeds,
accounts, accounts receivable, notes, drafts, acceptances, chattel paper,
checks, deposit accounts, rights to payment of any and every kind, and other
forms of obligations and receivables which at any time constitute all or part of
or are included in the proceeds of any of the foregoing). Notwithstanding
anything to the contrary herein, there shall be no more than three Subsequent
Transfer Dates during the Funding Period.
The transfer by the Seller (through the Depositor) and the Depositor of
the Subsequent Home Equity Loans set forth on the related Schedule of Home
Equity Loans to the Trustee shall be absolute and shall be intended by the
Owners and all parties hereto to be treated as a sale by the Seller and the
Depositor. Any Subsequent Home Equity Loan transferred shall be included in one
and only one of either the Fixed Rate Group or the Adjustable Rate Group. The
amount released from the Pre-Funding Account shall be one-hundred percent (100%)
of the aggregate principal balances of the Subsequent Home Equity Loans so
transferred. Upon the transfer by the Seller and the Depositor of the Subsequent
Home Equity Loans hereunder, such Subsequent Home Equity Loans (and all
principal received and interest due thereon on and subsequent to the Subsequent
Cut-Off Date) and all other rights and interests with respect to such Subsequent
Home Equity Loans transferred pursuant to a Subsequent Transfer Agreement shall
be deemed for all purposes hereunder to be part of the Trust Estate.
(b) The obligation of the Trustee to accept the transfer of the
Subsequent Home Equity Loans and the other property and rights related thereto
described in paragraph (a) above is subject to the satisfaction of each of the
following conditions on or prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Trustee and the
Certificate Insurer with an Addition Notice and shall have provided any
information reasonably requested by any of the foregoing with respect
to the Subsequent Home Equity Loans;
(ii) the Seller shall have delivered to the Trustee (with a
copy to the Certificate Insurer) a duly executed written Subsequent
Transfer Agreement (including an acceptance by the Trustee) in
substantially the form of Exhibit D hereto, which shall indicate
whether such Subsequent Home Equity Loan is to be assigned to the Fixed
Rate Group or the Adjustable Rate Group and which shall include a
Schedule of Home Equity Loans, listing the Subsequent Home Equity Loans
and any other exhibits listed thereon;
(iii) the Seller shall have delivered to the Servicer for
deposit in the Principal and Interest Account all principal received
and interest due in respect of such Subsequent Home Equity Loans on and
after the related Subsequent Cut-Off Date;
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(iv) as of each Subsequent Transfer Date, neither the Seller
nor the Depositor was insolvent, nor will either of them be made
insolvent by such transfer, nor is either of them aware of any pending
insolvency;
(v) the Funding Period with respect to the related Group shall
not have ended:
(vi) the Seller and the Depositor each shall have delivered to
the Trustee and the Certificate Insurer an Officer's Certificate
confirming the satisfaction of each condition precedent specified in
this paragraph (b) and paragraphs (c) and (d) below and in the related
Subsequent Transfer Agreement and the Certificate Insurer shall have
consented to such transfer; and
(vii) the Seller shall have delivered to the Trustee and the
Certificate Insurer Opinions of Counsel with respect to the transfer of
the Subsequent Home Equity Loans substantially in the form of the
Opinions of Counsel delivered to the Trustee and the Certificate
Insurer on the Startup Day with respect to the Initial Home Equity
Loans (bankruptcy, corporate and tax).
(c) The obligation of the Trust to purchase a Subsequent Home Equity
Loan for addition to the Fixed Rate Group on any Subsequent Transfer Date is
subject to the following requirements any of which may, at the Seller's request,
be waived or modified by the Certificate Insurer by a written waiver, (a copy of
which waiver shall be delivered to the Trustee, Standard & Poor's and Moody's):
(i) such Subsequent Home Equity Loan will be a fixed-rate Home Equity Loan; (ii)
such Subsequent Home Equity Loan will have a Coupon Rate of not less than 7.60%;
(iii) such Subsequent Home Equity Loan will not be 30 days or more contractually
Delinquent as of the Subsequent Cut-Off Date; (iv) the remaining term to
maturity of such Subsequent Home Equity Loan may not exceed 360 months; (v) such
Subsequent Home Equity Loan will have an original Loan Balance of less than
$227,150; and (vi) the weighted average combined Loan-to-Value Ratio of such
Subsequent Home Equity Loans shall not exceed 80.00%; (vii) the weighted average
Coupon Rate of such Subsequent Home Equity Loans shall not be less than 11.08%;
(viii) no more than 10.00% of such Subsequent Home Equity Loans shall be Second
Mortgage Loans; and (ix) no more than 45.00% of such Subsequent Home Equity
Loans shall be balloon loans. In addition, the Subsequent Home Equity Loans with
respect to the Fixed Rate Group and the final pool of Home Equity Loans in the
Fixed Rate Group shall conform to the requirements in the Insurance Agreement.
(d) The obligation of the Trust to purchase a Subsequent Home Equity
Loan for addition to the Adjustable Rate Group on any Subsequent Transfer Date
is subject to the following requirements any of which may, at the Seller's
request, be waived or modified by the Certificate Insurer by a written waiver (a
copy of which waiver shall be delivered to the Trustee, Standard & Poor's and
Moody's): (i) such Subsequent Home Equity Loan will be an adjustable-rate Home
Equity Loan; (ii) such Subsequent Home Equity Loan will have a minimum Coupon
Rate of not less than 7.45%; (iii) such Subsequent Home Equity Loan will be in a
first lien position; (iv) such Subsequent Home Equity Loan will not be 30 days
or more contractually Delinquent as of the Subsequent Cut-Off Date; (v) the
remaining term to maturity of such Subsequent Home Equity Loan may not exceed
360 months; (vi) such Subsequent Home Equity
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Loan will have a lifetime minimum Coupon Rate of not less than 2.00%; (vii) such
Subsequent Home Equity Loans will have an original Loan Balance of less than
$450,000; (viii) such Subsequent Home Equity Loans will have a weighted average
Coupon Rate of at least 10.42%; (ix) such Subsequent Home Equity Loans will have
a weighted average original Loan-to-Value Ratio of not more than 84.00%; (x) at
least 17.00% of such Subsequent Home Equity Loans shall be six-month adjustable
rate loans; (xi) such Subsequent Home Equity Loans will have a weighted gross
average margin of no less than 5.90%; and (xii) none of such Subsequent Home
Equity Loans shall be balloon loans. In addition, the Subsequent Home Equity
Loans with respect to the Adjustable Rate Group and the final pool of Home
Equity Loans in the Adjustable Rate Group shall conform to the requirements in
the Insurance Agreement.
(e) In connection with each Subsequent Transfer Date and, if
applicable, on the Final Pre-Funding Payment Date, the Trustee shall determine:
(i) the amount and correct dispositions of the Fixed Rate Group Capitalized
Interest Requirement and the Adjustable Rate Group Capitalized Interest
Requirement, Pre-Funding Account Earnings and the Pre-Funded Amount and (ii) any
other necessary matters in connection with the administration of the Pre-Funding
Account and of the Capitalized Interest Account. In the event that any amounts
are released as a result of an error in calculation to the Owners or Depositor
from the Pre-Funding Account or from the Capitalized Interest Account, such
Owners or the Depositor shall immediately repay such amounts to the Trustee or
the Trustee shall have the right to withhold such amounts from future
distributions on such Certificates or the Depositor.
On the Final Pre-Funding Payment Date, the Certificate Insurer may
modify the related Specified Subordinated Amount as provided in Exhibits L and
M.
Section 3.08 Custodian.
Notwithstanding anything to the contrary in this Agreement, the parties
hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Files pursuant to Sections
3.05, 3.06, 3.07 and 8.14 and the related Pool Certification and Final
Certification shall be performed by the Custodian on the Trustee's behalf
pursuant to the Custodial Agreement; provided, however, the Trustee shall remain
primarily liable for such obligations. The fees and expenses of the Custodian
will be paid by the Servicer.
If, pursuant to Section 4.12 of the Custodial Agreement, the Custodian
shall request written instructions from the Trustee, the Trustee hereby agrees
to promptly provide such instructions.
Section 3.09 Cooperation Procedures. (a) The Seller shall, in
connection with the delivery of each Qualified Replacement Mortgage to the
Custodian, on behalf of the Trustee, provide the Trustee with information set
forth in the Schedules of Home Equity Loans with respect to such Qualified
Replacement Mortgage.
(b) The Seller, the Depositor, the Servicer and the Trustee covenant to
provide each other with all data and information required to be provided by them
hereunder at the times required hereunder, and additionally covenant reasonably
to cooperate with each other in
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providing any additional information required to be obtained by any of them in
connection with their respective duties hereunder.
(c) The Servicer shall maintain such accurate and complete accounts,
records and computer systems pertaining to each File as shall enable it and the
Trustee to comply with this Agreement. In performing its recordkeeping duties
the Servicer shall act in accordance with the servicing standards set forth in
this Agreement. The Servicer shall conduct, or cause to be conducted, periodic
audits of its accounts, records and computer systems as set forth in Section
8.16 and 8.17 hereof. The Servicer shall promptly report to the Trustee any
failure on its part to maintain its accounts, records and computer systems
herein provided and promptly take appropriate action to remedy any such failure.
(d) The Seller further confirms to the Trustee that it has caused the
portions of the electronic ledger relating to the Home Equity Loans to be
clearly and unambiguously marked to indicate that such Home Equity Loans have
been sold, transferred, assigned and conveyed through the Depositor to the
Trustee and constitute part of the Trust Estate in accordance with the terms of
the trust created hereunder and that the Seller will treat the transaction
contemplated by such sale, transfer, assignment and conveyance as a sale for
accounting purposes.
Notwithstanding anything to the contrary in this Agreement, the parties
hereto acknowledge that the functions of the Trustee with respect to the
custody, acceptance, inspection and release of the Files pursuant to Sections
3.05, 3.06, 3.07 and 8.14 and the related Pool Certification and Final
Certification shall be performed by the Custodian pursuant to the Custodial
Agreement. The fees and expenses of the Custodian will be paid by the Seller.
END OF ARTICLE III
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ARTICLE IV
ISSUANCE AND SALE OF CERTIFICATES
Section 4.01 Issuance of Certificates.
On the Startup Day, upon the Trustee's receipt from the Seller of an
executed Delivery Order in the form set forth as Exhibit H hereto, the Trustee
shall authenticate and deliver the Certificates on behalf of the Trust.
Section 4.02 Sale of Certificates.
At 11 a.m. New York City time on the Startup Day, at the offices of
Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038-4982
(or at such other location acceptable to the Seller), the Seller will sell and
convey the Initial Home Equity Loans and the money, instruments and other
property related thereto to the Depositor and the Depositor will convey the
Initial Home Equity Loans and the money, instruments and other property related
thereto to the Trustee, and the Trustee will deliver (i) to the Underwriter (as
designee of the Depositor), the Class A Certificates with an aggregate
Percentage Interest in each Class equal to 100% registered in the name of Cede &
Co. or in such other names as the Underwriter shall direct, against payment to
the Depositor of the purchase price thereof by wire transfer of immediately
available funds to the Trustee as designee of the Depositor and (ii) to the
respective registered owners thereof (as designees of the Depositor), Class R
Certificates with a Percentage Interest equal to 99.999%, registered in the name
of the initial purchasers thereof and a Class R Certificate with a Percentage
Interest equal to 0.001%, registered in the name of the Tax Matters Person (all
such events shall be referred to herein as the "Closing").
Upon the Trustee's receipt of the entire net proceeds of the sale of
the Class A Certificates, the Trustee on behalf of the Depositor shall deposit
an amount equal to the Original Aggregate Pre-Funded Amount in the Pre-Funding
Account and the Original Capitalized Interest Deposit in the Capitalized
Interest Account contributed out of the proceeds of the sale of the Class A
Certificates and $27,824.21 to the Certificate Account, $7,441.28 of which will
be allocable to the Fixed Rate Group and $20,382.93 of which will be allocable
to the Adjustable Rate Group. The Trustee shall then remit the entire balance of
such net proceeds in accordance with instructions delivered by the Depositor.
END OF ARTICLE IV
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ARTICLE V
CERTIFICATES AND TRANSFER OF INTERESTS
Section 5.01 Terms.
(a) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates as to "principal" and "interest" thereof, no debt of
any Person is represented thereby, nor are the Certificates or the underlying
Notes guaranteed by any Person (except that the Notes may be recourse to the
Mortgagors thereof to the extent permitted by law and the terms of the related
Note and except for the rights of the Trustee on behalf of the Owners of the
Class A Certificates with respect to the Certificate Insurance Policies). The
Class A Certificates are payable solely from payments received on or with
respect to the Home Equity Loans (net of the Servicing Fees, Trustee Fees,
Premium Amounts and Trustee Reimbursable Expenses), moneys in the Principal and
Interest Account, except as otherwise provided herein, moneys in the Pre-Funding
Account and the Capitalized Interest Account and moneys initially deposited into
the Certificate Account in respect of loans that will not accrue a full 30 days
interest for the first Payment Date, from earnings on moneys and the proceeds of
property held as a part of the Trust Estate and, upon the occurrence of certain
events, from Insured Payments. Each Certificate entitles the Owner thereof to
receive monthly on each Payment Date, in order of priority of distributions with
respect to such Class of Certificates as set forth in Section 7.03, a specified
portion of such payments with respect to the Home Equity Loans, certain related
Insured Payments, pro rata in accordance with such Owner's Percentage Interest
and certain amounts payable from the Capitalized Interest Account and from the
Pre-Funding Account.
(b) Each Owner is required, and hereby agrees, to return to the
Trustee, any Certificate prior to the Trustee making the final distribution due
thereon. Any such Certificate as to which the Trustee has made the final
distribution thereon shall be deemed canceled and shall no longer be Outstanding
for any purpose of this Agreement.
Section 5.02 Forms.
The Class A-1 Certificates, the Class A-2 Certificates, the Class A-3
Certificates, the Class A-4 Certificates and the Class A-5 Certificates and the
Class R Certificates shall be in substantially the forms set forth in Exhibits
A-1, A-2, A-3, A-4, A-5, and C hereof, respectively.
Section 5.03 Execution, Authentication and Delivery.
Each Certificate shall be executed on behalf of the Trust, by the
manual signature of one of the Trustee's Authorized Officers. In addition, each
Certificate shall be authenticated by the manual signature of one of the
Trustee's Authorized Officers.
Certificates bearing the manual signature of individuals who were at
any time the proper officers of the Trustee shall, upon proper authentication by
the Trustee, bind the Trust, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the
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execution and delivery of such Certificates or did not hold such offices at the
date of authentication of such Certificates.
The initial Certificates shall be dated as of the Startup Day and
delivered at the Closing to the parties specified in Section 4.02 hereof.
Subsequently issued Certificates will be dated as of the issuance of the
Certificate.
No Certificate shall be valid until executed and authenticated as set
forth above.
Section 5.04 Registration and Transfer of Certificates.
(a) The Trustee shall cause to be kept a register (the "Register") in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and the registration of
transfer of Certificates. The Trustee is hereby initially appointed Registrar
for the purpose of registering Certificates and transfers of Certificates as
herein provided. The Certificate Insurer, the Owners and the Trustee shall have
the right to inspect the Register during the Trustee's normal hours and to
obtain copies thereof, and the Trustee shall have the right to rely upon a
certificate executed on behalf of the Registrar by an Authorized Officer thereof
as to the names and addresses of the Owners of the Certificates and the
principal amounts and numbers of such Certificates.
If a Person other than the Trustee is appointed as Registrar by the
Owners of a majority of the aggregate Percentage Interests represented by the
Class A Certificates then Outstanding with the consent of the Certificate
Insurer or if there are no longer any Class A Certificates then outstanding, by
such majority of the Percentage Interests represented by the Class R
Certificates, such Owners shall give the Trustee, the Certificate Insurer and
the Owners prompt written notice of the appointment of such Registrar and of the
location, and any change in the location, of the Register. In connection with
any such appointment the reasonable fees of the Registrar shall be paid, as
expenses of the Trust, pursuant to Section 7.06 hereof.
(b) Subject to the provisions of Section 5.08 hereof, upon surrender
for registration of transfer of any Certificate at the office designated as the
location of the Register, upon the direction of the Registrar, the Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of a like Class and in the aggregate
outstanding principal amount or Percentage Interest of the Certificate so
surrendered.
(c) At the option of any Owner, Certificates of any Class owned by such
Owner may be exchanged for other Certificates authorized of like Class and tenor
and a like aggregate outstanding principal amount or Percentage Interest and
bearing numbers not contemporaneously outstanding, upon surrender of the
Certificates to be exchanged at the office designated as the location of the
Register. Whenever any Certificate is so surrendered for exchange, upon the
direction of the Registrar, the Trustee shall execute, authenticate and deliver
the Certificate or Certificates which the Owner making the exchange is entitled
to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of Certificates shall be valid evidence of the same ownership interests
in the Trust and entitled to
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the same benefits under this Agreement as the Certificates surrendered upon such
registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by
the Owner thereof or his attorney duly authorized in writing.
(f) No service charge shall be made to an Owner for any registration of
transfer or exchange of Certificates, but the Registrar or Trustee may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Certificates; any other expenses in connection with such transfer or exchange
shall be an expense of the Trust.
(g) It is intended that the Class A Certificates be registered so as to
participate in a global book-entry system with the Depository, as set forth
herein. Each Class of Class A Certificates shall, except as otherwise provided
in Subsection (h), be initially issued in the form of a single fully registered
Class A Certificate of such Class. Upon initial issuance, the ownership of each
such Class A Certificate shall be registered in the Register in the name of Cede
& Co., or any successor thereto, as nominee for the Depository.
On the Startup Day, no Class A-1, Class A-2, Class A-3, Class A-4 or
A-5 Certificates shall be issued in denominations of less than $l,000 and
integral multiples of $1 in excess thereof.
The Depositor and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository in the form provided to
the Trustee by the Depositor.
With respect to the Class A Certificates registered in the Register in
the name of Cede & Co., as nominee of the Depository, the Depositor, the
Servicer, the Seller, the Certificate Insurer and the Trustee shall have no
responsibility or obligation to Direct or Indirect Participants or beneficial
owners for which the Depository holds Class A Certificates from time to time as
a Depository. Without limiting the immediately preceding sentence, the
Depositor, the Servicer, the Seller, the Certificate Insurer and the Trustee
shall have no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, Cede & Co., or any Direct or Indirect Participant
with respect to the ownership interest in the Class A Certificates, (ii) the
delivery to any Direct or Indirect Participant or any other Person, other than a
registered Owner of a Class A Certificate as shown in the Register, of any
notice with respect to the Class A Certificates or (iii) the payment to any
Direct or Indirect Participant or any other Person, other than a registered
Owner of a Class A Certificate as shown in the Register, of any amount with
respect to any distribution of principal or interest on the Class A
Certificates. No Person other than a registered Owner of a Class A Certificate
as shown in the Register shall receive a certificate evidencing such Class A
Certificate.
Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of interest by the mailing of checks or drafts to
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the registered Owners of Class A Certificates appearing as registered Owners in
the registration books maintained by the Trustee at the close of business on a
Record Date, the name "Cede & Co." in this Agreement shall refer to such new
nominee of the Depository.
(h) In the event that (i) the Depository or the Seller advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the
Class A Certificates and the Seller or the Trustee is unable to locate a
qualified successor or (ii) the Seller at its sole option elects to terminate
the book-entry system through the Depository, the Class A Certificates shall no
longer be restricted to being registered in the Register in the name of Cede &
Co. (or a successor nominee) as nominee of the Depository. At that time, the
Seller may determine that the Class A Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Seller and at the Seller's expense, or such
depository's agent or designee but, if the Seller does not select such
alternative global book-entry system, then the Class A Certificates may be
registered in whatever name or names registered Owners of Class A Certificates
transferring Class A Certificates shall designate, in accordance with the
provisions hereof.
(i) Notwithstanding any other provision of this Agreement to the
contrary, so long as any Class A Certificate is registered in the name of Cede &
Co., as nominee of the Depository, all distributions of principal or interest on
such Class A Certificates and all notices with respect to such Class A
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
Section 5.05 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Trustee, or the
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Certificate, and (ii) in the case of any mutilated Certificate, such
mutilated Certificate shall first be surrendered to the Trustee, and in the case
of any destroyed, lost or stolen Certificate, there shall be first delivered to
the Trustee such security or indemnity as may be reasonably required by it to
hold the Trustee and the Certificate Insurer harmless (provided, that with
respect to an Owner which is an institutional investor, a letter of indemnity
furnished by it shall be sufficient for this purpose), then, in the absence of
notice to the Trustee or the Registrar that such Certificate has been acquired
by a bona fide purchaser, the Seller shall execute and the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like Class, tenor
and aggregate principal amount, bearing a number not contemporaneously
outstanding.
Upon the issuance of any new Certificate under this Section, the
Registrar or Trustee may require the payment from the transferor or transferee
of the related Certificate of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto; any other expenses
in connection with such issuance shall be an expense of the Trust.
Every new Certificate issued pursuant to this Section in exchange for
or in lieu of any mutilated, destroyed, lost or stolen Certificate shall
constitute evidence of a substitute interest in
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the Trust, and shall be entitled to all the benefits of this Agreement equally
and proportionately with any and all other Certificates of the same Class duly
issued hereunder and such mutilated, destroyed, lost or stolen Certificate shall
not be valid for any purpose.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 5.06 Persons Deemed Owners.
Prior to due presentment for registration of transfer of any
Certificate, the Certificate Insurer, the Trustee and any agent of the Trustee
may treat the Person in whose name any Certificate is registered as the Owner of
such Certificate for the purpose of receiving distributions with respect to such
Certificate and for all other purposes whatsoever, and neither the Certificate
Insurer, the Trustee nor any agent of the Trustee shall be affected by notice to
the contrary.
Section 5.07 Cancellation.
All Certificates surrendered for registration of transfer or exchange
shall, if surrendered to any Person other than the Trustee, be delivered to the
Trustee and shall be promptly canceled by it. No Certificate shall be
authenticated in lieu of or in exchange for any Certificate canceled as provided
in this Section, except as expressly permitted by this Agreement. All canceled
Certificates may be held by the Trustee in accordance with its standard
retention policy.
Section 5.08 Limitation on Transfer of Ownership Rights.
(a) No sale or other transfer of record or beneficial ownership of a
Class R Certificate (whether pursuant to a purchase, a transfer resulting from a
default under a secured lending agreement or otherwise) shall be made to a
Disqualified Organization or an agent of a Disqualified Organization. The
transfer, sale or other disposition of a Class R Certificate (whether pursuant
to a purchase, a transfer resulting from a default under a secured lending
agreement or otherwise) to a Disqualified Organization shall be deemed to be of
no legal force or effect whatsoever and such transferee shall not be deemed to
be an Owner for any purpose hereunder, including, but not limited to, the
receipt of distributions on such Class R Certificate. Furthermore, in no event
shall the Trustee accept surrender for transfer, registration of transfer, or
register the transfer, of any Class R Certificate nor authenticate and make
available any new Class R Certificate unless the Trustee has received an
affidavit from the proposed transferee in the form attached hereto as Exhibit I.
Each holder of a Class R Certificate by his acceptance thereof, shall be deemed
for all purposes to have consented to the provisions of this Section 5.08(a).
(b) No other sale or other transfer of record or beneficial ownership
of a Class R Certificate shall be made unless such transfer is exempt from the
registration requirements of the Securities Act, and any applicable state
securities laws or is made in accordance with said Securities Act and laws. In
the event such a transfer is to be made within three years from the
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Startup Day, (i) in the case of transfers for which an investment letter in the
form of Exhibit J-1 is provided by the transferee to the Trustee and the
Certificate Insurer, the Trustee or the Depositor shall require a written
Opinion of Counsel acceptable to and in form and substance satisfactory to the
Depositor, the Trustee and the Certificate Insurer in the event that such
transfer may be made pursuant to an exemption, describing the applicable
exemption and the basis therefor, from said Securities Act and laws or is being
made pursuant to said Securities Act and laws, which Opinion of Counsel shall
not be an expense of the Depositor, the Trustee, the Trust Estate or the
Certificate Insurer; and (ii) an investment letter in the form of Exhibit J-1 or
J-2, which investment letter shall not be an expense of the Depositor, the
Trustee, the Trust Estate or the Certificate Insurer. The Owner of a Class R
Certificate desiring to effect such transfer shall, and does hereby agree to,
indemnify the Trustee, the Certificate Insurer, the Depositor and the Seller
against any liability that may result if the transfer is not so exempt or is not
made in accordance with such federal and state laws.
(c) No transfer of a Class R Certificate shall be made unless the
Trustee shall have received either: (i) a representation letter from the
transferee of such Class R Certificate, acceptable to and in form and substance
satisfactory to the Trustee and the Certificate Insurer (which may be combined
with the investment letter required by subsection (b) above), to the effect that
such transferee is not an employee benefit plan subject to Section 406 of ERISA
nor a plan or other arrangement subject to Section 406 of ERISA nor a plan or
other arrangement subject to Section 4975 of the Code (collectively, a "Plan"),
nor is acting on behalf of any Plan nor using the assets of any Plan to effect
such transfer or (ii) in the event that any Class R Certificate is purchased by
a Plan, or by a person or entity acting on behalf of any Plan or using the
assets of any Plan to effect such transfer (including the assets of any Plan
held in an insurance company separate or general account), an Opinion of
Counsel, acceptable to and in form and substance satisfactory to the Trustee and
the Certificate Insurer, which Opinion of Counsel shall not be at the expense of
either the Trustee, the Certificate Insurer or the Trust, to the effect that the
purchase or holding of any Class R Certificates will not result in the assets of
the Trust being deemed to be "plan assets," will not cause the Trust to be
subject to the fiduciary requirements and prohibited transaction provisions of
ERISA and the Code, and will not subject the Trustee to any obligation or
liability in addition to those expressly undertaken under this Agreement.
Notwithstanding anything else to the contrary herein, any purported transfer of
a Certificate to or on behalf of any Plan without the delivery to the Trustee
and the Certificate Insurer of an Opinion of Counsel as described above shall be
null and void and of no effect.
(d) No sale or other transfer of any Class A Certificate may be made to
the Depositor, the Seller, the Servicer or any of their respective Affiliates
(other than in the case of the Depositor, Donaldson, Lufkin & Jenrette
Securities Corporation).
(e) No sale or other transfer of any Class R Certificate shall be made
to the Seller.
(f) Notwithstanding anything to the contrary contained in this Section
5.08, the Class R Certificates may be transferred to CHEC Residual Corporation,
a Nevada corporation and wholly-owned subsidiary of the Seller, without regard
to Sections 5.08(a), (b), (c) or (d) above.
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Section 5.09 Assignment of Rights.
An Owner may pledge, encumber, hypothecate or assign all or any part of
its right to receive distributions hereunder, but such pledge, encumbrance,
hypothecation or assignment shall not constitute a transfer of an ownership
interest sufficient to render the transferee an Owner of the Trust without
compliance with the provisions of Section 5.04 and Section 5.08 hereof.
END OF ARTICLE V
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ARTICLE VI
COVENANTS
Section 6.01 Distributions.
On each Payment Date, the Trustee will withdraw amounts from the
Certificate Account and make the distributions with respect to the Certificates
in accordance with the terms of the Certificates and this Agreement. Such
distributions shall be made (i) in the case of the Class A Certificates
registered in the name of the Depository, by wire transfer to the Depository or
(ii) by check or draft mailed on each Payment Date or (iii) if requested by any
Owner (other than the Depository) of (A) a Class A Certificate having an
original principal balance of not less than $1,000,000 or (B) a Class R
Certificate having a Percentage Interest of not less than 10% in writing not
later than one Business Day prior to the applicable Record Date (which request
does not have to be repeated unless it has been withdrawn), to such Owner by
wire transfer to an account within the United States designated no later than
five Business Days prior to the related Record Date, made on each Payment Date,
in each case to each Owner of record on the immediately preceding Record Date.
Section 6.02 Money for Distributions to be Held in Trust; Withholding.
(a) All payments of amounts due and payable with respect to any
Certificate that are to be made from amounts withdrawn from the Certificate
Account or from Insured Payments shall be made by and on behalf of the Trustee
or by a Paying Agent, and no amounts so withdrawn from the Certificate Account
for payments of Certificates and no Insured Payment shall be paid over to the
Trustee except as provided in this Section.
(b) If the Depositor has appointed a Paying Agent pursuant to Section
11.15 hereof, the Trustee will, on the Business Day immediately preceding each
Payment Date, deposit with such Paying Agent in immediately available funds an
aggregate sum sufficient to pay the amounts then becoming due (to the extent
funds are then available for such purpose in the Certificate Account for the
Class to which such amounts are due) such sum to be held in trust for the
benefit of the Owners entitled thereto.
(c) The Depositor may at any time direct any Paying Agent to pay to the
Trustee all sums held in trust by such Paying Agent, such sums to be held by the
Trustee upon the same trusts as those upon which the sums were held by such
Paying Agent; and upon such payment by any Paying Agent to the Trustee, such
Paying Agent shall be released from all further liability with respect to such
money.
(d) The Depositor shall require the Paying Agent, including the Trustee
on behalf of the Trust to comply with all requirements of the Code and
applicable state and local law with respect to the withholding from any
distributions made by it to any Owner of any applicable withholding taxes
imposed thereon and with respect to any applicable reporting requirements in
connection therewith.
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(e) Any money held by the Trustee or a Paying Agent in trust for the
payment of any amount due with respect to any Class A Certificate remaining
unclaimed by the Owner of such Certificate for the period then specified in the
escheat laws of the State of New York after such amount has become due and
payable shall be discharged from such trust and be paid first to the Certificate
Insurer on account of any Reimbursement Amount and second to the Owners of the
Class R Certificates; and the Owner of such Class A Certificate shall
thereafter, as an unsecured general creditor, look only to the Owners of the
Class R Certificates and not to the Certificate Insurer for payment thereof (but
only to the extent of the amounts so paid to the Owners of the Class R
Certificates) and all liability of the Trustee or such Paying Agent with respect
to such trust money shall thereupon cease; provided, however, that the Trustee
or such Paying Agent before being required to make any such payment, may at the
expense of the Trust cause to be published once, in the eastern edition of The
Wall Street Journal, notice that such money remains unclaimed and that, after a
date specified therein, which shall be not fewer than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
paid to the Certificate Insurer on account of any Reimbursement Amount or to the
Owners of the Class R Certificates. The Trustee shall, at the direction of the
Seller, also adopt and employ, at the expense of the Seller, any other
reasonable means of notification of such payment (including but not limited to
mailing notice of such payment to Owners whose right to or interest in moneys
due and payable but not claimed is determinable from the records of the
Registrar, the Trustee or any Paying Agent, at the last address of record for
each such Owner).
Section 6.03 Protection of Trust Estate.
(a) The Trustee will hold the Trust Estate in trust for the benefit of
the Owners and the Certificate Insurer and, upon request of the Certificate
Insurer or, with the consent of the Certificate Insurer, at the request of the
Depositor, will from time to time execute and deliver all such supplements and
amendments hereto pursuant to Section 11.14 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request from the Depositor (with the consent of the Certificate Insurer) or
the Certificate Insurer, to:
(i) more effectively hold in trust all or any portion
of the Trust Estate;
(ii) perfect, publish notice of, or protect the
validity of any grant made or to be made by this Agreement;
(iii) enforce any of the Home Equity Loans; or
(iv) preserve and defend title to the Trust Estate
and the rights of the Trustee, and the ownership interests of
the Owners represented thereby, in such Trust Estate against
the claims of all Persons and parties.
To the extent not covered by the indemnity or other security
contemplated by 10.01(e) and 10.01(g), the Trustee shall be reimbursed for any
costs or expenses associated with this section pursuant to Section
7.03(b)(iv)(F) hereof.
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(b) The Trustee shall have the power to enforce, and shall enforce the
obligations and rights of the other parties to this Agreement, and of the
Certificate Insurer or the Owners, by action, suit or proceeding at law or
equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Certificate Insurer or the Owners as such rights are set forth in this
Agreement; provided, however, that nothing in this Section shall require any
action by the Trustee unless the Trustee shall first (i) have been furnished
indemnity satisfactory to it and (ii) when required by this Agreement, have been
requested by the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer (unless a Certificate Insurer
Default under clause (a) of the definition thereof has occurred and is
continuing) or, if there are no longer any Class A Certificates then
outstanding, by such majority of the Percentage Interests represented by the
Class R Certificates; provided, further, however, that if there is a dispute
with respect to payments under the Certificate Insurance Policies the Trustee's
first responsibility is to the Owners.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties, or adversely affect its rights and immunities
hereunder.
Section 6.04 Performance of Obligations.
The Trustee will not take any action that would release any Person from
any of such Person's covenants or obligations under any instrument or document
relating to the Certificates or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or document, except as
expressly provided in this Agreement or such other instrument or document.
The Trustee may contract with other Persons to assist it in performing
its duties hereunder pursuant to Section 10.03(g); provided, that the Trustee
shall remain liable for the performance of any such duties notwithstanding any
such contractual arrangement.
Section 6.05 Negative Covenants.
The Trustee will not:
(i) sell, transfer, exchange or otherwise dispose of
any of the Trust Estate except as expressly permitted by this
Agreement;
(ii) claim any credit on or make any deduction from
the distributions payable in respect of, the Certificates
(other than amounts properly withheld from such payments under
the Code) or assert any claim against any present or former
Owner by reason of the payment of any taxes levied or assessed
upon any of the Trust Estate;
(iii) incur, assume or guaranty, on behalf of the
Trust, any indebtedness of any Person except pursuant to this
Agreement;
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(iv) dissolve or liquidate the Trust in whole or in
part, except pursuant to Article IX hereof; or
(v) (A) permit the validity or effectiveness of this
Agreement to be impaired, or permit any Person to be released
from any covenant or obligation with respect to the Trust or
to the Certificates under this Agreement, except as may be
expressly permitted hereby or (B) permit any lien, charge,
adverse claim, security interest, mortgage or other
encumbrance to be created on or extend to or otherwise arise
upon or burden the Trust Estate or any part thereof or any
interest therein or the proceeds thereof.
Section 6.06 No Other Powers.
The Trustee will not permit the Trust to engage in any business
activity or transaction other than those activities permitted by Section 2.03
hereof.
Section 6.07 Limitation of Suits.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to this Agreement or the Certificate Insurance Policies,
or for the appointment of a receiver or trustee of the Trust, or for any other
remedy with respect to an event of default hereunder, unless:
(1) such Owner has previously given written notice to the Seller
and the Trustee of such Owner's intention to institute such
proceeding;
(2) the Owners of not less than 25% of the Percentage Interests
represented by the Class A Certificates then Outstanding or,
if there are no Class A Certificates then Outstanding, by a
majority of the Percentage Interests represented by the Class
R Certificates, shall have made written request to the Trustee
to institute such proceeding in its own name as Trustee
establishing the Trust;
(3) such Owner or Owners have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity has failed to institute such
proceeding;
(5) as long as any Class A Certificates are Outstanding or any
Reimbursement Amounts are owed to the Certificate Insurer, the
Certificate Insurer has consented in writing thereto (unless a
Certificate Insurer Default as defined in clause (a) of the
definition thereof has occurred and is continuing); and
(6) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Owners
of a majority of the Percentage Interests
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represented by the Class A Certificates or, if there are no
Class A Certificates then Outstanding, by such majority of the
Percentage Interests represented by the Class R Certificates;
it being understood and intended that no one or more Owners shall have any right
in any manner whatever by virtue of, or by availing themselves of, any provision
of this Agreement to affect, disturb or prejudice the rights of any other Owner
of the same Class or to obtain or to seek to obtain priority or preference over
any other Owner of the same Class or to enforce any right under this Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all the Owners of the same Class.
In the event the Trustee shall receive conflicting or inconsistent
requests and indemnity from two or more groups of Owners, each representing less
than a majority of the applicable Class of Certificates and each conforming to
paragraphs (1)-(6) of this Section 6.07, the Certificate Insurer in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provision of this Agreement.
Section 6.08 Unconditional Rights of Owners to Receive Distributions.
Notwithstanding any other provision in this Agreement, the Owner of any
Certificate shall have the right, which is absolute and unconditional, to
receive distributions to the extent provided herein and therein with respect to
such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner.
Section 6.09 Rights and Remedies Cumulative.
Except as otherwise provided herein, no right or remedy herein
conferred upon or reserved to the Trustee, the Certificate Insurer or to the
Owners is intended to be exclusive of any other right or remedy, and every right
and remedy shall, to the extent permitted by law, be cumulative and in addition
to every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise. Except as otherwise provided herein, the
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
Section 6.10 Delay or Omission Not Waiver.
No delay of the Trustee, the Certificate Insurer or any Owner of any
Certificate to exercise any right or remedy under this Agreement shall impair
any such right or remedy or constitute a waiver of such right or remedy. Every
right and remedy given by this Article VI or by law to the Trustee, the
Certificate Insurer or to the Owners may be exercised from time to time, and as
often as may be deemed expedient, by the Trustee, the Certificate Insurer, or by
the Owners, as the case may be.
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Section 6.11 Control by Owners.
The Certificate Insurer or the Owners of a majority of the Percentage
Interests represented by the Class A Certificates then Outstanding with the
consent of the Certificate Insurer or, if there are no longer any Class A
Certificates then Outstanding, by such majority of the Percentage Interests
represented by the Class R Certificates then Outstanding may direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee with respect to the Certificates or exercising any trust or power
conferred on the Trustee with respect to the Certificates or the Trust Estate,
including, but not limited to, those powers set forth in Section 6.03 and
Section 8.20 hereof, provided that:
(1) such direction shall not be in conflict with any rule of law
or with this Agreement;
(2) the Trustee shall have been provided with indemnity
satisfactory to it; and
(3) the Trustee may take any other action deemed proper by the
Trustee, as the case may be, which is not inconsistent with
such direction (and which does not require Certificate Insurer
consent or direction pursuant to the terms of this Agreement);
provided, however, that the Trustee need not take any action
which it determines might involve it in liability or may be
unjustly prejudicial to the Owners not so directing.
Section 6.12 Indemnification by the Seller.
The Seller agrees to indemnify and hold the Trustee, the Depositor, the
Certificate Insurer and each Owner 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 Trustee, the Certificate Insurer and any
Owner sustain in any way related to the failure of Seller to perform its duties
in compliance with the terms of this Agreement. The Seller shall immediately
notify the Trustee, the Depositor, the Certificate Insurer and each Owner if a
claim is made by a third party that the Servicer has failed to perform its
obligations to service and administer the Home Equity Loans in compliance with
the terms of this Agreement, and the Seller shall assume (with the consent of
the Trustee) the defense of any such claim and pay all expenses in connection
therewith, including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the Depositor, the
Servicer, the Seller, the Trustee, the Certificate Insurer and/or Owner in
respect of such claim. The Trustee shall, in accordance with instructions
received from the Seller, reimburse the Seller only from amounts otherwise
distributable on the Class R Certificates for all amounts advanced by it
pursuant to the preceding sentence, except when a final nonappealable
adjudication determines that the claim relates directly to the failure of the
Seller to perform its duties in compliance with the terms of this Agreement. The
provisions of this Section 6.12 shall survive the termination of this Agreement
and the payment of the outstanding Certificates.
END OF ARTICLE VI
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ARTICLE VII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 7.01 Collection of Money.
Except as otherwise expressly provided herein, the Trustee shall demand
payment or delivery of all money and other property payable to or receivable by
the Trustee pursuant to this Agreement or the Certificate Insurance Policies,
including (a) all payments due on the Home Equity Loans in accordance with the
respective terms and conditions of such Home Equity Loans and required to be
paid over to the Trustee by the Servicer or by any Sub-Servicer and (b) Insured
Payments. The Trustee shall hold all such money and property received by it,
other than pursuant to or as contemplated by Section 6.02(d) hereof, as part of
the Trust Estate and shall apply it as provided in this Agreement.
Section 7.02 Establishment of Accounts.
(a) The Depositor shall cause to be established on the Startup Day, and
the Trustee shall maintain, at the Corporate Trust Office, the Certificate
Account, a Pre-Funding Account and a Capitalized Interest Account each an
Eligible Account to be held by the Trustee in the name of the Trust on behalf of
the Owners of the Certificates and the Certificate Insurer. The Pre-Funding
Account and the Capitalized Interest Account are not assets of the REMIC Estate.
(b) On each Determination Date the Trustee shall determine (subject to
the terms of Section 10.03(j) hereof, based solely on information provided to it
in writing by the Servicer) with respect to the immediately following Payment
Date, the amounts that are expected to be on deposit in the Certificate Account
(exclusive of any deposits from the Pre-Funding Account and the Capitalized
Interest Account expected to be made) as of such date on such Payment Date with
respect to the Fixed Rate Group (disregarding the amounts of any Insured
Payments) and equal to the sum of (x) such amounts excluding the amount of any
Total Monthly Excess Cashflow from the Fixed Rate Group included in such amounts
plus (y) any amounts of related Total Monthly Excess Cashflow from either Group
to be applied on such Payment Date to the Fixed Rate Certificates plus (z) any
deposit to the Certificate Account relating to the Fixed Rate Group from the
Pre-Funding Account and the Capitalized Interest Account expected to be made
with respect to the Fixed Rate Group on such Payment Date. The sum of the
amounts described in clauses (x) and (z) of the preceding sentence with respect
to each Payment Date is the "Fixed Rate Group Available Funds" and the sum of
the amounts described in clauses (x), (y) and (z) of the preceding sentence with
respect to each Payment Date is the "Fixed Rate Group Total Available Funds."
(c) On each Determination Date the Trustee shall determine (subject to
the terms of Section 10.03(j) hereof, based solely on information provided to it
in writing by the Servicer) with respect to the immediately following Payment
Date, the amounts that are expected to be on deposit in the Certificate Account
(exclusive of any deposits from the Pre-Funding Account and the Capitalized
Interest Account expected to be made) as of such date on such Payment Date with
respect to the Adjustable Rate Group (disregarding the amounts of any Insured
Payments)
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and equal to the sum of (x) such amounts excluding the amount of any Total
Monthly Excess Cashflow for the Adjustable Rate Group included in such amounts
plus (y) any amounts of related Total Monthly Excess Cashflow from either Group
to be applied on such Payment Date to the Class A-5 Certificates, plus (z) any
deposit to the Certificate Account relating to the Adjustable Rate Group from
the Pre-Funding Account and the Capitalized Interest Account expected to be
made. The sum of the amounts described in clauses (x) and (z) of the preceding
sentence with respect to each Payment Date is the "Adjustable Rate Group
Available Funds" and the sum of the amounts described in clauses (x), (y) and
(z) of the preceding sentence with respect to each Payment Date is the
"Adjustable Rate Group Total Available Funds."
Section 7.03 Flow of Funds.
(a)(i) The Trustee shall deposit in the Certificate Account
without duplication, upon receipt, any Insured Payments under the Fixed
Rate Group Certificate Insurance Policy, the proceeds of any
liquidation of the assets of the Trust insofar as such assets relate to
the Fixed Rate Group, all remittances made to the Trustee pursuant to
Section 8.08(d)(ii) with respect to the Fixed Rate Group and the Fixed
Rate Group Monthly Remittance Amount remitted by the Servicer and
amounts transferred from the Pre-Funding Account applicable to the
Fixed Rate Group and the Fixed Rate Group Capitalized Interest
Requirement.
(ii) The Trustee shall deposit in the Certificate Account
without duplication, upon receipt, any Insured Payments under the
Adjustable Rate Group Certificate Insurance Policy, the proceeds of any
liquidation of the assets of the Trust insofar as such assets relate to
the Adjustable Rate Group, all remittances made to the Trustee pursuant
to Section 8.08(d)(ii) with respect to the Adjustable Rate Group and
the Adjustable Rate Group Monthly Remittance Amount remitted by the
Servicer and amounts transferred from the Pre-Funding Account
applicable to the Adjustable Rate Group and the Adjustable Rate Group
Capitalized Interest Requirement.
