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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): January 29, 1998
HomeSide Mortgage Securities, Inc.
(Exact name of registrant specified in Charter)
Delaware 33-34957 59-2957725
(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
7301 Baymeadows Way
Jacksonville, Florida 32256
(Address of principal executive offices) Zip Code
REGISTRANT'S TELEPHONE, INCLUDING AREA CODE: (904) 281-3000
(Former name and former address, if changed since last report)
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ITEM 2. Acquisition or Disposition of Assets; General
On January 29, 1998, HomeSide Mortgage Securities, Inc. issued
its Multi-Class Mortgage Pass-Through Certificates, Series 1998-1, such series
representing interests in a pool of fixed rate conventional one-to four-family
mortgage loans. Capitalized terms used herein and not otherwise defined shall
have the meanings assigned to them in the prospectus dated January 28, 1998, as
supplemented by the prospectus supplement dated January 28, 1998 (together, the
"Prospectus").
The Class A Certificates consist of the Class A-1
Certificates, the Class A-2 Certificates, the Class A-3 Certificates, the Class
A-4 Certificates, the Class A-5 Certificates, the Class A-6 Certificates, the
Class A-7 Certificates, the Class A-8 Certificates, the Class A-9 Certificates,
the Class A-10 Certificates, the A-R Certificates and the Class A-X
Certificates. The Class M Certificates consist of the Class M Certificates. The
Class B Certificates consist of the Class B-1 Certificates, the Class B-2
Certificates, the Class B-3 Certificates, the Class B-4 Certificates and the
Class B-5 Certificates.
The Class A Certificates evidence in the aggregate the Class A
Percentage ownership interest in the Trust Fund. The Class M Certificates
evidence in the aggregate the Class M Percentage ownership interest in the Trust
Fund. The Class B Certificates evidence the remaining ownership interest in the
Trust Fund and are subordinated to the rights of the Class A Certificates and
the Class M Certificates to the extent described in the Prospectus. The Trust
Fund consists of the Mortgage Pool and certain other property described in the
Prospectus.
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ITEM 7. Financial Statements and Exhibits
(c) Exhibits
<TABLE>
<CAPTION>
Item 601(a)
of Regulation S-K
Exhibit No. Description
- ----------- -----------
<S> <C>
1 Underwriting Agreement among HomeSide
Mortgage Securities, Inc., HomeSide Lending, Inc.
and Donaldson, Lufkin & Jenrette Securities
Corporation dated January 28, 1998 for Mortgage
Pass-Through Certificates issuable in series.
4 Pooling and Servicing Agreement among
HomeSide Mortgage Securities, Inc., HomeSide
Lending, Inc. and Norwest Bank Minnesota,
National Association, as trustee, dated as of January
1, 1998, for Multi-Class Mortgage Pass-Through
Certificates, Series 1998-1.
</TABLE>
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Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
HOMESIDE MORTGAGE SECURITIES, INC.
January 29, 1998
By: /s/ W. Blake Wilson
-------------------------------------
Name: W. Blake Wilson
Title: Vice President
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
<S> <C>
1 Underwriting Agreement among HomeSide
Mortgage Securities, Inc., HomeSide Lending, Inc.
and Donaldson, Lufkin & Jenrette Securities
Corporation dated January 28, 1998 for Mortgage
Pass-Through Certificates issuable in series.
4 Pooling and Servicing Agreement among
HomeSide Mortgage Securities, Inc., HomeSide
Lending, Inc. and Norwest Bank Minnesota,
National Association, as trustee, dated as of January
1, 1998, for Multi-Class Mortgage Pass-Through
Certificates, Series 1998-1.
</TABLE>
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EXHIBIT 1
HOMESIDE MORTGAGE SECURITIES, INC.