(b) Subject to any superseding provisions of clause (c) below during
the continuance of a Certificate Insurer Default, with respect to funds on
deposit in the Certificate Account, on each Payment Date, the Trustee shall make
the following allocations (based solely on information provided by the Servicer
in writing), disbursements and transfers for each Home Equity Loan Group from
amounts deposited therein pursuant to subsection (a) in the following order of
priority, and each such allocation, transfer and disbursement shall be treated
as having occurred only after all preceding allocations, transfers and
disbursements have occurred:
(i) first, on each Payment Date from amounts then on deposit in
the Certificate Account, (A) the Trustee Fee shall be paid to
the Trustee and (B) provided that no Certificate Insurer
Default as defined in clause (a) of the definition thereof has
occurred and is continuing, the Premium Amount for each Home
Equity Loan Group for such Payment Date shall be paid to the
Certificate Insurer;
(ii) second, on each Payment Date, the Trustee shall allocate an
amount equal to the sum of (x) the Total Monthly Excess Spread
with respect to such Home Equity
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Loan Group and Payment Date plus (y) any Subordination
Reduction Amount with respect to such Home Equity Loan Group
and Payment Date (such sum being the "Total Monthly Excess
Cashflow" with respect to such Home Equity Loan Group and
Payment Date) to the applicable Home Equity Loan Group in the
following order of priority:
(A) first, such Total Monthly Excess Cashflow with
respect to each Group shall be allocated to the
payment of the related Class A Distribution Amount
pursuant to clause (b)(iii) below (excluding any
related Subordination Increase Amount) in an amount
equal to the amount, if any, by which (x) the related
Class A Distribution Amount (excluding any related
Subordination Increase Amount) exceeds (y) the
Available Funds with respect to such Group (net of
the related Trustee Fee and the related Premium
Amount) and shall be paid as part of the Class A
Distribution Amount, first pursuant to clause
(b)(iii)(A) below, and then pursuant to clause
(b)(iii)(B) or (C) below (the amount of such
difference being the "Fixed Rate Group Available
Funds Shortfall" with respect to the Fixed Rate Group
and the "Adjustable Rate Group Available Funds
Shortfall" with respect to the Adjustable Rate
Group);
(B) second, any portion of the Total Monthly Excess
Cashflow with respect to such Home Equity Loan Group
remaining after the application described in clause
(b)(ii)(A) above shall be allocated against any
Available Funds Shortfall with respect to the other
Home Equity Loan Group;
(C) third, provided that no Certificate Insurer Default
as defined in clause (a) of the definition thereof
has occurred and is continuing, any portion of the
Total Monthly Excess Cashflow with respect to such
Home Equity Loan Group remaining after the
allocations described in clauses (b)(ii)(A) and (B)
above shall be paid to the Certificate Insurer in
respect of amounts owed on account of any
Reimbursement Amount with respect to the related Home
Equity Loan Group;
(D) fourth, provided that no Certificate Insurer Default
as defined in clause (a) of the definition thereof
has occurred and is continuing, any portion of the
Total Monthly Excess Cashflow with respect to such
Home Equity Loan Group remaining after the
allocations described in clauses (b)(ii)(A), (B) and
(C) above shall be paid to the Certificate Insurer in
respect of any Reimbursement Amount with respect to
the other Home Equity Loan Group;
(E) fifth, any portion of the Total Monthly Excess
Cashflow with respect to such Home Equity Loan Group
remaining after the application described in clauses
(b)(ii)(A), (B), (C) and (D) above shall be used to
reduce to zero, through the payment to the Owners of
the related Class A Certificates of a Subordination
Increase Amount included in the related
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Principal Distribution Amount, which shall be paid
pursuant to clause (b)(iii)(B) or (C) below, any
Subordination Deficiency Amount with respect to the
related Home Equity Loan Group as of such Payment
Date;
(F) sixth, if a Certificate Insurer Default, as defined
in clause (a) of the definition thereof has occurred
and is continuing, then any portion of the Total
Monthly Excess Cashflow with respect to such Home
Equity Loan Group remaining after the allocations
described in clauses (b)(ii)(A), (B), (C), (D) and
(E) above shall be paid to the Certificate Insurer in
respect of amounts owed on account of any
Reimbursement Amount with respect to the related Home
Equity Loan Group;
(G) seventh, any portion of the Total Monthly Excess
Cashflow remaining after the application described in
clauses (b)(ii)(A), (B), (C), (D), (E) and (F) above
shall be used to reduce to zero, through the payment
to the Owners of the Class A Certificates related to
the other Home Equity Loan Group of a Subordination
Increase Amount included in the other Principal
Distribution Amount pursuant to clauses (b)(iii)(B)
or (C) below, any Subordination Deficiency Amount,
with respect to such other Home Equity Loan Group as
of such Payment Date;
(H) eighth, if a Certificate Insurer Default, as defined
in clause (a) of the definition thereof, has occurred
and is continuing, then any portion of the Total
Monthly Excess Cashflow with respect to such Home
Equity Loan Group remaining after the allocations
described in clauses (b)(ii)(A), (B), (C), (D), (E),
(F) and (G) above shall be paid to the Certificate
Insurer in respect of any Reimbursement Amount with
respect to the other Home Equity Loan Group;
(I) ninth, any portion of Total Monthly Excess Cashflow
with respect to the Adjustable Rate Group remaining
after application of clauses (b)(ii)(A), (B), (C),
(D), (E), (F), (G) and (H) above shall be paid to the
Owners of Class A-5 Certificates pursuant to clause
(b)(iii)(E) below, to the extent of any Unpaid Class
A-5 Certificateholders' Interest Index Carryovers
from prior Payment Dates;
(J) tenth, any Total Monthly Excess Cashflow remaining
after the application described in clauses
(b)(ii)(A), (B), (C), (D), (E), (F), (G), (H) and (I)
above shall be paid to the Servicer pursuant to
clause (b)(iii)(F) below to the extent of any
unreimbursed Delinquency Advances, unreimbursed
Servicing Advances and unreimbursed Compensating
Interest; and
(iii) third, following the making by the Trustee of all allocations,
transfers and disbursements described (b)(ii) above from
amounts (including any related Insured Payment) then on
deposit in the Certificate Account with respect to the related
Home Equity Loan Group (after giving effect to the allocations
provided
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in clause (b)(ii) above from the other Home Equity Loan
Group), the Trustee shall distribute:
(A) to the Owners of each Class of related Class A
Certificates, the related Current Interest for each
Class (including the proceeds of any Insured Payments
made by the Certificate Insurer) on a pro rata basis
based on each such Class A Certificate's Current
Interest without priority among the Class A
Certificates;
(B) the Fixed Rate Group Principal Distribution Amount
shall be distributed as follows: (I) to the Owners of
the Class A-4 Certificates an amount equal to the
Class A-4 Lockout Distribution Amount and (II) the
remainder as follows: (i) first, to the Owners of the
Class A-1 Certificates until the Class A-1
Certificate Principal Balance is reduced to zero;
(ii) second, to the Owners of the Class A-2
Certificates until the Class A-2 Certificate
Principal Balance is reduced to zero; (iii) third, to
the Owners of the Class A-3 Certificates until the
Class A-3 Certificate Principal Balance is reduced to
zero; and (iv) fourth, to the Owners of the Class A-4
Certificates until the Class A-4 Certificate are
reduced to zero (the "Class A-4 Termination Date");
(C) the Adjustable Rate Group Principal Distribution
Amount shall be distributed to the Owners of the
Class A-5 Certificates until the Class A-5
Certificate Principal Balance is reduced to zero;
(D) to the Certificate Insurer the amounts described in
clauses (b)(ii)(C), (D), (F) and (H) above;
(E) to the Owners of the Class A-5 Certificates, the
aggregate amount of any Unpaid Class A-5
Certificateholders' Interest Index Carryover from
prior Payment Dates;
(F) to the Servicer the amounts set forth in clause
(b)(ii)(J) above;
(G) to the Trustee, any unreimbursed Trustee Reimbursable
Expenses, and to any successor Servicer, amounts owed
pursuant to Section 8.20; and
(iv) fourth, following the making by the Trustee of all allocations,
transfers and disbursements described above, the Trustee shall
distribute to the Owners of the Class R Certificates, the
Residual Net Monthly Excess Cashflow, if any, for such Payment
Date.
(c) on any Payment Date during the continuance of any Certificate
Insurer Default, if there is a Subordination Deficit with respect to the Fixed
Rate Group, then the Fixed Rate Group Principal Distribution Amount for such
Payment Date shall be distributed pro rata to the Owners of any related
Outstanding Class A Certificates on such Payment Date.
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(d) Notwithstanding any of the foregoing provisions, the aggregate
amounts distributed on all Payment Dates to the Owners of the related Class A
Certificates on account of principal pursuant to clause (b)(iii)(B) and (C)
shall not exceed the original Certificate Principal Balance of the related Class
A Certificates.
(e) Upon receipt of Insured Payments from the Certificate Insurer on
behalf of Owners of the Class A Certificates, the Trustee shall deposit such
Insured Payments in the Policy Payments Account. On each Payment Date, pursuant
to Section 12.02(b) hereof, such amounts will be transferred from the Policy
Payments Account to the Certificate Account and the Trustee shall distribute
such Insured Payments, or the proceeds thereof in accordance with Section
7.03(b), to the Owners of such Class A Certificates.
(f) The Trustee or Paying Agent shall (i) receive for each Owner of the
Class A Certificates any Insured Payment from the Certificate Insurer and (ii)
disburse the same to the Owners of the related Class A Certificates as set forth
in Section 7.03(b). Insured Payments disbursed by the Trustee or Paying Agent
from proceeds of the related Certificate Insurance Policy shall not be
considered payment by the Trust, nor shall such payments discharge the
obligation of the Trust with respect to such Class A Certificates and the
Certificate Insurer shall be entitled to receive the Reimbursement Amount
pursuant to Section 7.03(b)(iii)(D) hereof. Nothing contained in this paragraph
shall be construed so as to impose duties or obligations on the Trustee that are
different from or in addition to those expressly set forth in this Agreement.
The rights of the Owners to receive distributions from the proceeds of
the Trust Estate, and all ownership interests of the Owners in such
distributions, shall be as set forth in this Agreement. In this regard, all
rights of the Owners of the Class R Certificates to receive distributions in
respect of the Class R Certificates shall be subject and subordinate to the
preferential rights of the holders of the Class A Certificates to receive
distributions thereon and the ownership interests of such Owners in such
distributions, as described herein. In accordance with the foregoing, the
ownership interests of the Owners of the Class R Certificates in amounts
deposited in the Accounts from time to time shall not vest unless and until such
amounts are distributed in respect of the Class R Certificates in accordance
with the terms of this Agreement. Notwithstanding anything contained in this
Agreement to the contrary, and the Owners of the Class R Certificate shall not
be required to refund any amount properly distributed on the Class R
Certificates pursuant to this Section 7.03.
Section 7.04 Pre-Funding Account and Capitalized Interest Account.
(a) On the Startup Day, the Trustee will deposit, on behalf of the
Owners of the Class A Certificates and the Certificate Insurer, (i) in the
Pre-Funding Account (A) the Original Fixed Rate Group Pre-Funded Amount from the
proceeds of the sale of the Fixed Rate Certificates and (B) the Original
Adjustable Rate Group Pre-Funded Amount from the proceeds of the sale of the
Class A-5 Certificates and (ii) in the Capitalized Interest Account , (A) the
Original Fixed Rate Group Capitalized Interest Deposit, from the sale of the
Fixed Rate Certificates and (B) the Original Adjustable Rate Group Capitalized
Interest Deposit from the sale of the Class A-5 Certificates.
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(b) on any Subsequent Transfer Date, the Seller shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Loan Balances of the Subsequent Home Equity Loans sold to the Trust on
such Subsequent Transfer Date and pay such amount to or upon the order of the
Seller upon satisfaction of the conditions set forth in Sections 3.05 and 3.07
hereof with respect to such transfer; in connection with such instructions, the
Depositor shall additionally inform the Trustee and the Certificate Insurer
whether such Subsequent Home Equity Loans are being transferred to the Fixed
Rate Group or the Adjustable Rate Group. In no event shall the Seller be
permitted to instruct the Trustee to release from the Pre-Funding Account to the
Certificate Account with respect to the aggregate Subsequent Home Equity Loans
to be transferred to the Fixed Rate Group an aggregate amount in excess of the
Original Fixed Rate Group Pre-Funded Amount or to release from the Pre-Funding
Account to the Certificate Account with respect to the aggregate Subsequent Home
Equity Loans to be transferred to the Adjustable Rate Group an aggregate amount
in excess of the Original Adjustable Rate Group Pre-Funded Amount.
(c) After giving effect to any reductions in the Pre-Funded Amount with
respect to a Group on or before the Monthly Remittance Date relating to the
Final Pre-Funding Payment Date, the Trustee shall withdraw from the Pre-Funding
Account the amount (exclusive of any related Pre-Funding Account Earnings still
on deposit therein) remaining in the Pre-Funding Account with respect to such
Group on such Monthly Remittance Date relating to the Final Pre-Funding Payment
Date and deposit such amount to the Certificate Account on such Monthly
Remittance Date.
(d) Reserved.
(e) On each Pre-Funding Payment Date, the Trustee shall transfer from
the Capitalized Interest Account to the Certificate Account, the Fixed Rate
Group Capitalized Interest Requirement and Adjustable Rate Group Capitalized
Interest Requirement for such Pre-Funding Payment Date.
(f) The Capitalized Interest Account shall be closed on the Final
Pre-Funding Payment Date after any transfers to the Certificate Account required
on such Payment Date. All amounts, if any, remaining in the Capitalized Interest
Account on such day after giving effect to all transfers pursuant to Section
7.04(e) shall be transferred to the Seller.
(g) On each Pre-Funding Payment Date, the Trustee shall transfer from
the Pre-Funding Account to the Certificate Account all Pre-Funding Account
Earnings for the related Remittance Period.
(h) The Pre-Funding Account and the Capitalized Interest Account shall
not be an asset of the REMIC Estate.
(i) On the Startup Day, $27,824.21 shall be deposited into the
Certificate Account, $7,441.28 of which will be allocable to the Fixed Rate
Group and $20,382.93 of which will be allocable to the Adjustable Rate Group.
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Section 7.05 Investment of Accounts.
(a) Consistent with any requirements of the Code, all or a portion of
any Account held by the Trustee for the benefit of the Owners may (i) remain
uninvested or (ii) be invested and reinvested by the Trustee in the name of the
Trustee for the benefit of the Owners and the Certificate Insurer in one or more
Eligible Investments bearing interest or sold at a discount. The bank serving as
Trustee or any affiliate thereof may be the obligor on any investment which
otherwise qualifies as an Eligible Investment. No investment in any Account
shall mature later than the Business Day immediately preceding the next Payment
Date. Amounts held in the Certificate Account shall be invested in Eligible
Investments, which Eligible Investments shall mature no later than the Business
Day preceding the immediately following Payment Date or, if such Eligible
Investments are an obligation of the Trustee or are money market funds for which
the Trustee or any affiliate is the manager or the adviser, such Eligible
Investments shall mature no later than the following Payment Date.
(b) If any amounts are needed for disbursement from any Account held by
the Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. No investments will be
liquidated prior to maturity unless the proceeds thereof are needed for
disbursement.
(c) All income or other gain from investment in the Certificate Account
held by the Trustee shall be withdrawn and retained by the Trustee. Any
investment losses on amounts held in the Certificate Account shall be for the
account of the Trustee and promptly upon the realization of such loss shall be
contributed by the Trustee to the Certificate Account.
Section 7.06 Payment of Trust Expenses.
(a) The Trustee shall make demand on the Seller to pay and the Seller
shall pay the amount of the expenses of the Trust referred to in Section 2.05
(other than payments of premiums to the Certificate Insurer) (including
Trustee's fees and expenses not covered by Sections 7.03(b)(i)(A) and
7.03(b)(iii)(G) respectively), and the Seller shall promptly pay such expenses
directly to the Persons to whom such amounts are due. With respect to the
Certificate Account the Trustee shall receive all income and other gains from
investments as described in Section 7.05(c).
(b) The Seller shall pay directly on the Startup Day the reasonable
fees and expenses of counsel to the Trustee.
Section 7.07 Eligible Investments.
The following are Eligible Investments:
(a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or
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instrumentality thereof, provided such obligations are backed by the full faith
and credit of the United States, FHLMC senior debt obligations, and FNMA senior
debt obligations, but excluding any of such securities whose terms do not
provide for payment of a fixed dollar amount upon maturity or call for
redemption;
(b) Federal Housing Administration debentures;
(c) FHLMC participation certificates which guaranty timely payment of
principal and interest and senior debt obligations;
(d) Consolidated senior debt obligations of any Federal Home Loan
Banks;
(e) FNMA mortgage-backed securities (other than stripped mortgage
securities) and senior debt obligations;
(f) Federal funds, certificates of deposit, time deposits, and bankers'
acceptances (having original maturities of not more than 365 days) of any
domestic bank, the short-term debt obligations of which have been rated A-l by
Standard & Poor's and P-l by Moody's; provided that any such certificates of
deposit must be secured at all times by collateral described in clause (a) or
(b) above, such collateral must be held by a third party and the Trustee must
have a perfected first priority security interest in such collateral;
(g) Deposits of any bank or savings and loan association (the long-term
deposit rating of which is Baa3 or better by Moody's and BBB by Standard &
Poor's) which has combined capital, surplus and undivided profits of at least
$50,000,000 which deposits are insured by the FDIC and held up to the limits
insured by the FDIC;
(h) Repurchase agreements collateralized by securities described in
(a), (c), or (e) above with any registered broker/dealer subject to the
Securities Investors Protection Corporation's jurisdiction and subject to
applicable limits therein promulgated by Securities Investors Protection
Corporation or any commercial bank, if such broker/dealer or bank has an
uninsured, unsecured and unguaranteed short-term or long-term obligation rated
P-l or Aa2, respectively, or better by Moody's and A-1+ or AA, respectively, or
better by Standard & Poor's, provided:
a. A master repurchase agreement or specific written
repurchase agreement governs the transaction, and
b. The securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent for the
Trustee, and such third party is (a) a Federal Reserve Bank, (b) a bank
which is a member of the FDIC and which has combined capital, surplus
and undivided profits of not less than $125 million, or (c) a bank
approved in writing for such purpose by the Certificate Insurer, and
the Trustee shall have received written confirmation from such third
party that it holds such securities, free and clear of any lien, as
agent for the Trustee, and
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c. A perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31 CFR 306.1 et
seq. or 31 CFR 350.0 et seq., in such securities is created for the
benefit of the Trustee, and
d. The repurchase agreement has a term of thirty days or less
and the Trustee will value the collateral securities no less frequently
than weekly marked-to-market at current market price plus interest and
will liquidate the collateral securities if any deficiency in the
required collateral percentage is not restored within two business days
of such valuation, and
e. The fair market value of the collateral securities in
relation to the amount of the repurchase obligation, including
principal and interest, is equal to at least 106%.
(i) Commercial paper (having original maturities of not more than 270
days) rated in the highest short-term rating categories of Standard & Poor's and
Moody's;
(j) Any money market fund rated AAAm or AAAm-G by Standard & Poor's and
Aaa by Moody's which funds are registered under the Investment Company Act of
1940 and whose shares are registered under the Securities Act of 1933, including
any such fund that is managed by the Trustee or any affiliate of the Trustee or
for which the Trustee or any of its affiliates acts as an adviser; and
(k) Any other investment permitted by each of the Rating Agencies and
the Certificate Insurer.
provided that no instrument described above shall evidence either the right to
receive (a) only interest with respect to the obligations underlying such
instrument or (b) both principal and interest payments derived from obligations
underlying such instrument and the interest and principal payments with respect
to such instrument provided a yield to maturity at par greater than 120% of the
yield to maturity at par of the underlying obligations; and provided, further,
that all instruments described hereunder shall mature at par on or prior to the
next succeeding Payment Date unless otherwise provided in this Agreement and
that no instrument described hereunder may be purchased at a price greater than
par if such instrument may be prepaid or called at a price less than its
purchase price prior to stated maturity.
Section 7.08 Accounting and Directions by Trustee.
By 12:00 noon New York time, on each Payment Date (or such earlier
period as shall be agreed by the Seller and the Trustee), the Trustee shall
notify (subject to the terms of Section 10.03(j) hereof, based solely on
information provided to the Trustee by the Servicer and upon which the Trustee
may rely) the Seller, the Depositor, each Owner and the Certificate Insurer, of
the following information with respect to such Payment Date (which notification
may be given by facsimile, or by telephone promptly confirmed in writing):
(1) The aggregate amount on deposit in the Certificate Account
as of the related Determination Date;
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(2) The Class A Distribution Amount, with respect to each
Class individually, and all Classes in the aggregate on the next
Payment Date;
(3) The amount of any Subordination Increase Amount for each
Group;
(4) The amount of any Insured Payment to be made by the
Certificate Insurer on such Payment Date;
(5) The application of the amounts described in clauses (1),
(3) and (4) above in respect of the distribution of the Class A
Distribution Amount on such Payment Date in accordance with Section
7.03 hereof;
(6) The Class A Certificate Principal Balance, the aggregate
amount of the principal of each Class of the Class A Certificates to be
paid on such Payment Date and the remaining Certificate Principal
Balance of each Class of Class A Certificates following any such
payment;
(7) The amount, if any, of any Realized Losses for each Group
for the related Remittance Period;
(8) The amount of any Subordination Deficit, any Subordination
Reduction Amount and the Specified Subordination Amount for each Group;
(9) For the Payment Dates during the Funding Period, (A) the
Pre-Funded Amount previously used to purchase Subsequent Home Equity
Loans, (B) the Pre-Funded Amount distributed as either a Fixed Rate
Group Principal Distribution Amount or an Adjustable Rate Group
Principal Distribution Amount, (C) the Fixed Rate Group Pre-Funding
Account Earnings and Adjustable Rate Group Pre-Funding Account Earnings
transferred to the Certificate Account, (D) the amounts transferred
from the Capitalized Interest Account to the Certificate Account and
the amount transferred to the Seller, if any and (E) the remaining
Pre-Funded Amount; and
Section 7.09 Reports by Trustee to Owners and Certificate Insurer.
(a) On each Payment Date the Trustee shall transmit a report in writing
to each Owner, the Underwriter, the Depositor, the Certificate Insurer, Standard
& Poor's and Moody's:
(i) the amount of the distribution with respect to such
Owners' Certificates (based on a Certificate in the original principal
amount of $l,000);
(ii) the amount of such Owner's distributions allocable to
principal, separately identifying the aggregate amount of any
Prepayments in full or other Prepayments or other recoveries of
principal included therein with respect to the Fixed Rate Group and the
Adjustable Rate Group and any Pre-Funded Amounts distributed as a
prepayment
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(based on a Certificate in the original principal amount of $l,000) and
any related Subordination Increase Amount;
(iii) the amount of such Owner's distributions allocable to
interest (based on a Certificate in the original principal amount of
$l,000);
(iv) if the distribution (net of any Insured Payment) to the
Owners of any Class of the Class A Certificates on such Payment Date
was less than the related Class A Distribution Amount on such Payment
Date, the related Carry Forward Amount and the allocation thereof to
the related Classes of Class A Certificates resulting therefrom;
(v) the amount of any Insured Payment included in the amounts
distributed to the Owners of Class A Certificates on such Payment Date;
(vi) the principal amount of each Class of Class A Certificate
(based on a Certificate in the original principal amount of $1,000)
which will be Outstanding and the aggregate Loan Balance of each Group
after giving effect to any payment of principal on such Payment Date;
(vii) the Subordinated Amount and Subordination Deficit for
each Group, if any, remaining after giving effect to all distributions
and transfers on such Payment Date;
(viii) based upon information furnished by the Servicer, such
information as may be required by Section 6049(d)(7)(C) of the Code and
the regulations promulgated thereunder to assist the Owners in
computing their market discount;
(ix) the total of any Substitution Amounts and any Loan
Purchase Price amounts included in such distribution with respect to
each Group;
(x) the weighted average Coupon Rate of the Home Equity Loans
in each Group;
(xi) the amount of any Carry-Forward Amounts;
(xii) during the Funding Period, the Loan Balance as the
Subsequent Home Equity Loans added to the Trust during the related
Remittance Period; are
(xiii) such other information as the Certificate Insurer or
any Owner may reasonably request with respect to Delinquent Home Equity
Loans;
(xiv) the weighted average gross margin of the Home Equity
Loan in the Adjustable Rate Group;
(xv) the largest home equity loan balance outstanding in each
Group;
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(xvi) for Payment Dates during the Funding Period, the
remaining Pre-Funded Amount for each Group; and
(xvii) the Class A-5 Pass-Through Rate.
The Servicer shall provide to the Trustee the information described in
Section 8.08(d)(iii) and in clause (b) below to enable the Trustee to perform
its reporting obligations under this Section, and such obligations of the
Trustee under this Section arc conditioned upon such information being received
and the information provided in clauses (ii), (ix) and (x) shall be based solely
upon information contained in the monthly servicing report provided by the
Servicer to the Trustee pursuant to Section 8.08 hereof.
(b) In addition, on each Payment Date the Trustee will distribute to
each Owner, the Certificate Insurer, the Underwriter, Standard & Poor's and
Moody's, together with the information described in Subsection (a) preceding,
the following information with respect to each Home Equity Loan Group and for
both Groups in the aggregate which is hereby required to be prepared by the
Servicer and furnished to the Trustee for such purpose on or prior to the
related Monthly Remittance Date:
(i) the number and aggregate principal balances of Home Equity
Loans (a) 30-59 days Delinquent, (b) 60-89 days Delinquent and (c) 90
or more days Delinquent, as of the close of business on the last
Business Day of the calendar month immediately preceding the Payment
Date, (d) the numbers and aggregate Loan Balances of all Home Equity
Loans as of such Payment Date after giving effect to any payment of
principal on the last day of the Remittance Period immediately
preceding the Payment Date and (e) the percentage that each of the
amounts represented by clauses (a), (b) and (c) represent as a
percentage of the respective amounts in clause (d);
(ii) the status and the number and dollar amounts of all Home
Equity Loans in foreclosure proceedings as of the close of business on
the last Business Day of the calendar month immediately preceding such
Payment Date, separately stating, for this purpose, all Home Equity
Loans with respect to which foreclosure proceedings were commenced in
the immediately preceding calendar month;
(iii) the number of Mortgagors and the Loan Balances of (a)
the related Mortgages involved in bankruptcy proceedings as of the
close of business on the last Business Day of the calendar month
immediately preceding such Payment Date and (b) Home Equity Loans that
are "balloon" loans;
(iv) the existence and status of any REO Properties, as of the
close of business of the last Business Day of the month immediately
preceding the Payment Date;
(v) the book value of any REO Property as of the close of
business on the last Business Day of the calendar month immediately
preceding the Payment Date;
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(vi) cumulative Realized Losses, incurred on the Home Equity
Loans from the Startup Day to and including the Remittance Period
immediately preceding the Payment Date;
(vii) the amount of net Liquidation Proceeds realized on the
Home Equity Loans during the Remittance Period immediately preceding
the Payment Date;
(viii) the Annual Loss Percentage (Rolling Twelve Month) with
respect to such Payment date; and
(ix) the 90+ Delinquency Percentage (Rolling Three Month) with
respect to such payment Date.
(c) The Trustee shall, on behalf of the Trust, prepare the periodic
reports required to be filed under the provisions of the Securities Exchange Act
of 1934, as amended, and the rules and regulations of the Securities and
Exchange Commission thereunder as described in the SEC Letter Agreement at the
times and in the manner described therein. Upon the request of the Trustee, each
of the Depositor, the Seller and the Servicer shall cooperate with the Trustee
in the preparation of any such report and shall provide to the Trustee in a
timely manner all such information or documentation as the Trustee may
reasonably request in connection with the performance of its duties and
obligations under this Section 7.09(c).
Section 7.10 Reports by Trustee.
(a) The Trustee shall report to the Depositor, the Seller, the
Certificate Insurer and each Owner, with respect to the amount on deposit in the
Certificate Account (including the amount therein relating to each Group) and
the identity of the investments included therein, as the Depositor, the Seller,
any Owner or the Certificate Insurer may from time to time reasonably request.
Without limiting the generality of the foregoing, the Trustee shall, at the
reasonable request of the Depositor, the Seller, any Owner or the Certificate
Insurer transmit promptly to the Depositor, the Seller, any Owner and the
Certificate Insurer copies of all accountings of receipts in respect of the Home
Equity Loans furnished to it by the Servicer and shall notify the Seller and the
Certificate Insurer if any Monthly Remittance Amount has not been received by
the Trustee when due.
(b) The Trustee shall report to the Certificate Insurer and each Owner
with respect to any written notices it may from time to time receive which
provide an Authorized Officer with actual knowledge that any of the statements
set forth in Section 3.04(b) hereof are inaccurate.
END OF ARTICLE VII
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ARTICLE VIII
SERVICING AND ADMINISTRATION OF HOME EQUITY LOANS
Section 8.01 Servicer and Sub-Servicers.
Acting directly or through one or more Sub-Servicers as provided in
Section 8.03, the Servicer shall service and administer the Home Equity Loans in
accordance with this Agreement and the terms of the respective Home Equity
Loans, and with prudent and reasonable care, using the degree of skill and
attention that the Servicer exercises with respect to comparable home equity
loans that it services for itself or others and shall have full power and
authority, acting alone, to do or cause to be done any and all things in
connection with such servicing and administration which it may deem necessary or
desirable but without regard to: (i) any relationship that the Servicer, any
Sub-Servicer or any Affiliate of the Servicer or any Sub-Servicer may have with
the related Mortgagor; (ii) the ownership of any Certificate by the Servicer or
any Affiliate of the Servicer; (iii) the Servicer's obligation to make
Delinquency Advances or Servicing Advances; or (iv) the Servicer's or any
Sub-Servicer's right to receive compensation for its services hereunder or with
respect to any particular transaction.
Subject to Section 8.03 hereof, the Servicer may, and is hereby
authorized to, perform any of its servicing responsibilities with respect to all
or certain of the Home Equity Loans through a Sub-Servicer as it may from time
to time designate, but no such designation of a Sub-Servicer shall serve to
release the Servicer from any of its obligations under this Agreement. Such
Sub-Servicer shall have the rights and powers of the Servicer which have been
delegated to such Sub-Servicer with respect to such Home Equity Loans under this
Agreement.
Without limiting the generality of the foregoing, but subject to
Sections 8.13 and 8.14, the Servicer in its own name or in the name of a
Sub-Servicer is hereby authorized and empowered to execute and deliver, on
behalf of itself, the Owners and the Trustee or any of them, (i) 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 Home Equity
Loans and with respect to the Properties, (ii) to institute foreclosure
proceedings or obtain a deed in lieu of foreclosure so as to effect ownership of
any Property in the name of the Servicer on behalf of the Trustee, and (iii) to
hold title to any Properly upon such foreclosure or deed in lieu of foreclosure
on behalf of the Trustee; provided, however, that to the extent any instrument
described in clause (i) preceding would be delivered by the Servicer outside of
its usual procedures for home equity loans held in its own portfolio the
Servicer shall, prior to executing and delivering such instrument, obtain the
prior written consent of the Certificate Insurer, and provided, further,
however, that Section 8.13(a) and Section 8.14(a) shall each constitute a
revocable power of attorney from the Trustee to the Servicer to execute an
instrument of satisfaction (or assignment of mortgage without recourse) with
respect to any Home Equity Loan held by the Trustee hereunder paid in full or
foreclosed (or with respect to which payment in full has been escrowed).
Revocation of the power of attorney created by the final proviso of the
preceding sentence shall take effect upon (i) the receipt by the Servicer of
written notice thereof from the Trustee, (ii) a Servicer Termination Event or
(iii) the termination of the Trust. The Trustee shall execute any documentation
furnished to it by the Servicer for recordation by the Servicer in the
appropriate
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jurisdictions, as shall be necessary to effectuate the foregoing. Subject to
Sections 8.13 and 8.14, the Trustee shall, if necessary, execute a power of
attorney to the Servicer or any Sub-Servicer and furnish them with any other
documents as the Servicer or such Sub-Servicer shall reasonably request to
enable the Servicer and such Sub-Servicer to carry out their respective
servicing and administrative duties hereunder.
Upon the request of the Trustee, the Servicer shall send to the
Trustee, the details concerning the servicing of the Home Equity Loans on
computer generated tape, diskette or other machine readable format which is
mutually agreeable.
The Servicer shall give prompt notice to the Trustee of any action, of
which the Servicer has actual knowledge, to (i) assert a claim against the Trust
or (ii) assert jurisdiction over the Trust.
Servicing Advances incurred by the Servicer or any Sub-Servicer in
connection with the servicing of the Home Equity Loans (including any penalties
in connection with the payment of any taxes and assessments or other charges) on
any Property shall be recoverable by the Servicer or such Sub-Servicer to the
extent described in Section 8.09(b) hereof.
Section 8.02 Collection of Certain Home Equity Loan Payments.
The Servicer shall make reasonable efforts to collect all payments
called for under the terms and provisions of the Home Equity Loans, and shall,
to the extent such procedures shall be consistent with this Agreement and the
terms and provisions of any applicable Insurance Policy, follow collection
procedures for all Home Equity Loans [at least as rigorous as those described in
the FNMA Guide.] Consistent with the foregoing, the Servicer may in its
discretion waive or permit to be waived any late payment charge, prepayment
charge, assumption fee or any penalty interest in connection with the prepayment
of a Home Equity Loan or any other fee or charge which the Servicer would be
entitled to retain hereunder as servicing compensation. In the event the
Servicer shall consent to the deferment of the due dates for payments due on a
Note, the Servicer shall nonetheless make payment of any required Delinquency
Advance with respect to the payments so extended to the same extent as if such
installment were due, owing and Delinquent and had not been deferred, and shall
be entitled to reimbursement therefor in accordance with Section 8.09(a) hereof.
Section 8.03 Sub-Servicing Agreements Between Servicer and
Sub-Servicers.
The Servicer may, with the prior written consent of the Certificate
Insurer, enter into Sub-Servicing Agreements for any servicing and
administration of Home Equity Loans with any institution which is acceptable to
the Certificate Insurer and which, (x) is in compliance with the laws of each
state necessary to enable it to perform its obligations under such Sub-Servicing
Agreement, (y) has experience servicing home equity loans that are similar to
the Home Equity Loans and (z) has equity of not less than $5,000,000 (as
determined in accordance with generally accepted accounting principles). The
Servicer shall give notice to the Trustee, the Owners, the Certificate Insurer
and the Rating Agencies of the appointment of any Sub-Servicer (and shall
receive the confirmation of the Rating Agencies that such Sub-Servicer shall not
result in a
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withdrawal or downgrading by any Rating Agency of the rating or the shadow
rating of the Class A Certificates). For purposes of this Agreement, the
Servicer shall be deemed to have received payments on Home Equity Loans when any
Sub-Servicer has received such payments. Each Sub-Servicer shall be required to
service the Home Equity Loans in accordance with this Agreement and any such
Sub-Servicing Agreement shall be consistent with and not violate the provisions
of this Agreement. Each Sub-Servicing Agreement shall provide that the Trustee
(if acting as successor Servicer) or any other successor Servicer shall have the
option to terminate such agreement without payment of any fees if the original
Servicer is terminated or resigns. The Servicer shall deliver to the Trustee and
the Certificate Insurer copies of all Sub-Servicing Agreements, and any
amendments or modifications thereof promptly upon the Servicer's execution and
delivery of such instrument.
Section 8.04 Successor Sub-Servicers.
The Servicer shall be entitled to terminate any Sub-Servicing Agreement
in accordance with the terms and conditions of such Sub-Servicing Agreement and
to either itself directly service the related Home Equity Loans or enter into a
Sub-Servicing Agreement with a successor Sub-Servicer which qualifies under
Section 8.03.
Section 8.05 Liability of Servicer; Indemnification.
(a) The Servicer shall not be relieved of its obligations under this
Agreement notwithstanding any Sub-Servicing Agreement or any of the provisions
of this Agreement relating to agreements or arrangements between the Servicer
and a Sub-Servicer and the Servicer shall be obligated to the same extent and
under the same terms and conditions as if it alone were servicing and
administering the Home Equity Loans. The Servicer shall be entitled to enter
into any agreement with a Sub-Servicer for indemnification of the Servicer by
such Sub-Servicer and nothing contained in such Sub-Servicing Agreement shall be
deemed to limit or modify this Agreement.
(b) The Servicer agrees to indemnify and hold the Trustee, the
Certificate Insurer and each Owner 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 Trustee, the Depositor, the Certificate
Insurer and any Owner may sustain in any way related to the failure of the
Servicer to perform its duties and service the Home Equity Loans in compliance
with the terms of this Agreement. The Servicer shall immediately notify the
Trustee, the Depositor, the Certificate Insurer and each Owner if a claim is
made by a third party with respect to this Agreement, and the Servicer shall
assume (with the consent of the Trustee and the Certificate Insurer) the defense
of any such claim and pay all expenses in connection therewith, including
reasonable counsel fees, and promptly pay, discharge and satisfy any judgment or
decree which may be entered against the Servicer, the Trustee, the Depositor,
the Certificate Insurer and/or Owner in respect of such claim. The Trustee
shall, in accordance with instructions received from the Servicer, reimburse the
Servicer only from amounts otherwise distributable on the Class R Certificates
for all amounts advanced by it pursuant to the preceding sentence, except when a
final nonpayable adjudication determines that the claim relates directly to the
failure of the Servicer to perform its duties in compliance with the Agreement.
The provisions of this Section
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8.05(b) shall survive the termination of this Agreement and the payment of the
outstanding Certificates.
Section 8.06 No Contractual Relationship Between Sub-Servicer, Trustee
or the Owners.
Any Sub-Servicing Agreement and any other transactions or services
relating to the Home Equity Loans involving a Sub-Servicer shall be deemed to be
between the Sub-Servicer and the Servicer alone and the Trustee and the Owners
shall not be deemed parties thereto and shall have no claims, rights,
obligations, duties or liabilities with respect to any Sub-Servicer except as
set forth in Section 8.07.
Section 8.07 Assumption or Termination of Sub-Servicing Agreement by
Trustee.
In connection with the assumption of the responsibilities, duties and
liabilities and of the authority, power and rights of the Servicer hereunder by
the Trustee pursuant to Section 8.20 or another successor Servicer, it is
understood and agreed that the Servicer's rights and obligations under any
Sub-Servicing Agreement then in force between the Servicer and a Sub-Servicer
shall be assumed simultaneously by the Trustee or another successor Servicer
without act or deed on part of the Trustee; provided, however, that the Trustee
(if acting as successor Servicer) or any other successor Servicer may terminate
the Sub-Servicer as provided in Section 8.03.
The Servicer shall, upon the reasonable request of the Trustee, but at
the expense of the Servicer, deliver to the assuming party documents and records
relating to each Sub-Servicing Agreement and an accounting of amounts collected
and held by it and otherwise use its best reasonable efforts to effect the
orderly and efficient transfer of the Sub-Servicing Agreements to the assuming
party.
Section 8.08 Principal and Interest Account.
(a) The Servicer shall establish and maintain at one or more Designated
Depository Institutions the Principal and Interest Account to be held as a trust
account. The Principal and Interest Account shall be an Eligible Account. Each
Principal and Interest Account shall be identified on the records of the
Designated Depository Institution as follows: Norwest Bank Minnesota, National
Association, as Trustee on behalf of MBIA Insurance Corporation and the Owners
of the Centex Home Equity Loan Trust 1998-1 Home Equity Loan Pass-Through
Certificates. If the institution at any time holding the Principal and Interest
Account ceases to be eligible as a Designated Depository Institution hereunder,
then the Servicer shall immediately be required to name a successor institution
meeting the requirements for a Designated Depository Institution hereunder. If
the Servicer fails to name such a successor institution, then the Principal and
Interest Account shall thenceforth be held as a trust account with a qualifying
Designated Depository Institution selected by the Trustee. The Servicer shall
notify the Trustee, the Certificate Insurer and the Owners if there is a change
in the name, account number or institution holding the Principal and Interest
Account.
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Subject to Subsection (c) below, the Servicer shall deposit all
receipts required pursuant to Subsection (c) below and related to the Home
Equity Loans to the Principal and Interest Account on a daily basis (but no
later than the first Business Day after receipt).
(b) All funds in the Principal and Interest Account shall be held (i)
uninvested up to the amount insured by the FDIC or (ii) invested in Eligible
Investments. Any investments of funds in the Principal and Interest Account
shall mature or be withdrawable at par on or prior to the immediately succeeding
Monthly Remittance Date. The Principal and Interest Account shall be held in
trust in the name of the Trust for the benefit of the Owners. The Trust shall be
divided into two separate sub-trusts; one for the Adjustable Rate Group and any
Trust assets allocable to such Adjustable Rate Group and the other for the Fixed
Rate Group and any Trust assets allocable to such Fixed Rate Group. Any
investment earnings on funds held in the Principal and Interest Account shall be
for the account of the Servicer and may only be withdrawn from the Principal and
Interest Account by the Servicer immediately following the remittance of the
Monthly Remittance Amount (and the Total Monthly Excess Spread included therein)
by the Servicer. Any investment losses on amounts held in the Principal and
Interest Account shall be for the account of the Servicer and promptly upon the
realization of such loss shall be contributed by the Servicer to the Principal
and Interest Account. Any references herein to amounts on deposit in the
Principal and Interest Account shall refer to amounts net of such investment
earnings.
(c) The Servicer shall deposit to the Principal and Interest Account on
the Business Day after receipt, all principal collected and interest due on the
Home Equity Loans (net of the Servicing Fee related to such Home Equity Loans)
on and after the Cut-Off Date, the related Subsequent Cut-Off Date and the
Replacement Cut-Off Date, as applicable, including any Prepayments
and Net Liquidation Proceeds, other recoveries or amounts related to the Home
Equity Loans received by the Servicer and any income from REO Properties, but
net of (i) Net Liquidation Proceeds to the extent such Net Liquidation Proceeds
exceed the sum of (I) the Loan Balance of the related Home Equity Loan
immediately prior to liquidation, plus (II) accrued and unpaid interest on such
Home Equity Loan (net of the related Servicing Fee) and (III) any unreimbursed
Realized Losses, (ii) principal received and interest due on the Home Equity
Loans prior to the Cut-Off Date, the related Subsequent Cut-Off Date or the
related Replacement Cut-Off Date, as the case may be, (iii) reimbursements for
unreimbursed Delinquency Advances (but solely from amounts received on the
related Home Equity Loan) and (iv) reimbursements for amounts deposited in the
Principal and Interest Account representing payments of principal and/or
interest on a Note by a Mortgagor which are subsequently returned by a
depository institution as unpaid (all such net amount herein referred to as
"Daily Collections").
(d) (i) The Servicer may make withdrawals from the Principal and
Interest Account, with respect to each Home Equity Loan Group, only in the
following priority and for the following purposes:
(A) on each Monthly Remittance Date, to pay itself the related
Servicing Fees to the extent such Servicing Fees are unpaid;
(B) to withdraw investment earnings on amounts on deposit in the
Principal and Interest Account;
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(C) to withdraw amounts that have been deposited to the Principal
and Interest Account in error;
(D) to reimburse itself pursuant to Section 8.09(a) for
unrecovered Delinquency Advances and unrecovered Servicing
Advances (in each case, solely from amounts recovered on the
related Home Equity Loan) and for any excess interest
collected from a Mortgagor;
(E) Nonrecoverable Advances; and
(F) to clear and terminate the Principal and Interest Account
following the termination of the Trust pursuant to Article IX;
(ii) The Servicer shall (a) remit to the Trustee for deposit
in the Certificate Account by wire transfer, or otherwise make funds available
in immediately available funds, without duplication, the Monthly Remittance
Amount allocable to a Remittance Period not later than the related Monthly
Remittance Date, and (b) on each Monthly Remittance Date, deliver to the Trustee
and the Certificate Insurer, a monthly servicing report, with respect to each
Home Equity Loan Group, containing (without limitation) the following
information: principal and interest collected in respect of the Home Equity
Loans, scheduled principal and interest that was due on the Home Equity Loans,
relevant information with respect to Liquidated Loans, if any, summary and
detailed delinquency reports, Liquidation Proceeds and other similar information
concerning the servicing of the Home Equity Loans and any other information
requested by the Certificate Insurer (including, without limitation, a
liquidation report with respect to each Liquidated Loan). In addition, the
Servicer shall inform the Trustee and the Certificate Insurer on each Monthly
Remittance Date, with respect to each Home Equity Loan Group, of the amounts of
any Loan Purchase Prices or Substitution Amounts so remitted during the related
Remittance Period, and of the Loan Balance of the Home Equity Loan having the
largest Loan Balance as of such date.
(iii) The Servicer shall provide to the Trustee the
information described in Section 8.08(d)(ii)(b) and in Section 7.09(b) to enable
the Trustee to perform its reporting requirements under Section 7.09 and to make
the allocations and disbursements set forth in Sections 7.02 and 7.03.
Section 8.09 Delinquency Advances and Servicing Advances.
(a) On or before each Monthly Remittance Date, the Servicer shall be
required to remit to the Trustee for deposit to the Certificate Account out of
the Servicer's own funds or from collections on any Home Equity Loans that are
not required to be distributed on the Payment Date occurring during the month in
which such reimbursement is made (all or any portion of such amount to be
replaced on future Monthly Remittance Dates to the extent required for
distribution) any Delinquent payment of interest with respect to each Delinquent
Home Equity Loan, which payment was not received on or prior to the last day of
the related Remittance Period. Such amounts of the Servicer's own funds so
deposited are "Delinquency Advances".
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The Servicer shall be permitted to reimburse itself on any Business Day
for any Delinquency Advances paid from the Servicer's own funds, from late
collections on the related Home Equity Loan or as provided in Section
7.03(b)(iii)(F).
Notwithstanding the foregoing, in the event that the Servicer
determines in its reasonable business judgment in accordance with the servicing
standards set out herein that any proposed Delinquency Advance would not be
recoverable, the Servicer shall not be required to make Delinquency Advances
with respect to such Home Equity Loan. To the extent that the Servicer
previously has made Delinquency Advances with respect to a Home Equity Loan that
the Servicer subsequently determines will be nonrecoverable, the Servicer shall
be entitled to reimbursement for such aggregate Nonrecoverable Advances from
collections on any Home Equity Loan on deposit in the Principal and Interest
Account. The Servicer shall give written notice of such determination as to why
such amount would not be recoverable to the Trustee and the Certificate Insurer;
the Trustee shall promptly furnish a copy of such notice to the Owners of the
Class R Certificates; provided, further, that the Servicer shall be entitled to
recover any unreimbursed Delinquency Advances from Liquidation Proceeds for the
related Home Equity Loan.
(b) The Servicer will pay all "out-of-pocket" costs and expenses
incurred in the performance of its servicing obligations, including, but not
limited to, (i) Preservation Expenses, (ii) the cost of any enforcement or
judicial proceedings, including foreclosures, (iii) the cost of the management
and liquidation of REO Property, (iv) advances required by Section 8.13(a),
except to the extent that such amounts are determined by the Servicer in its
reasonable business judgment not to be recoverable and (v) expenses incurred
pursuant to Section 8.22. Such costs will constitute "Servicing Advances". The
Servicer may recover a Servicing Advance (x) from the Mortgagors to the extent
permitted by the Home Equity Loans or, if not theretofore recovered from the
Mortgagor on whose behalf such Servicing Advance was made, from Liquidation
Proceeds realized upon the liquidation of the related Home Equity Loan and (y)
as provided in Section 7.03(b)(iii)(F). The Servicer shall be entitled to
recover the Servicing Advances from the Liquidation Proceeds on the related Home
Equity Loan prior to the payment of the Liquidation Proceeds to any other party
to this Agreement. In no case may the Servicer recover Servicing Advances from
the principal and interest payments on any other Home Equity Loan except as
provided in Section 7.03(b)(iii)(F).
Section 8.10 Compensating Interest; Repurchase of Home Equity Loans.
(a) If a Prepayment in full of a Home Equity Loan or a Prepayment of at
least six times a Mortgagor's Monthly Payment occurs during any calendar month,
any difference between (x) the interest collected from the Mortgagor in
connection with such payoff, and (y) the full months interest at the Coupon Rate
that would be due on the related Due Date for such Home Equity Loan
("Compensating Interest") (but not in excess of the aggregate Servicing Fee for
the related Remittance Period) shall be deposited by the Servicer to the
Principal and Interest Account (or if such difference is an excess, the Servicer
shall retain such excess) on the next succeeding Monthly Remittance Date and
shall be included in the Monthly Remittance Amount
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to be made available to the Trustee on such Monthly Remittance Date. The
Servicer may recover any unreimbursed payments of Compensating Interest as
provided in Section 7.03(b)(iii)(F).
(b) Subject to the clause (c) below, the Servicer has the right and the
option, but not the obligation, to purchase for its own account any Home Equity
Loan which becomes Delinquent, in whole or in part, as to at least three
consecutive monthly installments or any Home Equity Loan as to which enforcement
proceedings have been brought by the Servicer pursuant to Section 8.13;
provided, however, that the Servicer may not purchase any such Home Equity Loan
unless the Servicer has delivered to the Trustee and the Certificate Insurer at
the Servicer's expense, an Opinion of Counsel acceptable to the Certificate
Insurer and to the Trustee to the effect that such a purchase would not
constitute a Prohibited Transaction for the Trust or otherwise subject the Trust
to tax and would not jeopardize the status of the Trust Estate as a REMIC. Any
such Home Equity Loan so purchased shall be purchased by the Servicer on or
prior to a Monthly Remittance Date at a purchase price equal to the Loan
Purchase Price thereof, which purchase price shall be deposited in the Principal
and Interest Account.
(c) If a Home Equity Loan to be repurchased by the Servicer pursuant to
clause (b) above, is the greatest number of days Delinquent of all then
Delinquent Home Equity Loans (including Home Equity Loans relating to REO
Property), the Servicer may purchase Home Equity Loans without having first
notified the Certificate Insurer of such purchase. In all other cases, the
Servicer must notify the Certificate Insurer and the Trustee, in writing, of its
intent to purchase a Home Equity Loan and the Servicer may not purchase such
Home Equity Loan without the written consent of the Certificate Insurer.
(d) The Net Liquidation Proceeds from the disposition of any REO
Property shall be deposited in the Principal and Interest Account and remitted
to the Trustee as part of the Monthly Remittance Amount remitted by the Servicer
to the Trustee.
Section 8.11 Maintenance of Insurance.
(a) The Servicer shall cause to be maintained with respect to each Home
Equity Loan a hazard insurance policy with a carrier generally acceptable to the
Servicer that provides for fire and extended coverage, and which provides for a
recovery by the Trust of insurance proceeds relating to such Home Equity Loan in
an amount not less than the least of (i) the outstanding principal balance of
the Home Equity Loan (plus the related senior lien loan, if any), (ii) the
minimum amount required to compensate for damage or loss on a replacement cost
basis and (iii) the full insurable value of the premises. The Servicer shall
maintain the insurance policies required hereunder in the name of the mortgagee,
its successors and assigns, and shall be named as loss payee. The policies shall
require the insurer to provide the mortgagee with 30 days' notice prior to any
cancellation or as otherwise required by law. The Servicer may also maintain a
blanket hazard insurance policy or policies if the insurer or insurers of such
policies are rated investment grade by Moody's and Standard & Poor's.
(b) If the Home Equity Loan at the time of origination (or if required
by federal law, at any time thereafter) relates to a Property in an area
identified in the Federal Register by the Federal Emergency Management Agency as
having special flood hazards, the Servicer will cause
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to be maintained with respect thereto a flood insurance policy in a form meeting
the requirements of the then current guidelines of the Federal Insurance
Administration with a carrier generally acceptable to the Servicer in an amount
representing coverage, and which provides for a recovery by the Trust of
insurance proceeds relating to such Home Equity Loan of not less than the least
of (i) the outstanding principal balance of the Home Equity Loan (plus the
related senior lien loan, if any), (ii) the minimum amount required to
compensate for damage or loss on a replacement cost basis and (iii) the maximum
amount of insurance that is available under the Flood Disaster Protection Act of
1973. The Servicer shall indemnify the Trust and the Certificate Insurer out of
the Servicer's own funds for any loss to the Trust or the Certificate Insurer
resulting from the Servicer's failure to advance premiums for such insurance
required by this Section when so permitted by the terms of the Mortgage as to
which such loss relates.
(c) Amounts collected by the Servicer under any Insurance Policies
shall be deposited into the Principal and Interest Account.
Section 8.12 Due-on-Sale Clauses; Assumption and Substitution
Agreements.
When a Property has been or is about to be conveyed by the Mortgagor,
the Servicer shall, to the extent it has knowledge of such conveyance or
prospective conveyance, exercise its rights to accelerate the maturity of the
related Home Equity Loan under any "due-on-sale" clause contained in the related
Mortgage or Note; provided, however, that the Servicer shall not exercise any
such right if the "due-on-sale" clause, in the reasonable belief of the
Servicer, is not enforceable under applicable law. An Opinion of Counsel,
provided at the expense of the Servicer, to the foregoing effect shall
conclusively establish the reasonableness of such belief. In such event, the
Servicer shall enter into an assumption and modification agreement with the
person to whom such property has been or is about to be conveyed, pursuant to
which such person becomes liable under the Note and, unless prohibited by
applicable law or the Mortgage documents, the Mortgagor remains liable thereon.
If the foregoing is not permitted under applicable law, the Servicer is
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as Mortgagor and becomes liable under the Note; provided,
however, that to the extent any such substitution of liability agreement would
be delivered by the Servicer outside of its usual procedures for home equity
loans held in its own portfolio the Servicer shall, prior to executing and
delivering such agreement, obtain the prior written consent of the Certificate
Insurer. The Home Equity Loan, as assumed, shall conform in all material
respects to the requirements, representations and warranties of this Agreement.
The Servicer shall notify the Trustee that any such assumption or substitution
agreement has been completed by forwarding to the Trustee or to the Custodian on
the Trustee's behalf the original copy of such assumption or substitution
agreement (indicating the File to which it relates) which copy shall be added by
the Trustee or by the Custodian on the Trustee's behalf to the related File and
which shall, for all purposes, be considered a part of such File to the same
extent as all other documents and instruments constituting a part thereof. The
Servicer shall be responsible for recording any such assumption or substitution
agreements. In connection with any such assumption or substitution agreement, no
material term of the Home Equity Loan (including, without limitation, the
required monthly payment on the related Home Equity Loan, the stated maturity,
the outstanding principal amount or the Coupon Rate) shall be changed nor shall
any required monthly payments
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of principal or interest be deferred or forgiven. Any fee collected by the
Servicer or the Sub-Servicer for consenting to any such conveyance or entering
into an assumption or substitution agreement shall be retained by or paid to the
Servicer as additional servicing compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Home Equity Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever.
Section 8.13 Realization Upon Defaulted Home Equity Loans; Workout of
Home Equity Loans.
(a) The Servicer shall foreclose upon or otherwise comparably effect
the ownership in the name of the Trustee on behalf of the Trust of Properties
relating to defaulted Home Equity Loans as to which no satisfactory arrangements
can be made for collection of Delinquent payments and which the Servicer has not
purchased pursuant to Section 8.10(b). In connection with such foreclosure or
other conversion, the Servicer shall exercise such of the rights and powers
vested in it hereunder, and use the same degree of care and skill in their
exercise or use, as prudent mortgage lenders would exercise or use under the
circumstances in the conduct of their own affairs and consistent with the
servicing standards set forth in the FNMA Guide, including, but not limited to,
advancing funds for the payment of taxes, amounts due with respect to Senior
Liens, and insurance premiums. Any amounts so advanced shall constitute
"Servicing Advances" within the meaning of Section 8.09(b) hereof. The Servicer
shall sell any REO Property within 35 months of its acquisition by the Trust, at
such price as the Servicer in good faith deems necessary to comply with this
covenant unless the Servicer obtains for the Certificate Insurer and the
Trustee, an Opinion of Counsel (the expense of which opinion shall be a
Servicing Advance) experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee, addressed to the Certificate Insurer, the
Trustee and the Servicer, to the effect that the holding by the Trust of such
REO Property for any greater period will not result in the imposition of taxes
on "Prohibited Transactions" of the Trust or the REMIC Estate as defined in
Section 860F of the Code or cause the REMIC Estate to fail to qualify as a REMIC
under the REMIC Provisions at any time that any Certificates are Outstanding.
Notwithstanding the generality of the foregoing provisions, the Servicer shall
manage, conserve, protect and operate each REO Property for the Owners solely
for the purpose of its prompt disposition and sale in a manner which does not
cause such REO Property to fail to qualify as "foreclosure property within the
meaning of Section 860G(a)(8) of the Code or result in the receipt by the REMIC
created hereunder of any "income from non-permitted assets" within the meaning
of Section 860F(a)(2)(B) of the Code or any "net income from foreclosure
property" which is subject to taxation under the REMIC Provisions. Pursuant to
its efforts to sell such REO Property, the Servicer shall either itself or
through an agent selected by the Servicer protect and conserve such REO Property
in the same manner and to such extent as is customary in the locality where such
REO Property is located and may, incident to its conservation and protection of
the interests of the Owners, rent the same, or any part thereof, as the Servicer
deems to be in the best interest of the Owners for the period prior to the sale
of such REO Property. The Servicer shall take into account the existence of any
hazardous substances, hazardous wastes or solid wastes, as such
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terms are defined in the Comprehensive Environmental Response Compensation and
Liability Act, the Resource Conservation and Recovery Act of 1976, or other
federal, state or local environmental legislation, on a Property in determining
whether to foreclose upon or otherwise comparably convert the ownership of such
Property. If the Servicer has actual knowledge of any environmental or hazardous
waste risk with respect to the Property that the Servicer is contemplating
acquiring in foreclosure or deed in lieu of foreclosure, the Servicer will cause
an environmental inspection of the Property in accordance with the servicing
standards set forth in this Agreement. The Servicer shall not take any such
action with respect to any Property known by the Servicer to contain such wastes
or substances or to be within one mile of the site of such wastes or substances,
without the prior written consent of the Certificate Insurer.
(b) The Servicer shall determine, with respect to each defaulted Home
Equity Loan, when it has recovered, whether through trustee's sale, foreclosure
sale or otherwise, all amounts it expects to recover from or on account of such
defaulted Home Equity Loan, whereupon such Home Equity Loan shall become a
"Liquidated Loan" and the Servicer shall promptly submit a liquidation report to
the Certificate Insurer in form acceptable to the Certificate Insurer.
(c) The Servicer shall not agree to any modification, waiver or
amendment of any provision of any Home Equity Loan unless, in the Servicer's
good faith judgment, such modification, waiver or amendment would minimize the
loss that might otherwise be experienced with respect to such Home Equity Loan
and only in the event of a payment default with respect to such Home Equity Loan
or in the event that a payment default with respect to such Home Equity Loan is
reasonably foreseeable by the Servicer; provided, however, that no such
modification, waiver or amendment shall extend the maturity date of such Home
Equity Loan beyond the Remittance Period related to the Final Scheduled Payment
Date of the latest Class of Class A Certificates remaining in the Trust.
Notwithstanding anything set out in this Section 8.13(c) or elsewhere in this
Agreement to the contrary, the Servicer shall be permitted to modify, waive or
amend any provision of a Home Equity Loan if required by statute or a court of
competent jurisdiction to do so.
(d) The Servicer has no intent to foreclose on any Mortgage based on
the delinquency characteristics as of the Startup Day; provided, that the
foregoing does not prevent the Servicer from initiating foreclosure proceedings
on any date hereafter if the facts and circumstances of such Mortgage including
delinquency characteristics in the Servicer's discretion so warrant such action.
Section 8.14 Trustee to Cooperate; Release of Files.
(a) Upon the payment in full of any Home Equity Loan (including any
liquidation of such Home Equity Loan through foreclosure or otherwise), or the
receipt by the Servicer of a notification that payment in full will be escrowed
in a manner customary for such purposes, the Servicer shall deliver to the
Custodian, on behalf of the Trustee, a written request of the Servicer signed by
an Authorized Officer which states the purpose of the release of a File. Upon
receipt of such written request, the Custodian, on behalf of the Trustee shall
promptly release the related File, in trust, in its reasonable discretion to (i)
the Servicer, (ii) an escrow agent or (iii) any employee, agent or attorney of
the Trustee. Upon any such payment in full, or the receipt of such
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notification that such funds have been placed in escrow, the Servicer is
authorized to give, as attorney-in-fact for the Trustee and the mortgagee under
the Mortgage which secured the Note, an instrument of satisfaction (or
assignment of Mortgage without recourse) regarding the Property relating to such
Mortgage, which instrument of satisfaction or assignment, as the case may be,
shall be delivered to the Person or Persons entitled thereto against receipt
therefor of payment in full, it being understood and agreed that no expense
incurred in connection with such instrument of satisfaction or assignment, as
the case may be, shall be chargeable to the Principal and Interest Account or to
the Trustee. In lieu of executing any such satisfaction or assignment, as the
case may be, the Servicer may prepare and submit to the Custodian, on behalf of
the Trustee, a satisfaction (or assignment without recourse, if requested by the
Person or Persons entitled thereto) in form for execution by the Trustee with
all requisite information completed by the Servicer; in such event, the
Custodian, on behalf of the Trustee shall execute and acknowledge such
satisfaction or assignment, as the case may be, and deliver the same with the
related File, as aforesaid.
(b) The Servicer shall have the right (upon receiving the prior written
consent of the Certificate Insurer) to accept applications of Mortgagors for
consent to (i) partial releases of Mortgages, (ii) alterations and (iii)
removal, demolition or division of properties subject to Mortgages. No
application for approval shall be considered by the Servicer unless: (x) the
provisions of the related Note and Mortgage have been complied with; (y) the
Loan-to-Value Ratio and debt-to-income ratio after any release does not exceed
the Loan-to-Value Ratio and debt-to-income ratio of such Note on the Cut-Off
Date, or Subsequent Cut-Off Date, as applicable and any increase in the
Loan-to-Value Ratio shall not exceed 5% unless approved in writing by the
Certificate Insurer; and (z) the lien priority of the related Mortgage is not
affected. Upon receipt by the Trustee of an Officer's Certificate executed on
behalf of the Servicer setting forth the action proposed to be taken in respect
of a particular Home Equity Loan and certifying that the criteria set forth in
the immediately preceding sentence have been satisfied, the Trustee shall
execute and deliver to the Servicer the consent or partial release so requested
by the Servicer. A proposed form of consent or partial release, as the case may
be, shall accompany any Officer's Certificate delivered by the Servicer pursuant
to this paragraph. The Servicer shall notify the Certificate Insurer and the
Rating Agencies if an application is approved under clause (y) above without
approval in writing by the Certificate Insurer.
(c) From time to time and as appropriate in the servicing of any Home
Equity Loan, including, without limitation, foreclosure or other comparable
conversion of a Home Equity Loan or collection under any applicable Insurance
Policy, the Trustee shall release the related File to the Servicer, promptly
upon a written request of the Servicer signed by an Authorized Officer, which
states the purpose of the release of a File; provided, however, that no more
than 5% of the outstanding Home Equity Loans (by number) shall be released to
the Servicer at any time. Such receipt shall obligate the Servicer to return the
File to the Trustee when the need therefore by the Servicer no longer exists.
(d) In all cases where the Servicer needs the Trustee to sign any
document or to release a File within a particular period of time, the Servicer
shall notify an Authorized Officer of the Trustee by telephone of such need and
the Trustee shall thereon use its best efforts to comply
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with the Servicer's needs, but in any event will comply within two Business Days
of such request.
(e) No costs associated with the procedures described in this Section
8.14 shall be an expense of the Trust.
Section 8.15 Servicing Compensation.
As compensation for its activities hereunder, the Servicer shall be
entitled to retain the amount of the related Servicing Fee with respect to each
Home Equity Loan. Additional servicing compensation in the form of prepayment
charges, release fees, bad check charges, assumption fees, late payment charges,
prepayment penalties, or any other servicing-related fees, Net Liquidation
Proceeds not required to be deposited in the Principal and Interest Account
pursuant to Section 8.08(c)(i) and similar items may, to the extent collected
from Mortgagors, be retained by the Servicer, unless a successor Servicer is
appointed pursuant to Section 8.20 hereof, in which case the successor Servicer
shall be entitled to such fees as are agreed upon by the Trustee, the
Certificate Insurer and the successor Servicer.
The right to receive the Servicing Fee may not be transferred in whole
or in part except in connection with the transfer of all of the Servicer's
responsibilities and obligations under this Agreement.
Section 8.16 Annual Statement as to Compliance.
The Servicer, at its own expense, will deliver to the Trustee, the
Certificate Insurer, the Depositor, and the Rating Agencies, on or before July
31 of each year, commencing in 1999, an Officer's Certificate stating, as to
each signer thereof, that (i) a review of the activities of the Servicer during
such preceding calendar year and of performance under this Agreement has been
made under such officers' supervision, and (ii) to the best of such officers'
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement for such year, or, if there has been a default in the
fulfillment of all such obligations, specifying each such default known to such
officers and the nature and status thereof including the steps being taken by
the Servicer to remedy such default.
The Servicer shall deliver to the Trustee, the Certificate Insurer and
the Rating Agencies, promptly after having obtained knowledge thereof but in no
event later than five Business Days thereafter, written notice by means of an
Officer's Certificate of any event which with the giving of notice or the lapse
of time would become a Servicer Termination Event.
Section 8.17 Annual Independent Certified Public Accountants' Reports.
On or before July 31 of each year, commencing in 1999, the Servicer, at
its own expense (or if the Trustee is then acting as Servicer, at the expense of
the Seller, which in no event shall exceed $1,000 per annum), shall cause to be
delivered to the Trustee, the Certificate Insurer, the Depositor, and the Rating
Agencies a letter or letters of a firm of independent, nationally recognized
certified public accountants reasonably acceptable to the Certificate Insurer
stating
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that such firm has examined the Servicer's overall servicing operations in
accordance with the requirements of the Uniform Single Attestation Program for
Mortgage Bankers, and stating such firm's conclusions relating thereto.
Section 8.18 Access to Certain Documentation and Information Regarding
the Home Equity Loans.
The Servicer shall provide to the Trustee and the Certificate Insurer
access to the documentation regarding the Home Equity Loans, such access being
afforded without charge but only upon reasonable request and during normal
business hours at the offices of the Servicer designated by it.
Upon any change in the format of the computer tape maintained by the
Servicer in respect of the Home Equity Loans, the Servicer shall deliver a copy
of such computer tape to the Trustee and in addition shall provide a copy of
such computer tape to the Trustee, and the Certificate Insurer at such other
times as the Trustee or the Certificate Insurer may reasonably request.
Section 8.19 Assignment of Agreement.
Other than with respect to entering into Sub-Servicing Agreements
pursuant to Section 8.03 hereof, the Servicer may not assign its obligations
under this Agreement, in whole or in part, unless it shall have first obtained
the written consent of the Trustee and the Certificate Insurer, which such
consent shall not be unreasonably withheld; provided, however, that any assignee
must meet the eligibility requirements set forth in Section 8.20(h) hereof for a
successor servicer.
Section 8.20 Removal of Servicer; Retention of Servicer; Resignation of
Servicer.
(a) The Certificate Insurer or the Trustee (with the prior written
consent of the Certificate Insurer) may remove the Servicer upon the occurrence
of any of the following events (each a "Servicer Termination Event"):
(i) The Servicer shall (I) apply for or consent to
the appointment of a receiver, trustee, liquidator or
custodian or similar entity with respect to itself or its
property, (II) admit in writing its inability to pay its debts
generally as they become due, (III) make a general assignment
for the benefit of creditors, (IV) be adjudicated a bankrupt
or insolvent, (V) commence a voluntary case under the federal
bankruptcy laws of the United States of America or any state
bankruptcy law or similar laws or file a voluntary petition or
answer seeking reorganization, an arrangement with creditors
or an order for relief or seeking to take advantage of any
insolvency law or file an answer admitting the material
allegations of a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding or (VI) take corporate
action for the purpose of effecting any of the foregoing; or
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(ii) If without the application, approval or consent
of the Servicer, a proceeding shall be instituted in any court
of competent jurisdiction, under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors,
seeking in respect of the Servicer an order for relief or an
adjudication in bankruptcy, reorganization, dissolution,
winding up, liquidation, a composition or arrangement with
creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or similar entity
with respect to the Servicer or of all or any substantial part
of its assets, or other like relief in respect thereof under
any bankruptcy or insolvency law, and, if such proceeding is
being contested by the Servicer in good faith, the same shall
(A) result in the entry of an order for relief or any such
adjudication or appointment or (B) continue undismissed or
pending and unstayed for any period of seventy-five (75)
consecutive days; or
(iii) The Servicer shall fail to perform any one or
more of its obligations hereunder and shall continue in
default thereof for a period of thirty (30) days (one (1)
Business Day in the case of a delay in making a payment or
deposit required of the Servicer under this Agreement) after
the earlier of (a) actual knowledge of an officer of the
Servicer or (b) receipt of notice from the Trustee or the
Certificate Insurer of said failure; provided, however, that
if the Servicer can demonstrate to the reasonable satisfaction
of the Certificate Insurer that it is diligently pursuing
remedial action, then the cure period may be extended with the
written approval of the Certificate Insurer; or
(iv) The Servicer shall fail to cure any breach of
any of its representations and warranties set forth in Section
3.02 or in the other Operative Documents which materially and
adversely affects the interests of the Owners or the
Certificate Insurer which remains unremedied for a period of
sixty (60) days after the earlier of the Servicer's discovery
or receipt of notice thereof; provided, however, that if the
Servicer can demonstrate to the reasonable satisfaction of the
Certificate Insurer that it is diligently pursuing remedial
action, then the cure period may be extended with the written
approval of the Certificate Insurer; or
(v) The merger, consolidation or other combination of
the Servicer with or into any other entity, unless (1) the
Servicer or an Affiliate of the Servicer is the surviving
entity of such combination or (2) the surviving entity (A) is
servicing at least $300,000,000 of home equity loans that are
similar to the Home Equity Loans, (B) has Tangible Net Worth
of not less than $15,000,000 (as determined in accordance with
generally acceptable account principles), (C) is consented to
by the Certificate Insurer (such consent not to be
unreasonably withheld) and (D) agrees to assume the Servicer's
obligations thereunder; or
(vi) The failure of the Servicer to satisfy the
Servicer Termination Test.
(b) Upon the occurrence of a Servicer Termination Event, the Servicer
shall continue to act as servicer under this Agreement until removed as set
forth in this Section 8.20 and a successor Servicer has assumed the servicing
obligations. After the occurrence of a Servicer
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Termination Event, the Certificate Insurer or the Trustee (with the prior
written consent of the Certificate Insurer) may remove the Servicer by written
notice to the Servicer. Such termination shall be effective on the date
specified in such notice, provided that a successor Servicer or the Trustee has
assumed the servicing obligations. Upon the effective date of termination of the
Servicer, the Trustee (or another successor Servicer appointed by the
Certificate Insurer) shall assume the servicing obligations hereunder. The
Certificate Insurer may appoint a successor Servicer other than the Trustee.
Until a successor Servicer has been appointed by the Certificate Insurer, the
Trustee shall be the successor Servicer in all respects without further action,
and all authority and power of the Servicer under this agreement shall pass to
and be vested in the Trustee on and after the effective date of termination.
(c) [Reserved]
(d) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except upon (i) determination that its duties hereunder
are no longer permissible under applicable law or are in material conflict by
reason of applicable law with any other activities carried on by it, the other
activities of the Servicer so causing such a conflict being of a type and nature
carried on by the Servicer at the date of this Agreement or (ii) written consent
of the Certificate Insurer and the Trustee. Any such determination under clause
(i) shall be evidenced by an Opinion of Counsel acceptable to the Trustee and
the Certificate Insurer at the expense of the Servicer to such effect which
shall be delivered to the Trustee and the Certificate Insurer.
(e) No removal or resignation of the Servicer shall become effective
until the Trustee or a successor Servicer shall have assumed the Servicer's
responsibilities and obligations in accordance with this Section.
(f) Upon removal or resignation of the Servicer, the Servicer at its
own expense also shall promptly deliver or cause to be delivered to a successor
servicer or the Trustee all the books and records (including, without
limitation, records kept in electronic form) that the Servicer has maintained
for the Home Equity Loans, including all tax bills, assessment notices,
insurance premium notices and all other documents as well as all original
documents then in the Servicer's possession.
(g) Any collections then being held by the Servicer prior to its
removal and any collections received by the Servicer after removal or
resignation shall be endorsed by it to the Trustee and remitted directly and
immediately to the Trustee or the successor Servicer.
(h) Upon removal or resignation of the Servicer, the Trustee may (A)
unless the Certificate Insurer has appointed a successor Servicer other than the
Trustee, solicit bids for a successor servicer as described below and (B) until
such time as another successor Servicer is appointed by the Certificate Insurer,
shall assume the duties and obligations of the Servicer hereunder. The Trustee
agrees to act as Servicer during the solicitation process and shall assume all
duties and obligations of the Servicer. The Certificate Insurer may appoint a
successor Servicer other than the Trustee. If the Certificate Insurer fails to
appoint a successor Servicer, the Trustee shall, if it is unable to obtain a
qualifying bid and is prevented by law from acting as Servicer, appoint, or
petition a court of competent jurisdiction to appoint, any housing and home
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finance institution, bank or mortgage servicing institution which has been
designated as an approved seller-servicer by FNMA or FHLMC for first and second
home equity loans and having equity of not less than $5,000,000 (or such lower
level as may be acceptable to the Certificate Insurer), as determined in
accordance with generally accepted accounting principles and acceptable to the
Certificate Insurer as the successor to the Servicer hereunder in the assumption
of all or any part of the responsibilities, duties or liabilities of the
Servicer hereunder. The compensation of any successor Servicer (other than the
Trustee in its capacity as successor Servicer) so appointed shall be the amount
agreed to between the successor Servicer, the Certificate Insurer and the
Trustee (up to a maximum of 0.50% per annum on the outstanding principal balance
of each Home Equity Loan), together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Sections 8.08 and 8.15; provided, however, that if the Trustee becomes the
successor Servicer it shall receive as its compensation the same compensation
paid to the Servicer immediately prior to the Servicer's removal or resignation;
provided, further, however, that the predecessor Servicer agrees to pay to the
Trustee or other successor Servicer at such time that it becomes such successor
Servicer a set-up fee of twenty-five dollars ($25.00) for each Home Equity Loan
then included in the Trust Estate. The amount payable in excess of twenty-five
dollars ($25.00) per Home Equity Loan, if any, shall be payable to the successor
Servicer and reimbursable pursuant to Section 7.03(b)(iii)(G) hereof. The
Trustee shall be obligated to serve as successor Servicer whether or not the fee
described in this section is paid by the Servicer, but shall in any event be
entitled to receive, and to enforce payment of, such fee from the Servicer.
(i) In the event the Trustee elects to solicit bids as provided above,
the Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor Servicer shall be entitled to servicing compensation in accordance
with clause (h) above, together with the other servicing compensation in the
form of assumption fees, late payment charges or otherwise as provided in
Sections 8.08 and 8.15. Within thirty days after any such public announcement,
the Trustee shall negotiate and effect the sale, transfer and assignment of the
servicing rights and responsibilities hereunder to the qualified party
submitting the highest satisfactory bid as to the price it will pay to obtain
servicing provided that the Certificate Insurer has given its prior written
consent. The Trustee shall deduct from any sum received by the Trustee from the
successor to the Servicer in respect of such sale, transfer and assignment all
costs and expenses of any public announcement and of any sale, transfer and
assignment of the servicing rights and responsibilities hereunder. After such
deductions, the remainder of such sum less any amounts due the Trustee or the
Trust from the Servicer shall be paid by the Trustee to the successor Servicer
at the time of such sale, transfer and assignment to the Servicer's successor.
(j) The Trustee and such successor shall take such action, consistent
with this Agreement, as shall be necessary to effectuate any such succession,
including the notification to all Mortgagors of the transfer of servicing. The
predecessor Servicer agrees to cooperate with the Trustee and any successor
Servicer in effecting the termination of the predecessor Servicer's servicing
responsibilities and rights hereunder and shall promptly provide the Trustee or
such successor Servicer, as applicable, all documents and records reasonably
requested by it to enable it to assume the Servicer's functions hereunder and
shall promptly also transfer to the Trustee or
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such successor Servicer, as applicable, all amounts which then have been or
should have been deposited in the Principal and Interest Account by the Servicer
or which are thereafter received with respect to the Home Equity Loans. Any
amounts and documents which are property of the Trust held by the predecessor
Servicer shall be held in trust on behalf of the Trustee until transferred to
the successor Servicer or Trustee. Neither the Trustee nor any other successor
Servicer shall be held liable by reason of any failure to make, or any delay in
making, any distribution hereunder or any portion thereof caused by (i) the
failure of the Servicer to deliver, or any delay in delivering, cash, documents
or records to it, or (ii) restrictions imposed by any regulatory authority
having jurisdiction over the Servicer. If the Servicer resigns or is replaced
hereunder, the Servicer agrees to reimburse the Trust, the Owners and the
Certificate Insurer for the costs and expenses associated with the transfer of
servicing to the replacement Servicer, but subject to a maximum reimbursement to
all such parties in the amount of twenty-five dollars ($25.00) for each Home
Equity Loan then included in the Trust Estate. The amount payable in excess of
twenty-five dollars ($25.00) per Home Equity Loan, if any, shall be payable to
the successor Servicer and reimbursable pursuant to Section 7.03(b)(iii)(G)
hereof.
(k) The Trustee or any other successor Servicer, upon assuming the
duties of Servicer hereunder, shall immediately (i) record all assignments of
Home Equity Loans not previously recorded in the name of the Trustee pursuant to
Section 3.05(b)(ii) as a result of an Opinion of Counsel and (ii) make all
Delinquency Advances and Compensating Interest payments and deposit them to the
Principal and Interest Account which the Servicer has theretofore failed to
remit with respect to the Home Equity Loans.
(l) The Servicer which is being removed or is resigning shall give
notice to the Mortgagors, to Moody's and to Standard & Poor's of the transfer of
the servicing to the successor.
(m) The Trustee shall give notice to the Certificate Insurer, the
Owners, the Trustee, the Seller, Moody's and Standard & Poor's of the occurrence
of any event described in paragraphs (a) above of which the Trustee is aware.
(n) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities of the predecessor Servicer including,
but not limited to, the maintenance of the hazard insurance policy(ies), the
fidelity bond and an errors and omissions policy pursuant to Section 8.21(b) and
shall be entitled to the Servicing Fee and all of the rights granted to the
predecessor Servicer by the terms and provisions of this Agreement. The
appointment of a successor Servicer shall not affect any liability of the
predecessor Servicer which may have arisen under this Agreement prior to its
termination as Servicer (including, without limitation, any deductible under an
insurance policy) nor shall any successor Servicer be liable for any acts or
omissions of the predecessor Servicer or for any breach by such Servicer of any
of its representations or warranties contained herein or in any related document
or agreement.
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Section 8.21 Inspections by Certificate Insurer; Errors and Omissions
Insurance.
(a) At any reasonable time and from time to time upon reasonable
notice, the Trustee, the Certificate Insurer, any Owner of a Class R
Certificate, or any agents thereof may inspect the Servicer's servicing
operations and discuss the servicing operations of the Servicer during the
Servicer's normal business hours with any of its officers or directors;
provided, however, that the costs and expenses incurred by the Servicer or its
agents or representatives in connection with any such examinations or
discussions shall be paid by the Servicer.
(b) The Servicer (including the Trustee if it shall become the Servicer
hereunder) agrees to maintain errors and omissions coverage and a fidelity bond,
each at least to the extent required by Section 305 of Part I of FNMA Guide or
any successor provision thereof; provided, however, that in any event that the
fidelity bond or the errors and omissions coverage is no longer in effect, the
Servicer shall notify the Trustee and the Trustee shall promptly give such
notice to the Certificate Insurer and the Owners.
Section 8.22 Additional Servicing Responsibilities for Second Mortgage
Loans.
The Servicer shall file (or cause to be filed) a request for notice of
any action by a superior lienholder under a superior lien for the protection of
the Trustee's interest, where permitted by local law and whenever applicable
state law does not require that a junior lienholder be named as a party
defendant in foreclosure proceedings in order to foreclose such junior
lienholder's equity of redemption.
If the Servicer is notified that any superior lienholder has
accelerated or intends to accelerate the obligations under a First Mortgage
Loan, or has declared or intends to declare a default under the mortgage or the
promissory note secured thereby, or has filed or intends to file an election to
have the Mortgaged Property sold or foreclosed, the Servicer shall take, on
behalf of the Trust, whatever actions are necessary to protect the interests of
the Owners and the Certificate Insurer, and/or to preserve the security of the
related Home Equity Loan, subject to the application of the REMIC Provisions.
The Servicer shall advance the necessary funds to cure the default or reinstate
the lien securing a First Mortgage Loan, if such advance is in the best
interests of the Certificate Insurer and the Owners; provided, however, that no
such additional advance need be made if such advance would be nonrecoverable
from Liquidation Proceeds on the related Home Equity Loan. The Servicer shall
thereafter take such action as is necessary to recover the amount so advanced.
Any expenses incurred by the Servicer pursuant to this Section 8.22 shall be
Servicing Advances.
Section 8.23 The Adjustable Rate Group Home Equity Loans.
The Servicer shall enforce each Home Equity Loan in the Adjustable Rate
Group in accordance with its terms and shall timely calculate, record, report
and apply all interest rate adjustments in accordance with the related Note. The
Servicer's records shall, at all times, reflect the then Coupon Rate and monthly
payment and the Servicer shall timely notify the Mortgagor of any changes to the
Coupon Rate or the Mortgagor's monthly payment. If the Servicer fails to make
either a timely or accurate adjustment to the Coupon Rate or monthly payment or
to notify
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the Mortgagor of such adjustments, upon the Servicer's discovery of such error
and such continued failure, the Servicer shall pay from its own funds any
shortage. If the Servicer's continued failure after notice thereof to make a
scheduled change affects the Trust's rights to make future adjustments under the
terms of such Adjustable Rate Group Home Equity Loan, the Servicer shall
repurchase such Adjustable Rate Group Home Equity Loan in accordance with the
provisions hereof. Any amounts paid by the Servicer pursuant to this Section
shall not be an advance and shall not be reimbursable from the proceeds of any
Adjustable Rate Group Home Equity Loan.
Section 8.24 Merger, Conversion, Consolidation or Succession to
Business of Servicer. Any corporation into which the Servicer may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Servicer shall be a
party or any corporation succeeding to all or substantially all of the business
of the Servicer shall be the successor of the Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto provided that such corporation meets the qualifications set forth
in Section 8.20(h) and the resulting corporation has a Tangible Net Worth of at
least $15 million.
Section 8.25 Notices of Material Events. The Servicer shall give prompt
notice to the Certificate Insurer, the Trustee, Moody's and Standard & Poor's of
the occurrence of any of the following events:
(a) Any default or any fact or event of which the Servicer has
knowledge which results, or which with notice or the passage of time, or both,
would result in the occurrence of a default by the Seller, or the Servicer under
any Operative Document or would constitute a material breach of a
representation, warranty or covenant under any Operative Document;
(b) The submission of any claim or the initiation of any legal process,
litigation or administrative or judicial investigation against the Seller or the
Servicer to which the Servicer has knowledge in any federal, state or local
court or before any governmental body or agency or before any arbitration board
or any such proceedings threatened by any governmental agency, which, if
adversely determined, would have a material adverse effect upon any of the
Seller's or the Servicer's ability to perform its obligations under any
Operative Document;
(c) The commencement of any proceedings by or against the Seller or the
Servicer under any applicable bankruptcy, reorganization, liquidation,
insolvency or other similar law now or hereafter in effect or of any proceeding
in which a receiver, liquidator, trustee or other similar official shall have
been, or may be, appointed or requested for the Seller or the Servicer; and
(d) The receipt of notice from any agency or governmental body having
authority over the conduct of any of the Seller's or the Servicer's business
that the Seller or the Servicer is to cease or desist, or to undertake any
practice, program, procedure or policy employed by the Seller or the Servicer in
the conduct of the business of any of them, and such cessation or undertaking
will materially and adversely affect the conduct of the Seller's or the
Servicer's business or its ability to
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perform under the Operative Documents or materially and adversely affect the
financial affairs of the Seller or the Servicer.
Section 8.26 Indemnification by the Servicer. The Servicer agrees to
indemnify and hold the Trustee, the Certificate Insurer and each Owner 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
Trustee, the Certificate Insurer and any Owner may sustain in any way related to
the failure of the Servicer to perform its duties and service the Home Equity
Loans in compliance with the terms of this Agreement. A party against whom a
claim is brought shall immediately notify the other parties and the Rating
Agencies if a claim is made by a third party with respect to this Agreement, and
the Servicer shall assume (with the consent of the Trustee) the defense of any
such claim and pay all expenses in connection therewith, including reasonable
counsel fees, and promptly pay, discharge and satisfy any judgment or decree
which may be entered against the Certificate Insurer, the Servicer, the Trustee
and/or Owner in respect of such claim.
END OF ARTICLE VIII
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ARTICLE IX
TERMINATION OF TRUST
Section 9.01 Termination of Trust.
The Trust created hereunder and all obligations created by this
Agreement will terminate upon the payment to the Owners of all Certificates from
amounts other than those available under the Certificate Insurance Policies of
all amounts held by the Trustee and required to be paid to such Owners pursuant
to this Agreement and payment in full of all amounts owed to the Certificate
Insurer upon the later to occur of (a) the final payment or other liquidation
(or any advance made with respect thereto) of the last Home Equity Loan in the
Trust Estate, (b) the disposition of all property acquired in respect of any
Home Equity Loan remaining in the Trust Estate and (c) at any time if a
Qualified Liquidation of both Home Equity Loan Groups within the Trust is
effected as described in Section 9.02. To effect a termination of this Agreement
pursuant to clause (c) above, the Owners of all Certificates then Outstanding
shall provide to the Trustee and the Certificate Insurer, at their expense, an
Opinion of Counsel experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that each such liquidation
constitutes a Qualified Liquidation, and the Servicer either shall sell the Home
Equity Loans and the Trustee shall distribute the proceeds of the liquidation of
the Trust Estate, or the Servicer shall distribute equitably in kind all of the
assets of the Trust Estate to the remaining Owners of the Certificates to the
effect that each such liquidation constitutes a Qualified Liquidation. In no
event, however, will the Trust created by this Agreement continue beyond 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 United Kingdom, living on the date hereof. The Trustee shall give written
notice of termination of the Agreement to each Owner in the manner set forth in
Section 11.05.
Section 9.02 Termination Upon Option of the Servicer.
(a) On any Monthly Remittance Date after the Clean-Up Call Date, the
Servicer may determine to purchase, in whole only, and may cause the purchase
from the Trust of all (but not fewer than all) Home Equity Loans and all
property theretofore acquired in respect of any Home Equity Loan by foreclosure,
deed in lieu of foreclosure, or otherwise then remaining in the Trust Estate (i)
on terms agreed upon between the Certificate Insurer, the Servicer and such
Owners of the Class R Certificates, or (ii) in the absence of such an agreement,
at a price equal to the Termination Price. In connection with such purchase, the
Servicer shall remit to the Trustee all amounts then on deposit in the Principal
and Interest Account for deposit to the Certificate Account, which deposit shall
be deemed to have occurred immediately preceding such purchase.
(b) In the event that the Servicer purchases all Home Equity Loans and
each REO Property remaining in the Trust Estate pursuant to Section 9.02(a), the
Trust Estate shall be terminated in accordance with the following additional
requirements:
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(i) The Trustee shall specify the first day in the 90-day
liquidation period in a statement attached to the final Tax Return of
the REMIC created hereunder pursuant to Treasury regulation Section
1.860F-1 and shall satisfy all requirements of a qualified liquidation
under Section 860F of the Code and any regulations thereunder;
(ii) During such 90-day liquidation period, and at or prior to
the time of making the final payment on the Certificates, the Trustee
shall sell all of the assets of the Trust Estate to the Servicer for
cash; and
(iii) At the time of the making of the final payment on the
Certificates and payment of all amounts owed to the Certificate
Insurer, the Trustee shall distribute or credit, or cause to be
distributed or credited, to the Owners of the Class R Certificates all
cash on hand in the Trust Estate (other than cash retained to meet
claims), and the Trust Estate shall terminate at that time.
(c) By their acceptance of the Certificates, the Owners thereof hereby
agree to authorize the Trustee to specify the first day in the 90-day
liquidation period in a statement attached to the Trust Estate's final Tax
Return, which shall be binding upon all successor Owners.
(d) In connection with any such purchase, the Servicer shall provide to
the Trustee and the Certificate Insurer an Opinion of Counsel at the expense of
the Servicer experienced in federal income tax matters acceptable to the
Certificate Insurer and the Trustee to the effect that such purchase and
liquidation constitutes a Qualified Liquidation of the REMIC Estate.
(e) If the Servicer does not exercise its option pursuant to this
Section 9.02 with respect to the Trust Estate, then the Certificate Insurer may
purchase the Trust Estate pursuant to this Section 9.02.
(f) Promptly following any purchase described in this Section 9.02, the
Trustee will release the Files to the Servicer or the Certificate Insurer, as
the case may be, or otherwise upon their order, in a manner similar to that
described in Section 8.14 hereof.
Section 9.03 Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service or
by a court of competent jurisdiction, in either case from which no appeal is
taken within the permitted time for such appeal, or if any appeal is taken,
following a final determination of such appeal from which no further appeal can
be taken, to the effect that the REMIC created hereunder does not and will no
longer qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar days
following such Final Determination (i) the Certificate Insurer or the Owners of
a majority in Percentage Interests represented by the Class A Certificates then
Outstanding with the consent of the Certificate Insurer may direct the Trustee
on behalf of the Trust to adopt a plan of complete liquidation, as contemplated
by Section 860F(a)(4) of the Code and (ii) the Certificate Insurer may notify
the Trustee of the Certificate Insurer's determination to purchase from the
Trust all (but not fewer than all) Home
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Equity Loans and all property theretofore acquired by foreclosure, deed in lieu
of foreclosure, or otherwise in respect of any Home Equity Loan then remaining
in the Trust Estate at a price equal to the Termination Price.