PASS-THROUGH CERTIFICATES
UNDERWRITING AGREEMENT
January 28, 1998
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue, 9th Floor
New York, New York 10017
Ladies and Gentlemen:
HomeSide Mortgage Securities, Inc. (the "Company"), a Delaware
corporation, has authorized the issuance and sale of Pass-Through Certificates
(the "Certificates") evidencing interests in pools of mortgage loans (the
"Mortgage Loans"). The Certificates may be issued in various series, and, within
each series, in one or more classes, and, within each class, in one or more
sub-classes, in one or more offerings on terms determined at the time of sale
(each such series, a "Series" and each such class, a "Class"). Each Series of
the Certificates will be issued under a separate Pooling and Servicing Agreement
(each, a "Pooling and Servicing Agreement") with respect to such Series among
the Company, as depositor, a servicer to be identified in the prospectus
supplement for each such Series (the "Servicer") and a trustee to be identified
in the prospectus supplement for each such Series (the "Trustee"). The
Certificates of each Series will evidence specified interests in separate pools
of Mortgage Loans (each a "Mortgage Pool"), and certain other property held in
trust with respect to such Series (each, a "Trust Fund").
The Certificates are more fully described in a Registration Statement
which the Company has furnished to you. Capitalized terms used but not defined
herein shall have the meanings given to them in the Pooling and Servicing
Agreement. The term "you" as used herein, unless the context otherwise requires,
shall mean you and such persons as are named as co-managers in the applicable
Terms Agreement (defined below).
Whenever the Company determines to make an offering of Certificates
pursuant to this Agreement through you or through an underwriting syndicate
managed by you it will enter into an agreement (the "Terms Agreement") providing
for the sale of such Certificates to, and the purchase and offering thereof by,
you and such other underwriters, if any, selected by you as have authorized you
to enter into such Terms Agreement on their behalf (the "Underwriters,"
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which term shall include you whether acting alone in the sale of Certificates or
as a member of an underwriting syndicate; as the context requires, Donaldson,
Lufkin & Jenrette Securities Corporation is sometimes referred to individually
herein as "DLJ"). The Terms Agreement relating to each offering of Certificates
shall specify, among other things, the stated balance or balances of
Certificates to be issued, the price or prices at which the Certificates are to
be purchased by the Underwriters from the Company and the initial public
offering price or prices or the method by which the price or prices at which
such Certificates are to be sold will be determined. A Terms Agreement, which
shall be substantially in the form of Exhibit A hereto, may take the form of an
exchange of any standard form of written telecommunication between you and the
Company. Each such offering of Certificates which the Company elects to make
pursuant to this Agreement will be governed by this Agreement, as supplemented
by the applicable Terms Agreement, and this Agreement and such Terms Agreement
shall inure to the benefit of and be binding upon the Underwriters participating
in the offering of such Certificates.
SECTION 1. Representations and Warranties. (a) The Company represents
and warrants to you as of the date hereof, and to the Underwriters named in the
applicable Terms Agreement, all as of the date of such Terms Agreement (in each
case, the "Representation Date"), as follows (any representations and warranties
so made to the Underwriters named in an applicable Terms Agreement respecting
the Certificates being deemed to relate only to the Certificates described
therein):
(1) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
33-34957), relating to the offering of Certificates from time to time
in accordance with Rule 415 under the Securities Act of 1933, as
amended (the "1933 Act"), and has filed, and proposes to file, such
amendments thereto as may have been required to the date hereof and the
same has become effective under the 1933 Act and the rules of the
Commission thereunder (the "Regulations") and no stop order suspending
the effectiveness of such registration statement has been issued and no
proceedings for that purpose have been initiated or, to the Company's
knowledge, threatened, by the Commission. Such registration statement,
including incorporated documents, exhibits and financial statements, as
amended at the time when it became effective under the 1933 Act, and
the prospectus relating to the sale of Certificates by the Company
constituting a part thereof, as from time to time each is amended or
supplemented pursuant to the 1933 Act or otherwise, are referred to
herein as the "Registration Statement" and the "Prospectus,"
respectively; provided, however, that a supplement to the Prospectus
contemplated by Section 3(a) hereof (a "Prospectus Supplement") shall
be deemed to have supplemented the Prospectus only with respect to the
offering or offerings of Certificates to which it relates. Any
reference herein to the Registration Statement, a preliminary
prospectus, the Prospectus or the Prospectus Supplement shall be deemed
to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Securities
Exchange Act of 1934, as amended (the "1934 Act") on or before the date
on which the Registration Statement, as amended, became effective or