Upon receipt of such direction from the Certificate Insurer, the
Trustee shall notify the Owners of the Class R Certificates of such election to
liquidate or such determination to purchase, as the case may be (the
"Termination Notice"). The Owners of a majority of the Percentage Interest of
the Class R Certificates then Outstanding may, within 60 days from the date of
receipt of the Termination Notice (the "Purchase Option Period"), at their
option, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining in
the Trust Estate at a purchase price equal to the Termination Price. If, during
the Purchase Option Period, the Owners of the Class R Certificates have not
exercised the option described in the immediately preceding paragraph, then upon
the expiration of the Purchase Option Period (i) in the event that the
Certificate Insurer or the Owners of the Class A Certificates with the consent
of the Certificate Insurer have given the Trustee the direction described in
clause (a)(i) above, the Trustee shall sell the Home Equity Loans and distribute
the proceeds of the liquidation of the Trust Estate, each in accordance with the
plan of complete liquidation, such that, if so directed, the liquidation of the
Trust Estate, the distribution of the proceeds of the liquidation and the
termination of this Agreement occur no later than the close of the 60th day, or
such later day as the Certificate Insurer or the Owners of the Class A
Certificates with the consent of the Certificate Insurer shall permit or direct
in writing, after the expiration of the Purchase Option Period and (ii) in the
event that the Certificate Insurer has given the Trustee notice of the
Certificate Insurer's determination to purchase the Trust Estate described in
clause (a)(ii) preceding the Certificate Insurer shall, within 60 days, purchase
all (but not fewer than all) Home Equity Loans and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure or otherwise in respect of
any Home Equity Loan then remaining in the Trust Estate. In connection with such
purchase, the Servicer shall remit to the Trustee all amounts then on deposit in
the Principal and Interest Account for deposit to the Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
(b) Following a Final Determination, the Owners of a majority of the
Percentage Interest of the Class R Certificates then Outstanding may, at their
option and upon delivery to the Certificate Insurer of an Opinion of Counsel
experienced in federal income tax matters, acceptable to the Certificate Insurer
and selected by the Owners of the Class R Certificates, which opinion shall be
reasonably satisfactory in form and substance to the Certificate Insurer, to the
effect that the effect of the Final Determination is to increase substantially
the probability that the gross income of the Trust will be subject to federal
taxation, purchase from the Trust all (but not fewer than all) Home Equity Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Home Equity Loan then remaining in
the Trust Estate at a purchase price equal to the Termination Price. In
connection with such purchase, the Servicer shall remit to the Trustee all
amounts then on deposit in the Principal and Interest Account for deposit to the
Certificate Account, which deposit shall be deemed to have occurred immediately
preceding such purchase. The foregoing opinion shall be deemed satisfactory
unless the Certificate Insurer gives the Owners of a majority of the Percentage
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Interest of the Class R Certificates notice that such opinion is not
satisfactory within thirty days after receipt by the Certificate Insurer of such
opinion.
Section 9.04 Disposition of Proceeds.
The Trustee shall, upon receipt thereof, deposit the proceeds of any
Termination Price or other liquidation of the Trust Estate pursuant to this
Article IX to the Certificate Account for distribution in accordance with the
priorities set forth in Section 7.03(b) hereof; provided, however, that any
amounts representing unreimbursed Delinquency Advances and Servicing Advances
theretofore funded by the Servicer from the Servicer's own funds shall be paid
by the Trustee to the Servicer from the proceeds of the Trust Estate.
Section 9.05 Netting of Amounts.
If any Person paying the Termination Price would receive a portion of
the amount to be paid, such Person may net any such amount against the
Termination Price otherwise payable.
END OF ARTICLE IX
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ARTICLE X
THE TRUSTEE
Section 10.01 Certain Duties and Responsibilities.
(a) The Trustee (i) (A) undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Trustee and (B) the
banking institution that is the Trustee shall serve as the Trustee at all times
under this Agreement, and (ii) in the absence of bad faith on its part, may
conclusively rely, as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions or any other
resolutions, statements, reports, documents, orders or other instruments
furnished pursuant to and conforming to the requirements of this Agreement; but
in the case of any such certificates or opinions or any other resolutions,
statements, reports, documents, orders or other instruments which by any
provision hereof are specifically required to be furnished to the Trustee, shall
be under a duty to examine the same to determine whether or not on their face
they conform to the requirements of this Agreement; provided, however, that the
Trustee shall not be responsible for the accuracy or content of any resolution,
Certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer, the Certificate Insurer, the Seller or the Depositor
hereunder. If any such instrument is found not to conform in any material
respect to the requirements of this Agreement, the Trustee shall notify the
Certificate Insurer of such instrument in the event that the Trustee, after so
requesting does not receive a satisfactorily corrected instrument.
Notwithstanding the foregoing, if a Servicer Termination Event of which a
responsible officer of the Trustee shall have actual knowledge has occurred and
has not been cured or waived, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Notwithstanding the appointment of the Servicer hereunder, the
Trustee is hereby empowered to perform the duties of the Servicer it being
expressly understood, however, that the foregoing describes a power and not an
obligation of the Trustee (unless the Servicer shall have resigned or been
terminated and a successor Servicer shall not have been appointed pursuant to
the terms of this Agreement), and that all parties hereto agree that, prior to
any termination of the Servicer, the Servicer and, thereafter, the Trustee or
any other successor servicer shall perform such duties. Specifically, and not in
limitation of the foregoing, the Trustee shall upon termination or resignation
of the Servicer, and pending the appointment of any other Person as successor
Servicer have the power and duty during its performance as successor Servicer:
(i) to collect Mortgagor payments;
(ii) to foreclose on defaulted Home Equity Loans;
(iii) to enforce due-on-sale clauses and to enter into assumption
and substitution agreements as permitted by Section 8.12
hereof;
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(iv) to deliver instruments of satisfaction pursuant to Section
8.14;
(v) to enforce the Home Equity Loans; and
(vi) to make Delinquency Advances and Servicing Advances and to pay
Compensating Interest.
(c) 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, except that:
(i) this subsection shall not be construed to limit the
effect of subsection (a) of this Section;
(ii) the Trustee shall not be personally liable for any
error of judgment made in good faith by an Authorized
Officer, unless it shall be proved that the Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good
faith in accordance with the direction of the
Certificate Insurer or of the Owners of a majority in
Percentage Interest of the Certificates of the
affected Class or Classes and the Certificate Insurer
relating to the time, method and place of conducting
any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred
upon the Trustee, under this Agreement relating to
such Certificates;
(iv) The Trustee shall not be required to take notice or
be deemed to have notice or knowledge of any default
unless an Authorized Officer of the Trustee shall
have received written notice thereof or an Authorized
Officer shall have actual knowledge thereof. In the
absence of receipt of such notice, the Trustee may
conclusively assume that there is no default; and
(v) Subject to the other provisions of this Agreement and
without limiting the generality of this Section
l0.01, the Trustee shall have no duty (A) to see to
any recording, filing, or depositing of this
Agreement or any agreement referred to herein or any
financing statement or continuation statement
evidencing a security interest, or to see to the
maintenance of any such recording or filing or
depositing or to any rerecording, refiling or
redepositing of any thereof, (B) to see to any
insurance or (C) to see to the payment or discharge
of any tax, assessment, or other governmental charge
or any lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of
the Trust Estate from funds available in the
Certificate Account.
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(d) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
(e) No provision of this Agreement shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it. None of the provisions contained in this Agreement
shall in any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer under this
Agreement, except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of this Agreement.
(f) The permissive right of the Trustee to take actions enumerated in
this Agreement shall not be construed as a duty and the Trustee shall not be
answerable for other than its own negligence or willful misconduct.
(g) The Trustee shall be under no obligation to institute any suit, or
to take any remedial proceeding under this Agreement, or to take any steps in
the execution of the trusts hereby created or in the enforcement of any rights
and powers hereunder until it shall be indemnified to its satisfaction against
any and all costs and expenses, outlays and counsel fees and other reasonable
disbursements and against all liability, except liability which is adjudicated
to have resulted from its negligence or willful misconduct, in connection with
any action so taken.
(h) The Trustee hereby undertakes to provide the Seller with notice of
any correspondence relating to any Property.
(i) The Trustee hereby agrees to disclose the Premium Amount to any
Person upon request.
Section 10.02 Removal of Trustee for Cause.
(a) The Trustee may be removed pursuant to paragraph (b) hereof upon
the occurrence of any of the following events (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) the Trustee shall fail to distribute to the Owners
entitled hereto on any Payment Date any amounts available for
distribution that it has received in accordance with the terms hereof;
(provided, however, that any such failure which is due to circumstances
beyond the control of the Trustee shall not be a cause for removal
hereunder); or
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(2) the Trustee shall fail in the performance of, or breach,
any covenant or agreement of the Trustee in this Agreement, or if any
representation or warranty of the Trustee made in this Agreement or in
any certificate or other writing delivered pursuant hereto or in
connection herewith shall prove to be incorrect in any material respect
as of the time when the same shall have been made, and such failure or
breach shall continue or not be cured for a period of 30 days after
there shall have been given, by registered or certified mail, to the
Trustee by the Seller, the Certificate Insurer, or by the Owners of at
least 25% of the aggregate Percentage Interests in the Trust Estate
represented by the Class A Certificates then Outstanding, or, if there
are no Class A Certificates then Outstanding, by such Percentage
Interests represented by the Class R Certificates, a written notice
specifying such failure or breach and requiring it to be remedied; or
(3) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Trustee, and such decree or order shall have remained in
force undischarged or unstayed for a period of 75 days; or
(4) a conservator or receiver or liquidator or sequestrator or
custodian of the property of the Trustee is appointed in any
insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings of or relating to the Trustee or relating to all
or substantially all of its property; or
(5) the Trustee shall become insolvent (however insolvency is
evidenced), generally fail to pay its debts as they come due, file or
consent to the filing of a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for the
benefit of its creditors, voluntarily suspend payment of its
obligations, or take corporate action for the purpose of any of the
foregoing.
The Depositor shall give to the Certificate Insurer, Moody's and
Standard & Poor's notice of the occurrence of any such event of which the
Depositor is aware.
(b) If any event described an Paragraph (a) occurs and is continuing,
then and in every such case (i) the Certificate Insurer or (ii) with the prior
written consent (which shall not be unreasonably withheld) of the Certificate
Insurer, the Depositor and the Owners of a majority of the Percentage Interests
represented by the Class A Certificates or if there are no Class A Certificates
then outstanding by such majority of the Percentage Interests represented by the
Class R Certificates, may, whether or not the Trustee resigns pursuant to
Section l0.09(b) hereof, immediately, concurrently with the giving of notice to
the Trustee, and without delaying the 30 days required for notice therein,
appoint a successor Trustee pursuant to the terms of Section l0.09 hereof.
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Section 10.03 Certain Rights of the Trustee.
Except as otherwise provided in Section 10.01 hereof:
(a) the Trustee (acting as Trustee or Tax Matters Person) may request
and may rely and shall be protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, note 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) any request or direction of the Depositor, the Seller, the
Certificate Insurer, or the Owners of any Class of Certificates mentioned herein
shall be sufficiently evidenced in writing;
(c) whenever in the administration of this Agreement the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel, and the advice of such
counsel (selected in good faith by the Trustee) shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reasonable reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement at the request or direction of
any of the Owners pursuant to this Agreement, unless such Owners shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities which might be incurred by it in compliance with such
request or direction;
(f) 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, direction, consent, order, bond, note or other
paper or document, unless requested in writing to do so by the Owners; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Trustee, not reasonably assured to the
Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require reasonable indemnity against such cost, expense or liability
as a condition to taking any such action;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys
or custodian;
(h) the Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized by the
Authorized Officer of any Person and within its rights or powers under this
Agreement other than as to validity and sufficiency of its authentication of the
Certificates;
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(i) the right of the Trustee to perform any discretionary act
enumerated in this Agreement shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful misconduct in
the performance of such act;
(j) pursuant to the terms of this Agreement, the Servicer is required
to furnish to the Trustee from time to time certain information and make various
calculations which are relevant to the performance of the Trustee's duties under
the Agreement. The Trustee shall be entitled to rely in good faith on any such
information and calculations in the performance of its duties hereunder, (i)
unless and until an Authorized Officer of the Trustee has actual knowledge, or
is advised by any Owner of a Certificate or the Certificate Insurer (either in
writing or orally with prompt written or telecopy confirmations), that such
information or calculations is or are incorrect, or (ii) unless there is a
manifest error in any such information; and
(k) the Trustee shall not be required to give any bond or surety in
respect of the execution of the Trust Estate created hereby or the powers
granted hereunder.
Section 10.04 Not Responsible for Recitals or Issuance of Certificates.
The recitals and representations contained herein and in the
Certificates, except the execution and authentication of the Certificates, shall
be taken as the statements of the Depositor, and the Trustee assumes no
responsibility for their correctness (other than with respect to such execution
and authentication). The Trustee makes no representation as to the validity or
sufficiency of this Agreement, of the Certificates, or any Home Equity Loan or
document related thereto other than as to validity and sufficiency of its
authentication of the Certificates. The Trustee shall not be accountable for the
use or application by the Depositor 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 Seller or the Servicer in respect of the Home Equity Loans
or deposited into or withdrawn from the Principal and Interest Account or the
Certificate Account by the Depositor, the Servicer or the Seller, and shall have
no responsibility for filing any financing or continuation statement in any
public office at any time or otherwise to perfect or maintain the perfection of
any security interest or lien or to prepare or file any tax returns or
Securities and Exchange Commission filings for the Trust or to record this
Agreement. The Trustee shall not be required to take notice or be deemed to have
notice or knowledge of any default unless an Authorized Officer of the Trustee
shall have received written notice thereof or an Authorized Officer has actual
knowledge thereof. In the absence of receipt of such notice, the Trustee may
conclusively assume that no default has occurred.
Section 10.05 May Hold Certificates.
The Trustee, any Paying Agent, Registrar or any other agent of the
Trust, in its individual or any other capacity, may become an Owner or pledged
of Certificates and may otherwise deal with the Trust with the same rights it
would have if it were not Trustee, any Paying Agent, Registrar or such other
agent.
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Section 10.06 Money Held in Trust.
Money held by the Trustee in trust hereunder need not be segregated
from other trust funds except to the extent required herein or required by law.
The Trustee shall be under no liability for interest on any money received by it
hereunder except as otherwise agreed with the Depositor and except to the extent
of income or other gain on investments which are deposits in or certificates of
deposit of the Trustee in its commercial capacity and income or other gain
actually received by the Trustee on Eligible Investments.
Section 10.07 Compensation and Reimbursement.
The Trustee shall receive compensation for fees and reimbursement for
expenses pursuant to Section 2.05, Section 6.12, Section 7.03(b)(i)(A),
7.03(b)(iii)(G), Section 7.06 and Section 10.13 hereof. Except as otherwise
provided in this Agreement, the Trustee and any director, officer, employee or
agent of the Trustee shall be indemnified by the Trust and held harmless against
any loss, liability, or "unanticipated out-of-pocket" expense incurred or paid
to third parties (which expenses shall not include salaries paid to employees,
or allocable overhead, of the Trustee) in connection with or any claim or legal
action or any pending or threatened claim or legal action arising out of or in
connection with the acceptance or administration of its trusts hereunder or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder. All such amounts described in the preceding sentence shall be payable
as provided in Section 7.03(b)(iii)(G) to Sections 10.01(e) and 10.01(g). It is
understood by the parties hereto that a "claim" as used in this paragraph
includes any claim for indemnification made by the Custodian under the
applicable provisions of the Custodial Agreement. The Trustee and any director,
officer, employee or agent of the Trustee shall be indemnified by the Seller and
held harmless against any loss, liability or reasonable expenses incurred by the
Trustee in performing its duties as Tax Matters Person for the REMIC created
under this Agreement, other than any loss, liability or expense incurred by
reason of willful misfeasance, bad faith or negligence in the performance of its
duties as Tax Matters Person for the REMIC created hereunder. The provisions of
this Section 10.07 shall survive the termination of this Agreement.
Section 10.08 Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
corporation or association organized and doing business under the laws of the
United States of America or of any State authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
$50,000,000 subject to supervision or examination by the United States of
America, or any state, acceptable to the Certificate Insurer and having a
deposit rating of at least A- from Standard & Poor's and A2 by Moody's. If such
Trustee 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 or association shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, it shall, upon the request of the
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Certificate Insurer, resign immediately in the manner and with the effect
hereinafter specified in this Article X.
Section 10.09 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a
successor trustee pursuant to this Article X shall become effective until the
acceptance of appointment by the successor trustee under Section 10.10 hereof.
(b) The Trustee, or any trustee or trustees hereafter appointed, may
resign at any time by giving written notice of resignation to the Depositor and
by mailing notice of resignation by first-class mail, postage prepaid, to the
Certificate Insurer and the Owners at their addresses appearing on the Register.
A copy of such notice shall be sent by the resigning Trustee to the Rating
Agencies. Upon receiving notice of resignation, the Depositor shall promptly
appoint a successor Trustee or Trustees acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so resigning and one copy to the successor Trustee or
Trustees. If no successor Trustee shall have been appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Trustee may petition any court of competent jurisdiction for the
appointment of a successor Trustee, or any Owner may, on behalf of himself and
all others similarly situated, petition any such court for the appointment of a
successor Trustee. Such court may thereupon, after such notice, if any, as it
may deem proper and appropriate, appoint a successor Trustee.
(c) If at any time the Trustee shall cease to be eligible under Section
10.08 hereof and shall fail to resign after written request therefor by the
Depositor or by the Certificate Insurer, the Certificate Insurer or the
Depositor with the written consent of the Certificate Insurer may remove the
Trustee and appoint a successor Trustee acceptable to the Certificate Insurer by
written instrument, in duplicate, executed on behalf of the Trust by an
Authorized Officer of the Depositor, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor Trustee.
(d) The Owners of a majority of the Percentage Interests represented by
the Class A Certificates with the prior written consent of the Certificate
Insurer, or, if there are no Class A Certificates then Outstanding, by such
majority of the Percentage Interests represented by the Class R Certificates,
may at any time remove the Trustee and appoint a successor Trustee acceptable to
the Certificate Insurer by delivering to the Trustee to be removed, to the
successor Trustee so appointed, to the Depositor, to the Servicer and to the
Certificate Insurer, copies of the record of the act taken by the Owners, as
provided for in Section 11.03 hereof.
(e) If the Trustee fails to perform its duties in accordance with the
terms of this Agreement, or becomes ineligible pursuant to Section 10.08 to
serve as Trustee, the Certificate Insurer may remove the Trustee and appoint a
successor Trustee by written instrument, in triplicate, signed by the
Certificate Insurer 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 Trustee so appointed.
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(f) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Seller shall promptly appoint a successor Trustee acceptable to the
Certificate Insurer. If within one year after such resignation, removal or
incapability or the occurrence of such vacancy, a successor Trustee shall be
appointed by act of the Certificate Insurer or the Owners of a majority of the
Percentage Interests represented by the Class A Certificates then Outstanding
with the consent of the Certificate Insurer, the successor Trustee so appointed
shall forthwith upon its acceptance of such appointment become the successor
Trustee and supersede the successor Trustee appointed by the Depositor. If no
successor Trustee shall have been so appointed by the Depositor or the Owners
and shall have accepted appointment in the manner hereinafter provided, any
Owner may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor Trustee.
(g) The Servicer shall give notice of any removal of the Trustee by
mailing notice of such event by first-class mail, postage prepaid, to the
Certificate Insurer, to the Rating Agencies and to the Owners as their names and
addresses appear in the Register. Each notice shall include the name of the
successor Trustee and the address of its corporate trust office.
Section 10.10 Acceptance of Appointment by Successor Trustee.
Every successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Depositor on behalf of the Trust to the Certificate Insurer
and to its predecessor Trustee an instrument accepting such appointment
hereunder and stating its eligibility to serve as Trustee hereunder, and
thereupon the resignation or removal of the predecessor Trustee shall become
effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts, duties and
obligations of its predecessor hereunder; but, on request of the Depositor, the
Certificate Insurer or the successor Trustee, such predecessor Trustee shall,
upon payment of its charges then unpaid, execute and deliver an instrument
transferring to such successor Trustee all of the rights, powers and trusts of
the Trustee so ceasing to act, and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such Trustee so ceasing to
act hereunder. Upon request of any such successor Trustee, the Depositor on
behalf of the Trust shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts.
Upon acceptance of appointment by a successor Trustee as provided in
this Section, the Depositor shall mail notice thereof by first-class mail,
postage prepaid, to the Owners at their last addresses appearing upon the
Register and to the Certificate Insurer. The Depositor shall send a copy of such
notice to the Rating Agencies. If the Depositor fails to mail such notice within
ten days after acceptance of appointment by the successor Trustee, the successor
Trustee shall cause such notice to be mailed at the expense of the Trust.
No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor shall be qualified and eligible under this
Article X.
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Section 10.11 Merger, Conversion, Consolidation or Succession to
Business of the Trustee.
Any corporation or association into which the Trustee may be merged or
converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any corporation or association succeeding to all or
substantially all of the corporate trust business of the Trustee, shall be the
successor of the Trustee hereunder, without the execution or filing of any paper
or any further act on the pan of any of the parties hereto; provided, however,
that such corporation or association shall be otherwise qualified and eligible
under this Article X. In case any Certificates have been executed, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such Trustee may adopt such execution and deliver the
Certificates so executed with the same effect as if such successor Trustee had
itself executed such Certificates.
Section 10.12 Reporting; Withholding.
(a) The Trustee shall timely provide to the Owners the Internal Revenue
Service's Form 1099 and any other statement required by applicable Treasury
regulations as determined by the Tax Matters Person, and shall withhold, as
required by applicable law, federal, state or local taxes, if any, applicable to
distributions to the Owners, including but not limited to backup withholding
under Section 3406 of the Code and the withholding tax on distributions to
foreign investors under Sections 1441 and 1442 of the Code.
(b) As required by law or upon request of the Tax Matters Person and
except as otherwise specifically set forth in (a) preceding, the Trustee shall
timely file all reports prepared by the Seller and required to be filed by the
Trust, including other reports that must be filed with the Owners, such as the
Internal Revenue Service's Form 1066 and Schedule Q. The Trustee shall, upon
request of the Seller, collect any forms or reports from the Owners determined
by the Seller to be required under applicable federal, state and local tax laws.
(c) Except as otherwise provided, the Trustee shall have the
responsibility for preparation and execution of those returns, forms, reports
and other documents referred to in this Section.
(d) The Seller covenants and agrees that it shall provide to the
Trustee any information necessary to enable the Trustee to meet its obligations
under subsections (a), (b) and (c) above.
Section 10.13 Liability of the Trustee.
The Trustee shall be liable in accordance herewith only to the extent
of the obligations specifically imposed upon and undertaken by the Trustee
herein. Neither the Trustee nor any of the directors, officers, employees or
agents of the Trustee shall be under any liability on any Certificate or
otherwise to the Certificate Account, the Depositor, the Seller, the Servicer or
any
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Owner 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 Trustee, its directors,
officers, employees or agents or any such Person against any liability which
would otherwise be imposed by reason of negligent action, negligent failure to
act or willful misconduct in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. Subject to the foregoing
sentence, the Trustee shall not be liable for losses on investments of amounts
in the Certificate Account (except for any losses on obligations on which the
bank serving as Trustee is the obligor). In addition, the Depositor, the Seller
and Servicer covenant and agree to indemnify the Trustee and the Servicer (if
the Servicer is also the Trustee) from, and hold it harmless against, any and
all losses, liabilities, damages, claims or expenses (including legal fees and
expenses) of whatsoever kind arising out of or in connection with the
performance of its duties hereunder other than those resulting from the
negligence or bad faith of the Trustee, and the Seller shall pay all amounts not
otherwise paid or reimbursed pursuant to Sections 2.05, 6.12 and 7.06 hereof.
The Trustee and any director, officer, employee or agent of the Trustee may rely
and shall be protected in acting or refraining from acting in good faith on any
Certificate, notice or other document of any kind prima facie properly executed
and submitted by the Authorized Officer of any Person respecting any matters
arising hereunder. The provisions of this Section 10.13 shall survive the
termination of this Agreement and the payment of the outstanding Certificates.
Section 10.14 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust Estate or Property may at the time be located, the
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee and reasonably acceptable to the Certificate Insurer to act as
co-Trustee or co-Trustees, jointly with the Trustee, of all or any part of the
Trust Estate or separate Trustee or separate Trustees of any part of the Trust
Estate, and to vest in such Person or Persons, in such capacity and for the
benefit of the Owners and the Certificate Insurer, such title to the Trust
Estate, or any part thereof, and, subject to the other provisions of this
Section 10.14, such powers, duties, obligations, rights and trusts as the
Servicer and the Trustee may consider necessary or desirable. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in the case any event indicated in Section 8.20(a)
shall have occurred and be continuing, the Trustee subject to reasonable
approval of the Certificate Insurer 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 10.08 and no
notice to Owner of the appointment of any co-Trustee or separate Trustee shall
be required under Section 10.09.
Every separate Trustee and co-Trustee shall, to the extent permitted,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate Trustee or
co-Trustee jointly (it being understood that such separate
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Trustee or co-Trustee is not authorized to act separately without the
Trustee joining in such act), except to the extent that under any law
of any jurisdiction in which any particular act or acts are to be
performed (whether as Trustee hereunder or as successor to the Servicer
hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate Trustee or co-Trustee, but solely at
the direction of the Trustee;
(ii) No co-Trustee hereunder shall be held personally liable
by reason of any act or omission of any other co-Trustee hereunder; and
(iii) The Servicer, and the Certificate Insurer and the
Trustee acting jointly may at any time accept the resignation of or
remove any separate Trustee or co-Trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate Trustees and co-Trustees,
as effectively as if given to each of them. Every instrument appointing any
separate Trustee or co-Trustee shall refer to this Agreement and the conditions
of this Section 10.14. Each separate Trustee and co-Trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer and the Certificate Insurer.
Any separate Trustee or co-Trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate Trustee or co-Trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 10.15 Appointment of Custodians.
The Trustee may appoint one or more Custodians to hold all or a portion
of the Files as agent for the Trustee, by entering into a Custodial Agreement
acceptable to the Certificate Insurer. Subject to this Article X, the Trustee
agrees to comply with the terms of the Custodial Agreement and to enforce the
terms and provisions thereof against the Custodian for the benefit of the Owners
of the Certificates and the Certificate Insurer.
END OF ARTICLE X
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ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions.
Upon any application or request by the Depositor, the Seller, the
Certificate Insurer or the Owners to the Trustee to take any action under any
provision of this Agreement, the Depositor, the Seller, the Certificate Insurer
or the Owners, as the case may be, shall furnish to the Trustee a certificate
stating that all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with, except that in the case
of any such application or request as to which the furnishing of such documents
is specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate need be furnished.
Except as otherwise specifically provided herein, each certificate or
opinion with respect to compliance with a condition or covenant provided for in
this Agreement (including one furnished pursuant to specific requirements of
this Agreement relating to a particular application or request) shall include:
(a) a statement that each individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based; and
(c) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 11.02 Form of Documents Delivered to the Trustee.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Trustee may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by counsel, unless such Authorized Officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate or opinion of an Authorized
Officer of the Trustee or any Opinion of Counsel may be based, insofar as it
relates to factual matter upon a certificate or opinion of, or representations
by, one or more Authorized Officers of the Depositor,
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the Seller or the Servicer, stating that the information with respect to such
factual matters is in the possession of the Depositor, the Seller or the
Servicer, unless such Authorized Officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous. Any Opinion of Counsel may also be
based, insofar as it relates to factual matters, upon a certificate or opinion
of, or representations by, an Authorized Officer of the Trustee, stating that
the information with respect to such matters is in the possession of the
Trustee, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous. Any Opinion of Counsel may be based on the written
opinion of other counsel, in which event such Opinion of Counsel shall be
accompanied by a copy of such other counsel's opinion and shall include a
statement to the effect that such counsel believes that such counsel and the
Trustee may reasonably rely upon the opinion of such other counsel.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 11.03 Acts of Owners.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken by the
Owners may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Owners in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee, and, where it is hereby expressly required, to the Seller. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "act" of the Owners signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and conclusive in favor of the Trustee and the Trust, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by the certificate of any notary public or other officer authorized
by law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Whenever
such execution is by an officer of a corporation or a member of a partnership on
behalf of such corporation or partnership, such certificate or affidavit shall
also constitute sufficient proof of his authority.
(c) The ownership of Certificates shall be proved by the Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Owner of any Certificate shall bind the Owner of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Trustee or the Trust in reliance thereon, whether or
not notation of such action is made upon such Certificates.
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Section 11.04 Notices, etc. to Trustee.
Any request, demand, authorization, direction, notice, consent, waiver
or act of the Owners or other documents provided or permitted by this Agreement
to be made upon, given or furnished to, or filed with the Trustee by any Owner,
the Certificate Insurer, the Depositor, the Seller shall be sufficient for every
purpose hereunder if made, given, furnished or filed in writing to or with and
received by the Trustee at its Corporate Trust Office as set forth in Section
2.02 hereof.
Section 11.05 Notices and Reports to Owners; Waiver of Notices.
Where this Agreement provides for notice to Owners of any event or the
mailing of any report to Owners, such notice or report shall be sufficiently
given (unless otherwise herein expressly provided) if mailed, first-class
postage prepaid, to each Owner affected by such event or to whom such report is
required to be mailed, at the address of such Owner as it appears on the
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice or the mailing of such report. In
any case where a notice or report to Owners is mailed in the manner provided
above, neither the failure to mail such notice or report nor any defect in any
notice or report so mailed to any particular Owner shall affect the sufficiency
of such notice or report with respect to other Owners, and any notice or report
which is mailed in the manner herein provided shall be conclusively presumed to
have been duly given or provided. Notwithstanding the foregoing, if the Servicer
is removed or resigned or the Trust is terminated, notice of any such events
shall be made by overnight courier, registered mail or telecopy followed by a
telephone call.
Where this Agreement provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Owners shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Owners when such notice is required to be given
pursuant to any provision of this Agreement, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Agreement provides for notice to any Rating Agency that
rated any Certificates, failure to give such notice shall not affect any other
rights or obligations created hereunder.
Section 11.06 Rules by Trustee.
The Trustee may make reasonable rules for any meeting of Owners.
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Section 11.07 Successors and Assigns.
All covenants and agreements in this Agreement by any party hereto
shall bind its successors and assigns, whether so expressed or not.
Section 11.08 Severability.
In case any provision in this Agreement or in the Certificates shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
Section 11.09 Benefits of Agreement.
Nothing in this Agreement or in the Certificates, expressed or implied,
shall give to any Person, other than the Owners, the Certificate Insurer and the
parties hereto and their successors hereunder, any benefit or any legal or
equitable right, remedy or claim under this Agreement.
Section 11.10 Legal Holidays.
In any case where the date of any Payment Date, any other date on which
any distribution to any Owner is proposed to be paid, or any date on which a
notice is required to be sent to any Person pursuant to the terms of this
Agreement (with the exception of any Monthly Remittance Date) shall not be a
Business Day, then (notwithstanding any other provision of the Certificates or
this Agreement) payment or mailing need not be made on such date, but may be
made on the next succeeding Business Day with the same force and effect as if
made or mailed on the nominal date of any such Payment Date, or such other date
for the payment of any distribution to any Owner or the mailing of such notice,
as the case may be, and no interest shall accrue for the period from and after
any such nominal date, provided such payment is made in full on such next
succeeding Business Day. In any case where the date of any Monthly Remittance
Date or any Monthly Reporting Date shall not be a Business Day, then payment or
mailing need not be made on such date, but must be made on the preceding
Business Day.
Section 11.11 Governing Law; Submission to Jurisdiction.
(a) In view of the fact that Owners are expected to reside in many
states and outside the United States and the desire to establish with certainty
that this Agreement will be governed by and construed and interpreted in
accordance with the law of a state having a well-developed body of commercial
and financial law relevant to transactions of the type contemplated herein, this
Agreement and each Certificate shall be construed in accordance with and
governed by the laws of the State of New York applicable to agreements made and
to be performed therein, without giving effect to the conflicts of law
principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and any
court in the State of New York located in the City and County of New York, and
any appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of
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the related documents or the transactions contemplated hereunder or for
recognition or enforcement of any judgment, and the parties hereto hereby
irrevocably and unconditionally agree that all claims in respect of any such
action or proceeding may be heard or determined in such New York State court or,
to the extent permitted by law, in such federal court. The parties hereto agree
that a final judgment in any such action, suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law. To the extent permitted by applicable law, the
parties hereto hereby waive and agree not to assert by way of motion, as a
defense or otherwise in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that the related documents or the
subject matter thereof may not be litigated in or by such courts.
(c) Each of the Depositor, Seller and Servicer hereby irrevocably
appoints and designates the Trustee as its true and lawful attorney and duly
authorized agent for acceptance of service of legal process with respect to any
action, suit or proceeding set forth in paragraph (b) hereof. Each of the Seller
and Servicer agrees that service of such process upon the Trustee shall
constitute personal service of such process upon it.
(d) Nothing contained in this Agreement shall limit or affect the right
of the Depositor, the Seller, the Servicer or the Certificate Insurer or
third-party beneficiary hereunder, as the case may be, to serve process in any
other manner permitted by law or to start legal proceedings relating to any of
the Home Equity Loans against any Mortgagor in the courts of any jurisdiction.
Section 11.12 Counterparts.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 11.13 Usury.
The amount of interest payable or paid on any Certificate under the
terms of this Agreement shall be limited to an amount which shall not exceed the
maximum nonusurious rate of interest allowed by the applicable laws of the State
of New York or any applicable law of the United States permitting a higher
maximum nonusurious rate that preempts such applicable New York laws, which
could lawfully be contracted for, charged or received (the "Highest Lawful
Rate"). In the event any payment of interest on any Certificate exceeds the
Highest Lawful Rate, the Trust stipulates that such excess amount will be deemed
to have been paid to the Owner of such Certificate as a result of an error on
the part of the Trustee acting on behalf of the Trust and the Owner receiving
such excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Trustee on behalf of the Trust, refund the amount of such
excess or, at the option of such Owner, apply the excess to the payment of
principal of such Certificate, if any, remaining unpaid. In addition, all sums
paid or agreed to be paid to the Trustee for the benefit of Owners of
Certificates for the use, forbearance or detention of money shall, to the extent
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permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term of such Certificates.
Section 11.14 Amendment.
(a) The Trustee, the Depositor, the Seller and the Servicer, may at any
time and from time to time, with the prior written approval of the Certificate
Insurer but without the giving of notice to or the receipt of the consent of the
Owners, amend this Agreement, and the Trustee shall consent to the amendment for
the purposes of (i) if accompanied by an approving Opinion of Counsel which
shall not be at the expense of the Trustee experienced in federal income tax
matters, removing the restriction against the transfer of a Class R Certificate
to a Disqualified Organization (as such term is defined in the Code), (ii)
complying with the requirements of the Code including any amendments necessary
to maintain REMIC status of the REMIC Estate (other than the Pre-Funding Account
and the Capitalized Interest Account), (iii) curing any ambiguity, (iv)
correcting or supplementing any provisions of this Agreement which are
inconsistent with any other provisions of this Agreement or (v) for any other
purpose, provided that in the case of clause (v), such amendment shall not
adversely affect in any material respect any Owner. Any such amendment shall be
deemed not to adversely affect in any material respect any Owner if such Owner
shall have consented thereto in writing or if there is delivered to the Trustee
written notification from each Rating Agency that such amendment will not cause
such Rating Agency to reduce its then current rating assigned to the Class A
Certificates without regard to the related Certificate Insurance Policy.
Notwithstanding anything to the contrary, no such amendment shall (a) change in
any manner the amount of, or delay the timing of, payments which are required to
be distributed to any Owner without the consent of the Owner of such
Certificate, (b) change the percentages of Percentage interest which are
required to consent to any such amendments, without the consent of the Owners of
all Certificates of the Class or Classes affected then outstanding or (c) which
affects in any manner the terms or provisions of the related Certificate
Insurance Policy.
(b) The Certificate Insurer and the Rating Agencies shall be provided
by the Seller with copies of any amendments to this Agreement, together with
copies of any opinions or other documents or instruments executed in connection
therewith.
(c) Notwithstanding any contrary provisions of this Agreement, the
Trustee shall not consent to any amendment to this Agreement unless it shall
have first received an Opinion of Counsel (provided by the Person requesting
such amendment) to the effect that such amendment will not result in the
imposition of any tax on the Trust pursuant to the REMIC Provisions or cause the
REMIC created hereunder to fail to qualify as a REMIC at any time that any of
the Certificates are outstanding.
Section 11.15 Paying Agent; Appointment and Acceptance of Duties.
The Trustee is hereby appointed Paying Agent. The Seller may, subject
to the eligibility requirements for the Trustee set forth in Section 10.08
hereof, including, without limitation, the prior written consent of the
Certificate Insurer, appoint one or more other Paying Agents or successor Paying
Agents.
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Each Paying Agent, immediately upon such appointments shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver
to the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.02, that such Paying Agent will:
(a) allocate all sums received for distribution to the Owners
of Certificates of each Class for which it is acting as Paying Agent on
each Payment Date among such Owners in the proportion specified by the
Trustee; and
(b) hold all sums held by it for the distribution of amounts
due with respect to the Certificates in trust for the benefit of the
Owners entitled thereto until such sums shall be paid to such Owners or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent and signed
by the Trustee.
In the event of the resignation or removal of any Paying Agent other
than the Trustee such Paying Agent shall pay over, assign and deliver any moneys
held by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying
Agent, the Trustee shall notify the Certificate Insurer and the Owners by
mailing notice thereof at their addresses appearing on the Register.
Section 11.16 REMIC Status.
(a) The parties hereto intend that the REMIC Estate shall constitute,
and that the affairs of the REMIC Estate shall be conducted so as to qualify it
as a REMIC in accordance with the REMIC Provisions. In furtherance of such
intention, Norwest Bank Minnesota, National Association or such other person
designated pursuant to Section 11.18 hereof shall act as agent for the Trust and
as Tax Matters Person for the Trust and that in such capacity it shall: (i)
prepare or cause to be prepared and filed, at its own expense, in a timely
manner, annual tax returns and any other tax return required to be filed by the
REMIC created hereunder using a calendar year as the taxable year for such
REMIC; (ii) in the related first such tax return, make (or cause to be made) an
election satisfying the requirements of the REMIC Provisions, on behalf of the
REMIC created hereunder, for it to be treated as a REMIC; (iii) at the Tax
Matters Person's expense, prepare and forward, or cause to be prepared and
forwarded, to the Owners all information, reports or tax returns required with
respect to the REMIC created hereunder, including Schedule Q to Form 1066, as,
when and in the form required to be provided to the Owners, and to the
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Internal Revenue Service and any other relevant governmental taxing authority in
accordance with the REMIC Provisions and any other applicable federal, state or
local laws, including without limitation information reports relating to
"original issue discount" as defined in the Code based upon the prepayment
assumption and calculated by using the "Issue Price" (within the meaning of
Section 1273 of the Code) of the Certificates of the related Class; provided
that the tax return filed on Schedule Q to Form 1066 shall be prepared and
forwarded to the Owners of the Class R Certificates no later than 50 days after
the end of the period to which such tax return was due; (iv) not take any action
or omit to take any action that would cause the termination of the REMIC status
of the REMIC created hereunder, except as provided under this Agreement; (v)
represent, the Trust or the REMIC created hereunder in any administrative or
judicial proceedings relating to an examination or audit by any governmental
taxing authority, request an administrative adjustment as to a taxable year of
the Trust or the REMIC created hereunder, enter into settlement agreements with
any governmental taxing agency, extend any statute of limitations relating to
any tax item of the Trust or the REMIC created hereunder, and otherwise act on
behalf of the Trust or the REMIC created hereunder in relation to any tax matter
involving the Trust or the REMIC created hereunder (the legal expenses and costs
of any such action described in this subsection (v) and any liability resulting
therefrom shall constitute expenses of the Trust and the Trustee shall be
entitled to reimbursement therefor as provided in Section 7.03(b)(iii)(G) unless
such legal expenses and costs are incurred by reason of the Trustee's willful
misfeasance, bad faith or negligence); (vi) comply with all statutory or
regulatory requirements with regard to its conduct of activities pursuant to the
foregoing clauses of this Section 11.16, including, without limitation,
providing all notices and other information to the Internal Revenue Service and
Owners of Class R Certificates required of a "tax matters person" pursuant to
subtitle F of the Code and the Treasury Regulations thereunder; (vii) make
available information necessary for the computation of any tax imposed (A) on
transferor of residual interests to certain Disqualified Organizations or (B) on
pass-through entities, any interest in which is held by a Disqualified
Organization; and (viii) acquire and hold the Tax Matters Person Residual
Interest. The obligations of the Trustee or such other designated Tax Matters
Person pursuant to this Section 11.16 shall survive the termination or discharge
of this Agreement.
(b) The Seller, the Depositor, the Trustee and the Servicer covenant
and agree for the benefit of the Owners and the Certificate Insurer (i) to take
no action which would result in the termination of REMIC status for the REMIC
created hereunder, (ii) not to engage in any "prohibited transaction", as such
term is defined in Section 860F(a)(2) of the Code, (iii) not to engage in any
other action which may result in the imposition on the Trust of any other taxes
under the Code and (iv) to cause the Servicer not to take or engage in any such
action, to the extent the Seller is aware of any such proposed action by the
Servicer.
(c) The REMIC created hereunder shall, for federal income tax purposes,
maintain books on a calendar year basis and report income on an accrual basis.
(d) Except as otherwise permitted by Section 7.05(b), no Eligible
Investment shall be sold prior to its stated maturity (unless sold pursuant to a
plan of liquidation in accordance with Article IX hereof).
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(e) None of the Depositor, the Seller or the Trustee shall enter into
any arrangement by which the Trustee will receive a fee or other compensation
for services rendered pursuant to this Agreement, other than as expressly
contemplated by this Agreement.
(f) Notwithstanding the foregoing clauses (d) and (e), the Trustee or
the Seller may engage in any of the transactions prohibited by such clauses,
provided that the Trustee shall have received an Opinion of Counsel experienced
in federal income tax matters acceptable to the Certificate Insurer to the
effect that such transaction does not result in a tax imposed on the Trustee or
cause a termination of REMIC status for the REMIC created hereunder; provided,
however, that such transaction is otherwise permitted under this Agreement.
(g) In the event that any tax is imposed on "prohibited transactions"
of the Trust created hereunder as defined in Section 860F(a)(2) of the Code, on
"net income from foreclosure property" of the Trust as defined in Section
860G(c) of the Code, on any contributions to the Trust after the Startup Date
therefor pursuant to Section 860G(d) of the Code, or any other tax is imposed by
the Code or any applicable provisions of state or local tax laws, such tax shall
be charged (i) to the Trustee if such tax arises out of or results from the
willful misfeasance, bad faith or negligence in performance by the Trustee of
any of its obligations under Article X, (ii) to the Servicer if such tax arises
out of or results from a breach by the Servicer of any of its obligations under
Article VIII or otherwise.
Section 11.17 Additional Limitation on Action and Imposition of Tax.
Any provision of this Agreement to the contrary notwithstanding, the
Trustee shall not, without having obtained an Opinion of Counsel experienced in
federal income tax matters acceptable to the Certificate Insurer at the expense
of the party seeking to take such action but in no event at the expense of the
Trust to the effect that such transaction does not result in a tax imposed on
the Trust or the REMIC created hereunder or cause a termination of REMIC status
for the REMIC created hereunder, (i) sell any assets in the Trust Estate, (ii)
accept any contribution of assets after the Startup Day (other than Subsequent
Home Equity Loans), (iii) allow the Servicer to foreclose upon any Home Equity
Loan if such foreclosure would result in a tax on the Trust or the REMIC created
hereunder or cause termination of the REMIC status for the REMIC created
hereunder or (iv) agree to any modification of this Agreement. To the extent
that sufficient amounts cannot be so retained to pay or provide for the payment
of such tax, the Trustee is hereby authorized to and shall segregate, into a
separate non-interest bearing account, the net income from any such Prohibited
Transactions of the REMIC created hereunder and use such income, to the extent
necessary, to pay such tax; provided that, to the extent that any such income is
paid to the Internal Revenue Service, the Trustee shall retain an equal amount
from future amounts otherwise distributable to the Owners of Class R
Certificates and shall distribute such retained amounts to the Owners of Class A
Certificates to the extent they are fully reimbursed and then to the Owners of
the Class R Certificates. If any tax, including interest penalties or
assessments, additional amounts or additions to tax, is imposed on the Trust,
such tax shall be charged against amounts otherwise distributable to the owners
of the Class R Certificates on a pro rata basis. The Trustee is hereby
authorized to and shall retain from amounts otherwise distributable to the
Owners of the Class R Certificates sufficient funds to pay or provide for the
payment of, and to actually pay, such tax as is legally owed by the Trust (but
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such authorization shall not prevent the Trustee from contesting any such tax in
appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings).