the issue date of such
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preliminary prospectus, Prospectus, or Prospectus Supplement, as the
case may be; and any reference herein to the terms "amend," "amendment"
or supplement with respect to the Registration Statement, any
preliminary prospectus, the Prospectus or the Prospectus Supplement
shall be deemed to refer to and include the filing of any document
under the 1934 Act after the date on which the Registration Statement
became effective or the issue date of any preliminary prospectus, the
Prospectus or the Prospectus Supplement, as the case may be, deemed to
be incorporated therein by reference. The Registration Statement and
Prospectus, at the time the Registration Statement became effective
did, and as of the applicable Representation Date will, conform in all
material respects to the requirements of the 1933 Act and the
Regulations. The Registration Statement, at the time it became
effective did not, and as of the applicable Representation Date and the
applicable Closing Time (as defined in Section 2 hereof) will not,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, as amended or
supplemented as of the applicable Representation Date and the
applicable Closing Time (as defined in Section 2 hereof), will not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the representations and warranties in this
subsection shall not apply to (i) statements in, or omissions from, the
Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by the
Underwriters expressly for use in the Registration Statement or
Prospectus or (ii) the DLJ Information (as defined in Section 10
hereof). The conditions to the use by the Company of a registration
statement on Form S-3 under the 1933 Act, as set forth in the General
Instructions to Form S-3, have been satisfied with respect to the
Registration Statement and the Prospectus. There are no contracts or
documents of the Company which are required to be described in the
Registration Statement or Prospectus or filed as exhibits to the
Registration Statement pursuant to the 1933 Act or the Regulations
which have not been so described or filed.
(2) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware with corporate power and authority to enter into and
perform its obligations under this Agreement, the applicable Pooling
and Servicing Agreement, and with respect to a Series of Certificates,
the Certificates and the applicable Terms Agreement; and the Company is
duly qualified or registered as a foreign corporation to transact
business and is in good standing in each jurisdiction in which the
ownership or lease of its properties or the conduct of its business
requires such qualification.
(3) The Company is not in violation of its certificate of
incorporation or by-laws or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any material contract, indenture, mortgage, loan agreement, note,
lease or other material instrument to which it is a party or by which
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<PAGE> 4
it or its properties may be bound, which default might result in any
material adverse change in the financial condition, earnings, affairs
or business of the Company or which might materially and adversely
affect the properties or assets thereof or the Company's ability to
perform its obligations under this Agreement, the applicable Terms
Agreement or the applicable Pooling and Servicing Agreement.
(4) The execution and delivery by the Company of this
Agreement, the applicable Terms Agreement and the applicable Pooling
and Servicing Agreement and the signing of the Registration Statement
by the Company are within the corporate power of the Company and have
been duly authorized by all necessary corporate action on the part of
the Company; and with respect to a Series of Certificates described in
the applicable Terms Agreement, neither the issuance and sale of the
Certificates to the Underwriters, nor the execution and delivery by the
Company of this Agreement, such Terms Agreement and the related Pooling
and Servicing Agreement, nor the consummation by the Company of the
transactions herein or therein contemplated, nor compliance by the
Company with the provisions hereof or thereof, will conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company other than as contemplated by a Pooling and Servicing
Agreement, pursuant to any material indenture, mortgage, contract or
other material instrument to which the Company is a party or by which
it is bound or to which the property or assets of the Company are
subject, or result in the violation of the provisions of the
certificate of incorporation or by-laws of the Company or any statute
or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its properties.
(5) This Agreement has been, and each applicable Terms
Agreement when executed and delivered as contemplated hereby and
thereby will have been, duly authorized, executed and delivered by the
Company, and each constitutes, or will constitute when so executed and
delivered, a legal, valid and binding instrument enforceable against
the Company in accordance with its terms (assuming due authorization,
execution and delivery by the other parties thereto), subject (a) to
applicable bankruptcy, insolvency, reorganization, moratorium, or other
similar laws affecting creditors' rights generally, (b) as to
enforceability to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and (c) as
to enforceability with respect to rights of indemnity thereunder, to
limitations of public policy under applicable securities laws.
(6) Each applicable Pooling and Servicing Agreement when
executed and delivered as contemplated hereby and thereby will have
been duly authorized, executed and delivered by the Company, and will
constitute when so executed and delivered, a legal, valid and binding
instrument enforceable against the Company in accordance with its terms
(assuming due authorization, execution and delivery by the other
parties
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thereto), subject (a) to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and (b) as to enforceability to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law); and as of the Closing Date, the representations and
warranties made by the Company in the applicable Pooling and Servicing
Agreement will be true and correct as of the date made.
(7) As of the Closing Time (as defined in Section 2 hereof)
with respect to a Series of Certificates, the Certificates will have
been duly and validly authorized by the Company, and, when executed and
authenticated as specified in the related Pooling and Servicing
Agreement, will be validly issued and outstanding and will be entitled
to the benefits of the related Pooling and Servicing Agreement, and the
Classes of Certificates so designated in the related Prospectus
Supplement will be "mortgage related securities," as defined in Section
3(a)(41) of the 1934 Act.
(8) There are no actions, proceedings or investigations now
pending against the Company or, to the knowledge of the Company,
threatened against the Company, before any court, administrative agency
or other tribunal (i) asserting the invalidity of this Agreement, the
applicable Terms Agreement, the applicable Pooling and Servicing
Agreement or with respect to a Series of Certificates, the
Certificates, (ii) seeking to prevent the issuance of such Certificates
or the consummation of any of the transactions contemplated by this
Agreement, the applicable Terms Agreement or such Pooling and Servicing
Agreement, (iii) which would be likely to materially and adversely
affect the performance by the Company of its obligations under, or
which would if adversely determined materially and adversely affect the
validity or enforceability of, this Agreement, the applicable Terms
Agreement, such Pooling and Servicing Agreement or such Certificates or
(iv) seeking to adversely affect the federal income tax attributes of
such Certificates described in the Prospectus and the related
Prospectus Supplement.
(9) Any taxes, fees and other governmental charges that are
assessed and due in connection with the execution, delivery and
issuance of this Agreement, the applicable Terms Agreement, the
applicable Pooling and Servicing Agreement and with respect to a Series
of Certificates shall have been paid at or prior to the Closing Time.
(10) No filing or registration with, notice to or consent,
approval, authorization, order or qualification of or with any court or
governmental agency or body is required for the issuance and sale of
the Certificates or the consummation by the Company of the transactions
contemplated by this Agreement, the applicable Pooling and Servicing
Agreement or the applicable Terms Agreement, except the registration
under the 1933 Act of the Certificates, and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution of the Certificates by the Underwriters.
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(11) The Company possesses all material licenses,
certificates, authorities or permits issued by the appropriate state,
federal or foreign regulatory agencies or bodies deemed by the Company
to be reasonably necessary to conduct the business now operated by it
and as described in the Prospectus and the Company has received no
notice of proceedings relating to the revocation or modification of any
such license, certificate, authority or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would materially and adversely affect the conduct of the
business, operations, financial condition or income of the Company.
(12) No litigation is pending or, to the best of the Company's
knowledge, threatened, against the Company which would prohibit the
Company's entering into this Agreement or the applicable Pooling and
Servicing Agreement.
(13) As of the Closing Time, with respect to a Series of
Certificates described in the relevant Terms Agreement evidencing
interests in a Mortgage Pool, the Trustee will have either good and
marketable title, free and clear of all prior liens, charges, pledges,
mortgages, security interests and encumbrances, to or a validly
perfected first priority security interest in the Mortgage Notes and
the related Mortgages included in the Trust Fund, with respect to (a)
the Mortgage Notes, upon delivery thereof to the Trustee and (b) the
Mortgages, upon delivery to the Trustee of instruments of assignment in
recordable form assigning each Mortgage to the Trustee and the
recording of each such instrument of assignment in the appropriate
recording office in which the Mortgaged Property is located, or if
supported by an opinion of counsel, without recording.