Section 11.18 Appointment of Tax Matters Person.
A Tax Matters Person will be appointed for the REMIC created hereunder
for all purposes of the Code and such Tax Matters Person will perform, or cause
to be performed, such duties and take, or cause to be taken, such actions as are
required to be performed or taken by the Tax Matters Person under the Code. The
Tax Matters Person for the REMIC created hereunder shall be the Trustee as long
as it owns a Class R Certificate. If the Trustee does not own a Class R
Certificate, the Tax Matters Person may be any other entity that owns a Class R
Certificate and accepts a designation hereunder as Tax Matters person by
delivering an affidavit in the form of Exhibit I.
Section 11.19 The Certificate Insurer.
Any right conferred to the Certificate Insurer hereunder, including but
not limited to consent rights, shall be suspended and shall run to the benefit
of the Owners during any period in which there exists a Certificate Insurer
Default; provided, that the right of the Certificate Insurer to receive the
Premium Amount shall not be suspended if such Certificate Insurer Default was a
default other than a default under clause (a) of the definition thereof. If a
Certificate Insurer Default shall cease to exist, the rights of the Certificate
Issuer shall be immediately restored. At such time as the Class A Certificates
are no longer Outstanding hereunder and the Certificate Insurer has received all
Reimbursement Amounts, the Certificate Insurer's rights hereunder shall
terminate.
Section 11.20 Reserved.
Section 11.21 Third Party Rights.
The Trustee, the Seller, the Servicer, the Depositor and the Owners
agree that the Certificate Insurer shall be deemed a third-party beneficiary of
this Agreement as if it were a party hereto.
Section 11.22 Notices.
All notices hereunder shall be given as follows, until any superseding
instructions are given to all other Persons listed below:
The Trustee: Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0070
with a copy to the following:
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Norwest Bank Minnesota, National Association
Corporation Trust Services
11000 Broken Land Parkway
Columbia, Maryland 21044
Attention: Centex Home Equity Loan Trust 1998-1
Tel: (410) 884-2000
Fax: (410) 884-2360
The Depositor: DLJ Mortgage Acceptance Corp.
277 Park Avenue
New York, NY 10172
Attention: Paul Najarian
Tel: (212) 892-3000
Fax: (212) 892-3163
with a copy to the General Counsel's office on the
23rd floor at the same address
The Seller: Centex Credit Corporation d/b/a Centex Home Equity
Corporation
2728 North Harwood
Dallas, TX 75201
Attention: Anthony H. Barone
Telecopy No.: (214) 981-5990
Confirmation: (214) 981-5220
The Servicer: Centex Credit Corporation d/b/a Centex Home Equity
Corporation
2728 North Harwood
Dallas, TX 75201
Attention: Anthony H. Barone
Telecopy No.: (214) 981-5990
Confirmation: (214) 981-5220
The Certificate
Insurer: MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management-Structured
Finance (Centex 1998-1)
Tel: (914) 765-3111
Fax: (914) 765-3919
The Underwriters
Moody's: Moody's Investors Service, Inc.
99 Church Street
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New York, New York 10007
Attention: The Residential Mortgage
Monitoring Department
Tel: (212) 553-0300
Fax: (212) 553-0355
Standard & Poor's: Standard & Poor's Ratings Services, a division of
the McGraw-Hill Companies
26 Broadway
15th Floor
New York, New York 10004
Attention: Residential Mortgage Group
Tel: (212) 208-8000
Fax: (212) 208-8365
Section 11.23 Rule 144A Information. For so long as any of the Class R
Certificates are "restricted securities" within the meaning of Rule 144A under
the Securities Act, the Servicer (or if the Trustee is then acting as Servicer,
the Seller) agrees to provide to any Owner of the Class R Certificate and to any
prospective purchaser of Class R Certificates designated by such an Owner, upon
the request of such Owner or prospective purchaser, the information specified
below which is intended to satisfy the condition set forth in Rule 144A(d)(4)
under the Securities Act; provided that this Section 11.23 shall require, as to
the Trustee or the Servicer, only that the Servicer (or if the Trustee is then
acting as Servicer, the Seller) provide publicly available information regarding
it or the Trustee in response to any such request; and provided further that the
Servicer (or if the Trustee is then acting as Servicer, the Seller) shall be
obligated to provide only such basic, material information concerning the
structure of the Class R Certificates and distributions thereon, the nature,
performance and servicing of the Home Equity Loans supporting the Certificates,
and any credit enhancement mechanism, if any, associated with the Certificates.
Any recipient of information provided pursuant to this Section 11.23 shall agree
that such information shall not be disclosed or used for any purpose other than
the evaluation of the Class R Certificates by the prospective purchaser. The
Trustee shall have no responsibility for the sufficiency under Rule 144A of any
information so provided by the Servicer to any Owner or prospective purchaser of
Class R Certificates.
END OF ARTICLE XI
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ARTICLE XII
CERTAIN MATTERS REGARDING THE CERTIFICATE INSURER
Section 12.01 Trust Estate and Accounts Held for Benefit of the
Certificate Insurer.
The Trustee shall hold the Trust Estate for the benefit of the related
Owners and the Certificate Insurer and all references in this Agreement and in
the Certificates to the benefit of Owners of the Certificates shall be deemed to
include the Certificate Insurer. The Trustee shall cooperate in all reasonable
respects with any reasonable request by the Certificate Insurer for action to
preserve or enforce the Certificate Insurer's rights or interests under this
Agreement and the Certificates.
The Servicer hereby acknowledges and agrees that it shall service and
administer the Home Equity Loans and any REO Properties, and shall maintain the
Principal and Interest Account, for the benefit of the Owners and for the
benefit of the Certificate Insurer, and all references in this Agreement to the
benefit of or actions on behalf of the Owners shall be deemed to include the
Certificate Insurer. Unless a Certificate Insurer Default exists, the Servicer
shall not terminate any Sub-Servicing Agreements without cause without the prior
consent of the Certificate Insurer.
Section 12.02 Claims Upon the Policy; Policy Payments Account.
(a) In the event that an Insured Payment becomes due pursuant
to the terms of a Certificate Insurance Policy, the Trustee shall submit a
Notice (in the form attached to such Certificate Insurance Policy) in accordance
with the terms of such Certificate Insurance Policy.
(b) The Trustee shall establish and maintain a separate
special purpose trust account for the benefit of the Owners of the Class A
Certificates and the Certificate Insurer referred to herein as the "Policy
Payments Account" over which the Trust shall have exclusive control and sole
right of withdrawal. The Policy Payments Account shall be an Eligible Account.
The Trustee shall deposit any amount paid under the Certificate Insurance
Policies in the Policy Payments Account and distribute such amount only for
purposes of payment to the Owners of the related Class A Certificates of the
Insured Payments for which a claim was made and such amount may not be applied
to satisfy any costs, expenses or liabilities of the Servicer, the Seller, the
Depositor, the Custodian, the Trustee or the Trust. Amounts paid under the
related Certificate Insurance Policy shall be transferred to the Certificate
Account in accordance with the next succeeding paragraph and disbursed by the
Trustee to Owners of the related Class A Certificates in accordance with Section
7.03. It shall not be necessary for such payments to be made by checks or wire
transfers separate from the checks or wire transfers used to pay the Insured
Payments with other funds available to make such payment. However, the amount of
any payment of principal of or interest on the related Class A Certificates to
be paid from funds transferred from the Policy Payments Account shall be noted
as provided in paragraph (c) below in the Register and in the statement to be
furnished to Owners of the Class A Certificates pursuant to Section 7.08. Funds
held in the Policy Payments Account shall not be invested by the Trustee.
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On any Payment Date with respect to which a claim has been
made under the related Certificate Insurance Policy, the amount of funds
received by the Trustee as a result of any claim under the related Certificate
Insurance Policy, to the extent required to make the Insured Payment on such
Payment Date shall be withdrawn from the Policy Payments Account and deposited
in the Certificate Account and applied by the Trustee, together with the other
funds to be withdrawn from the Certificate Account, directly to the payment in
full of the Insured Payment due on the related Class of Class A Certificates.
Funds received by the Trustee as a result of any claim under either Certificate
Insurance Policy shall be deposited by the Trustee in the Policy Payments
Account and used solely for payment to the Owners of the Class A Certificates
and may not be applied to satisfy any costs, expenses or liabilities of the
Servicer, the Seller, the Depositor, the Custodian, the Trustee or the Trust.
Any funds remaining in the Policy Payments Account on the first Business Day
following a Payment Date shall be remitted to the Certificate Insurer, pursuant
to the instructions of the Certificate Insurer, by the end of such Business Day.
(c) The Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of any Class A Certificate
from moneys received under the Certificate Insurance Policies. The Certificate
Insurer shall have the right to inspect such records at reasonable times during
normal business hours upon one Business Day's prior notice to the Trustee.
(d) The Trustee shall promptly notify the Certificate Insurer
and Fiscal Agent (as defined in the Certificate Insurance Policies) of any
proceeding or the institution of any action, of which an Authorized Officer of
the Trustee has actual knowledge, seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership or similar law (a
"Preference Claim") of any distribution made with respect to the Class A
Certificates. Each Owner of a Class A Certificate by its purchase of such
Certificate, the Servicer and the Trustee hereby agree that, the Certificate
Insurer (so long as no Certificate Insurer Default exists) may at any time
during the continuation of any proceeding relating to a Preference Claim direct
all matters relating to such Preference Claim, including without limitation, (i)
the direction of any appeal of any order relating to such Preference Claim and
(ii) the posting of any surety, supersedeas or performance bond pending any such
appeal. In addition and without limitation of the foregoing, the Certificate
Insurer shall be subrogated to the rights of the Servicer, the Trustee and Owner
of Class A Certificate in the conduct of any such Preference Claim, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Preference
Claim.
Section 12.03 Effect of Payments by the Certificate Insurer;
Subrogation.
Anything herein to the contrary notwithstanding, any payment with
respect to principal of or interest on any of the Class A Certificates which is
made with moneys received pursuant to the terms of the Certificate Insurance
Policies shall not be considered payment of such Certificates from the Trust and
shall not result in the payment of or the provision for the payment of the
principal of or interest on such Certificates within the meaning of Section
7.03. The Depositor, the Servicer and the Trustee acknowledge, and each Owner by
its acceptance of a Certificate
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agrees, that without the need for any further action on the part of the
Certificate Insurer, the Depositor, the Servicer, the Trustee or the Registrar
(a) to the extent the Certificate Insurer makes payments, directly or
indirectly, on account of principal of or interest on any Class A Certificates
to the Owners of such Certificates, the Certificate Insurer will be fully
subrogated to the rights of such Holders to receive such principal and interest
from the Trust and (b) the Certificate Insurer shall be paid such principal and
interest but only from the sources and in the manner provided herein for the
payment of such principal and interest.
The Trustee, the Seller, the Depositor and the Servicer shall cooperate
in all respects with any reasonable request by the Certificate Insurer for
action to preserve or enforce the Certificate Insurer's rights or interests
under this Agreement without limiting the rights or affecting the interests of
the Owners as otherwise set forth therein.
Section 12.04 Notices to the Certificate Insurer.
All notices, statements, reports, certificates or opinions required by
this Agreement to be sent to any other party hereto or to any of the Owners
shall also be sent to the Certificate Insurer.
Section 12.05 Third-Party Beneficiary.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement, entitled to enforce the provisions hereof as if a party hereto.
Section 12.06 Rights to the Certificate Insurer To Exercise Rights of
Owners.
By accepting its Certificate, each Owner of a Class A Certificate
agrees that unless a Certificate Insurer Default exists, the Certificate Insurer
shall have the right to exercise all rights of the Owners of the Class A
Certificates as specified under this Agreement without any further consent of
the Owners of the Class A Certificates.
END OF ARTICLE XII
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IN WITNESS WHEREOF, the Depositor, the Seller, the Servicer and the
Trustee have caused this Agreement to be duly executed their respective officers
thereunto duly authorized, all as of the day and year first above written.
DLJ MORTGAGE ACCEPTANCE CORP.
as Depositor
By:
---------------------------------------
Title:
------------------------------------
CENTEX CREDIT CORPORATION d/b/a
CENTEX HOME EQUITY CORPORATION,
as Seller
By:
---------------------------------------
Title:
------------------------------------
CENTEX CREDIT CORPORATION d/b/a
CENTEX HOME EQUITY CORPORATION,
as Servicer
By:
---------------------------------------
Title:
------------------------------------
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By:
---------------------------------------
Title:
------------------------------------
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STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 26th day of February, 1998, before me personally came Paul J.
Najarian, to me known that he is a Senior Vice President of DLJ Mortgage
Acceptance Corp., a Delaware corporation; and that he signed his name thereto by
order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
------------------------------
Notary Public
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STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 26th day of February, 1998, before me personally came Anthony H.
Barone to me known that he is President of Centex Credit Corporation d/b/a
Centex Home Equity Corporation, a Nevada corporation and that he signed his name
thereto by order of the respective Boards of Directors of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
-----------------------------------
Notary Public
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STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the 26th day of February, 1998, before me personally came Randall S.
Reider to me known that he/she is a Trust Officer of Norwest Bank Minnesota,
National Association, a national banking association described in and that
executed the above instrument as Trustee; and that he/she signed his/her name
thereto by order of the Board of Directors of said national banking association.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
NOTARIAL SEAL
-----------------------------------
Notary Public
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SCHEDULE I-A
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-A-1
<PAGE>
SCHEDULE I-B
SCHEDULE OF HOME EQUITY LOANS
A copy of this Schedule is maintained by the Trustee at the Corporate
Trust Office and by the Servicer.
I-B-1
<PAGE>
EXHIBIT A-1
FORM OF CLASS A-1 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 1998-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-1
(6.41% Pass-Through Rate)
Representing Certain Interests in a Pool of Fixed Rate Group Home Equity
Loans Originated and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by DLJ
Mortgage Acceptance Corp. (the "Depositor") or Centex Credit Corporation d/b/a
Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Fixed Rate Group
Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 1998-1") or its agent 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.
No: A-1-1 152314 AA 8
--------------------
CUSIP
$ February 26, 1998 December 25, 2012
- --------------------------------- ----------------- ------------------
Original Class A-1 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
--------------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in the Fixed Rate
Group (other than any principal
<PAGE>
received and interest due thereon prior to February 1, 1998) listed in Schedule
I-A to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in the Fixed Rate Group (other than
any principal received and interest payments due thereon prior to the related
Subsequent Cut-Off Date) listed in Schedule I-A to any Subsequent Transfer
Agreement which the Seller will cause to be delivered to the Depositor and the
Depositor will cause to be delivered to the Trustee (and all substitutions
therefor as provided by Section 3.03, 3.04 and 3.06 of the Pooling and Servicing
Agreement), together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to the Fixed Rate Group as may be held by the Trustee in the
Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer), (c) the Depositor's rights, but none of its obligations, under the
Loan Sale Agreement (except with respect to Sections 4.03 and 4.04) and (d)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (d) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original Class
A-1 Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Payment Date for the Class A-1
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to March 25, 1998 (the first Payment
Date) be less than the Original Class A Certificate Principal Balance set forth
above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS
A-1-2
<PAGE>
CERTIFICATE MAY ON ANY DATE SUBSEQUENT TO MARCH 25, 1998 (THE FIRST PAYMENT
DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 1998-1, Home Equity Loan
Pass-Through Certificates, Class A-1 (the "Class A-1 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of February 1, 1998 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), DLJ Mortgage Acceptance Corp., in its capacity as
Depositor (the "Depositor") and Norwest Bank Minnesota, National Association, a
national banking association, in its capacity as the Trustee (the "Trustee"), to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 1998-1 Home Equity Loan Pass-Through Certificates, Class A-2
(the "Class A-2 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class
A-4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates and the Class A-5 Certificates shall be together referred to as
the "Class A Certificates" and the Class A Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing March 25, 1998, the Owners of the Class A-1 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-1 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-l Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-1 Certificates. The Percentage Interest of each
Class A-1 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-1 Certificate on the Startup Day by the aggregate Class A-l
Certificate Principal Balance on the Startup Day.
A-1-3
<PAGE>
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in the
related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the appropriate Class of
the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by DLJ Mortgage Acceptance Corp. or Centex Credit Corporation d/b/a
Centex Home Equity Corporation or any of their affiliates. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Home Equity Loans and amounts on deposit in the Certificate Account and the
Principal and Interest Account (except as otherwise provided in the Pooling and
Servicing Agreement) and payments received by the Trustee pursuant to the
related Certificate Insurance Policy, all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the
A-1-4
<PAGE>
Owners of such Class A-l Certificates, the Certificate Insurer will be
subrogated to the rights of such Owners of Class A-l Certificates with respect
to such Insured Payment, shall be deemed to the extent of the payments so made
to be a registered Owner of such Class A-1 Certificates and shall receive all
future distributions of the Class A-l Distribution Amount until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer upon the latest to occur of (a)
the final payment or other liquidation (or any advance made with respect
thereto) of the last Home Equity Loan in the Trust Estate, (b) the disposition
of all property acquired in respect of any Home Equity Loan remaining in the
Trust Estate or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the affect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby effect
early retirement of the Certificates, on any Monthly Remittance Date after the
Clean Up Call Date. Under certain circumstances, the Certificate Insurer may
also exercise such purchase rights if the Servicer does not do so. In addition,
under certain circumstances relating to the qualification of the REMIC as a
REMIC under the Code, the Home Equity Loans may be sold, thereby effecting the
early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in
A-1-5
<PAGE>
the Register upon surrender of this Certificate for registration of transfer at
the office designated as the location of the Register duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Registrar duly executed by, the Owner hereof or his attorney duly authorized in
writing, and thereupon one or more new Certificates of the like Class, tenor and
a like Percentage Interest will be issued to the designated transferee or
transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendments. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-1 Certificates are issuable only as registered Certificates
in minimum denominations of $l,000,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-1 Certificates are exchangeable for new
Class A-1 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-1-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:
-----------------------------------
Title:
--------------------------------
Trustee Authentication
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
By:
-----------------------------------
Title:
--------------------------------
A-1-7
<PAGE>
EXHIBIT A-2
FORM OF CLASS A-2 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 1998-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-2
(6.40% Pass-Through Rate)
Representing Certain Interests in a Pool of Fixed Rate Group Home Equity
Loans Originated and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by DLJ
Mortgage Acceptance Corp. (the "Depositor") or Centex Credit Corporation d/b/a
Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Fixed Rate Group
Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 1998-1") or its agent 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.
No: A-2-1 152314 AB 6
--------------------
CUSIP
$ February 26, 1998 May 25, 2017
- --------------------------------- ----------------- ------------
Original Class A-2 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
--------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in the Fixed Rate
Group (other than any principal
<PAGE>
received and interest due thereon prior to February 1, 1998) listed in Schedule
I-A to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in the Fixed Rate Group (other than
any principal received and interest payments due thereon prior to the related
Subsequent Cut-Off Date) listed in Schedule I-A to any Subsequent Transfer
Agreement which the Seller will cause to be delivered to the Depositor and the
Depositor will cause to be delivered to the Trustee (and all substitutions
therefor as provided by Section 3.03, 3.04 and 3.06 of the Pooling and Servicing
Agreement), together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to the Fixed Rate Group as may be held by the Trustee in the
Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer), (c) the Depositor's rights, but none of its obligations, under the
Loan Sale Agreement (except with respect to Sections 4.03 and 4.04) and (d)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (d) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original Class
A-2 Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Payment Date for the Class A-2
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to March 25, 1998 (the first Payment
Date) be less than the Original Class A Certificate Principal Balance set forth
above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS
A-2-2
<PAGE>
CERTIFICATE MAY ON ANY DATE SUBSEQUENT TO MARCH 25, 1998 (THE FIRST PAYMENT
DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 1998-1, Home Equity Loan
Pass-Through Certificates, Class A-2 (the "Class A-2 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of February 1, 1998 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), DLJ Mortgage Acceptance Corp., in its capacity as
Depositor (the "Depositor") and Norwest Bank Minnesota, National Association, a
national banking association, in its capacity as the Trustee (the "Trustee"), to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 1998-1 Home Equity Loan Pass-Through Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-3 (the "Class A-3 Certificates"), Class
A-4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates and the Class A-5 Certificates shall be together referred to as
the "Class A Certificates" and the Class A Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing March 25, 1998, the Owners of the Class A-2 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-2 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-2 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-2 Certificates. The Percentage Interest of each
Class A-2 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-2 Certificate on the Startup Day by the aggregate Class A-2
Certificate Principal Balance on the Startup Day.
A-2-3
<PAGE>
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in the
related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the appropriate Class of
the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, DLJ Mortgage Acceptance Corp. or Centex Credit Corporation d/b/a
Centex Home Equity Corporation or any of their affiliates. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Home Equity Loans and amounts on deposit in the Certificate Account and the
Principal and Interest Account (except as otherwise provided in the Pooling and
Servicing Agreement) and payments received by the Trustee pursuant to the
related Certificate Insurance Policy all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-2
Certificates, the Certificate Insurer will be subrogated to the rights of
A-2-4
<PAGE>
such Owners of Class A-2 Certificates with respect to such Insured Payment,
shall be deemed to the extent of the payments so made to be a registered Owner
of such Class A-2 Certificates and shall receive all future distributions of the
Class A-2 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer upon the latest to occur of (a)
the final payment or other liquidation (or any advance made with respect
thereto) of the last Home Equity Loan in the Trust Estate, (b) the disposition
of all property acquired in respect of any Home Equity Loan remaining in the
Trust Estate or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the effect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby effect
early retirement of the Certificates, on any Monthly Remittance Date after the
Clean Up Call Date. Under certain circumstances, the Certificate Insurer may
also exercise such purchase rights if the Servicer does not do so. In addition,
under certain circumstances relating to the qualification of the REMIC as a
REMIC under the Code, the Home Equity Loans may be sold, thereby effecting the
early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated
A-2-5
<PAGE>
as the location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-2 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-2 Certificates are exchangeable for new
Class A-2 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-2-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to he duly
executed on behalf of the Trust.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:
--------------------------------------
Title:
-----------------------------------
Trustee Authentication
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
By:
--------------------------------------
Title:
-----------------------------------
A-2-7
<PAGE>
EXHIBIT A-3
FORM OF CLASS A-3 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 1998-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-3
(6.92% Pass-Through Rate)
Representing Certain Interests in a Pool of Fixed Rate Group Home Equity
Loans Originated and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by DLJ
Mortgage Acceptance Corp. (the "Depositor") or Centex Credit Corporation d/b/a
Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Fixed Rate Group
Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 1998-1") or its agent 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.
No: A-3-1 152314 AC 4
--------------------
CUSIP
$ February 26, 1998 March 25, 2029
- ------------------------------- ----------------- --------------
Original Class A-3 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
------------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in the Fixed Rate
Group (other than any principal
<PAGE>
received and interest due thereon prior to February 1, 1998) listed in Schedule
I-A to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in the Fixed Rate Group (other than
any principal received and interest payments due thereon prior to the related
Subsequent Cut-Off Date) listed in Schedule I-A to any Subsequent Transfer
Agreement which the Seller will cause to be delivered to the Depositor and the
Depositor will cause to be delivered to the Trustee (and all substitutions
therefor as provided by Section 3.03, 3.04 and 3.06 of the Pooling and Servicing
Agreement), together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to the Fixed Rate Group as may be held by the Trustee in the
Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer), (c) the Depositor's rights, but none of its obligations, under the
Loan Sale Agreement (except with respect to Sections 4.03 and 4.04) and (d)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (d) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original Class
A-3 Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Payment Date for the Class A-3
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to March 25, 1998 (the first Payment
Date) be less than the original Class A Certificate Principal Balance set forth
above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS
A-3-2
<PAGE>
CERTIFICATE MAY ON ANY DATE SUBSEQUENT TO MARCH 25, 1998 (THE FIRST PAYMENT
DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 1998-1, Home Equity Loan
Pass-Through Certificates, Class A-2 (the "Class A-2 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of February 1, 1998 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), DLJ Mortgage Acceptance Corp., in its capacity as
Depositor (the "Depositor") and Norwest Bank Minnesota, National Association, a
national banking association, in its capacity as the Trustee (the "Trustee"), to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 1998-1 Home Equity Loan Pass-Through Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class
A-4 (the "Class A-4 Certificates"), Class A-5 (the "Class A-5 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates and the Class A-5 Certificates shall be together referred to as
the "Class A Certificates" and the Class A Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing March 25, 1998, the Owners of the Class A-3 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-3 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-3 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-3 Certificates. The Percentage Interest of each
Class A-3 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-3 Certificate on the Startup Day by the aggregate Class A-3
Certificate Principal Balance on the Startup Day.
A-3-3
<PAGE>
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in the
related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the appropriate Class of
the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, DLJ Mortgage Acceptance Corp. or Centex Credit Corporation d/b/a
Centex Home Equity Corporation or any of their affiliates. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Home Equity Loans and amounts on deposit in the Certificate Account and the
Principal and Interest Account (except as otherwise provided in the Pooling and
Servicing Agreement) and payments received by the Trustee pursuant to the
related Certificate Insurance Policy all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-3
Certificates, the Certificate Insurer will be subrogated to the rights of
A-3-4
<PAGE>
such Owners of Class A-3 Certificates with respect to such Insured Payment,
shall be deemed to the extent of the payments so made to be a registered Owner
of such Class A-3 Certificates and shall receive all future distributions of the
Class A-3 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer upon the latest to occur of (a)
the final payment or other liquidation (or any advance made with respect
thereto) of the last Home Equity Loan in the Trust Estate, (b) the disposition
of all property acquired in respect of any Home Equity Loan remaining in the
Trust Estate or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the effect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby effect
early retirement of the Certificates, on any Monthly Remittance Date after the
Clean Up Call Date. Under certain circumstances, the Certificate Insurer may
also exercise such purchase rights if the Servicer does not do so. In addition,
under certain circumstances relating to the qualification of the REMIC as a
REMIC under the Code, the Home Equity Loans may be sold, thereby effecting the
early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated
A-3-5
<PAGE>
as the location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-3 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-3 Certificates are exchangeable for new
Class A-3 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to he duly
executed on behalf of the Trust.
A-3-6
<PAGE>
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:
---------------------------------------
Title:
------------------------------------
Trustee Authentication
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
By:
---------------------------------------
Title:
------------------------------------
A-3-7
<PAGE>
EXHIBIT A-4
FORM OF CLASS A-4 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 1998-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-4
(6.40% Pass-Through Rate)
Representing Certain Interests in a Pool of Fixed Rate Group Home Equity
Loans Originated and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by DLJ
Mortgage Acceptance Corp. (the "Depositor") or Centex Credit Corporation d/b/a
Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Fixed Rate Group
Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 1998-1") or its agent 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.
No: A-4-1 152314 AD 2
--------------------
CUSIP
$ February 26, 1998 March 25, 2029
- ------------------------------ ----------------- --------------
Original Class A-4 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
-----------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans in the Fixed Rate
Group (other than any principal
<PAGE>
received and interest due thereon prior to February 1, 1998) listed in Schedule
I-A to the Pooling and Servicing Agreement which the Seller is causing to be
delivered to the Depositor and the Depositor is causing to be delivered to the
Trustee and the Subsequent Home Equity Loans in the Fixed Rate Group (other than
any principal received and interest due thereon prior to the related Subsequent
Cut-Off Date) listed in Schedule I-A to any Subsequent Transfer Agreement which
the Seller will cause to be delivered to the Depositor and the Depositor will
cause to be delivered to the Trustee (and all substitutions therefor as provided
by Section 3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together
with the related Home Equity Loan documents and the Depositor's interest in any
Property, and all payments thereon and proceeds of the conversion, voluntary or
involuntary, of the foregoing; (b) such amounts allocable to the Fixed Rate
Group as may be held by the Trustee in the Certificate Account, the Pre-Funding
Account and the Capitalized Interest Account together with investment earnings
on such amounts and such amounts as may be held in the name of the Trustee in
the Principal and Interest Account, if any, exclusive of investment earnings
thereon (except as otherwise provided in the Pooling and Servicing Agreement),
whether in the form of cash, instruments, securities or other properties
(including any Eligible Investments held by the Servicer), (c) the Depositor's
rights, but none of its obligations, under the Loan Sale Agreement (except with
respect to Sections 4.03 and 4.04) and (d) proceeds of all the foregoing
(including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy relating
to the Home Equity Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing) to pay the Certificates as specified in the Pooling and Servicing
Agreement ((a) - (d) above shall be collectively referred to herein as the
"Trust Estate").
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original Class
A-4 Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Payment Date for the Class A-4
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to March 25, 1998 (the first Payment
Date) be less than the Original Class A Certificate Principal Balance set forth
above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO MARCH 25, 1998 (THE
A-4-2
<PAGE>
FIRST PAYMENT DATE) BE LESS THAN ITS ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 1998-1, Home Equity Loan
Pass-Through Certificates, Class A-4 (the "Class A-4 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of February 1, 1998 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), DLJ Mortgage Acceptance Corp., in its capacity as
Depositor (the "Depositor") and Norwest Bank Minnesota, National Association, a
national banking association, in its capacity as the Trustee (the "Trustee"), to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 1998-1 Home Equity Loan Pass-Through Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class
A-3 (the "Class A-3 Certificates"), Class A-5 (the "Class A-5 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates and the Class A-5 Certificates shall be together referred to as
the "Class A Certificates" and the Class A Certificates and the Class R
Certificates are together referred to are together referred to herein as the
"Certificates." Terms capitalized herein and not otherwise defined herein shall
have the respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing March 25, 1998, the Owners of the Class A-4 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-4 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-4 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-4 Certificates. The Percentage Interest of each
Class A-4 Certificate as of any date of determination will be equal to the
percentage obtained by dividing the original Certificate Principal Balance of
such Class A-4 Certificate on the Startup Day by the aggregate Class A-4
Certificate Principal Balance on the Startup Day.
A-4-3
<PAGE>
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in the
related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the appropriate Class of
the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, DLJ Mortgage Acceptance Corp. or Centex Credit Corporation d/b/a
Centex Home Equity Corporation or any of their affiliates. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Home Equity Loans and amounts on deposit in the Certificate Account and the
Principal and Interest Account (except as otherwise provided in the Pooling and
Servicing Agreement) and payments received by the Trustee pursuant to the
related Certificate Insurance Policy all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner. The Owner of this Certificate, by
its acceptance hereof, agrees, however, that to the extent the Certificate
Insurer makes Insured Payments, either directly or indirectly (as by paying
through the Trustee or Paying Agent), to the Owners of such Class A-4
Certificates, the Certificate Insurer will be subrogated to the rights of
A-4-4
<PAGE>
such Owners of Class A-4 Certificates with respect to such Insured Payment,
shall be deemed to the extent of the payments so made to be a registered Owner
of such Class A-4 Certificates and shall receive all future distributions of the
Class A-4 Distribution Amount until all such Insured Payments by the Certificate
Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer upon the latest to occur of (a)
the final payment or other liquidation (or any advance made with respect
thereto) of the last Home Equity Loan in the Trust Estate, (b) the disposition
of all property acquired in respect of any Home Equity Loan remaining in the
Trust Estate or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the effect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby effect
early retirement of the Certificates, on any Monthly Remittance Date after the
Clean up Call Date. Under certain circumstances, the Certificate Insurer may
also exercise such purchase rights if the Servicer does not do so. In addition,
under certain circumstances relating to the qualification of the REMIC as a
REMIC under the Code, the Home Equity Loans may be sold, thereby effecting the
early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated
A-4-5
<PAGE>
as the location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided that in certain other circumstances provided for in the Pooling
and Servicing Agreement such consent of the Owners will be required prior to
amendment. Any such consent by the Owner at the time of the giving thereof, of
this Certificate shall be conclusive and binding upon such Owner and upon all
future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-4 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-4 Certificates are exchangeable for new
Class A-4 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-4-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:
----------------------------------------
Title:
-------------------------------------
Trustee Authentication
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
By:
----------------------------------------
Title:
-------------------------------------
A-4-7
<PAGE>
EXHIBIT A-5
FORM OF CLASS A-5 CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A
CLASS OF "REGULAR INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT"
("REMIC") AS THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF
THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE
WITH THE REMIC PROVISIONS OF THE CODE.
CENTEX HOME EQUITY LOAN TRUST 1998-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS A-5
(Variable Pass-Through Rate)
Representing Certain Interests in a Pool of Adjustable Rate Group Home Equity
Loans Originated and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by DLJ
Mortgage Acceptance Corp. (the "Depositor") or Centex Credit Corporation d/b/a
Centex Home Equity Corporation (the "Seller" or the "Servicer"). This
Certificate represents a fractional ownership interest in the Adjustable Rate
Group Home Equity Loans and certain other property held by the Trust.)
Unless this certificate is presented by an authorized representative of
The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
("Centex Home Equity Loan Trust 1998-1") or its agent 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.
No: A-5-1 152314 AE 0
--------------------
CUSIP
$ February 26, 1998 March 25, 2029
- ------------------------------- ----------------- --------------
Original Class A-5 Certificate Date Final Scheduled
Principal Balance Payment Date
CEDE & CO.
------------------------
Registered Owner
The registered Owner now above is the registered beneficial Owner of a
fractional interest in (a) the Initial Home Equity Loans in the Adjustable Rate
Group (other than any
<PAGE>
principal received and interest due thereon prior to February 1, 1998) listed in
Schedule I-B to the Pooling and Servicing Agreement which the Seller is causing
to be delivered to the Depositor and the Depositor is causing to be delivered to
the Trustee and the Subsequent Home Equity Loans in the Adjustable Rate Group
(other than any principal received and interest due thereon prior to the related
Subsequent Cut-Off Date) listed in Schedule I-B to any Subsequent Transfer
Agreement which the Seller will cause to be delivered to the Depositor and the
Depositor will cause to be delivered to the Trustee (and all substitutions
therefor as provided by Section 3.03, 3.04 and 3.06 of the Pooling and Servicing
Agreement), together with the related Home Equity Loan documents and the
Depositor's interest in any Property, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; (b) such amounts
allocable to the Adjustable Rate Group as may be held by the Trustee in the
Certificate Account, the Pre-Funding Account and the Capitalized Interest
Account together with investment earnings on such amounts and such amounts as
may be held in the name of the Trustee in the Principal and Interest Account, if
any, exclusive of investment earnings thereon (except as otherwise provided in
the Pooling and Servicing Agreement), whether in the form of cash, instruments,
securities or other properties (including any Eligible Investments held by the
Servicer), (c) the Depositor's rights, but none of its obligations, under the
Loan Sale Agreement (except with respect to Sections 4.03 and 4.04) and (d)
proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, flood insurance, hazard insurance and title
insurance policy relating to the Home Equity Loans, cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, rights to payment of any and every kind, and other forms of
obligations and receivables which at any time constitute all or part of or are
included in the proceeds of any of the foregoing) to pay the Certificates as
specified in the Pooling and Servicing Agreement ((a) - (d) above shall be
collectively referred to herein as the "Trust Estate").
The Owner hereof is entitled to principal payments on each Payment
Date, as hereinafter described, which will fully amortize such original Class
A-5 Certificate Principal Balance over the period from the date of initial
issuance of the Certificates to the final Payment Date for the Class A-5
Certificates. Therefore, the actual Outstanding principal amount of this
Certificate may, on any date subsequent to March 25, 1998 (the first Payment
Date) be less than the Original Class A Certificate Principal Balance set forth
above.
Upon receiving the final distribution hereon, the Owner hereof is
required to send this Certificate to the Trustee. The Pooling and Servicing
Agreement (as defined below) provides that, in any event, upon the making of the
final distribution due on this Certificate, this Certificate shall be deemed
canceled for all purposes under the Pooling and Servicing Agreement.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
A-5-2
<PAGE>
THE PRINCIPAL OF THIS CERTIFICATE IS PAYABLE IN INSTALLMENTS.
THEREFORE, THE ACTUAL OUTSTANDING PRINCIPAL AMOUNT OF THIS CERTIFICATE MAY ON
ANY DATE SUBSEQUENT TO APRIL 21, 1997 (THE FIRST PAYMENT DATE) BE LESS THAN ITS
ORIGINAL CERTIFICATE PRINCIPAL BALANCE.
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 1998-1, Home Equity Loan
Pass-Through Certificates, Class A-5 (the "Class A-5 Certificates") and issued
under and subject to the terms, provisions and conditions of that certain
Pooling and Servicing Agreement dated as of February 1, 1998 (the "Pooling and
Servicing Agreement") by and among Centex Credit Corporation d/b/a Centex Home
Equity Corporation, in its capacity as the Seller (the "Seller") and as the
Servicer (the "Servicer"), DLJ Mortgage Acceptance Corp., in its capacity as
Depositor (the "Depositor") and Norwest Bank Minnesota, National Association, a
national banking association, in its capacity as the Trustee (the "Trustee"), to
which Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 1998-1 Home Equity Loan Pass-Through Certificates, Class A-1
(the "Class A-1 Certificates"), Class A-2 (the "Class A-2 Certificates"), Class
A-3 (the "Class A-3 Certificates"), Class A-4 (the "Class A-4 Certificates") and
Class R (Residual Interest) (the "Class R Certificates"). The Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates and the Class A-5 Certificates shall be together referred to as
the "Class A Certificates" and the Class A Certificates and the Class R
Certificates are together referred to herein as the "Certificates." Terms
capitalized herein and not otherwise defined herein shall have the respective
meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing March 25, 1998, the Owners of the Class A-5 Certificates as of the
close of business on the last Business Day of the calendar month immediately
preceding the calendar month in which a Payment Date occurs (the "Record Date")
will be entitled to receive the Class A-5 Distribution Amount relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Certificates having an aggregate original
Certificate Principal Balance of at least $1,000,000 (by wire transfer or
otherwise) to the account of an Owner at a domestic bank or other entity having
appropriate facilities therefor, if such Owner has so notified the Trustee, or
by check mailed to the address of the person entitled thereto as it appears on
the Register.
Each Owner of record of a Class A-5 Certificate will be entitled to
receive such Owner's Percentage Interest in the amounts due on such Payment Date
to the Owners of the Class A-5 Certificates. The Percentage Interest of each
Class A-5 Certificate as of any date of
A-5-3
<PAGE>
determination will be equal to the percentage obtained by dividing the original
Certificate Principal Balance of such Class A-5 Certificate on the Startup Day
by the aggregate Class A-5 Certificate Principal Balance on the Startup Day.
The Certificate Insurer is required, subject to the terms of the
related Certificate Insurance Policy to make Insured Payments available to the
Trustee on or prior to the related Payment Date for distribution to the Owners
provided that timely notice has been given to the Certificate Insurer by the
Trustee. "Insured Payments" shall have the meaning as provided therefor in the
related Certificate Insurance Policy.
Upon receipt of amounts under the related Certificate Insurance Policy
on behalf of the Owners of the Class A Certificates, the Trustee shall
distribute in accordance with the Pooling and Servicing Agreement such amounts
(directly or through a Paying Agent) to the Owners of the appropriate Class of
the Class A Certificates.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into Sub-Servicing Agreements with certain institutions
eligible for appointment as Sub-Servicers for the servicing and administration
of certain Home Equity Loans. No appointment of any Sub-Servicer shall release
the Servicer from any of its obligations under the Pooling and Servicing
Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by, DLJ Mortgage Acceptance Corp. or Centex Credit Corporation d/b/a
Centex Home Equity Corporation or any of their affiliates. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Home Equity Loans and amounts on deposit in the Certificate Account and the
Principal and Interest Account (except as otherwise provided in the Pooling and
Servicing Agreement) and payments received by the Trustee pursuant to the
related Certificate Insurance Policy all as more specifically set forth
hereinabove and in the Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive
A-5-4
<PAGE>
distributions to the extent provided in the Pooling and Servicing Agreement with
respect to such Certificate or to institute suit for the enforcement of any such
distribution, and such right shall not be impaired without the consent of such
Owner. The Owner of this Certificate, by its acceptance hereof, agrees, however,
that to the extent the Certificate Insurer makes Insured Payments, either
directly or indirectly (as by paying through the Trustee or Paying Agent), to
the owners of such Class A-5 Certificates, the Certificate Insurer will be
subrogated to the rights of such Owners of Class A-5 Certificates with respect
to such Insured Payment, shall be deemed to the extent of the payments so made
to be a registered Owner of such Class A-5 Certificates and shall receive all
future distributions of the Class A-5 Distribution Amount until all such Insured
Payments by the Certificate Insurer have been fully reimbursed.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement and payment in full
of all amounts owed to the Certificate Insurer upon the latest to occur of (a)
the final payment or other liquidation (or any advance made with respect
thereto) of the last Home Equity Loan in the Trust Estate, (b) the disposition
of all property acquired in respect of any Home Equity Loan remaining in the
Trust Estate or (c) at any time if a Qualified Liquidation of the Trust Estate
is effected as described below. To effect a termination of the Pooling and
Servicing Agreement pursuant to clause (c) above, the Owners of all Certificates
then Outstanding shall provide the Trustee and the Certificate Insurer, at such
Owners' expense, an Opinion of Counsel experienced in federal income tax matters
acceptable to the Certificate Insurer and the Trustee to the effect that each
such liquidation constitutes a Qualified Liquidation, and the Servicer shall
either sell the Home Equity Loans and the Trustee shall distribute the proceeds
of the liquidation of the Trust Estate, or the Servicer shall distribute
equitably in kind all of the assets of the Trust Estate to the remaining Owners
of the Certificates to the effect that each such liquidation constitutes a
Qualified Liquidation, each in accordance with such plan, so that the
liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby effect
early retirement of the Certificates, on any Monthly Remittance Date after the
Clean up Call Date. Under certain circumstances, the Certificate Insurer may
also exercise such purchase rights if the Servicer does not do so. In addition,
under certain circumstances relating to the qualification of the REMIC as a
REMIC under the Code, the Home Equity Loans may be sold, thereby effecting the
early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
A-5-5
<PAGE>
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like Percentage interest
will be issued to the designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class A-5 Certificates are issuable only as registered Certificates
in minimum denominations of $1,000,000 original Certificate Principal Balance.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class A-5 Certificates are exchangeable for new
Class A-5 Certificates of authorized denominations evidencing the same aggregate
principal amount.
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
A-5-6
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:
----------------------------------------
Title:
-------------------------------------
Trustee Authentication
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
By:
----------------------------------------
Title:
-------------------------------------
A-5-7
<PAGE>
EXHIBIT C
FORM OF CLASS R CERTIFICATE
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE REPRESENTS A CLASS OF
"RESIDUAL INTERESTS" IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT" ("REMIC") AS
THOSE TERMS ARE DEFINED, RESPECTIVELY, IN SECTION 860G AND 860D OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED (THE "CODE"), ASSUMING COMPLIANCE WITH THE
REMIC PROVISIONS OF THE CODE.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"). ANY RESALE OR TRANSFER OF THIS CERTIFICATE WITHOUT
REGISTRATION THEREOF UNDER THE ACT MAY BE MADE ONLY IN A TRANSACTION EXEMPT FROM
THE REGISTRATION REQUIREMENTS OF THE ACT AND IN ACCORDANCE WITH THE PROVISIONS
OF SECTION 5.08 OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
TRANSFER OF THIS CLASS R CERTIFICATE IS RESTRICTED AS SET FORTH IN THE
POOLING AND SERVICING AGREEMENT. NO TRANSFER OF THIS CLASS R CERTIFICATE MAY BE
MADE TO A "DISQUALIFIED ORGANIZATION" AS DEFINED IN SECTION 860E(e)(5) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"). SUCH TERM INCLUDES THE
UNITED STATES, ANY STATE OR POLITICAL SUBDIVISION THEREOF, ANY FOREIGN
GOVERNMENT, ANY INTERNATIONAL ORGANIZATION, ANY AGENCY OR INSTRUMENTALITY OF ANY
OF THE FOREGOING (OTHER THAN CERTAIN TAXABLE INSTRUMENTALITIES), ANY COOPERATIVE
ORGANIZATION FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO
PERSONS IN RURAL AREAS, OR ANY ORGANIZATION (OTHER THAN A FARMER'S COOPERATIVE)
THAT IS EXEMPT FROM FEDERAL INCOME TAX UNLESS SUCH ORGANIZATION IS SUBJECT TO
THE TAX ON UNRELATED BUSINESS INCOME. NO TRANSFER OF THIS CLASS R CERTIFICATE
WILL BE REGISTERED BY THE CERTIFICATE REGISTRAR UNLESS THE PROPOSED TRANSFEREE
HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THAT THE PROPOSED
TRANSFEREE HAS DELIVERED AN AFFIDAVIT AFFIRMING, AMONG OTHER THINGS, THE
PROPOSED TRANSFEREE IS NOT A DISQUALIFIED ORGANIZATION AND IS NOT ACQUIRING THE
CLASS R CERTIFICATE FOR THE ACCOUNT OF A DISQUALIFIED ORGANIZATION. A COPY OF
THE FORM OF AFFIDAVIT REQUIRED OF EACH PROPOSED TRANSFEREE IS ON FILE AND
AVAILABLE FROM THE TRUSTEE.