(14) As of the Closing Time, with respect to a Series of
Certificates as to which there is a Reserve Fund, to the extent that
the Reserve Fund does not constitute part of the Trust Fund for such
Series, the Trustee will have acquired either good and marketable title
to or a duly and validly perfected security interest in the Reserve
Fund with respect to such Series, if any, subject to no prior lien,
mortgage, security interest, pledge, charge or other encumbrance.
(15) As of the Closing Time, with respect to a Series of
Certificates, the Mortgage Pool will have substantially the
characteristics described in the Prospectus Supplement and in the Form
8-K of the Company prepared with respect to such Certificates, if the
Mortgage Pool is described in such Form 8-K.
(16) Neither the Company nor the Trust Fund created by the
applicable Pooling and Servicing Agreement will be subject to
registration as an "investment company" under the Investment Company
Act of 1940, as amended (the "1940 Act").
(17) The Certificates, the applicable Pooling and Servicing
Agreement, the applicable Terms Agreement and any Primary Insurance
Policies, Mortgage Pool Insurance Policies, Standard Hazard Insurance
Policies, Special Hazard Insurance
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Policies, Mortgagor Bankruptcy Insurance and Alternate Credit
Enhancement related to the Certificates described in the relevant Terms
Agreement conform in all material respects to the descriptions thereof
contained in the Prospectus.
(18) As of the Closing Time, the Mortgage Loans will have been
duly and validly assigned and delivered by the Company to the Trustee
under the related Pooling and Servicing Agreement.
(19) As of the Closing Time, the representations and
warranties of the Company contained in the applicable Pooling and
Servicing Agreement are true and correct in all material respects.
(b) HomeSide Lending, Inc. ("HomeSide") represents and warrants to you
as of the date hereof, and to the Underwriters named in the applicable Terms
Agreement, all as of the date of such Terms Agreement (in each case, the
"Representation Date"), as follows (any representations and warranties so made
to the Underwriters named in an applicable Terms Agreement respecting the
Certificates being deemed to relate only to the Certificates described therein):
(1) HomeSide has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Florida with corporate power and authority to enter into and perform
its obligations under this Agreement, the applicable Pooling and
Servicing Agreement, and with respect to a Series of Certificates, the
applicable Terms Agreement; and HomeSide is duly qualified or
registered as a foreign corporation to transact business and is in good
standing in each jurisdiction in which the ownership or lease of its
properties or the conduct of its business requires such qualification.
(2) HomeSide is not in violation of its certificate of
incorporation or by-laws or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any material contract, indenture, mortgage, loan agreement, note,
lease or other material instrument to which it is a party or by which
it or its properties may be bound, which default might result in any
material adverse change in the financial condition, earnings, affairs
or business of HomeSide or which might materially and adversely affect
the properties or assets thereof or HomeSide's ability to perform its
obligations under this Agreement, the applicable Terms Agreement or the
applicable Pooling and Servicing Agreement.
(3) The execution and delivery by HomeSide of this Agreement,
the applicable Terms Agreement and the applicable Pooling and Servicing
Agreement are within the corporate power of HomeSide and have been duly
authorized by all necessary corporate action on the part of HomeSide;
and with respect to a Series of Certificates described in the
applicable Terms Agreement, neither the execution and delivery by
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HomeSide of this Agreement, such Terms Agreement and the related
Pooling and Servicing Agreement, nor the consummation by HomeSide of
the transactions herein or therein contemplated, nor compliance by
HomeSide with the provisions hereof or thereof, will conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of
HomeSide other than as contemplated by a Pooling and Servicing
Agreement, pursuant to any material indenture, mortgage, contract or
other material instrument to which HomeSide is a party or by which it
is bound or to which the property or assets of HomeSide are subject, or
result in the violation of the provisions of the certificate of
incorporation or by-laws of HomeSide or any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over HomeSide or any of its properties.