A TRANSFER IN VIOLATION OF THE APPLICABLE RESTRICTIONS MAY GIVE RISE TO
A SUBSTANTIAL TAX UPON THE TRANSFEROR OR, IN CERTAIN CASES, UPON AN AGENT ACTING
FOR THE TRANSFEREE. A PASS-THROUGH ENTITY THAT HOLDS THIS CLASS R CERTIFICATE
AND THAT HAS A
<PAGE>
DISQUALIFIED ORGANIZATION AS A RECORD OWNER IN ANY TAXABLE YEAR GENERALLY WILL
BE SUBJECT TO A TAX FOR EACH SUCH YEAR EQUAL TO THE PRODUCT OF (A) THE AMOUNT OF
EXCESS INCLUSIONS WITH RESPECT TO THE PORTION OF THIS CERTIFICATE OWNED THROUGH
SUCH PASS-THROUGH ENTITY BY SUCH DISQUALIFIED ORGANIZATION, AND (B) THE HIGHEST
MARGINAL FEDERAL TAX RATE ON CORPORATIONS. FOR PURPOSES OF THE PRECEDING
SENTENCE, THE TERM "PASS-THROUGH" ENTITY INCLUDES REGULATED INVESTMENT
COMPANIES, REAL ESTATE INVESTMENT TRUSTS, COMMON TRUST FUNDS, PARTNERSHIPS,
TRUSTS, ESTATES, COOPERATIVES TO WHICH PART I OF SUBCHAPTER 1T OF THE CODE
APPLIES AND, EXCEPT AS PROVIDED IN REGULATIONS, NOMINEES.
NEITHER THIS CERTIFICATE NOR THE UNDERLYING HOME EQUITY LOANS ARE
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION OR ANY OTHER GOVERNMENTAL AGENCY.
C-2
<PAGE>
CENTEX HOME EQUITY LOAN TRUST 1998-1
HOME EQUITY LOAN PASS-THROUGH CERTIFICATE
CLASS R
(Residual Interest)
Representing Certain Interests Relating to two Pools of
Home Equity Loans Originated or Purchased
and Serviced by
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
(This certificate does not represent an interest in, or an obligation
of, nor are the underlying Home Equity Loans insured or guaranteed by DLJ
Mortgage Acceptance Corp. or Centex Credit Corporation d/b/a Centex Home Equity
Corporation This Certificate represents a fractional ownership interest in the
Trust Estate as defined below.)
No: R-_ February 26, 1998
-----------------
Date
Percentage Interest _____%
CHEC Residual Corporation
-------------------------
Registered Owner
The registered Owner named above is the registered beneficial Owner of
a fractional interest in (a) the Initial Home Equity Loans (other than any
principal and interest due thereon on or prior to February 1, 1998 whether or
not received) listed in Schedule I-A and Schedule I-B to the Pooling and
Servicing Agreement which the Seller is causing to be delivered to the Depositor
and the Depositor is causing to be delivered to the Trustee and the Subsequent
Home Equity Loans (other than any principal and interest payments due thereon on
or prior to the related Subsequent Cut-Off Date whether or not received) listed
in Schedule I-A and Schedule I-B to any Subsequent Transfer Agreement which the
Seller will cause to be delivered to the Depositor and the Depositor will cause
to be delivered to the Trustee (and all substitutions therefor as provided by
Section 3.03, 3.04 and 3.06 of the Pooling and Servicing Agreement), together
with the related Home Equity Loan documents and the Seller's interest in any
Property which secured a Home Equity Loan but which has been acquired by
foreclosure or deed in lieu of foreclosure, and all payments thereon and
proceeds of the conversion, voluntary or involuntary, of the foregoing; (b) such
amounts as may be held by the Trustee in the Certificate Account, the
Pre-Funding Account and the Capitalized Interest Account together with
investment earnings on such amounts and such amounts as may be held in the name
of the Trustee in the Principal and Interest Account, if any, exclusive of
investment earnings thereon (except as otherwise provided in the Pooling and
Servicing Agreement), whether in the form of cash, instruments, securities or
other properties (including any Eligible Investments held by the Servicer) and
(c) proceeds of all the foregoing (including, but not by way of limitation, all
proceeds of any mortgage insurance, hazard insurance and title insurance policy
relating to the Home Equity Loans, cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts,
C-3
<PAGE>
rights to payment of any and every kind, and other forms of obligations and
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing) to pay the Certificates as specified in the
Pooling and Servicing Agreement ((a) - (c) above shall be collectively referred
to herein as the "Trust Estate").
THIS CERTIFICATE IS A PASS-THROUGH CERTIFICATE ONLY AND,
NOTWITHSTANDING REFERENCES HEREIN TO PRINCIPAL AND INTEREST, NO DEBT OF ANY
PERSON IS REPRESENTED HEREBY.
This Certificate is one of a Class of duly-authorized Certificates
designated as Centex Home Equity Loan Trust 1998-1, Home Equity Loan
Pass-Through Certificates, Class R (the "Class R Certificates") and issued under
and subject to the terms, provisions and conditions of that certain Pooling and
Servicing Agreement dated as of February 1, 1998 (the "Pooling and Servicing
Agreement") by and among Centex Credit Corporation d/b/a Centex Home Equity
Corporation, in its capacity as the Seller (the "Seller") and as the Servicer
(the "Servicer"), DLJ Mortgage Acceptance Corp., in its capacity as Depositor,
(the "Depositor") and Norwest Bank Minnesota, National Association, a New York
banking corporation, in its capacity as the Trustee (the "Trustee"), to which
Pooling and Servicing Agreement the Owner of this Certificate by virtue of
acceptance hereof assents and by which such Owner is bound. Also issued under
the Pooling and Servicing Agreement are Certificates designated as Centex Home
Equity Loan Trust 1998-1 Home Equity Loan Pass-Through Certificates, Class A-1,
Class A-2, Class A-3, Class A-4 and Class A-5 (collectively, the "Class A
Certificates"). The Class A Certificates and the Class R Certificates are
together referred to are together referred to herein as the "Certificates."
Terms capitalized herein and not otherwise defined herein shall have the
respective meanings set forth in the Pooling and Servicing Agreement.
On the 25th day of each month, or, if such day is not a Business Day,
then the next succeeding Business Day (each such day being a "Payment Date")
commencing March 25, 1998, each owner of a Class R Certificate as of the close
of business on the last day of the calendar month immediately preceding the
calendar month in which a Payment Date occurs (the "Record Date") will be
entitled to receive the Residual Net Monthly Excess Cashflow relating to such
Certificate on such Payment Date. Distributions will be made in immediately
available funds to Owners of Class R Certificates having an aggregate Percentage
Interest of at least 10% (by wire transfer or otherwise) to the account of an
Owner at a domestic bank or other entity having appropriate facilities therefor,
if such Owner has so notified the Trustee, or by check mailed to the address of
the person entitled thereto as it appears on the Register.
The Trustee or any duly-appointed Paying Agent will duly and punctually
pay distributions with respect to this Certificate in accordance with the terms
hereof and the Pooling and Servicing Agreement. Amounts properly withheld under
the Code by any Person from a distribution to any Owner shall be considered as
having been paid by the Trustee to such Owner for all purposes of the Pooling
and Servicing Agreement.
The Home Equity Loans will be serviced by the Servicer pursuant to the
Pooling and Servicing Agreement. The Pooling and Servicing Agreement permits the
Servicer to enter into
C-4
<PAGE>
Sub-Servicing Agreements with certain institutions eligible for appointment as
Sub-Servicers for the servicing and administration of certain Home Equity Loans.
No appointment of any Sub-Servicer shall release the Servicer from any of its
obligations under the Pooling and Servicing Agreement.
This Certificate does not represent a deposit or other obligation of,
or an interest in, nor are the underlying Home Equity Loans insured or
guaranteed by DLJ Mortgage Acceptance Corp. or Centex Credit Corporation d/b/a
Centex Home Equity Corporation or any of their affiliates. This Certificate is
limited in right of payment to certain collections and recoveries relating to
the Home Equity Loans, all as more specifically set forth hereinabove and in the
Pooling and Servicing Agreement.
No Owner shall have any right to institute any proceeding, judicial or
otherwise, with respect to the Pooling and Servicing Agreement, or for the
appointment of a receiver or trustee, or for any other remedy under the Pooling
and Servicing Agreement except in compliance with the terms thereof.
Notwithstanding any other provisions in the Pooling and Servicing
Agreement, the Owner of any Certificate shall have the right which is absolute
and unconditional to receive distributions to the extent provided in the Pooling
and Servicing Agreement with respect to such Certificate or to institute suit
for the enforcement of any such distribution, and such right shall not be
impaired without the consent of such Owner.
The Pooling and Servicing Agreement provides that the obligations
created thereby will terminate upon the payment to the Owners of all
Certificates from amounts other than those available under the Certificate
Insurance Policies of all amounts held by the Trustee and required to be paid to
such Owners pursuant to the Pooling and Servicing Agreement upon the latest to
occur of (a) the final payment or other liquidation (or any advance made with
respect thereto) of the last Home Equity Loan in the Trust Estate, (b) the
disposition of all property acquired in respect of any Home Equity Loan
remaining in the Trust Estate or (c) at any time when a Qualified Liquidation of
the Trust Estate is effected as described below. To effect a termination of the
Pooling and Servicing Agreement pursuant to clause (c) above, the Owners of all
Certificates then Outstanding shall provide the Trustee and the Certificate
Insurer, at such Owners' expense, an Opinion of Counsel experienced in federal
income tax matters acceptable to the Certificate Insurer and the Trustee to the
effect that each such liquidation constitutes a Qualified Liquidation, and the
Servicer shall either sell the Home Equity Loans and the Trustee shall
distribute the proceeds of the liquidation of the Trust Estate, or the Servicer
shall distribute equitably in kind all of the assets of the Trust Estate to the
remaining Owners of the Certificates to the effect that each such liquidation
constitutes a Qualified Liquidation, each in accordance with such plan, so that
the liquidation or distribution of the Trust Estate, the distribution of any
proceeds of the liquidation and the termination of the Pooling and Servicing
Agreement occur no later than the close of the 90th day after the date of
adoption of the plan of liquidation and such liquidation qualifies as a
Qualified Liquidation.
C-5
<PAGE>
The Pooling and Servicing Agreement additionally provides that the
Servicer may, at its option, purchase from the Trust all remaining Home Equity
Loans and other property then constituting the Trust Estate, and thereby effect
early retirement of the Certificates, on any Monthly Remittance Date after the
Clean Up Call Date. Under certain circumstances, the Certificate Insurer may
also exercise such purchase rights if the Owners of the Class R Certificates do
not do so. In addition, under certain circumstances relating to the
qualification of the REMIC as a REMIC under the Code, the Home Equity Loans may
be sold, thereby effecting the early retirement of the Certificates.
The Trustee shall give written notice of termination of the Pooling and
Servicing Agreement to each Owner in the manner set forth therein.
The Certificate Insurer or the Owners of the majority of the Percentage
Interests represented by the Class A Certificates with the prior written consent
of the Certificate Insurer have the right to exercise any trust or power set
forth in Section 6.11 of the Pooling and Servicing Agreement.
As provided in the Pooling and Servicing Agreement and subject to
certain limitations therein set forth and referred to on the face hereof, the
transfer of this Certificate is registrable in the Register upon surrender of
this Certificate for registration of transfer at the office designated as the
location of the Register duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Registrar duly executed by,
the Owner hereof or his attorney duly authorized in writing, and thereupon one
or more new Certificates of the like Class, tenor and a like aggregate
fractional undivided interest in the Trust Estate will be issued to the
designated transferee or transferees.
The Pooling and Servicing Agreement permits, with certain exceptions as
therein provided, the amendment thereof and the modifications of rights and
obligations of the parties provided therein by the Depositor, the Trustee, the
Seller and the Servicer at any time and from time to time, with the prior
written approval of the Certificate Insurer and without the consent of the
Owners; provided, that in certain other circumstances provided for in the
Pooling and Servicing Agreement such consent of the Owners will be required
prior to amendment. Any such consent by the Owner at the time of the giving
thereof, of this Certificate shall be conclusive and binding upon such Owner and
upon all future Owners of the Certificate and of any Certificate issued upon the
registration of Transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent or waiver is made upon this Certificate.
The Trustee is required to furnish certain information on each Payment
Date to the Owner of this Certificate, as more fully described in the Pooling
and Servicing Agreement.
The Class R Certificates are issuable only as registered Certificates.
As provided in the Pooling and Servicing Agreement and subject to certain
limitations therein set forth, Class R Certificates are exchangeable for new
Class R Certificates evidencing the same Percentage Interest as the Class R
Certificates exchanged.
C-6
<PAGE>
No service charge will be made for any such registration of transfer or
exchange, but the Registrar or Trustee may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
The Trustee and any agent of the Trustee may treat the Person in whose
name this Certificate is registered as the owner hereof for all purposes, and
neither the Trustee or any such agent shall be affected by notice to the
contrary, except as may otherwise be specifically provided in the Pooling and
Servicing Agreement with respect to the Certificate Insurer.
C-7
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed on behalf of the Trust.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:
----------------------------------------
Title:
-------------------------------------
Trustee Authentication
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
By:
----------------------------------------
Title:
-------------------------------------
<PAGE>
EXHIBIT D
FORM OF SUBSEQUENT TRANSFER AGREEMENT
DLJ Mortgage Acceptance Corp. (the "Depositor"), as Depositor, Centex
Credit Corporation d/b/a Centex Home Equity Corporation (the "Seller"), as
Seller, and Norwest Bank Minnesota, National Association (the "Trustee"), as
trustee, pursuant to the Pooling and Servicing Agreement dated as of February 1,
1998 among the Depositor, the Seller, as Seller and Servicer, and the Trustee
(the "Pooling and Servicing Agreement"), hereby confirm their understanding with
respect to the sale by the Seller and the purchase by the Depositor and the sale
by the Depositor and the purchase by the Trustee on behalf of the Trust of those
Home Equity Loans (the "Subsequent Home Equity Loans") listed on the attached
Schedule of Home Equity Loans.
Conveyance of Subsequent Home Equity Loans. The Seller does hereby
irrevocably transfer, assign, setover and otherwise convey to the Depositor
and the Depositor does hereby irrevocably transfer, assign, set over and
otherwise convey to the Trustee, without recourse (except as otherwise
explicitly provided for herein) all right, title and interest in and to any and
all benefits accruing from each Subsequent Home Equity Loan (other than any
principal received and interest due thereon prior to the later of (x) the date
of origination of such Subsequent Home Equity Loan and (y) March 1, 1998 the
"Subsequent Cut-Off Date") which are delivered to the Custodian on behalf of the
Trustee herewith (and all substitutions therefor as provided by Sections 3.03,
3.04 and 3.06 of the Pooling and Servicing Agreement), together with the related
Subsequent Home Equity Loan documents and the interest in any Property which
secured a Subsequent Home Equity Loan, and all payments thereon and proceeds of
the conversion, voluntary or involuntary, of the foregoing; and proceeds of all
the foregoing (including, but not by way of limitation, all proceeds of any
mortgage insurance, flood insurance, hazard insurance and title insurance policy
relating to the Subsequent Home Equity Loans, cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
rights to payment of any and every kind, and other forms of obligations and
receivables which at any time constitute all or part of or are included in the
proceeds of any of the foregoing). The Seller and the Depositor shall deliver
the original Mortgage or mortgage assignment with evidence of recording thereon
(except as otherwise provided by the Pooling and Servicing Agreement) and other
required documentation in accordance with the terms set forth in Sections 3.05
and 3.07 of the Pooling and Servicing Agreement.
The costs relating to the delivery of the documents specified in this
Subsequent Transfer Agreement and the Pooling and Servicing Agreement shall be
borne by the Seller and the Depositor.
Additional terms of the sale, if any, are attached hereto as Attachment
A.
The Seller and the Depositor hereby affirm the representations and
warranties set forth in the Pooling and Servicing Agreement that relate to the
Seller, the Depositor and the Subsequent Home Equity Loans as of the date
hereof. The Seller and the Depositor hereby deliver notice and
D-1
<PAGE>
confirms that each of the conditions set forth in Sections 3.07(b), 3.07(c) and
3.07(d) to the Pooling and Servicing Agreement are satisfied as of the date
hereof.
All terms and conditions of the Pooling and Servicing Agreement are
hereby ratified, confirmed and incorporated herein, provided that in the event
of any conflict the provisions of this Subsequent Transfer Agreement shall
control over the conflicting provisions of the Pooling and Servicing Agreement.
The Seller acknowledges and agrees that the Depositor intends to assign
the Depositor's rights hereunder to the Trustee pursuant to the Pooling and
Servicing Agreement. The Seller hereby consents to such assignment and agrees
that the Trustee, as ultimate assignee, may enforce the rights of the Depositor
hereunder directly against the Seller for the benefit of the Owners and the
Certificate Insurer and that the Certificate Insurer may enforce such rights
directly.
This Subsequent Transfer 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,
without giving effect to principles of conflicts of law.
This Subsequent Transfer Agreement may be signed in counterparts, each
of which shall be an original but all of which, taken together, shall constitute
one and the same instrument.
The Certificate Insurer shall be a third-party beneficiary of this
Agreement.
Terms capitalized herein and not defined herein shall have their
respective meanings as set forth in the Pooling and Servicing Agreement.
DLJ MORTGAGE ACCEPTANCE CORP.
as Depositor
By:
------------------------------------
Name:
Title:
CENTEX CREDIT CORPORATION d/b/a
CENTEX HOME EQUITY CORPORATION
as Seller
By:
------------------------------------
Name:
Title:
D-2
<PAGE>
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as
Trustee for Centex Home
Equity Loan Trust 1998-1
By:
------------------------------------
Name:
Title:
Dated:--------- (the "Subsequent Transfer Date")
D-3
<PAGE>
EXHIBIT E
FORM OF CERTIFICATE RE: HOME EQUITY LOANS
PREPAID IN FULL AFTER CUT-OFF DATE
CERTIFICATE RE: PREPAID LOANS
-----------------------------
I, __________________________, ______________________ of Centex Credit
Corporation d/b/a Centex Home Equity Corporation ("Centex"), hereby certify that
between the "Cut-Off Date" (as defined in the Pooling and Servicing Agreement
dated as of February 1, 1998 among DLJ Mortgage Acceptance Corp., as Depositor,
Centex as Seller and Servicer, and Norwest Bank Minnesota, National Association,
as Trustee) and the "Startup Day," the following schedule of "Home Equity Loans"
(each as defined in the Pooling and Servicing Agreement) have been prepaid in
full.
Account Original Current Date
Number Name Amount Balance Paid Off
------ ---- ------ ------- --------
Dated: February __, 1998
By:
----------------------------------------
Title:
-------------------------------------
E-1
<PAGE>
EXHIBIT F-1
TRUSTEE'S ACKNOWLEDGMENT OF RECEIPT
-----------------------------------
Norwest Bank Minnesota, National Association, in its capacity as
Trustee (the "Trustee") under that certain Pooling and Servicing Agreement dated
as of February 1, 1998 ( the "Pooling and Servicing Agreement") among DLJ
Mortgage Acceptance Corp., as Depositor, Centex Credit Corporation d/b/a Centex
Home Equity Corporation, a Nevada corporation, as seller and servicer
("Centex"), and Norwest Bank Minnesota, National Association, as Trustee (the
"Trustee"), hereby acknowledges receipt of an aggregate cash amount of
approximately $_________ into the Pre-Funding Account and an aggregate cash
amount of approximately $_________ into the Capitalized Interest Account
pursuant to Section 7.04 of the Pooling and Servicing Agreement.
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Dated: February __, 1998
F-1-1
<PAGE>
EXHIBIT F-2
CUSTODIAN'S ACKNOWLEDGMENT OF RECEIPT
-------------------------------------
The First Chicago National Processing Corporation, in its capacity as
custodian (the "Custodian") under the Custodial Agreement dated as of February
1, 1998 among the Custodian and Norwest Bank Minnesota, National Association, in
its capacity as Trustee (the "Trustee") under that certain Pooling and Servicing
Agreement dated as of February 1, 1998 ("the Pooling and Servicing Agreement")
among DLJ Mortgage Acceptance Corp., as Depositor, Centex Credit Corporation
d/b/a Centex Home Equity Corporation, a Nevada corporation, as seller and
servicer ("Centex"), and Norwest Bank Minnesota, National Association, as
Trustee (the "Trustee"), hereby acknowledges receipt (subject to review as
required by Section 3.06(a) of the Pooling and Servicing Agreement) of the items
delivered to it by Centex with respect to the Initial Home Equity Loans pursuant
to Section 3.05(b)(i) of the Pooling and Servicing Agreement.
The Schedule of Initial Home Equity Loans is attached to this Receipt.
The Custodian hereby additionally acknowledges that it shall review
such items as required by Section 3.06(a) of the Pooling and Servicing Agreement
and shall otherwise comply with Section 3.06(b) and 3.06(c) of the Pooling and
Servicing Agreement as required thereby.
THE FIRST CHICAGO NATIONAL
PROCESSING CORPORATION,
as Custodian
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Dated: February __, 1998
F-2-1
<PAGE>
EXHIBIT G
FORM OF POOL CERTIFICATION
POOL CERTIFICATION
------------------
WHEREAS, the undersigned is an Authorized Officer of First Chicago
National Processing Corporation, in its capacity as Custodian (the "Custodian")
under the Custodial Agreement dated February 1, 1998 between the Custodian and
Norwest Bank Minnesota, National Association, a national banking association,
acting in its capacity as trustee (the "Trustee") of a certain pool of mortgage
loans (the "Pool") heretofore conveyed in trust to the Trustee, pursuant to that
certain Pooling and Servicing Agreement dated as of February 1, 1998 (the
"Pooling and Servicing Agreement") among DLJ Mortgage Acceptance Corp., as
Depositor, Centex Credit Corporation d/b/a Centex Home Equity Corporation, as
Seller (the "Seller") and Servicer, and Norwest Bank Minnesota, National
Association, as Trustee; and
WHEREAS, the Custodian is required, pursuant to Section 3.06(a) of the
Pooling and Servicing Agreement, to review the Files relating to the Home Equity
Loans within a specified period following the Startup Day and to notify the
Seller promptly of any defects with respect to the Home Equity Loans, and the
Seller is required to remedy such defects or take certain other action, all as
set forth in Section 3.06(b) of the Pooling and Servicing Agreement; and
WHEREAS, Section 3.06(a) of the Pooling and Servicing Agreement
requires the Custodian to deliver this Pool Certification upon the satisfaction
of certain conditions set forth therein.
NOW, THEREFORE, the Custodian hereby certifies that it has determined
that all required documents (or certified copies of documents listed in Section
3.05 of the Pooling and Servicing Agreement) have been executed or received, and
that such documents relate to the Home Equity Loans identified in the Schedule
of Home Equity Loans pursuant to Section 3.06(a) of the Pooling and Servicing
Agreement or, in the event that such documents have not been executed and
received or do not so relate to such Home Equity Loans, any remedial action by
the Seller pursuant to Section 3.06(b) of the Pooling and Servicing Agreement
has been completed. The Custodian makes no certification hereby, however, with
respect to any intervening assignments or assumption and modification
agreements.
FIRST CHICAGO NATIONAL PROCESSING
CORPORATION, as Custodian
By:
---------------------------------------
Title:
------------------------------------
Dated: February __, 1998
G-1
<PAGE>
EXHIBIT H
FORM OF DELIVERY ORDER
DELIVERY ORDER
--------------
Norwest Bank Minnesota, National Association, as Trustee
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
Dear Sirs:
Pursuant to Section 4.01 of the Pooling and Servicing Agreement, dated
as of February 1, 1998 (the "Pooling and Servicing Agreement") among DLJ
Mortgage Acceptance Corp., as Depositor ("DMAC"), Centex Credit Corporation
d/b/a Centex Home Equity Corporation, a Nevada corporation, as Seller and
Servicer, and Norwest Bank Minnesota, National Association, a national banking
association, as Trustee (the "Trustee"), DMAC HEREBY CERTIFIES that all
conditions precedent to the issuance of the Centex Home Equity Loan Trust 1998-1
Home Equity Loan Pass-Through Certificates, Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5 and Class R (the "Certificates"), HAVE BEEN SATISFIED, and
HEREBY REQUESTS YOU TO AUTHENTICATE AND DELIVER said Certificates, and to
RELEASE said Certificates to the owners thereof, or otherwise upon their order.
Instructions regarding the registration of the Certificates are attached hereto.
Very truly yours,
DLJ MORTGAGE ACCEPTANCE CORP.
By:
---------------------------------------
Title:
------------------------------------
Dated: February __, 1998
H-1
<PAGE>
EXHIBIT I
FORM OF CLASS R TAX MATTERS TRANSFER CERTIFICATE
AFFIDAVIT PURSUANT TO SECTION
860E(e) OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED
STATE OF )
) ss:
COUNTY OF )
[NAME OF OFFICER], being first duly sworn, deposes and says:
1. That he is [Title of Officer] of [Name of Investor] (the
"Investor"), a [savings institution] [corporation] duly organized and existing
under the laws of [the State of _________] [the United States], on behalf of
which he makes this affidavit.
2. That (i) the Investor is not a "disqualified organization" and will
not be a "disqualified organization" as of [date of transfer] (For this purpose,
a "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 (other than certain taxable
instrumentalities), any cooperative organization furnishing electric energy or
providing telephone service to persons in rural areas, or any organization
(other than a farmers' cooperative) that is exempt from federal income tax
unless such organization is subject to the tax on unrelated business income.);
(ii) it is not acquiring the Class R Certificate for the account of a
disqualified organization; (iii) it consents to any amendment of the Pooling and
Servicing Agreement that shall be deemed necessary by the Trustee (upon advice
of counsel) to constitute a reasonable arrangement to ensure that the Class R
Certificates will not be owned directly or indirectly by a disqualified
organization; and (iv) it will not transfer such Class R Certificate unless (a)
it has received from the transferee an affidavit in substantially the same form
as this affidavit containing these same four representations and (b) as of the
time of the transfer, it does not have actual knowledge that such affidavit is
false.
I-1
<PAGE>
IN WITNESS WHEREOF, the Investor has caused this instrument to be
executed on its behalf, pursuant to authority of its Board of Directors, by its
[Title of Officer] and its corporate seal to be hereunto attached, attested by
its [Assistant] Secretary, this ___ day of __________, ____.
[NAME OF INVESTOR]
By:
------------------------
[Name of Officer]
[Title of Officer]
[Corporate Seal]
Attest:
- ------------------
[Assistant] Secretary
Personally appeared before me the above-named [Name of Officer], known
or proved to be the same person who executed the foregoing instrument and to be
the [Title of Officer] 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 ____________, ____.
- -----------------
NOTARY PUBLIC
COUNTY OF __________________
STATE OF ____________________
My commission expires the _ day of _______________, ____.
I-2
<PAGE>
EXHIBIT J-1
FORM OF CERTIFICATE REGARDING TRANSFER
(ACCREDITED INVESTOR)
[DATE]
Norwest Bank Minnesota, National Association, as Trustee
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Advanced Structured Products Services
Re: Centex Home Equity Loan Trust 1998-1
Home Equity Loan Pass-Through Certificates
("Certificates")
------------------------------------------
Gentlemen:
In connection with our purchase on the date hereof of the
above-referenced Certificates from ___________________ ("Seller"), [PURCHASER]
(the "Purchaser") hereby certifies that:
1. The Purchaser is acquiring the Certificates for [investment purposes
only for](1) the Purchaser's own account and not with a view to or for sale or
transfer in connection with any distribution thereof in any manner which would
violate Section 5 of the Securities Act of 1933, as amended (the "Act"),
provided that the disposition of its property shall at all times be and remain
within its control;
2. The Purchaser understands that the Certificates have not been and
will not be registered under the Act and may not be resold or transferred unless
they are (a) registered pursuant to the Act or (b) sold or transferred in
transactions which are exempt from registration;
3. The Purchaser has received a copy of the Pooling and Servicing
Agreement dated as of February 1, 1998 (the "Pooling and Servicing Agreement")
pursuant to which the Certificates are being sold, and such other documents and
information concerning the Certificates and the home equity loans in which the
Certificates represent interests which it has requested;
4. The Purchaser believes it has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of an investment in the Certificates and that it is able to bear the
economic risks of such an investment;
5. [The Purchaser is not an "employee benefit plan," within the meaning
of Section 3(3) of the Employment Retirement Income Security Act of 1974, as
amended ("ERISA") that is
- ----------
(1) Not required if the Purchaser is a broker/dealter.
J-1-1
<PAGE>
subject to the provisions of Title I of ERISA or a "plan" described in Section
4975(e)(1) of the Internal Revenue Code of 1986] OR [The source of funds to be
used by the Purchaser to purchase the Certificates is a general account and
either (i) no part of such assets constitutes assets of an "employee benefit
plan," within the meaning of Section 3(3) of the Employment Retirement Income
Security Act of 1974, as amended ("ERISA") that is subject to the provisions of
Title I of ERISA or a "plan" described in Section 4975(e)(1) of the Internal
Revenue Code of 1986, or (ii) to the extent that such assets constitute assets
of an "employee benefits plan" within the meaning of Section 3(3) of ERISA, or a
"plan" within the meaning of Section 4975(e)(1) of the Code, it acknowledges
that in the discharge of its duty as a plan fiduciary in connection with the
purchase of the Certificates it has concluded that such purchase will not
constitute a violation of Section 404(a) of ERISA];
6. If the Purchaser sells any of the Certificates at its option, it
will (i) obtain from any investor that purchases any Certificate from it a
letter substantially in the form of Exhibit J-1 or J-2 to the Pooling and
Servicing Agreement and (ii) to the extent required by the Pooling and Servicing
Agreement, cause an Opinion of Counsel to be delivered, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws; and
7. The Purchaser certifies that for purposes of the Certificate
Register, its address, including telecopier number and telephone number, is as
follows:
telecopier:
telephone:
8. The purchase of the Certificates by the Purchaser does not violate
the provisions of the first sentence of Section 5.08(d) of the Pooling and
Servicing Agreement.
J-1-2
<PAGE>
IN WITNESS WHEREOF, the Purchaser has caused this letter to be executed
by its signatory, duly authorized, as of the date first above written.
[PURCHASER]
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
J-1-3
<PAGE>
EXHIBIT J-2
FORM OF CERTIFICATE REGARDING TRANSFER
(Rule 144A)
[Date]
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Advanced Structured Products Services
Re: Centex Home Equity Loan Trust 1998-1
Home Equity Loan Pass-Through Certificates,
Class __-______ ("Certificates")
Dear Gentlemen or Ladies:
In connection with our purchase on the date hereof of the
above-referenced Certificates from ______________________ ("Seller") hereby
certify that:
1. We are acquiring the Certificates for our own account for investment
and not with a view to or for sale or transfer in connection with any
distribution thereof in any manner which would violate the Securities Act of
1933, as amended (the "Act"), provided that the disposition of our property
shall at all times be and remain within our control;
2. We understand that the Certificates have not been and will not be
registered under the Act and may not be resold or transferred unless they are
(a) registered pursuant to the Act or (b) sold or transferred in transactions
which are exempt from registration;
3. We have received a copy of the Pooling and Servicing Agreement dated
as of February 1, 1998 (the "Pooling and Servicing Agreement") pursuant to which
the Certificates are being sold, and such other documents and information
concerning the Certificates and the home equity loans in which the Certificates
represent interests which we have requested;
4. We believe we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Certificates and that we are able to bear the economic risks
of such an investment;
5. If we sell any of the Certificates at our option, we will either (i)
obtain from any institutional investor that purchases any Certificate from us a
certificate containing the same representations, warranties and agreements
contained in the foregoing paragraphs 1, 2 through 4 and this paragraph 5 or
(ii) deliver an Opinion of Counsel to such institutional investor, addressed and
satisfactory to the Seller and the Trustee, to the effect that such sale is in
compliance with all applicable federal and state securities laws;
J-2-1
<PAGE>
6. We are acquiring the Certificates for our own account and the source
of funds to be used by us to purchase the Certificates is a general account and
either (i) no part of such assets constitutes assets of an "employee benefit
plan," within the meaning of Section 3(3) of the Employment Retirement Income
Security Act of 1974, as amended ("ERISA") that is subject to the provisions of
Title I of ERISA or a "plan" described in Section 4975(e)(1) of the Internal
Revenue Code of 1986, or (ii) to the extent that such assets constitute assets
of an "employee benefits plan" within the meaning of Section 3(3) of ERISA, or a
"plan" within the meaning of Section 4975(e)(1) of the Code, we acknowledge that
in the discharge of our duty as a plan fiduciary in connection with the purchase
of the Certificates we have concluded that such purchase will not constitute a
violation of Section 404(a) of ERISA;
7. We certify that for purposes of the Certificate Register, our
address, including telecopier number and telephone number, is as follows:
-----------------------------------------
-----------------------------------------
-----------------------------------------
telecopier: ________________________________
telephone: _________________________________
8. If we sell any of the Certificates, will obtain from any purchaser
from us the same representations contained in the foregoing paragraph 6 and this
paragraph 7; and
9. Our purchase of the Certificates does not violate the provisions of
the first sentence of Section 5.08(d) of the Pooling and Servicing Agreement.
J-2-2
<PAGE>
IN WITNESS WHEREOF, we have signed this certificate as of the date
first written above.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
J-2-3
<PAGE>
EXHIBIT K TO THE POOLING AND SERVICING AGREEMENT
HOME EQUITY LOANS WITH DOCUMENT EXCEPTIONS
Loan Number Borrower Name Original Loan Amount Exception
- ----------- ------------- -------------------- ---------
K-1
<PAGE>
EXHIBIT L
DEFINITION OF ADJUSTABLE RATE GROUP SPECIFIED SUBORDINATED AMOUNT
(AND RELATED DEFINITIONS)
"Adjustable Rate Group Delinquency Amount" means the product of (i) the
Adjustable Rate Group Delinquency Percentage and (ii) the sum of (x) the
aggregate Loan Balance of the Home Equity Loans in the Adjustable Rate Group and
(y) the current Pre-Funded Amount with respect to the Adjustable Rate Group.
"Adjustable Rate Group Delinquency Percentage" means with respect to
any date of determination, the average of the percentage equivalents of the
fractions determined for each of the three immediately preceding Remittance
Periods the numerator of each of which is equal to (x) the sum of (without
duplication) (i) the aggregate Loan Balance of the Home Equity Loans in the
Adjustable Rate Group which are 90-Day Delinquent Loans, (ii) the aggregate Loan
Balance of Home Equity Loans in the Adjustable Rate Group in foreclosure and
(iii) the aggregate outstanding principal balance of Home Equity Loans in the
Adjustable Rate Group relating to REO Properties as of the end of such
Remittance Period and the denominator of which is (y) the aggregate Loan Balance
of the Home Equity Loans in the Adjustable Rate Group as of the end of such
Remittance Period.
"Adjustable Rate Group Initial Specified Subordinated Amount" means the
Adjustable Rate Group Target Percentage times the Original Adjustable Rate Group
Pool Balance.
"Adjustable Rate Group Specified Subordinated Amount" means:
(a) for any Payment Date occurring during the period commencing on the
Startup Day and ending on the later of (A) the date upon which principal in the
amount equal to one half of the Original Adjustable Rate Group Pool Balance has
been received by the Owners of the Class A-5 Certificates and (B) the thirtieth
Payment Date following the Startup Day, the greater of: (i) the Adjustable Rate
Group Initial Specified Subordinated Amount, and (ii) 85% of the Adjustable Rate
Group Delinquency Amount.
(b) for any Payment Date occurring after the end of the period in
clause (a) above, the greatest of (i)(x) two times the Adjustable Rate Group
Target Percentage times (y) the sum of the aggregate Loan Balance of the Home
Equity Loans in the Adjustable Rate Group and the current Pre-Funded Amount with
respect to the Adjustable Rate Group, (ii) 85% of the Adjustable Rate Group
Delinquency Amount (iii) 0.75% of the Original Adjustable Rate Group Pool
Balance, and (iv) the aggregate principal balance of the three Home Equity Loans
with the largest outstanding principal balances in the Adjustable Rate Group.
Provided, however, for any Payment Date occurring after the end of the
period specified in clause (a) above, if the Adjustable Rate Group Delinquency
Percentage exceeds 10.50%, the Adjustable Rate Group Specified Subordinated
Amount shall be no less than the Adjustable Rate Group Specified Subordinated
Amount as of the previous Payment Date.
Notwithstanding the above, on or before the final Pre-Funding Payment
Date, the Certificate Insurer may modify the definition of Adjustable Rate Group
Specified Subordinated
<PAGE>
Amount, including the definitions contained therein, if (x) the Subsequent Home
Equity Loans, individually or in the aggregate, do not conform to the conditions
specified in the Insurance Agreement or the Agreement or (y) the risk to the
Certificate Insurer under the Certificate Insurance Policies has changed as
reasonably determined by the Certificate Insurer; provided, however, if the
Owners of the Class R Certificates object in good faith to the Certificate
Insurer's determination in (y), any such modification shall not be made if the
Rating Agencies confirm that the risk to the Certificate Insurer in insuring the
Class A Certificates will be maintained at the level assigned on the Startup
Day. Further, the Certificate Insurer may, in its sole discretion, modify this
definition of Adjustable Rate Group Specified Subordinated Amount for the
purpose of reducing or eliminating, in whole or in part, the definition hereof.
The Trustee and the Rating Agencies shall be notified in writing of such
modification prior to the related Payment Date and such modification shall not
result in a downgrading of the then-current ratings of the Class A Certificates,
without regard to the Certificate Insurance Policies.
"Adjustable Rate Group Target Percentage" means 6.05%.
"Original Adjustable Rate Group Pool Balance" means the aggregate Loan
Balance of the Home Equity Loans in the Adjustable Rate Group as of the Startup
Day plus the Original Adjustable Rate Group Pre-Funded Amount.
<PAGE>
EXHIBIT M
DEFINITION OF FIXED RATE GROUP SPECIFIED SUBORDINATED AMOUNT
(AND RELATED DEFINITIONS)
"Fixed Rate Group Delinquency Amount" means the product of (i) the
Fixed Rate Group Delinquency Percentage and (ii)the sum of (x) the aggregate
Loan Balance of the Home Equity Loans in the Fixed Rate Group and (y) the
current Pre-Funded Amount with respect to the Fixed Rate Group.
"Fixed Rate Group Delinquency Percentage" means with respect to any
date of determination, the average of the percentage equivalents of the
fractions determined for each of the three immediately preceding Remittance
Periods the numerator of each of which is equal to (x) the sum (without
duplication) of (i) the aggregate Loan Balance of the Home Equity Loans in the
Fixed Rate Group which are 90-Day Delinquent Loans, (ii) the aggregate Loan
Balance of the Home Equity Loans in the Fixed Rate Group in foreclosure plus
(iii) the aggregate outstanding principal balance of Home Equity Loans in the
Fixed Rate Group relating to REO Properties as of the end of such Remittance
Period and the denominator of which is (y) the aggregate Loan Balance of all
Home Equity Loans in the Fixed Rate Group as of the end of such Remittance
Period.
"Fixed Rate Group Initial Specified Subordinated Amount" means the
Fixed Rate Group Target Percentage times the Original Fixed Rate Group Pool
Balance.
"Fixed Rate Group Specified Subordinated Amount" means:
(a) for any Payment Date occurring during the period commencing on the
Startup Day and ending on the later of (A) the date upon which principal in the
amount equal to one half of the Original Fixed Rate Group Pool Balance has been
received by the Owners of the Fixed Rate Certificates and (B) the thirtieth
Payment Date following the Startup Day, the greater of: (i) the Fixed Rate Group
Initial Specified Subordinated Amount, and (ii) 50% of the Fixed Rate Group
Delinquency Amount.
(b) for any Payment Date occurring after the end of the period in
clause (a) above, the greatest of (i)(x) two times the Fixed Rate Group Target
Percentage times (y) the sum of the aggregate Loan Balance of the Home Equity
Loans in the Fixed Rate Group and the current Pre-Funded Amount with respect to
the Fixed Rate Group, (ii) 50% of the Fixed Rate Group Delinquency Amount (iii)
0.75% of the Original Fixed Rate Group Pool Balance, and (iv) the aggregate
principal balance of the three Home Equity Loans with the largest outstanding
principal balances in the Fixed Rate Group.
Provided, however, for any Payment Date occurring after the end of the
period specified in clause (a) above, if the Fixed Rate Group Delinquency
Percentage exceeds 8.50%, the Fixed Rate Group Specified Subordinated Amount
shall be no less than the Fixed Rate Group Specified Subordinated Amount as of
the previous Payment Date.
Notwithstanding the above, on or before the final Pre-Funding Payment
Date, the Certificate Insurer may modify the definition of Fixed Rate Group
Specified Subordinated Amount, including the definitions contained therein if
(x) the Subsequent Home Equity Loans, individually or in the aggregate, do not
conform to the conditions specified in the Insurance Agreement or in the
Agreement, or (y) the risk to the Certificate Insurer under the Certificate
Insurance Policies has changed as reasonably determined by the Certificate
Insurer; provided, however, if the Owners of the Class R Certificates object in
good faith to the Certificate Insurer's
<PAGE>
determination in (y), any such modification shall not be made if the Rating
Agencies confirm that the risk to the Certificate Insurer in insuring the Class
A Certificates will be maintained at the level assigned on the Startup Day.
Further, the Certificate Insurer may, in its sole discretion, modify the
definition of Fixed Rate Group Specified Subordinated Amount for the purpose of
reducing or eliminating, in whole or in part, the definition hereof. The Trustee
and the Rating Agencies shall be notified in writing of such modification prior
to the related Payment Date and such modification shall not result in a
downgrading of the then-current ratings of the Class A Certificates, without
regard to the Certificate Insurance Policies.
"Fixed Rate Group Target Percentage" means 2.55%.
"Original Fixed Rate Group Pool Balance" means the aggregate Loan
Balance of the Home Equity Loans in the Fixed Rate Group as of the Startup Day
plus the Original Fixed Rate Group Pre-Funded Amount.
<PAGE>
DLJ MORTGAGE ACCEPTANCE CORP.,
Depositor
and
CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY CORPORATION
Seller
------------------------
LOAN SALE AGREEMENT
Dated as of February 1, 1998
<PAGE>
This Loan Sale Agreement, dated as of February 1, 1998, by and
among DLJ MORTGAGE ACCEPTANCE CORP., a Delaware corporation, its successors and
assigns (the "Depositor") and CENTEX CREDIT CORPORATION d/b/a CENTEX HOME EQUITY
CORPORATION, a Nevada corporation and its successors and assigns (the "Seller").
WHEREAS, Exhibit A attached hereto and made a part hereof
lists certain nonconforming first and second lien home equity loans (the "Home
Equity Loans") owned by the Seller that the Seller desires to sell to the
Depositor and that the Depositor desires to purchase;
WHEREAS, it is the intention of the Seller and the Depositor
that simultaneously with the conveyance of the Home Equity Loans by the Seller
to the Depositor on the Closing Date, (a) the Depositor shall deposit the Home
Equity Loans in a trust pursuant to a Pooling and Servicing Agreement to be
dated as of February 1, 1998 (the "Pooling and Servicing Agreement"), to be
entered into by and among the Depositor, as depositor, the Seller, as seller and
servicer and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee") and (b) the Trustee shall issue certificates evidencing beneficial
ownership interests in the property of the trust fund formed by the Pooling and
Servicing Agreement;
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. Definitions. (a) Whenever used herein, the
following words and phrases, unless the context otherwise requires, shall have
the meanings specified in this section:
"Agreement" means this Loan Sale Agreement, as amended or
supplemented in accordance with the provisions hereof.