(4) This Agreement has been, and each applicable Terms
Agreement when executed and delivered as contemplated hereby and
thereby will have been, duly authorized, executed and delivered by
HomeSide, and each constitutes, or will constitute when so executed and
delivered, a legal, valid and binding instrument enforceable against
HomeSide in accordance with its terms (assuming due authorization,
execution and delivery by the other parties thereto), subject (a) to
applicable bankruptcy, insolvency, reorganization, moratorium, or other
similar laws affecting creditors' rights generally, (b) as to
enforceability to general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law) and (c) as
to enforceability with respect to rights of indemnity thereunder, to
limitations of public policy under applicable securities laws.
(5) Each applicable Pooling and Servicing Agreement when
executed and delivered as contemplated hereby and thereby will have
been duly authorized, executed and delivered by HomeSide, and will
constitute when so executed and delivered, a legal, valid and binding
instrument enforceable against HomeSide in accordance with its terms
(assuming due authorization, execution and delivery by the other
parties thereto), subject (a) to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors'
rights generally and (b) as to enforceability to general principles of
equity (regardless of whether enforcement is sought in a proceeding in
equity or at law); and as of the Closing Date, the representations and
warranties made by HomeSide in the applicable Pooling and Servicing
Agreement will be true and correct as of the date made.
(6) There are no actions, proceedings or investigations now
pending against HomeSide or, to the knowledge of HomeSide, threatened
against HomeSide, before any court, administrative agency or other
tribunal (i) asserting the invalidity of this Agreement, the applicable
Terms Agreement or the applicable Pooling and Servicing Agreement, (ii)
seeking to prevent the issuance of such Certificates or the
consummation of any of the transactions contemplated by this Agreement,
the applicable Terms
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Agreement or such Pooling and Servicing Agreement, (iii) which would be
likely to materially and adversely affect the performance by HomeSide
of its obligations under, or which would if adversely determined
materially and adversely affect the validity or enforceability of, this
Agreement, the applicable Terms Agreement, such Pooling and Servicing
Agreement or such Certificates or (iv) seeking to adversely affect the
federal income tax attributes of such Certificates described in the
Prospectus and the related Prospectus Supplement.
SECTION 2. Purchase and Sale. The commitment of each Underwriter to
purchase Certificates pursuant to any Terms Agreement shall be several and not
joint and shall be deemed to have been made on the basis of the representations
and warranties herein contained and shall be subject to the terms and conditions
herein set forth.
Payment of the purchase price for, and delivery of, any Certificates to
be purchased by the Underwriters shall be made at the offices of Morgan, Lewis &
Bockius LLP, New York, New York, or at such other place as shall be agreed upon
by you and the Company, at such time or date as shall be agreed upon by you and
the Company in the Terms Agreement (each such time and date being referred to as
a "Closing Time"). Unless otherwise specified in the applicable Terms Agreement,
payment shall be made to the Company in immediately available Federal funds
wired to such bank as may be designated by the Company. Such Certificates shall
be in such denominations and registered in such names as you may request in
writing at least two business days prior to the applicable Closing Time. Such
Certificates will be made available for examination and packaging by you no
later than 12:00 noon on the first business day prior to the applicable Closing
Time.
It is understood that the Underwriters intend to offer the Certificates
for sale to the public as set forth in the Prospectus Supplement.
SECTION 3. Covenants of the Company. The Company covenants with each of
you and each Underwriter participating in an offering of Certificates pursuant
to a Terms Agreement, with respect to such Certificates and such offering, as
follows:
(a) Immediately following the execution of each Terms
Agreement, the Company will prepare a Prospectus Supplement setting
forth the principal amount of Certificates covered thereby, the price
or prices at which the Certificates are to be purchased by the
Underwriters, either the initial public offering price or prices or the
method by which the price or prices by which the Certificates are to be
sold will be determined, the selling concession(s) and reallowance(s),
if any, any delayed delivery arrangements, and such other information
as you and the Company deem appropriate in connection with the offering
of the Certificates. The Company will furnish you a copy of the
Prospectus Supplement for your review prior to filing such Prospectus
Supplement with the Commission. Thereafter, the Company will promptly
transmit copies of the
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Prospectus Supplement to the Commission for filing pursuant to Rule 424
under the 1933 Act and will furnish to the Underwriters as many copies
of the Prospectus and such Prospectus Supplement as you shall
reasonably request.