"Closing Date" shall have the meaning ascribed thereto in
Section 2.01(c).
"Current Report" means the Current Report on Form 8-K filed
with the Commission, containing the Derived Information.
"Commission" means the Securities and Exchange Commission.
"Depositor Information" shall have the meaning ascribed
thereto in Section 4.04(a).
"Derived Information" shall have the meaning ascribed thereto
in Section 4.04(a)(i).
<PAGE>
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Home Equity Loan Schedule" shall have the meaning ascribed
thereto in Section 2.01 (b).
"Pool Information" shall have the meaning ascribed thereto in
Section 4.04(a)(i).
"Pooling and Servicing Agreement" shall have the meaning
ascribed thereto in the recitals hereof.
"Prospectus" means the Prospectus dated December 3, 1997
relating to the offering by the Depositor from time to time of its Pass-Through
Certificates (Issuable in Series) in the form in which it was or will be filed
with the Securities Exchange Commission pursuant to Rule 424(b) under the
Securities Act with respect to the offer and sale of the Certificates.
"Prospectus Supplement" means the Prospectus Supplement dated
February 23, 1998, relating to the offering of the Class A Certificates in the
form in which it was or will be filed with the Commission pursuant to Rule
424(b) under the Securities Act with respect to the offer and sale of the Class
A Certificates.
"Prospectus Supplement Information" shall have the meaning
ascribed thereto in Section 4.04(a)(i).
"Registration Statement" means that certain registration
statement on Form S-3, as amended (Registration No. 333-39325) relating to the
offering by the Depositor from time to time of its Pass-Through Certificates
(Issuable in Series) as heretofore declared effective by the Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller Information" means the Prospectus Supplement
Information and the Pool Information.
"Termination Event" means the existence of any one or more of
the following conditions:
(a) a stop order suspending the effectiveness of the
Registration Statement shall have been issued or a proceeding for that purpose
shall have been initiated or threatened by the Commission; or
(b) if there has been, since the time of execution of this
Agreement or since the date of the Prospectus Supplement, any change, or any
development involving a prospective change, in or affecting particularly the
business or properties of the Servicer, the Seller or the Certificate
2
<PAGE>
Insurer which, in the Depositor's reasonable judgment, materially impairs the
investment quality of the Class A Certificates; or
(c) if there has occurred any downgrading in the rating of the
claims-paying ability of the Certificate Insurer by the Rating Agencies which,
in the reasonable judgment of the Depositor, materially impairs the investment
quality or marketability of the Class A Certificates or if the claims-paying
ability of the Certificate Insurer has been put on the "watch list" of the
Rating Agencies with negative implications; or
(d) subsequent to the date of this Agreement there shall have
occurred either of the following: (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade; (ii) a general moratorium on
commercial banking activities shall have been declared by either federal or New
York State authorities; or
(e) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or crisis which,
in the Depositor's reasonable judgment, is material and adverse, and, in the
case of any of the events specified in clauses (a) through (e), such event
singly or together with any other such event makes it in the Depositor's
reasonable judgment impractical to market the Class A Certificates.
"Underwriter" means Donaldson, Lufkin & Jenrette Securities
Corporation.
All capitalized terms used herein that are not otherwise
defined shall have the respective meanings ascribed thereto in the Pooling and
Servicing Agreement.
ARTICLE TWO
PURCHASE, SALE AND CONVEYANCE OF HOME EQUITY LOANS
Section 2.01. Agreement to Purchase the Initial Home Equity
Loans. (a) Subject to the terms and conditions of this Agreement, the Seller
agrees to sell, and the Depositor agrees to purchase, the Initial Home Equity
Loans listed in the Home Equity Loan Schedule.
(b) Subject to Section 2.08, the Depositor and the Seller have
agreed upon which of the Seller's Home Equity Loans are to be purchased by the
Depositor on the Closing Date pursuant to this Agreement, and the Seller has
prepared a schedule describing the Home Equity Loans (the "Home Equity Loan
Schedule") setting forth all of the Home Equity Loans to be purchased under this
Agreement, which schedule is attached hereto as Exhibit A. The Home Equity Loan
Schedule shall conform to the requirements of the Depositor and to the
definition of "Schedule of Home Equity Loans" under the Pooling and Servicing
Agreement.
3
<PAGE>
(c) The closing for the purchase and sale of the Home Equity
Loans shall take place at the offices of Stroock & Stroock & Lavan LLP, New
York, New York, at 10:00 a.m., New York time, on February 26, 1998 or such other
place and time as the parties shall agree (such time being herein referred to as
the "Closing Date").
Section 2.02. Sale and Conveyance of the Subsequent Home
Equity Loans. (a) Subject to the conditions set forth in Section 3.07 of the
Pooling and Servicing Agreement, in consideration of the delivery on the related
Subsequent Transfer Dates to or upon the order of the Seller of all or a portion
of the balance of funds in the Pre-Funding Account, the Seller shall on any
Subsequent Transfer Date sell, transfer, convey and assign to the Depositor,
pursuant to a Subsequent Transfer Agreement in the form attached to the Pooling
and Servicing Agreement as Exhibit D thereto and without recourse (but subject
to the terms of this Agreement), all of the Seller's right, title and interest
in and to any and all benefits accruing to the Seller from the Subsequent Home
Equity Loans (other than any principal received and interest payments due
thereon prior to the related Subsequent Cut-Off Date) listed in Schedule I to
the related Subsequent Transfer Agreement, which the Seller will cause to be
delivered, at the direction of the Depositor, to the Trustee (and all
substitutions for such Subsequent Home Equity Loans as provided by Sections
3.03, 3.04, 3.05 and 3.06 of the Pooling and Servicing Agreement), together with
the related Subsequent Home Equity Loan documents and the Seller's interest in
any related Property, and all payments thereon and proceeds of the conversion,
voluntary or involuntary, of the foregoing. The transfer by the Seller of the
Subsequent Home
Equity Loans set forth on Schedule I to each of the related Subsequent Transfer
Agreements shall be absolute and shall be intended by all parties hereto to be
treated as a complete, absolute and final sale by the Seller.
The amount released from the Pre-Funding Account shall be
one-hundred percent (100%) of the aggregate outstanding principal balances as of
the applicable Subsequent Cut-Off Date of the Subsequent Home Equity Loans so
transferred.
(b) In connection with the transfer and assignment of the
Subsequent Home Equity Loans, the Seller agrees to satisfy the obligations set
forth in Section 2.05 and 2.06 of this Agreement and Section 3.07(b) and Section
3.07(c) or (d) of the Pooling and Servicing Agreement with respect to such
Subsequent Home Equity Loans, the Seller shall be deemed to have made the
representations and warranties set forth in Section 3.01 and 3.02 of this
Agreement and shall take the action, if any, required by Section 2.07 and
5.01(h) of this Agreement, in each case with respect to the Subsequent Home
Equity Loans except that references to Home Equity Loans, the Closing Date and
the Cut-Off Date shall refer to the applicable Subsequent Home Equity Loans,
Subsequent Transfer Date and Subsequent Cut-Off Date, respectively, except that
references to one year from the Closing Date shall remain unchanged.
Section 2.03. Purchase Price. (a) On the Closing Date, as full
consideration for the Seller's sale of the Initial Home Equity Loans to the
Depositor, the Depositor will cause to be delivered to the order of the Seller
(i) an amount in cash equal to $157,078,758.63 (which
4
<PAGE>
includes in the case of the Fixed Rate Group Certificates accrued interest from
February 1, 1998 to the Closing Date) payable by wire transfer of same day funds
and (ii) the Class R Certificates. With respect to each Initial Home Equity Loan
which does not have a payment date in February 1998, the Seller shall deposit
into the Certificate Accout an amount equal to the product of the related Coupon
Rate and the related Loan Balance as of the Cut-Off Date.
(b) On each Subsequent Transfer Date, as full consideration
for the Seller's sale of the Subsequent Home Equity Loans to the Depositor, the
Depositor will deliver to the Seller an amount in cash equal to 100% of the
aggregate principal balance as of the related Subsequent Cut-Off Date of the
Subsequent Home Equity Loans, net of any amounts required to be deposited in the
Certificate Account with repsect to Subsequent Home Equity Loans that do not
have a first payment date in March 1998.
Section 2.04. Conveyance of Home Equity Loans; Possession of
Mortgage Files. (a) On the Closing Date, the Seller hereby sells, transfers,
assigns, sets over and conveys to the Depositor, without recourse and for the
exclusive benefit of the Depositor and its assigns, all of the Seller's right,
title and interest in and to any and all benefits accruing to the Seller from
(i) the Home Equity Loans having an aggregate principal balance as of the
Cut-Off Date equal to $175,000,000 (other than any principal received and
interest payments due thereon prior to February 1, 1998) listed in Exhibit A to
this Agreement which the Seller is causing to be delivered, at the direction of
the Depositor, to the Trustee herewith and the Subsequent Home Equity Loans
(other than any principal received and interest due thereon prior to the related
Subsequent Cut-Off Date) listed on Schedule I to any Subsequent Transfer
Agreement, which the Seller will cause to be delivered, at the direction of the
Depositor to the Trustee (and all substitutions for such Home Equity Loans as
provided by Sections 3.03, 3.04, 3.05 and 3.06 of the Pooling and Servicing
Agreement), together with the related Home Equity Loan documents and the
Seller's interest in any Property, and all payments thereon and proceeds of the
conversion, voluntary or involuntary, of the foregoing; (ii) proceeds of all the
foregoing (including, but not by way of limitation, all proceeds of any mortgage
insurance, flood insurance, hazard insurance and title insurance policy relating
to the Home Equity Loans, cash proceeds, accounts, accounts receivable, notes,
drafts, acceptances, chattel paper, checks, deposit accounts, rights to payment
of any and every kind, and other forms of obligations and receivables which at
any time constitute all or part of or are included in the proceeds of any of the
foregoing).
(b) Upon the sale of such Home Equity Loans, the ownership of
each related Note, each related Mortgage and the contents of the related
documents shall immediately vest in the Depositor and the ownership of all
related records and documents with respect to each Home Equity Loan prepared by
or which come into the possession of the Seller shall immediately vest in the
Depositor. The contents of any File in the possession of the Seller at any time
after such sale, and any payments of principal received and interest due on the
Home Equity Loans on and after the Cut-Off Date shall be held in trust by the
Seller for the benefit of the Depositor as the owner thereof, and shall be
promptly delivered by the Seller to or upon the order of the Depositor.
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(c) Pursuant to the Pooling and Servicing Agreement and the
related Subsequent Transfer Agreement, the Depositor shall, on the Closing Date
or the related Subsequent Transfer Date, as applicable, assign all of its right,
title and interest in and to the applicable Home Equity Loan and the other
rights it acquired from the Seller pursuant to Section 2.04(a) hereof, to the
Trustee for the benefit of the Certificateholders and the Certificate Insurer.
Section 2.05. Delivery of Home Equity Loan Documents. (a) On
or prior to the Closing Date, the Seller shall deliver to the Trustee (as
assignee of the Depositor pursuant to the Pooling and Servicing Agreement) or
the Custodian, each of the documents for each applicable Home Equity Loan as
specified in Section 3.05(b)(i)-(iii) of the Pooling and Servicing Agreement.
(b) Pursuant to the Pooling and Servicing Agreement, the
Seller shall submit assignments of Mortgages as provided in Section 3.05 of the
Pooling and Servicing Agreement.
(c) All original documents relating to the Home Equity Loans
that are not delivered to the Trustee (as assignee of the Depositor pursuant to
the Pooling and Servicing Agreement) or the Custodian as permitted by Section
3.05 and Section 3.06 of the Pooling and Servicing Agreement are and shall be
held by the Seller in trust for the benefit of the Trustee (as assignee of the
Depositor pursuant to the Pooling and Servicing Agreement) on behalf of the
Certificateholders and the Certificate Insurer. In the event that any such
original document is required pursuant to the terms of this Section 2.05, such
document shall be delivered promptly to the Trustee (as assignee of the
Depositor pursuant to the Pooling and Servicing Agreement). From and after the
sale of the Home Equity Loans to the Depositor pursuant hereto, to the extent
that the Seller retains legal title of record to any Home Equity Loans prior to
the vesting of legal title in the Trustee (as assignee of the Depositor pursuant
to the Pooling and Servicing Agreement), such title shall be retained in trust
for the Depositor as the purchaser of the Home Equity Loans hereunder and the
Trustee (as the owner of the Home Equity Loans) on behalf of Certificateholders
and the Certificate Insurer, as the Depositor's assignee.
Section 2.06. Acceptance of Home Equity Loans. The Seller
agrees to comply with its obligations under Sections 3.03, 3.04, 3.05 and 3.06
of the Pooling and Servicing Agreement and its other obligations under the
Operative Documents, and such obligations shall be deemed to be set forth herein
as if stated in full herein.
Section 2.07. Transfer of Home Equity Loans: Assignment of
Agreement. The Seller hereby acknowledges and agrees that the Depositor may
assign its interest under this Agreement to the Trustee on behalf of
Certificateholders and the Certificate Insurer as may be required to effect the
purposes of the Pooling and Servicing Agreement, without further notice to, or
consent of, the Seller and the Trustee shall succeed to such of the rights and
obligations of the Depositor hereunder as shall be so assigned. The Depositor
shall, pursuant to the Pooling and Servicing Agreement and any related
Subsequent Transfer Agreement, assign all of its right, title and interest in
and to the Home Equity Loans and its right to exercise the remedies created by
this Agreement and any related Subsequent Transfer Agreement insofar as such
rights relate to Home Equity Loans transferred to the Trustee, including but not
limited to those set forth in
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Section 2.06 hereof for breaches of the representations, warranties, agreements
and covenants of the Seller contained in Sections 2.05, 2.06, 3.01, 3.02, 3.04,
4.01 and 4.02 hereof to the Trustee for the benefit of the Certificateholders
and the Certificate Insurer. The Seller agrees, upon such assignment to the
Trustee, to recognize the Trustee, on behalf of the Certificateholders and the
Certificate Insurer, as the Depositor's assignee hereunder and that such
representations, warranties, agreements and covenants will run to and be for the
benefit of the Trustee on behalf of Certificateholders and the Certificate
Insurer and the Trustee on behalf of Certificateholders and the Certificate
Insurer may enforce, without joinder of the Depositor, the repurchase
obligations of the Seller set forth herein with respect to breaches of such
representations, warranties, agreements and covenants. The Trustee with the
consent of the Certificate Insurer or the Certificate Insurer shall have the
right to enforce the obligations of the Seller under this Agreement to the same
extent as though the Trustee and the Certificate Insurer were parties to this
Agreement. Notwithstanding, anything to the contrary herein, the Depositor (and
each of its directors, each of its officers who have signed the Registration
Statement and each person or entity who controls the Depositor or any such
person within the meaning of Section 15 of the Securities Act) will, subsequent
to such assignment maintain their right to exercise the remedies created by this
Agreement, in their own name, pursuant to Section 4.04 hereof and to enforce the
obligation of the Seller to pay the costs payable by the Seller pursuant to
Section 4.03 hereof.
Section 2.08. Examination of Mortgage Files. Prior to the
Closing Date, the Seller shall make the Files relating to the Initial Home
Equity Loans available to the Depositor or its designee for examination at the
Seller's offices or at such other place as the Seller shall reasonably specify.
Such examination may be made by the Depositor or its designee at any time on or
before the Closing Date. If the Depositor or its designee makes such examination
prior to the Closing Date and identifies any Initial Home Equity Loans that do
not conform to the requirements of the Depositor as described in this Agreement,
such Home Equity Loans shall be deleted from the Home Equity Loan Schedule and
may be replaced, prior to the Closing Date by substitute Home Equity Loans
acceptable to the Depositor. The Depositor may, at its option and without notice
to the Seller, purchase all or part of the Home Equity Loans without conducting
any partial or complete examination. The fact that the Depositor or the Trustee
has conducted or has failed to conduct any partial or complete examination of
the Files shall not affect the rights of the Depositor or the Trustee to demand
repurchase or other relief as provided in this Agreement or in the Pooling and
Servicing Agreement.
Section 2.09. Books and Records. The sale of each Home Equity
Loan shall be reflected on the Seller's accounting and other records, balance
sheet and other financial statements as a sale of assets by the Seller to the
Depositor. The Seller shall be responsible for maintaining, and shall maintain,
a complete set of books and records for each Home Equity Loan which shall be
clearly marked to reflect the ownership of each Home Equity Loan by the Trustee
for the benefit of the Certificateholders and the Certificate Insurer.
Section 2.10. Cost of Delivery and Recordation of Documents.
The costs relating to the delivery and recordation of the documents specified in
this Article Two and in the Pooling and Servicing Agreement in connection with
the Home Equity Loans shall be borne by the Seller.
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ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties as to the Seller.
The Seller hereby represents and warrants to the Depositor and its affiliates
and the Certificate Insurer, as of the Closing Date, that:
(a) The Seller is a corporation duly formed and validly existing under
the laws governing its creation and existence, is in compliance with the laws of
each state in which any Property or the Seller is located or doing business, is
in good standing in each jurisdiction in which the nature of its business, or
the properties owned or leased by it make such qualification necessary and is
qualified to do business as a foreign corporation in each jurisdiction necessary
to protect the validity and enforceability of this Agreement or any of the Home
Equity Loans. The Seller has all requisite corporate power and authority to own
and operate its properties, to carry out its business as presently conducted and
as proposed to be conducted and to enter into and discharge its obligations
under this Agreement and the other Operative Documents to which it is a party.
(b) The execution and delivery of this Agreement and the other
Operative Documents to which it is a party by the Seller and its performance and
compliance with the terms of this Agreement and the other Operative Documents to
which it is a party have been duly authorized by all necessary corporate action
on the part of the Seller and will not violate the Seller's Charter or bylaws or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, or result in a breach of, any material
contract, agreement or other instrument to which the Seller is a party or by
which the Seller is bound or violate any statute or any order, rule or
regulation of any court, governmental agency or body or other tribunal having
jurisdiction over the Seller or any of its properties.
(c) Each of this Agreement and the other Operative Documents to which
the Seller is a party, assuming due authorization, execution and delivery by the
other parties hereto and thereto, constitutes a valid, legal and binding
obligation of the Seller, enforceable against it in accordance with the terms
hereof and thereof, except as the enforcement thereof may be limited by (x)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally, (y) by general principles of equity
(whether considered in a proceeding or action in equity or at law), and (z) with
respect to rights of indemnity or contribution under the securities laws
pursuant to this Agreement, the Insurance Agreement and the Indemnification
Agreement, to limitations of public policy or applicable laws.
(d) The Seller is not in violation of or 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 violation or default could
materially and adversely affect the condition (financial or other) or operations
of the Seller or its properties or the consequences of which could
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materially and adversely affect its performance hereunder and under the other
Operative Documents to which the Seller is a party.
(e) No litigation, suit, action, proceeding or investigation is pending
with respect to which the Seller has received service of process or, to the best
of the Seller's knowledge, threatened against the Seller which litigation, suit,
action, proceeding or investigation might have consequences that would prohibit
its entering into this Agreement or any other Operative Documents to which it is
a party or that would materially and adversely affect the condition (financial
or otherwise) or operations of the Seller or its properties or might have
consequences that would materially and adversely affect its performance
hereunder and under the other Operative Documents to which the Seller is a
party.
(f) Neither the Seller Information nor any statement, report or other
document prepared by the Seller and furnished pursuant to this Agreement, the
Pooling and Servicing Agreement or in connection with the transactions
contemplated hereby or thereby contains any untrue statement or alleged untrue
statement of any material fact or omits to state a material fact necessary to
make the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading.
(g) Upon the receipt of each Home Equity Loan (including the related
Note) and other items by the Depositor under this Agreement, the Depositor will
have good title to such Home Equity Loan (including the related Note) and such
other items free and clear of any lien, charge, mortgage, encumbrance or rights
of others, except as set forth in Section 3.04(b)(ix) of the Pooling and
Servicing Agreement and other than liens which will be simultaneously released.
(h) All actions, approvals, consents, waivers, exemptions, variances,
franchises, orders, permits, authorizations, rights and licenses required to be
taken, given or obtained, as the case may be, by or from any federal, state or
other governmental authority or agency (other than any such actions, approvals,
etc. under any state securities laws, real estate syndication or "Blue Sky"
statutes, as to which the Seller makes no such representation or warranty), that
are necessary or advisable in connection with the purchase and sale of the
Certificates and the execution and delivery by the Seller of the Operative
Documents to which it is a party, have been duly taken, given or obtained, as
the case may be, are in full force and effect on the date hereof, are not
subject to any pending proceedings or appeals (administrative, judicial or
otherwise) and either the time within which any appeal therefrom may be taken or
review thereof may be obtained has expired or no review thereof may be obtained
or appeal therefrom taken, and are adequate to authorize the consummation of the
transactions contemplated by this Agreement and the other Operative Documents on
the part of the Seller and the performance by the Seller of its obligations
under this Agreement and such of the other Operative Documents to which it is a
party.
(i) The transactions contemplated by this Agreement are in the ordinary
course of business of the Seller.
(j) The Seller does not have any obligation to register the Trust as an
investment company under the Investment Company Act of 1940, as amended.
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(k) The Seller is not insolvent, nor will it be made insolvent by the
transfer of the Home Equity Loans pursuant to this Agreement or the Subsequent
Transfer Agreements nor is the Seller aware of any pending insolvency; the
Seller received fair consideration and reasonably equivalent value in exchange
for the sale of the interests in the Home Equity Loans.
(l) The servicing and collection practices used by the Seller with
respect to the Home Equity Loans have been, in all material respects, legal,
proper, prudent and customary in the home equity mortgage servicing business.
(m) The practices used in originating the Home Equity Loans have been,
in all material respects, legal, proper, prudent and customary in the home
equity mortgage lending business.
(n) The Seller does not believe, nor does it have any reason or cause
to believe, that it cannot perform each and every covenant contained in this
Agreement and the other Operative Documents.
(o) The Seller did not sell any interest in any Home Equity Loan with
any intent to hinder, delay or defraud any of its creditors.
It is understood and agreed that the representations and warranties set
forth in this Section 3.01 shall survive delivery of the respective Home Equity
Loans to the Trustee on behalf of the Depositor.
Section 3.02. Representations and Warranties Relating to the
Home Equity Loans. The Seller represents to the Depositor and its affiliates
that, as of the date set forth in Section 3.04(b) of the Pooling and Servicing
Agreement, each of the representations set forth in said section is hereby made
to the Depositor and its affiliates, the Trustee and the Certificate Insurer as
if the same were fully set forth herein.
Section 3.03. Representations and Warranties of the Depositor.
The Depositor hereby represents, warrants and covenants to the Seller, as of the
date of execution of this Agreement and the Closing Date, that:
(a) The Depositor is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) The Depositor has the corporate power and authority to
purchase each Home Equity Loan and to execute, deliver and perform, and to enter
into and consummate all the transactions contemplated by this Agreement and the
other Operative Documents to which it is a party;
(c) This Agreement has been duly and validly authorized,
executed and delivered by the Depositor, and, assuming the due authorization,
execution and delivery hereof by the Seller, constitutes the legal, valid and
binding obligation of the Depositor, enforceable against the Depositor in
accordance with its terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting
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the rights of creditors generally, and by general equity principles (regardless
of whether such enforcement is considered in a proceeding in equity or at law);
(d) No consent, approval, authorization or order of or
registration or filing with, or notice to, any governmental authority or court
is required for the execution, delivery and performance of or compliance by the
Depositor with this Agreement or the consummation by the Depositor of any of the
transactions contemplated hereby, except such as have been made on or prior to
the Closing Date;
(e) The Depositor has filed or will file the Prospectus and
Prospectus Supplement with the Commission in accordance with Rule 424(b) under
the Securities Act; and
(f) None of the execution and delivery of this Agreement, the
purchase of the Home Equity Loans from the Seller, the consummation of the other
transactions contemplated hereby, or the fulfillment of or compliance with the
terms and conditions of this Agreement, (i) conflicts or will conflict with the
charter or bylaws of the Depositor or conflicts or will conflict with or results
or will result in a breach of, or constitutes or will constitute a default or
results or will result in an acceleration under, any term, condition or
provision of any indenture, deed of trust, contract or other agreement or other
instrument to which the Depositor is a party or by which it is bound and which
is material to the Depositor, or (ii) results or will result in a violation of
any material law, rule, regulation, order, judgment or decree of any court or
governmental authority having jurisdiction over the Depositor.
Section 3.04. Repurchase Obligation for Defective
Documentation and for Breach of a Representation or Warranty. (a) Each of the
representations and warranties contained in Sections 3.01 and 3.02 shall survive
the purchase by the Depositor of the Home Equity Loans and the subsequent
transfer thereof by the Depositor to the Trustee and shall continue in full
force and effect, notwithstanding subsequent termination of this Agreement or
the Pooling and Servicing Agreement.
(b) It is understood and agreed that the obligations of the
Seller set forth in Section 2.06 and this Section 3.04 to cure, purchase or
substitute for a defective Home Equity Loan as provided in Section 2.06 and this
Section 3.04 and to indemnify the Depositor pursuant to Section 4.04, constitute
the sole remedies of the Depositor, the Trustee and the Certificateholders
respecting a breach of the foregoing representations and warranties.
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ARTICLE FOUR
THE SELLER
Section 4.01. Covenants of the Seller. The Seller covenants to
the Depositor and its affiliates as follows:
(a) The Seller shall cooperate with the Depositor, the
Certificate Insurer and the firm of independent certified public accountants
retained with respect to the issuance of the Certificates in making available
all information and taking all steps reasonably necessary to permit the
accountants' letters required hereunder to be delivered within the times set for
delivery herein.
(b) The Seller agrees to use its best efforts to satisfy or
cause to be satisfied on or prior to the Closing Date, all of the conditions to
the Depositor's obligations set forth in Section 5.01 hereof that are within the
Seller's (or its agents') control.
(c) The Seller hereby agrees to do all acts, transactions, and
things and to execute and deliver all agreements, documents, instruments, and
papers by and on behalf of the Seller as the Depositor, the Certificate Insurer
or either party's counsel may reasonably request in order to consummate the
transfer of the Home Equity Loans to the Depositor and the subsequent transfer
thereof to the Trustee, and the rating, issuance and sale of the Class A
Certificates.
Section 4.02. Merger or Consolidation. The Seller will keep in
full effect its existence, rights and franchises as a corporation and will
obtain and preserve its qualification to do business as a foreign corporation,
in each jurisdiction necessary to protect the validity and enforceability of
this Agreement or any of the Home Equity Loans and to perform its duties under
this Agreement. Any Person into which the Seller may be merged or consolidated,
or any corporation resulting from any merger, conversion or consolidation to
which the Seller shall be a party, or any Person succeeding to the business of
the Seller, shall be the successor to the Seller hereunder. The Seller shall
send notice of any such merger or consolidation to the Trustee and the
Certificate Insurer.
Section 4.03. Costs. In connection with the transactions
contemplated under this Agreement and the Pooling and Servicing Agreement, the
Seller shall promptly pay (or shall promptly reimburse the Depositor to the
extent that the Depositor shall have paid or otherwise incurred) all expenses
incident to the performance of its obligations under this Agreement, including:
(i) the printing of the documents (including the Prospectus and Prospectus
Supplement, and each amendment thereto ), (ii) the preparation, issuance and
delivery of the Class A Certificates to the Underwriter, (iii) the fees and
disbursements of the Seller's counsel (including without limitation, local
counsel in the Texas and Nevada) and accountants (including expenses in
connection with the accountants review of the Prospectus Supplement and delivery
of the letter described in Section 5.01), (iv) the qualification of the Class A
Certificates under state securities laws, including filing fees and the fees and
disbursements of counsel for the
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Underwriter in connection therewith and in connection with the preparation of
any blue sky or legal investment survey, if any is requested, (v) fees charged
by rating agencies for the rating of the Class A Certificates, (vi) the fees and
expenses of the Trustee and its counsel, (vii) the fees and expenses of the
Certificate Insurer, its counsel and its accountants, (viii) fees and expenses
relating to the filing of documents with the Securities and Exchange Commission
(including without limitation periodic reports under the Exchange Act and the
Current Report) and (ix) the shelf registration amortization fee (which fee
shall equal 1/33rd of 1% of the amount of the Class A Certificates plus $2,500)
paid in connection with the issuance of the Class A Certificates. For the
avoidance of doubt, the parties hereto acknowledge that it is the intention of
the parties that neither the Depositor nor its affiliates shall pay any of the
Trustee's fees and expenses in connection with the transactions contemplated by
the Pooling and Servicing Agreement. All other costs and expenses in connection
with the transactions contemplated hereunder shall be borne by the party
incurring such expenses.
Section 4.04. Indemnification. (a) (i) The Seller agrees to
indemnify and hold harmless the Depositor, each of its directors, each of its
officers who have signed the Registration Statement, and each of its directors
and each person or entity who controls the Depositor or any such person, within
the meaning of Section 15 of the Securities Act, against any and all losses,
claims, damages or liabilities, joint and several, to which the Depositor or any
such person or entity may become subject, under the Securities Act or otherwise,
and will reimburse the Depositor and each such controlling person for any legal
or other expenses incurred by the Depositor or such controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in the Prospectus
Supplement or any amendment or supplement to the Prospectus Supplement or the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements in the Prospectus Supplement,
or any amendment or supplement to the Prospectus Supplement approved in writing
by the Seller (such approval not to be unreasonably withheld), in light of the
circumstances under which they were made, not misleading, but only to the extent
that such untrue statement or alleged untrue statement or omission or alleged
omission relates to (x) the information contained in the Prospectus Supplement
under the following captions: "SUMMARY OF TERMS--Seller and Servicer," "SUMMARY
OF TERMS--The Initial Home Equity Loans," "RISK FACTORS--Limited Operating
History," "RISK FACTORS--Servicing Risk," "RISK FACTORS--Underwriting
Standards," "RISK FACTORS-- Risks Associated with Certain Origination Fees,"
"THE SELLER AND THE SERVICER" and "THE HOME EQUITY LOAN POOLS" (the "Prospectus
Supplement Information"), (y) the information contained in the Prospectus
Supplement under the caption "RISK FACTORS--Other Legal Considerations,"
regarding the percentage of Initial Home Equity Loans subject to the Riegle Act
and (z) any untrue statement or alleged untrue statement of material fact that
results directly from an error in any computer tape or diskette furnished by or
on behalf of the Seller to the Depositor or to the Underwriter (the "Pool
Information") that was used in the preparation of computational materials
relating to the Home Equity Loans by the Underwriter or used in the preparation
by the Depositor of the reports on Form 8-K as contemplated in the Prospectus
Supplement under the caption "ADDITIONAL
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INFORMATION" (the "Derived Information"). This indemnity agreement will be in
addition to any liability which the Seller may otherwise have.
(ii) The Seller agrees to indemnify and to hold the Depositor
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 may sustain in any way
related to the failure of any of the Seller to perform its duties in
compliance with the terms of this Agreement. The Seller shall
immediately notify the Depositor if a claim is made by a third party
with respect to this Agreement, and the Seller shall assume the defense
of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and
satisfy any judgment or decree which may be entered against the
Depositor in respect of such claim.
(b) Promptly after receipt by an indemnified party under this
Section 4.04 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 4.04, notify the indemnifying party in writing of the
commencement thereof, but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability which the indemnifying
party may have to any indemnified party hereunder except to the extent such
indemnifying party has been prejudiced thereby. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying party
to such indemnified party of its election to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section 4.04 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it that are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have
the right to select separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
indemnified party or parties. The indemnifying party shall not be liable for the
expenses of more than one separate counsel.
(c) In order to provide for just and equitable contribution in
circumstances in which the indemnity agreement provided for in the preceding
parts of this Section 4.04 is for any reason held to be unavailable to or
insufficient to hold harmless an indemnified party under subsection (a) of this
Section 4.04 in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, the indemnifying party shall
contribute to the amount paid or payable by the indemnified party as a result of
such losses, claims, damages or liabilities (or actions in respect thereof);
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. In
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determining the amount of contribution to which the respective parties are
entitled, there shall be considered the relative benefits received by the Seller
on the one hand, and the Depositor on the other, the Seller's and the
Depositor's relative knowledge and access to information concerning the matter
with respect to which the claim was asserted, the opportunity to correct and
prevent any statement or omission, and any other equitable considerations
appropriate in the circumstances. The Seller and the Depositor agree that it
would not be equitable if the amount of such contribution were determined by pro
rata or per capita allocation. For purposes of this Section 4.04, each director
of the Depositor, each officer of the Depositor who signed the Registration
Statement, and each person, if any who controls the Depositor within the meaning
of Section 15 of the Securities Act, shall have the same rights to contribution
as the Depositor, and each director of the Seller or the Seller, and each
person, if any who controls the Seller within the meaning of Section 15 of the
Securities Act, shall have the same rights to contribution as the Seller.
ARTICLE FIVE
CONDITIONS OF CLOSING
Section 5.01. Conditions of Depositor's Obligations. The
obligations of the Depositor to purchase the Initial Home Equity Loans will be
subject to the satisfaction on the Closing Date of the following conditions.
Upon payment of the purchase price for the Initial Home Equity Loans, such
conditions shall be deemed satisfied or waived; provided, however, that no such
waiver shall affect the survival of representations and warranties and the
obligations of the Seller with respect thereto as provided in Section 3.04
hereof and Section 6.04 hereof.
(a) Each of the obligations of the Seller required to be
performed by it on or prior to the Closing Date pursuant to the terms of this
Agreement and the other Operative Documents to which it is a party shall have
been duly performed and complied with and all of the representations and
warranties of the Seller under this Agreement and the other Operative Documents
to which it is a party shall be true and correct as of the Closing Date and no
event shall have occurred which, with notice or the passage of time, would
constitute a default under this Agreement or any of the other Operative
Documents to which either is a party, and the Depositor shall have received
certificates to the effect of the foregoing, each signed by an authorized
officer of the Seller.
(b) The Depositor shall have received a letter dated on or
before the date on which the Prospectus Supplement is dated and printed, in form
and substance acceptable to the Depositor and its counsel, prepared by Arthur
Andersen LLP (a) regarding certain numerical information contained or
incorporated by reference in the Prospectus Supplement and (b) relating to
certain agreed upon procedures as requested by the Depositor relating to the
Home Equity Loans.
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(c) The Initial Home Equity Loans will be acceptable to the
Certificate Insurer, Moody's and Standard & Poor's, in their sole discretion.
(d) The Depositor shall have received the following additional
closing documents, in form and substance satisfactory to the Depositor and its
counsel:
(i) the Home Equity Loan Schedule;
(ii) the Pooling and Servicing Agreement and the Underwriting
Agreement and all documents required thereunder, duly executed and
delivered by each of the parties thereto other than the Depositor and
its affiliates;
(iii) an officer's certificate of an officer of the Seller,
dated as of the Closing Date in the form of Exhibit B hereto,
reasonably satisfactory in form and substance to the Depositor and
counsel for the Depositor and attached thereto resolutions of the board
of directors and a copy of the charter and by-laws of the Seller;
(iv) an opinion of Anne E. Duffield, Senior Vice President and
General Counsel of the Seller or such other counsel reasonably
acceptable to the Depositor and counsel for the Depositor, dated the
Closing Date, opining as to matters set forth in Exhibit C hereto,
reasonably satisfactory in form and substance to the Depositor and
counsel for the Depositor as to various corporate matters;
(v) an opinion of Marshall, Hill, Cassas and deLipkau, counsel
to the Seller or such other counsel reasonably acceptable to the
Depositor and counsel for the Depositor, dated the Closing Date,
opining as to matters set forth in Exhibit D hereto, reasonably
satisfactory in form and substance to the Depositor and counsel for the
Depositor as to various corporate matters;
(vi) an opinion of Stroock & Stroock & Lavan LLP, special
counsel to the Seller or such other counsel reasonably acceptable to
the Depositor and counsel for the Depositor, dated the Closing Date,
opining as to matters set forth in Exhibit E hereto, reasonably
satisfactory in form and substance to the Depositor and counsel for the
Depositor as to various corporate matters;
(vii) an opinion of Thacher Proffitt & Wood, counsel for the
Depositor or such other counsel reasonably acceptable to the Depositor,
dated the Closing Date, opining as to matters set forth in Exhibit F
hereto reasonably satisfactory in form and substance to the Depositor
as to various corporate matters;
(viii) opinions of counsel for the Seller and Depositor, in
forms reasonably acceptable to the Depositor, its counsel, Standard &
Poor's and Moody's as to such matters as shall be required for the
assignment of a rating to the Class A Certificates of "AAA" by Standard
& Poor's, and "Aaa" by Moody's;
16
<PAGE>
(ix) a letter from Moody's that it has assigned a rating of
"Aaa" to the Class A Certificates;
(x) a letter from Standard & Poor's that it has assigned a
rating of "AAA" to the Class A Certificates;
(xi) an opinion of counsel for the Trustee dated the Closing
Date, opining as to matters set forth in Exhibit G hereto, in form and
substance reasonably acceptable to the Depositor, its counsel, Moody's
and Standard & Poor's;
(xii) an officer's certificate of an officer of the Trustee,
dated as of the Closing Date, reasonably satisfactory in form and
substance to the Depositor and counsel for the Depositor;
(xiii) an opinion or opinions of counsel for the Certificate
Insurer dated the Closing Date, opining as to the matters set forth in
Exhibit H hereto, in each case in form and substance reasonably
acceptable to the Depositor, its counsel, Moody's and Standard &
Poor's;
(xiv) an officer's certificate of an Authorized Officer of the
Certificate Insurer, dated as of the Closing Date reasonably
satisfactory in form and substance to the Depositor and counsel for the
Depositor;
(e) The Certificate Insurance Policies shall have been duly
executed, delivered and issued with respect to the Class A Certificates and
shall conform in all material respects to the description thereof in the
Prospectus Supplement as of the date thereof.
(f) All proceedings in connection with the transactions
contemplated by this Agreement and all documents incident hereto shall be
reasonably satisfactory in form and substance to the Depositor and its counsel.
(g) The Seller shall have furnished the Depositor with such
other certificates of its officers or others and such other documents or
opinions as the Depositor or its counsel may reasonably request.
(h) On each Subsequent Transfer Date, the Depositor shall have
received opinions from Stroock & Stroock & Lavan LLP, counsel to the Seller,
Marshall, Hill, Cassas and deLipkau, counsel to the Seller, Anne E. Duffield,
Senior Vice President and General Counsel of the Seller, and Thacher Proffitt &
Wood, counsel to the Depositor substantially similar to the opinions delivered
by such counsel on the Closing Date, appropriately modified to refer to the
applicable Subsequent Home Equity Loans, Subsequent Cut-Off Date, Subsequent
Transfer Date and Subsequent Transfer Agreement.
Section 5.02. [Reserved]
17
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Section 5.03. Termination of Depositor's Obligations. The
Depositor may terminate its obligations hereunder by notice to the Seller at any
time before delivery of and payment of the purchase price for the Home Equity
Loans and prior to issuance of the Certificate Insurance Policies if: (a) any of
the conditions set forth in Section 5.01 are not satisfied when and as provided
therein; (b) there shall have been the entry of a decree or order by a court or
agency or supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Seller, or for the winding up or liquidation
of the affairs of the Seller; (c) there shall have been the consent by the
Seller to the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to the Seller or of or relating to
substantially all of the property of the Seller; or (d) a Termination Event
shall have occurred. The termination of the Depositor's obligations hereunder
shall not terminate the Depositor's rights hereunder or its right to exercise
any remedy available to it at law or in equity.
ARTICLE SIX
MISCELLANEOUS
Section 6.01. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered to or mailed by registered mail, postage prepaid, or
transmitted by telex or telegraph and confined by a similar mailed writing, if
to the Depositor, addressed to the Depositor at DLJ Mortgage Acceptance Corp.,
277 Park Avenue, New York, New York 10172, Attention: Paul Najarian, with a copy
to the General Counsel's office on the 23rd floor at the same address, or to
such other address as the Depositor may designate in writing to the Seller, if
to the Seller, addressed to the Seller at Centex Home Equity Corporation, 2728
North Harwood, Dallas, Texas, Attention: Anthony H. Barone, with a copy to Anne
E. Duffield and if to the Certificate Insurer, addressed to the Certificate
Insurer at MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504,
Attention: Insured Portfolio Management-Structured Finance.
Section 6.02. Severability of Provisions. Any part, provision,
representation, warranty or covenant of this Agreement which is prohibited or
which is held to be void or unenforceable shall be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any part, provision, representation, warranty or covenant of
this Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction as to any Home Equity Loan shall not invalidate or render
unenforceable such provision in any other jurisdiction. To the extent permitted
by applicable law, the parties hereto waive any provision of law which prohibits
or renders void or unenforceable any provision hereof.
18
<PAGE>
Section 6.03. Agreement of Seller. The Seller agrees to
execute and deliver such instruments and take such actions as the Depositor or
the Certificate Insurer may, from time to time, reasonably request in order to
effectuate the purpose and to carry out the terms of this Agreement.
Section 6.04. Survival. The parties to this Agreement agree
that the representations, warranties and agreements made by each of them herein
and in any certificate or other instrument delivered pursuant hereto shall be
deemed to be relied upon by the other party hereto, notwithstanding any
investigation heretofore or hereafter made by such other party or on such other
party's behalf, and that the representations, warranties and agreements made by
the parties hereto in this Agreement or in any such certificate or other
instrument shall survive the delivery of and payment for the Home Equity Loans.
Section 6.05. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 6.06. Successors and Assigns. This Agreement shall
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns and the Certificate Insurer. Except
as expressly permitted by the terms hereof, this Agreement may not be assigned,
pledged or hypothecated by any party hereto to a third party without the prior
written consent of the other party to this Agreement and the Certificate
Insurer; provided, however, that the Depositor may assign its rights hereunder
to an affiliate of the Depositor or as contemplated in Section 2.07 hereof, in
each case without the consent of the Seller.
Section 6.07. Confirmation of Intent; Grant of Security
Interest. It is the express intent of the parties hereto that the conveyance of
the Home Equity Loans by the Seller to the Depositor as contemplated by this
Loan Sale Agreement and any Subsequent Transfer Agreement be, and be treated for
all purposes as, a sale of the Home Equity Loans. It is, further, not the
intention of the parties that such conveyance be deemed a pledge of the Home
Equity Loans from the Seller to the Depositor to secure a debt or other
obligation of the Seller. However, in the event that, notwithstanding the intent
of the parties, the Home Equity Loans are held to continue to be property of the
Seller then (a) this Loan Sale Agreement shall also be deemed to be a security
agreement within the meaning of Articles 8 and 9 of the Uniform Commercial Code;
(b) the transfer of the Home Equity Loans provided for herein shall be deemed to
be a grant by the Seller to the Depositor of a security interest in all of such
parties' right, title and interest in and to the Home Equity Loans and all
amounts payable on the Home Equity Loans in accordance with the terms thereof
and all proceeds of the conversion, voluntary or involuntary, of the foregoing
into cash, instruments, securities or other property; (c) the possession by the
Depositor of Notes and such other items of property as constitute instruments,
money, negotiable documents or chattel paper shall be deemed to be "possession
by the secured party" for purposes of perfecting the security interest pursuant
to Section 9-305 of the Uniform Commercial Code; and (d) notifications to
persons holding such property, and acknowledgments, receipts or confirmations
from persons holding such property, shall be deemed notifications to, or
acknowledgments, receipts or confirmations from, financial intermediaries,
bailees or agents
19
<PAGE>
(as applicable) of the Depositor for the purpose of perfecting such security
interest under applicable law. Any assignment of the interest of the Depositor
pursuant to any provision hereof shall also be deemed to be an assignment of any
security interest created hereby. The Seller and the Depositor shall, to the
extent consistent with this Loan Sale Agreement, take such actions as may be
necessary to ensure that, if this Loan Sale Agreement were deemed to create a
security interest in the Home Equity Loans, such security interest would be
deemed to be a perfected security interest of first priority under applicable
law and will be maintained as such throughout the term of this Agreement.
Section 6.08. Miscellaneous. This Agreement supersedes all
prior agreements and understandings relating to the subject matter hereof.
Section 6.09. Amendments. This Agreement may be amended from
time to time by the Seller and the Depositor by written agreement, upon the
prior written consent of the Certificate Insurer.
Section 6.10. Third-Party Beneficiaries. The parties agree
that except for Sections 4.03 and 4.04 hereof, each of the Certificate Insurer
and the Trustee is an intended third-party beneficiary of this Agreement. The
parties further agree that the Underwriter and each of its directors and each
person or entity who controls the Underwriter or any such person, within the
meaning of Section 15 of the Securities Act (each, an "Underwriter Entity") is
an intended third-party beneficiary of this Agreement to the extent necessary to
obtain the benefit of the enforcement of the obligations and covenants of the
Seller under Section 4.04(a)(i) of this Agreement.