(b) If the delivery of a prospectus is required at any time in
connection with the offering or sale of the Certificates described in
the relevant Terms Agreement and if at such time any event shall have
occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary during such period of time to
amend or supplement the Prospectus in order to comply with the 1933
Act, the Company agrees to notify you promptly and upon your request so
to amend or supplement the Prospectus and to prepare and furnish
without charge to each Underwriter and to any dealer in securities as
many copies as you may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will correct
such statement or omission or effect such compliance.
(c) During any period in which the delivery of a prospectus is
required at any time in connection with the offering or sale of the
Certificates described in the relevant Terms Agreement the Company will
give you reasonable notice of its intention to file any amendment to
the Registration Statement or any amendment or supplement to the
Prospectus, whether pursuant to the 1933 Act or otherwise, and will
furnish you with copies of any such amendment or supplement or other
documents proposed to be filed a reasonable time in advance of filing.
(d) During any period in which the delivery of a prospectus is
required at any time in connection with the offering or sale of the
Certificates described in the relevant Terms Agreement the Company will
notify you promptly (i) of the effectiveness of any amendment to the
Registration Statement, (ii) of the mailing or the delivery to the
Commission for filing of any supplement to the Prospectus or any
document other than quarterly and annual reports to be filed pursuant
to the 1934 Act, (iii) of the receipt of any comments from the
Commission with respect to the Registration Statement, the Prospectus
or any Prospectus Supplement, (iv) of any request by the Commission for
any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or for additional information, (v) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Certificates for sale in any
jurisdiction or the threat of any proceeding for that purpose and (vi)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose. The Company will use its best efforts to
prevent the issuance of any such stop order and, if any stop order is
issued, to obtain the lifting thereof as soon as possible.
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<PAGE> 11
(e) The Company agrees, so long as the Certificates shall be
outstanding, or until such time as you shall cease to maintain a
secondary market in the Certificates, whichever first occurs, to
deliver to you the annual statement as to compliance delivered to the
Trustee pursuant to Section 5.25 of the applicable Pooling and
Servicing Agreement and the annual statement of a firm of independent
public accountants furnished to the Trustee pursuant to Section 5.26 of
the applicable Pooling and Servicing Agreement, as soon as such
statements are furnished to the Company.
(f) The Company will deliver to you as many conformed copies
of the Registration Statement (as originally filed) and of each
amendment thereto (including exhibits filed therewith or incorporated
by reference therein and documents incorporated by reference in the
Prospectus) as you may reasonably request.
(g) The Company will endeavor, in cooperation with you, to
qualify the Certificates for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United
States as you may designate, and will maintain or cause to be
maintained such qualifications in effect for as long as may be required
for the distribution of the Certificates, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction. The Company will file or cause the filing of such
statements and reports as may be required by the laws of each
jurisdiction in which the Certificates have been qualified as above
provided.
SECTION 4. Conditions of Underwriters' Obligations. The obligations of
the Underwriters to purchase Certificates pursuant to any Terms Agreement shall
be subject to the accuracy of the representations and warranties on the part of
the Company herein contained, to the accuracy of the statements of the Company's
officers made pursuant hereto, to the performance by the Company of all of its
obligations hereunder and to the following additional conditions precedent:
(a) At the applicable Closing Time (i) no stop order
suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been
initiated or threatened by the Commission and the Prospectus Supplement
shall have been filed or transmitted for filing by means reasonably
calculated to result in filing with the Commission not later than the
time required by Rule 424(b) under the 1933 Act, (ii) the Certificates
shall have received the rating or ratings specified in the applicable
Terms Agreement, and (iii) there shall not have come to your attention
any facts that would cause you to believe that the Prospectus, together
with the applicable Prospectus Supplement at the time it was required
to be delivered to a purchaser of the Certificates, contained an untrue
statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in light of the
circumstances existing at such time, not misleading. No challenge by
the Commission shall have been made to the accuracy or adequacy of the
Registration
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<PAGE> 12
Statement and any request of the Commission for inclusion of additional
information in the Registration Statement or the Prospectus or the
Prospectus Supplement shall have been complied with and the Company
shall not have filed with the Commission any amendment or supplement to
the Registration Statement, the Prospectus or the Prospectus Supplement
without the consent of the Underwriters.