Section 6.11. Governing Law: Consent To Jurisdiction; Waiver
Of Jury Trial. (a) In order to establish with certainty that this Agreement will
be governed by and construed and interpreted in accordance with the law of a
state having a well-developed body of commercial and financial law relevant to
transactions of the type contemplated herein, this Agreement shall be construed
in accordance with and governed by the laws of the State of New York applicable
to agreements made and to be performed therein, without giving effect to the
conflicts of law principles thereof.
(b) The parties hereto hereby irrevocably submit to the jurisdiction of
the United States District Court for the Southern District of New York and any
court in the State of New York located in the City and County of New York, and
any appellate court from any thereof, in any action, suit or proceeding brought
against it or in connection with this Agreement or any of the related documents
or the transactions contemplated hereunder or for recognition or enforcement of
any judgment, and the parties hereto hereby irrevocably and unconditionally
agree that all claims in respect of any such action or proceeding may be heard
or determined in such New York State court or, to the extent permitted by law,
in such federal court. The parties hereto agree that a final judgment in any
such action, suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. To
the extent permitted by applicable law, the parties hereto hereby waive and
agree not to assert by way of motion, as a defense or otherwise in any such
suit, action or proceeding, any
20
<PAGE>
claim that it is not personally subject to the jurisdiction of such courts,
that the suit, action or proceeding is brought in an inconvenient forum, that
the venue of the suit, action or proceeding is improper or that the related
documents or the subject matter thereof may not be litigated in or by such
courts.
(C) The parties hereto waive personal service of any and all
process and consent that all such service of process be made by registered mail
directed to the address set forth in Section 6.01 of this Agreement and service
so made shall be deemed to be completed five days after the same shall have been
deposited in the U.S. Mail, postage prepaid. Nothing in this section shall
affect the right of the parties hereto to serve legal process in any other
manner permitted by law or affect the parties' right to bring any action or
proceeding in the courts of any other jurisdiction.
Section 6.12. Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which so executed shall be
deemed to be an originals but all such counterparts shall together constitute
but one and the same instrument.
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Agreement by their duly authorized officers as of the date first above written.
CENTEX CREDIT CORPORATION d/b/a
CENTEX HOME EQUITY CORPORATION, as Seller
By:
------------------------------------
Name:
Title:
DLJ MORTGAGE ACCEPTANCE CORP.,
as Purchaser
By:
------------------------------------
Name:
Title:
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On February 26, 1998 before me, the undersigned, a Notary
Public in and for said County and State, personally appeared Paul J. Najarian,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be a Senior Vice President of DLJ Mortgage Acceptance Corp., a Delaware
corporation, the corporation that executed the within Loan Sale Agreement on
behalf of said corporation, and acknowledged to me that said corporation
executed it.
---------------------------------------
Notary Public
My Commission expires:
<PAGE>
STATE OF NEW YORK )
) ss.
COUNTY OF NEW YORK )
On February 26, 1998 before me, the undersigned, a Notary
Public in and for said County and State, personally appeared Anthony H. Barone,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be a President of Centex Credit Corporation d/b/a Centex Home Equity
Corporation, the entity that executed the within Loan Sale Agreement; on behalf
of said corporation, and acknowledged to me that said corporation executed it.
--------------------------------
Notary Public
My Commission expires:
<PAGE>
EXHIBIT A
HOME EQUITY LOAN SCHEDULE
<PAGE>
Exhibit B
Certificate of the Seller
(i) the representations and warranties of the Seller
in each Operative Document to which it is a party, as of the date
specified in such agreements, are true and correct, and the Seller has
complied with all the agreements and satisfied all the conditions on
its part to be performed or satisfied at or prior to the Closing Date;
(ii) the Seller Information contained in the
Prospectus Supplement, as of the date thereof and as of the Closing
Date, does not contain any untrue statement or alleged untrue statement
of any material fact nor does it omit to state a material fact
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading;
(iii) the information set forth in the Home Equity
Loan Schedule required to be furnished pursuant to the Loan Sale
Agreement and the Pooling and Servicing Agreement does not contain any
untrue statement or alleged untrue statement of any material fact nor
does it omit to state a material fact necessary to make the statements
contained therein, in light of the circumstances under which they were
made, not misleading;
(iv) there has not occurred any material adverse
change, or any development involving a prospective material adverse
change, in the condition, financial or otherwise, or in the earnings,
business or operations of Seller and its subsidiaries, if any, taken as
a whole, from September 30, 1997; and
(v) each person who, as an officer or representative
of the Seller, signed or signs any Operative Document, or any other
document delivered pursuant hereto, on the date of such execution, or
on the Closing Date, as the case may be, in connection with the
transactions described in the Loan Sale Agreement, and the Pooling and
Servicing Agreement was, at the respective times of such signing and
delivery, and is now, duly elected or appointed, qualified and acting
as such officer or representative, and the signatures of such persons
appearing on such documents are their genuine signatures.
<PAGE>
Exhibit C
Opinion of Anne E. Duffield,
Senior Vice President and General Counsel of the Seller
(i) neither the transfer of the Home Equity Loans
pursuant to the Loan Sale Agreement, nor the execution, delivery or
performance by the Seller of the Operative Documents to which it is a
party (A) conflicts or will conflict with or results or will result in
a breach of, or constitutes or will constitute a default under, (i) any
term or provision of the certificate of incorporation or bylaws of any
of the Seller; (ii) to such counsel's knowledge, any term or provision
of any material agreement, contract, instrument or indenture, to which
any of the Seller is a party or is bound; or (iii) to such counsel's
knowledge, any order, judgment, writ, injunction or decree of any court
or governmental agency or body or other tribunal having jurisdiction
over any of the Seller; or (B) results in, or will result in the
creation or imposition of any lien, charge or encumbrance upon the
Trust or upon the Class A Certificates, except as otherwise
contemplated by the Pooling and Servicing Agreement;
(ii) to such counsel's knowledge, there are no
actions, proceedings or investigations pending or threatened against
the Seller before any court, governmental agency or body or other
tribunal (i) asserting the invalidity of any of the Operative Documents
or the Class A Certificates, (ii) seeking to prevent the issuance of
the Class A Certificates or the consummation of any of the transactions
contemplated by any of the Operative Documents or (iii) which, except
as disclosed in the Prospectus Supplement, are reasonably likely to
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, the Operative
Documents to which it is a party;
(iii) such counsel shall state that it has no reason
to believe that as of the date hereof and as of the Closing Date the
statements set forth in the Prospectus Supplement under the captions
"SUMMARY OF TERMS--The Initial Home Equity Loans," "RISK
FACTORS--Limited Operating History," "RISK FACTORS--Servicing Risk,"
"RISK FACTORS--Underwriting Standards," "THE SELLER AND THE SERVICER"
and "THE HOME EQUITY LOAN POOLS" (other than in each case, the
statements set forth in financial statements and other financial and
statistical data contained therein) contained any untrue statement of
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and
(iv) no consent, license, approval, authorization or order of,
registration or filing with, or notice to, any court, governmental
agency or body or other tribunal is, to the best of such counsel's
knowledge, required for the issuance and sale of the Class A
Certificates or execution, delivery and performance by the Seller of
the Operative Documents to which it is a party, except such as have
been duly obtained or made or as
<PAGE>
may be required under state securities or blue sky laws and except for
public filings provided for in the Operative Documents and/or required
by law to be made in the ordinary course of the Seller's business from
time to time after the issuance of the Class A Certificates.
In rendering such opinion, such counsel may (A) limit such opinions to
matters of existing laws of the State of Texas and the United States of America
and (B) rely, as to matters of fact, on certificates of responsible officers of
the Seller and public officials. Such opinion may also assume the due
authorization, execution and delivery of the instruments and documents referred
to therein by the parties thereto other than the Seller. Such counsel shall also
provide such other opinions as the Underwriter and its counsel may reasonably
require.
<PAGE>
Exhibit D
Opinion of Marshall, Hill, Cassas & deLipkau
(i) the Seller has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Nevada, with full corporate power and authority to own its
properties and conduct its business;
(ii) neither the transfer of the Home Equity Loans from the
Seller to the Depositor pursuant to the Loan Sale Agreement nor the
execution, delivery or performance by the Seller of the Operative
Documents to which it is a party conflicts or will conflict with or
results or will result in a breach of, or constitutes or will
constitute a default under any term or provision of the charter or
bylaws of the Seller; and
(iii) the Operative Documents to which the Seller is a party
have been duly authorized by the Seller.
In rendering such opinions, such counsel may (A) limit such opinions to
matters of existing laws of the State of Nevada and (B) rely, as to matters of
fact, on certificates of responsible officers of the Seller and public
officials. Such opinion may assume the due authorization, execution and delivery
of the instruments and documents referred to therein by the parties thereto
other than the Seller. Such counsel shall also provide such other opinions as
the Underwriter and its counsel may reasonably require.
<PAGE>
Exhibit E
Opinion of Stroock & Stroock & Lavan LLP
(i) the Class A Certificates, assuming due execution and
authentication by the Trustee, and delivery and payment therefor
pursuant to the Underwriting Agreement are validly issued and
outstanding and are entitled to the benefits of the Pooling and
Servicing Agreement. Neither the qualification of the Pooling and
Servicing Agreement under the Trust Indenture Act nor the registration
of the Trust created by such Agreement under the Investment Company Act
is presently required;
(ii) each Operative Document (other than the Insurance
Agreement and the Indemnification Agreement) to which the Seller is a
party constitutes the legal, valid and binding obligation of the
Seller, enforceable against the Seller, in accordance with its terms,
except as enforceability thereof may be limited by (x) bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally, as such laws would apply in
the event of a bankruptcy, insolvency or reorganization or similar
occurrence affecting the Trustee and (y) general principles of equity
regardless of whether such enforcement is sought in a proceeding at law
or in equity;
(iii) each of the Underwriting Agreement, the Loan Sale
Agreement, the Insurance Agreement and the Indemnification Agreement
constitutes the legal, valid and binding obligation of, to the extent
it is a party, the Seller, enforceable against the Seller in accordance
with its terms, except as enforceability thereof may be limited by (x)
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally, as such laws would
apply in the event of a bankruptcy, insolvency or reorganization or
similar occurrence affecting the Trustee; (y) general principles of
equity regardless of whether such enforcement is sought in a proceeding
at law or in equity; and (z) public policy considerations underlying
the securities laws, to the extent that such public policy
considerations limit the enforceability of the provisions of the
Underwriting Agreement, the Loan Sale Agreement, the Insurance
Agreement and the Indemnification Agreement which purport to provide
indemnification from securities laws liabilities;
(iv) assuming the legal opinions delivered pursuant to
Sections 5.01(v), (vi) and (vii) of the Loan Sale Agreement are true
and correct in all material respects, the endorsement to and delivery
to the Trustee of each Note governed by New York law, and the
preparation, execution, delivery and recording of an Assignment with
respect to each Mortgage governed by New York law in accordance with
the Pooling and Servicing Agreement, is sufficient fully to transfer to
the Trustee for the benefit of the Class A Certificateholders all
right, title and interest of the Seller and the Depositor in the Note
and Mortgage, as noteholder and mortgagee or assignee thereof;
<PAGE>
(v) the statements in the Prospectus Supplement set forth
under the captions "DESCRIPTION OF THE CLASS A CERTIFICATES" and "THE
POOLING AND SERVICING AGREEMENT," to the extent such statements purport
to summarize certain provisions of the Class A Certificates or of the
Pooling and Servicing Agreement, are fair and accurate in all material
respects;
(vi) the statements in the Prospectus Supplement set forth
under the captions "ERISA CONSIDERATIONS," "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES," "LEGAL INVESTMENT CONSIDERATIONS" and "CERTAIN LEGAL
MATTERS" to the extent that they constitute matters of federal or New
York law, or federal or New York legal conclusions provide a fair and
accurate summary of such law or conclusions;
(vii) assuming that (a) the Trustee causes certain assets and
accounts created under the Pooling and Servicing Agreement to elect, as
the Trustee has covenanted to do in the Pooling and Servicing
Agreement, to be treated as REMICs and (b) the parties to the Pooling
and Servicing Agreement comply with the terms thereof, certain assets
and accounts will be treated as REMICs, the Class A Certificates, other
than the Class R Certificates of each Trust issued pursuant to the
Pooling and Servicing Agreement, will be treated as the "regular
interests" in a REMIC and the Class R Certificate issued pursuant to
the Pooling and Servicing Agreement will be treated as "residual
interests" in a REMIC. Neither the Trust nor certain assets and
accounts of the Trust will be subject to tax upon their income or
assets by any taxing authority of the State of New York or New York
City (except that no opinion need be expressed with respect to any
minimum tax); and
(viii) such counsel has participated in conferences with
officers and other representatives of the Seller, the Depositor, the
Underwriter and the Certificate Insurer, at which the contents of the
Registration Statement and the Prospectus and related matters were
discussed and, although such counsel is not passing upon and does not
assume any responsibility for the accuracy, completeness or fairness of
the statements contained in the Registration Statement and the
Prospectus (except as set forth in paragraphs (iv) and (v) above), on
the basis of the foregoing (relying as to materiality to a large extent
upon the opinions of officers and other representatives of the Seller
and the Depositor), no facts have come to their attention which cause
them to believe that the Registration Statement relating to the Class A
Certificates as of its effective date, and the Prospectus (other than
the financial statements and other financial and statistical data
contained or
<PAGE>
incorporated by reference therein, the exhibits thereto and the
information under the captions "THE INSURANCE POLICIES AND THE
CERTIFICATE INSURER" and "CREDIT ENHANCEMENT -- Insurance Policies," as
to which such counsel need express no opinion) as of the date of the
Underwriting Agreement, and any amendment or supplement thereto, as of
its date when it became effective, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or
that the Prospectus (other than the financial statements and other
financial and statistical data contained or incorporated by reference
therein and the information under the captions "THE CERTIFICATE
INSURER" and "CREDIT ENHANCEMENT -- Insurance Policies," as to which
such counsel need express no opinion) on its date contained or on the
Closing Date contains, any untrue statement of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
For purposes of this opinion, references herein to the
Prospectus include the Prospectus and the Prospectus Supplement as defined in
the Loan Sale Agreement.
In rendering this opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of the Seller, the
Depositor, the Trustee and public officials. Such opinions may also assume the
due authorization, execution and delivery of the instruments and documents
referred to therein by the parties thereto and may rely on the opinion of Anne
E. Duffield, Senior Vice President and General Counsel of the Seller.
Opinion of Stroock & Stroock & Lavan LLP with respect to (i)
whether, in the event of the bankruptcy of the Seller or Depositor, as
applicable (each, a "Transferor"), a court, if properly presented with the
issue, would hold that the transfer of the Initial Home Equity Loans to the
related transferee by such Transferor on the Closing Date was a true sale and
would not recharacterize the transaction as a pledge and therefore the Home
Equity Loans and the payments thereon would not be considered property of the
estate of such Transferor under Section 541 of the Code and, accordingly,
Section 362 of the Code would not be applicable to those Home Equity Loans and
(ii) whether, in the event that a creditor or trustee in bankruptcy of a
Transferor, or a Transferor as a debtor-in-possession, were to be successful in
causing a court to recharacterize the transfer of the Initial Home Equity Loans
on the Closing Date to the Trust as a pledge by such Transferor to secure a
borrowing rather than a sale, the Trustee would be considered to be the holder
of a perfected security interest of first priority in and to the Notes and the
Mortgages. Such opinion may contain such assumptions, qualifications and
limitations as are customary in opinions of this type and are reasonably
acceptable to counsel to the Underwriter.
<PAGE>
Exhibit F
Opinion of Thacher Proffitt & Wood
(i) the Registration Statement became effective under the Act
as of November 3, 1997 and, to the best of such counsel's knowledge, no
stop suspending the effectiveness of the Registration Statement or any
part thereof or any amendment thereto has been issued under the Act and
no proceeding for that purpose has been instituted or threatened by the
Commission;
(ii) the documents incorporated by reference in the
Registration Statement and Prospectus, at the time they were or
hereafter are filed with the Commission, complied and will comply in
all material respects with the requirements of the Exchange Act and the
Rules and Regulations, except as to the financial statements and other
financial and statistical data included or incorporated by reference
therein, to which such counsel need not express any opinion;
(iii) the Registration Statement relating to the Class A
Certificates as of its effective date and the Prospectus as of the date
of the Underwriting Agreement, and any amendment or supplement thereto,
as of its date, complied as to form in all material respects with the
requirements of the Act and the applicable Rules and Regulations. Such
counsel need express no opinion with respect to the financial
statements, the exhibits, annexes and other financial, statistical,
numerical or portfolio data, economic conditions or financial condition
of the portfolio information included in or incorporated by reference
into the Registration Statement relating to the Class A Certificates,
the Prospectus or any amendment or supplement thereto;
(iv) the Depositor is a corporation, validly existing and in
good standing under the laws of the State of Delaware with the
corporate power and authority to convey the Home Equity Loans to be
conveyed by it and to execute, deliver and perform the Operative
Documents to which it is a party;
(v) the Underwriting Agreement and each of the Operative
Documents to which the Depositor is a party has been duly authorized,
executed and delivered by the Depositor;
(vi) neither the transfer of the Home Equity Loans from the
Depositor to the Trust pursuant to the Pooling and Servicing Agreement
nor the execution, delivery or performance by the Depositor of the
Operative Documents to which each is a party conflicts with or will
conflict with or results or will result in a breach of, or constitutes
or will constitute a default under or a breach of the corporate charter
or by-laws of the Depositor;
<PAGE>
(vii) no consent, license approval, authorization or order of,
registration or filing with, or notice to, any court, governmental
agency or body or other tribunal is, to such counsel's knowledge
required for the execution, delivery and performance by any of the
Depositor of the Operative Documents to which it is a party;
(viii) each Operative Document (other than the Insurance
Agreement and the Indemnification Agreement) to which the Depositor is
a party constitute the legal, valid and binding obligation of the
Depositor, enforceable against the Depositor, in accordance with its
terms, except as enforceability thereof may be limited by (x)
bankruptcy, insolvency, reorganization or other similar laws affecting
the enforcement of creditors' rights generally, as such laws would
apply in the event of a bankruptcy, insolvency or reorganization or
similar occurrence affecting the Trustee and (y) general principles of
equity regardless of whether such enforcement is sought in a proceeding
at law or in equity; and
(ix) each of the Underwriting Agreement, the Loan Sale
Agreement, the Insurance Agreement and the Indemnification Agreement
constitutes the legal, valid and binding obligation of, to the extent
it is a party, the Depositor, enforceable against the Depositor in
accordance with its terms, except as enforceability thereof may be
limited by (x) bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally, as such
laws would apply in the event of a bankruptcy, insolvency or
reorganization or similar occurrence affecting the Trustee; (y) general
principles of equity regardless of whether such enforcement is sought
in a proceeding at law or in equity; and (z) public policy
considerations underlying the securities laws, to the extent that such
public policy considerations limit the enforceability of the provisions
of the Underwriting Agreement, the Loan Sale Agreement, the Insurance
Agreement and the Indemnification Agreement which purport to provide
indemnification from securities laws liabilities.
For purposes of this opinion, references herein to the
Prospectus include the Prospectus and the Prospectus Supplement as defined in
the Loan Sale Agreement.
In rendering this opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of the Seller, the
Depositor, the Trustee and public officials.
F-2
<PAGE>
Exhibit G
Opinion of counsel to the Trustee
(i) the Trustee is a banking corporation association
duly incorporated and validly existing under the laws of the State of
New York;
(ii) the Trustee has the full corporate trust power
to execute, deliver and perform its obligations under the Pooling and
Servicing Agreement;
(iii) the execution and delivery by the Trustee of
the Pooling and Servicing Agreement and the performance by the Trustee
of its obligations under the Pooling and Servicing Agreement have been
duly authorized by all necessary corporate action of the Trustee;
(iv) the Pooling and Servicing Agreement is a valid
and legally binding obligation of the Trustee enforceable against the
Trustee;
(v) the execution and delivery by the Trustee of the
Pooling and Servicing Agreement does not (a) violate the Organization
Certificate of the Trustee or the Bylaws of the Trustee, (b) to such
counsel's knowledge, violate any judgment, decree or order of any New
York or United States federal court or other New York or United States
federal governmental authority by which the Trustee is bound or (c)
assuming the non-existence of any judgment, decree or order of any
court or other governmental authority that would be violated by such
execution and delivery, violate any New York or United States federal
statute, rule or regulation or require any consent, approval or
authorization of any New York or United States federal court or other
New York or United States federal governmental authority;
(vi) the Certificates have been duly authenticated,
executed and delivered by the Trustee; and
(vii) to the best of such counsel's knowledge, there
are no actions, proceedings or investigations pending or threatened
against or affecting the Trustee before or by any court, arbitrator,
administrative agency or other governmental authority which, if decided
adversely to the Trustee, would materially and adversely affect the
ability of the Trustee to carry out the transactions contemplated in
the Pooling and Servicing Agreement.
In rendering such opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of the Depositor and
the Seller, the Trustee and public officials. Such opinion may also assume the
due authorization, execution and delivery of the instruments and documents
referred to therein by the parties thereto other than the Trustee.
<PAGE>
Exhibit H
Opinion of counsel to the Certificate Insurer
(i) the Certificate Insurer is a stock insurance corporation,
duly incorporated and validly exiting under the laws of the State of New York.
The Certificate Insurer is validly licensed and authorized to issue the
Insurance Policies and perform its obligations under the Insurance Policies in
accordance with the terms thereof under the laws of the State of New York.
(ii) the execution and delivery by the Certificate Insurer of
the Insurance Policies is within the corporate power of the Certificate Insurer
and has been authorized by all necessary corporate action on the part of the
Certificate Insurer; the Insurance Policies have been duly executed and are the
valid and binding obligation of the Certificate Insurer enforceable in
accordance with their terms, except that the enforcement of the Insurance
Policies may be limited by laws relating to bankruptcy, insolvency,
reorganization, moratorium, receivership and other similar laws affecting
creditors' rights generally and by general principles of equity (regardless of
whether the enforcement of such remedies is considered in a proceeding in equity
or at law).
(iii) the Certificate Insurer is authorized to deliver the
Insurance Agreement and the Indemnity Agreement, and the Insurance Agreement and
the Indemnity Agreement have been duly executed and are the valid and binding
obligation of the Certificate Insurer enforceable in accordance with their terms
except that the enforcement of the Insurance Agreement and the Indemnity
Agreement may be limited by laws relating to bankruptcy, insolvency,
reorganization, moratorium, receivership and other similar laws affecting
creditors' rights generally and by general principles of equity and, in the case
of the Indemnification Agreement, subject to principles of public policy
limiting the right to enforce the indemnification provisions contained therein
insofar as such provisions relate to indemnification for liabilities arising
under the securities laws.
(iv) no consent, approval, authorization or order of any state
or federal court or government agency or body is required on the part of the
Certificate Insurer, the lack of which would adversely affect the validity or
enforceability of the Insurance Policies; to the extent required by applicable
legal requirements that would adversely affect the validity or enforceability of
the Insurance Policies, the Insurance Policies' forms have been filed with, and
approved by, all governmental authorities having jurisdiction over the
Certificate Insurer in connection with such Insurance Policies.
(v) to the extent the Insurance Policies constitute securities
within the meaning of Section 2(1) of the Securities Act of 1933, as amended
(the "Act"), the Insurance Policies are securities that are exempt from the
registration requirements of the Act.
(vi) the information set forth in the Prospectus Supplement
dated February 23, 1998 under the caption "THE INSURANCE POLICIES AND THE
CERTIFICATE INSURER," (other than the financial statements and other financial
and statistical data contained or
<PAGE>
incorporated therein, as to which such counsel need express no opinion), insofar
as such statements constitute a description of the Insurance Policies,
accurately summaries the Insurance Policies.
In rendering this opinion, such counsel may rely, as to matters
of fact, on certificates of responsible officers of the Depositor and the
Seller, the Trustee, the Insurer and public officials. Such opinion may assume
the due authorization, execution and delivery of the instruments and documents
referred to therein by the parties thereto other than the Certificate Insurer.
<PAGE>
CERTIFICATE GUARANTY INSURANCE POLICY
OBLIGATIONS: Centex Home Equity Loan POLICY NUMBER: 25814
Pass-Through Certificates, Series 1998-1
$44,500,000 6.41% Class A-1 Certificates
$46,000,000 6.40% Class A-2 Certificates
$13,000,000 6.92% Class A-3 Certificates
$11,500,000 6.40% Class A-4 Certificates
(collectively, the "Obligations")
MBIA Insurance Corporation (the "Insurer"), in consideration of the
payment of the premium and subject to the terms of this Certificate Guaranty
Insurance Policy (this "Policy"), hereby unconditionally and irrevocably
guarantees to any Owner that an amount equal to each full and complete Insured
Payment will be received by Norwest Bank Minnesota, National Association, or its
successors, as trustee for the Owners (the "Trustee"), on behalf of the Owners
from the Insurer, for distribution by the Trustee to each Owner of each Owner's
proportionate share of the Insured Payment. The Insurer's obligations hereunder
with respect to a particular Insured Payment shall be discharged to the extent
funds equal to the applicable Insured Payment are received by the Trustee,
whether or not such funds are properly applied by the Trustee. Insured Payments
shall be made only at the time set forth in this Policy and no accelerated
Insured Payments shall be made regardless of any acceleration of the Obligations
unless such acceleration is at the sole option of the Insurer.
Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of the Trust, any REMIC or the
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability). The Policy does not cover, and Insured Payments
shall not include, any Civil Relief Interest Shortfalls, any Class A-5
Certificateholders' Interest Index Carryovers or any Unpaid Class A-5
Certificateholder's Interest Index Carryovers.
The Insurer will pay any Insured Payment that is a Preference Amount on
the Business Day following receipt on a Business Day by the Fiscal Agent (as
described below) of (i) a certified copy of the order requiring the return of a
preference payment, (ii) an opinion of counsel satisfactory to the Insurer that
such order is final and not subject to appeal, (iii) an assignment in such form
as is reasonably required by the Insurer, irrevocably assigning to the Insurer
all rights and claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or otherwise with respect
to such preference payment and (iv) appropriate instruments to effect the
appointment of the Insurer as agent for such Owner in any legal proceeding
related to such preference payment, such instruments being in a form
satisfactory to the Insurer, provided that if such documents are received after
12:00 noon, New York City time, on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be disbursed to the
receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on
<PAGE>
behalf of the Owner and not to any Owner directly unless such Owner has returned
principal or interest paid on the Obligations to such receiver or trustee in
bankruptcy, in which case such payment shall be disbursed to such Owner.
The Insurer will pay any other amount payable hereunder no later than
12:00 noon, New York City time, on the later of the Payment Date on which the
related Deficiency Amount is due or the third Business Day following receipt in
New York, New York on a Business Day by State Street Bank and Trust Company,
N.A., as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a Notice (as described below), provided that
if such Notice is received after 12:00 noon, New York City time, on such
Business Day, it will be deemed to be received on the following Business Day. If
any such Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making claim hereunder, it shall be
deemed not to have been received by the Fiscal Agent for purposes of this
paragraph, and the Insurer or the Fiscal Agent, as the case may be, shall
promptly so advise the Trustee, and the Trustee may submit an amended Notice.
Insured Payments due hereunder unless otherwise stated herein will be
disbursed by the Fiscal Agent to the Trustee on behalf of the Owners by wire
transfer of immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference Amounts, any amount
held by the Trustee for the payment of such Insured Payment and legally
available therefor.
The Fiscal Agent is the agent of the Insurer only, and the Fiscal Agent
shall in no event be liable to Owners for any acts of the Fiscal Agent or any
failure of the Insurer to deposit or cause to be deposited sufficient funds to
make payments due under this Policy.
As used herein, the following terms shall have the following meanings:
"Agreement" means the Pooling and Servicing Agreement, dated as of
February 1, 1998, among DLJ Mortgage Acceptance Corp., as Depositor, Centex
Credit Corporation d/b/a Centex Home Equity Corporation, as Seller and as
Servicer, and the Trustee, as trustee, without regard to any amendment or
supplement thereto, unless such amendment or supplement has been approved in
writing by the Insurer.
"Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions in New York City, Dallas, Texas, the city in which
the Corporate Trust Office of the Trustee under the Agreement is located or the
city in which the Insurer is located are authorized or obligated by law or
executive order to be closed.
"Deficiency Amount" means with respect to any Payment Date the sum of
(a) the excess, if any, of (i) the related Current Interest on the Fixed Rate
Certificates over (ii) the Fixed Rate Group Total Available Funds (after
applying the crosscollateralization provisions of the Agreement, after any
deduction for the related Premium Amount and the related Trustee Fee and without
regard to any related Insured Payment to be made with respect to such Payment
Date) and (b) the related Subordination Deficit (after applying the
crosscollateralization provisions of the Agreement and
2
<PAGE>
after taking into account the portion of the Fixed Rate Group Principal
Distribution Amount to be actually distributed on such Payment Date without
regard to any related Insured Payment to be made with respect to such Payment
Date.)
"Insured Payment" means (a) as of any Payment Date, any Deficiency
Amount and (b) any Preference Amount (without duplication).
"Notice" means the telephonic or telegraphic notice, promptly confirmed
in writing by fax substantially in the form of Exhibit A attached hereto, the
original of which is subsequently delivered by registered or certified mail,
from the Trustee specifying the Insured Payment which shall be due and owing on
the applicable Payment Date.
"Owner" means each such Owner (as defined in the Agreement) of an
Obligation (other than the Trustee, the Depositor or the Servicer) who, on the
applicable Payment Date, is entitled under the terms of the applicable
Obligations to payment thereunder.
"Preference Amount" means any amount previously distributed to an Owner
on the Obligations that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Agreement as of the date of
execution of this Policy, without giving effect to any subsequent amendment to
or modification of the Agreement unless such amendment or modification has been
approved in writing by the Insurer.
Any notice hereunder or service of process on the Fiscal Agent may be
made at the address listed below for the Fiscal Agent or such other address as
the Insurer shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 15th Floor, 61 Broadway, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Trustee in writing.
THIS POLICY IS BEING ISSUED UNDER AND PURSUANT TO, AND SHALL BE
CONSTRUED UNDER, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
THE INSURANCE PROVIDED BY THIS POLICY IS NOT COVERED BY THE
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.
This Policy is not cancelable for any reason. The premium on this
Policy is not refundable for any reason, including payment, or provision being
made for payment, prior to maturity of the Obligations.
3
<PAGE>
IN WITNESS WHEREOF, the Insurer has caused this Policy to be executed
and attested this 26th day of February, 1998.
MBIA INSURANCE CORPORATION
By
------------------------------------
Title
---------------------------------
Attest:
- ------------------------------------
Secretary
4
<PAGE>
EXHIBIT A
TO CERTIFICATE GUARANTY INSURANCE POLICY
NUMBER: 25814
NOTICE UNDER CERTIFICATE GUARANTY
INSURANCE POLICY NUMBER: 25814
State Street Bank and Trust Company, N.A., as Fiscal Agent
for MBIA Insurance Corporation
61 Broadway, 15th Floor
New York, NY 10006
Attention: Municipal Registrar and
Paying Agency
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
The undersigned, a duly authorized officer of [NAME OF TRUSTEE], as
trustee (the "Trustee"), hereby certifies to State Street Bank and Trust
Company, N.A. (the "Fiscal Agent") and MBIA Insurance Corporation (the
"Insurer"), with reference to Certificate Guaranty Insurance Policy Number:
25814 (the "Policy") issued by the Insurer in respect of the Centex Home Equity
Loan Pass-Through Certificates, Series 1998-1, $44,500,000 6.41% Class A-1
Certificates, $ 46,000,000 6.40% Class A-2 Certificates, $13,000,000 6.92% Class
A-3 Certificates, $11,500,000 6.40% Class A-4 Certificates that:
(i) the Trustee is the trustee under the Pooling and Servicing
Agreement, dated as of February 1, 1998, among DLJ Mortgage Acceptance
Corp., as Depositor, Centex Credit Corporation d/b/a Centex Home Equity
Corporation, as Seller and as Servicer, and the Trustee, as trustee for
the Owners;
(ii) the amount due under clause (a) definition of Deficiency
Amount for the Payment Date occurring on
(the "Applicable Payment Date") is $ ;
(iii) the amount due under clause (b) definition of Deficiency
Amount for the Payment Date occurring on
(the "Applicable Payment Date") is $ ;
(iv) the sum of the amounts under paragraphs (ii) and (iii)
above is $ (the "Deficiencey Amount");
(v) the amount of previously distributed payments on the
Obligations that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy
<PAGE>
pursuant to the Bankruptcy Code in accordance with a final
nonappealable order of a court having competent jurisdiction is
$ (the "Preference Amount");
(vi) the total Insured Payment due is $ , which
amount equals the sum of the Deficiency Amount and the Preference
Amount;
(vii) the Trustee is making a claim under and pursuant to the
terms of the Policy for the dollar amount of the Insured Payment set
forth in (iv) above to be applied to the payment of the Deficiency
Amount for the Applicable Payment Date in accordance with the Agreement
and for the dollar amount of the Insured Payment set forth in (v) above
to be applied to the payment of any Preference Amount; and
(viii) the Trustee directs that payment of the Insured Payment
be made to the following account by bank wire transfer of federal or
other immediately available funds in accordance with the terms of the
Policy: [TRUSTEE'S ACCOUNT NUMBER].
Any capitalized term used in this Notice and not otherwise defined
herein shall have the meaning assigned thereto in the Policy.
Any Person Who Knowingly And With Intent To Defraud Any Insurance
Company Or Other Person Files An Application For Insurance Or Statement Of Claim
Containing Any Materially False Information, Or Conceals, For The Purpose Of
Misleading, Information Concerning Any Fact Material Thereto, Commits A
Fraudulent Insurance Act, Which Is A Crime, And Shall Also Be Subject To A Civil
Penalty Not To Exceed Five Thousand Dollars And The Stated Value Of The Claim
For Each Such Violation.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
under the Policy as of the day of , .
[NAME OF TRUSTEE], as Trustee
By
----------------------------------
Title
--------------------------------
A-2
<PAGE>
CERTIFICATE GUARANTY INSURANCE POLICY
OBLIGATIONS: Centex Home Equity Loan POLICY NUMBER: 25813
Pass-Through Certificates, Series 1998-1
$60,000,000 Adjustable Rate Class A-5 Certificates
(the "Obligations")
MBIA Insurance Corporation (the "Insurer"), in consideration of the
payment of the premium and subject to the terms of this Certificate Guaranty
Insurance Policy (this "Policy"), hereby unconditionally and irrevocably
guarantees to any Owner that an amount equal to each full and complete Insured
Payment will be received by Norwest Bank Minnesota, National Association, or its
successors, as trustee for the Owners (the "Trustee"), on behalf of the Owners
from the Insurer, for distribution by the Trustee to each Owner of each Owner's
proportionate share of the Insured Payment. The Insurer's obligations hereunder
with respect to a particular Insured Payment shall be discharged to the extent
funds equal to the applicable Insured Payment are received by the Trustee,
whether or not such funds are properly applied by the Trustee. Insured Payments
shall be made only at the time set forth in this Policy and no accelerated
Insured Payments shall be made regardless of any acceleration of the Obligations
unless such acceleration is at the sole option of the Insurer.
Notwithstanding the foregoing paragraph, this Policy does not cover
shortfalls, if any, attributable to the liability of the Trust, any REMIC or the
Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability). The Policy does not cover, and Insured Payments
shall not include, any Civil Relief Interest Shortfalls, any Class A-5
Certificateholder's Interest Index Carryovers or any Unpaid Class A-5
Certificateholders' Interest Index Carryovers.
The Insurer will pay any Insured Payment that is a Preference Amount on
the Business Day following receipt on a Business Day by the Fiscal Agent (as
described below) of (i) a certified copy of the order requiring the return of a
preference payment, (ii) an opinion of counsel satisfactory to the Insurer that
such order is final and not subject to appeal, (iii) an assignment in such form
as is reasonably required by the Insurer, irrevocably assigning to the Insurer
all rights and claims of the Owner relating to or arising under the Obligations
against the debtor which made such preference payment or otherwise with respect
to such preference payment and (iv) appropriate instruments to effect the
appointment of the Insurer as agent for such Owner in any legal proceeding
related to such preference payment, such instruments being in a form
satisfactory to the Insurer, provided that if such documents are received after
12:00 noon, New York City time, on such Business Day, they will be deemed to be
received on the following Business Day. Such payments shall be disbursed to the
receiver or trustee in bankruptcy named in the final order of the court
exercising jurisdiction on behalf of the Owner and not to any Owner directly
unless such Owner has returned principal or interest paid on the Obligations to
such receiver or trustee in bankruptcy, in which case such payment shall be
disbursed to such Owner.
<PAGE>
The Insurer will pay any other amount payable hereunder no later than
12:00 noon, New York City time, on the later of the Payment Date on which the
related Deficiency Amount is due or the third Business Day following receipt in
New York, New York on a Business Day by State Street Bank and Trust Company,
N.A., as Fiscal Agent for the Insurer or any successor fiscal agent appointed by
the Insurer (the "Fiscal Agent") of a Notice (as described below), provided that
if such Notice is received after 12:00 noon, New York City time, on such
Business Day, it will be deemed to be received on the following Business Day. If
any such Notice received by the Fiscal Agent is not in proper form or is
otherwise insufficient for the purpose of making claim hereunder, it shall be
deemed not to have been received by the Fiscal Agent for purposes of this
paragraph, and the Insurer or the Fiscal Agent, as the case may be, shall
promptly so advise the Trustee, and the Trustee may submit an amended Notice.
Insured Payments due hereunder unless otherwise stated herein will be
disbursed by the Fiscal Agent to the Trustee on behalf of the Owners by wire
transfer of immediately available funds in the amount of the Insured Payment
less, in respect of Insured Payments related to Preference Amounts, any amount
held by the Trustee for the payment of such Insured Payment and legally
available therefor.
The Fiscal Agent is the agent of the Insurer only, and the Fiscal Agent
shall in no event be liable to Owners for any acts of the Fiscal Agent or any
failure of the Insurer to deposit or cause to be deposited sufficient funds to
make payments due under this Policy.
As used herein, the following terms shall have the following meanings:
"Agreement" means the Pooling and Servicing Agreement, dated as of
February 1, 1998, among DLJ Mortgage Acceptance Corp., as Depositor, Centex
Credit Corporation d/b/a Centex Home Equity Corporation, as Seller and as
Servicer, and the Trustee, as trustee, without regard to any amendment or
supplement thereto, unless such amendment or supplement has been approved in
writing by the Insurer.
"Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions in New York City, Dallas, Texas, the city in which
the Corporate Trust Office of the Trustee under the Agreement is located or the
city in which the Certificate Insurer is located are authorized or obligated by
law or executive order to be closed.
"Deficiency Amount" means with respect to any Payment Date, the sum of
(a) the excess, if any, of (i) the Class A-5 Current Interest over (ii) the
Adjustable Rate Group Total Available Funds (after applying the
crosscollateralization provisions of the Agreement, after any deduction for the
related Premium Amount and the related Trustee Fee and without regard to any
related Insured Payment to be made with respect to such Payment Date) and (b)
the related Subordination Deficit (after applying the crosscollateralization
provisions of the Agreement and after taking into account the portion of the
Adjustable Rate Group Principal Distribution Amount to be actually distributed
on such Payment Date without regard to any related Insured Payment to be made
with respect to such Payment Date.)
2
<PAGE>
"Insured Payment" means (a) as of any Payment Date, any Deficiency
Amount and (b) any Preference Amount (without duplication).
"Notice" means the telephonic or telegraphic notice, promptly confirmed
in writing by fax substantially in the form of Exhibit A attached hereto, the
original of which is subsequently delivered by registered or certified mail,
from the Trustee specifying the Insured Payment which shall be due and owing on
the applicable Payment Date.
"Owner" means each such Owner (as defined in the Agreement) of an
Obligation (other than the Trustee, the Depositor or the Servicer) who, on the
applicable Payment Date, is entitled under the terms of the applicable
Obligations to payment thereunder.
"Preference Amount" means any amount previously distributed to an Owner
on the Obligations that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings set forth in the Agreement as of the date of
execution of this Policy, without giving effect to any subsequent amendment to
or modification of the Agreement unless such amendment or modification has been
approved in writing by the Insurer.
Any notice hereunder or service of process on the Fiscal Agent may be
made at the address listed below for the Fiscal Agent or such other address as
the Insurer shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 15th Floor, 61 Broadway, New
York, New York 10006 Attention: Municipal Registrar and Paying Agency, or such
other address as the Fiscal Agent shall specify to the Trustee in writing.
THIS POLICY IS BEING ISSUED UNDER AND PURSUANT TO, AND SHALL BE
CONSTRUED UNDER, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAWS PRINCIPLES THEREOF.
THE INSURANCE PROVIDED BY THIS POLICY IS NOT COVERED BY THE
PROPERTY/CASUALTY INSURANCE SECURITY FUND SPECIFIED IN ARTICLE 76 OF THE NEW
YORK INSURANCE LAW.
This Policy is not cancelable for any reason. The premium on this
Policy is not refundable for any reason, including payment, or provision being
made for payment, prior to maturity of the Obligations.
3
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IN WITNESS WHEREOF, the Insurer has caused this Policy to be executed
and attested this 26th day of February, 1998.
MBIA INSURANCE CORPORATION
By
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Title
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Attest:
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Secretary
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EXHIBIT A
TO CERTIFICATE GUARANTY INSURANCE POLICY
NUMBER: 25813
NOTICE UNDER CERTIFICATE GUARANTY
INSURANCE POLICY NUMBER: 25813
State Street Bank and Trust Company, N.A., as Fiscal Agent
for MBIA Insurance Corporation
61 Broadway, 15th Floor
New York, NY 10006
Attention: Municipal Registrar and
Paying Agency
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
The undersigned, a duly authorized officer of [NAME OF TRUSTEE], as
trustee (the "Trustee"), hereby certifies to State Street Bank and Trust
Company, N.A. (the "Fiscal Agent") and MBIA Insurance Corporation (the
"Insurer"), with reference to Certificate Guaranty Insurance Policy Number:
25813 (the "Policy") issued by the Insurer in respect of the Centex Home Equity
Loan Pass-Through Certificates, Series 1998-1, $60,000,000 Adjustable Rate Class
A-5 Certificates, that:
(i) the Trustee is the trustee under the Pooling and Servicing
Agreement, dated as of February 1, 1998, among DLJ Mortgage Acceptance
Corp., as Depositor, Centex Credit Corporation d/b/a Centex Home Equity
Corporation, as Seller and as Servicer, and the Trustee, as trustee for
the Owners;
(ii) the amount due under clause (a) definition of Deficiency
Amount for the Payment Date occurring on
(the "Applicable Payment Date") is $ ;
(iii) the amount due under clause (b) definition of Deficiency
Amount for the Payment Date occurring on
(the "Applicable Payment Date") is $ ;
(iv) the sum of the amounts under paragraphs (ii) and (iii)
above is $ (the "Deficiencey Amount");
(v) the amount of previously distributed payments on the
Obligations that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy
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pursuant to the Bankruptcy Code in accordance with a final
nonappealable order of a court having competent jurisdiction is
$ (the "Preference Amount");
(vi) the total Insured Payment due is $ ,
which amount equals the sum of the Deficiency Amount and the Preference
Amount;
(vii) the Trustee is making a claim under and pursuant to the
terms of the Policy for the dollar amount of the Insured Payment set
forth in (iv) above to be applied to the payment of the Deficiency
Amount for the Applicable Payment Date in accordance with the Agreement
and for the dollar amount of the Insured Payment set forth in (v) above
to be applied to the payment of any Preference Amount; and
(viii) the Trustee directs that payment of the Insured Payment
be made to the following account by bank wire transfer of federal or
other immediately available funds in accordance with the terms of the
Policy: [TRUSTEE'S ACCOUNT NUMBER].
Any capitalized term used in this Notice and not otherwise defined
herein shall have the meaning assigned thereto in the Policy.
Any Person Who Knowingly And With Intent To Defraud Any Insurance
Company Or Other Person Files An Application For Insurance Or Statement Of Claim
Containing Any Materially False Information, Or Conceals, For The Purpose Of
Misleading, Information Concerning Any Fact Material Thereto, Commits A
Fraudulent Insurance Act, Which Is A Crime, And Shall Also Be Subject To A Civil
Penalty Not To Exceed Five Thousand Dollars And The Stated Value Of The Claim
For Each Such Violation.
IN WITNESS WHEREOF, the Trustee has executed and delivered this Notice
under the Policy as of the day of , .
[NAME OF TRUSTEE], as Trustee
By
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Title
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