(b) At the applicable Closing Time you shall have
received:
(1) The opinion, dated as of the applicable Closing
Time, of Morgan, Lewis & Bockius LLP, counsel for the Company, in form
and substance satisfactory to such of you as may be named in the
applicable Terms Agreement, to the effect that:
(i) The Company is validly existing as a corporation
in good standing under the laws of the State of Delaware.
(ii) This Agreement and the applicable Terms
Agreement have been duly authorized, executed and delivered by
the Company, and each is a valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except that (A) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors'
rights generally, (B) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject
to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought, and (C)
the enforceability as to rights to indemnity thereunder may be
subject to limitations of public policy under applicable
securities laws.
(iii) The applicable Pooling and Servicing Agreement
has been duly authorized, executed and delivered by the
Company, and is a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its
terms, except that (A) such enforceability thereof may be
subject to bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to
creditors' rights generally and (B) the remedy of specific
performance and injunctive and other forms of equitable relief
may be subject to equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought.
(iv) The execution and delivery by the Company of
this Agreement, the applicable Terms Agreement and applicable
Pooling and Servicing Agreement and the signing of the
Registration Statement by the Company are within the corporate
power of the Company and have been duly authorized by all
necessary corporate action on the part of the Company; and
neither the issue and sale of the Certificates nor the
consummation of the transactions contemplated herein or
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<PAGE> 13
therein nor the fulfillment of the terms hereof or thereof
will, conflict with or constitute a breach or violation of any
of the terms or provisions of, or constitute a default under,
or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company
pursuant to, any contract, indenture, mortgage, or other
instrument to which the Company is a party or by which it may
be bound of which such counsel is aware, other than the lien
or liens created by the applicable Pooling and Servicing
Agreement, nor will such action result in any violation of the
provisions of the certificate of incorporation or by-laws of
the Company or, any statute, rule or regulation to which the
Company is subject or by which it is bound or any writ,
injunction or decree of any court, governmental authority or
regulatory body to which it is subject or by which it is bound
of which such counsel is aware.
(v) The Certificates have been duly authorized and,
when executed and authenticated as specified in the related
Pooling and Servicing Agreement and delivered and paid for,
will be validly issued, fully paid, nonassessable and entitled
to the benefits of the related Pooling and Servicing
Agreement.
(vi) Assuming strict compliance by the Underwriters
with the provisions of this Agreement, no filing or
registration with or notice to or consent, approval,
authorization, order or qualification of or with any court or
governmental agency or body is required for the issuance and
sale of the Certificates or the consummation by the Company of
the transactions contemplated by this Agreement, the
applicable Pooling and Servicing Agreement or the applicable
Terms Agreement, except the registration under the 1933 Act of
the Certificates, and such consents, approvals,
authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Certificates by the
Underwriters.
(vii) Other than as may be set forth or contemplated
in the Prospectus, there is no action, suit or proceeding of
which such counsel is aware before or by any court or
governmental agency or body, domestic or foreign, now pending
or, to the best of such counsel's knowledge, threatened
against the Company which might result in any material adverse
change in the financial condition, earnings, affairs or
business of the Company, or which might materially and
adversely affect the properties or assets thereof or might
materially and adversely affect the performance by the Company
of its obligations under, or the validity or enforceability
of, the Certificates, this Agreement or the Pooling and
Servicing Agreement, or which is required to be disclosed in
the Registration Statement.
(viii) The Registration Statement is effective under
the 1933 Act and, to the best of such counsel's knowledge, no
stop order suspending the effectiveness
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<PAGE> 14
of the Registration Statement has been issued under the 1933
Act or proceedings therefor initiated or threatened by the
Commission.
(ix) The applicable Pooling and Servicing Agreement
is not required to be qualified under the Trust Indenture Act
of 1939, as amended.
(x) The Registration Statement and the Prospectus
(other than the financial statements and other financial and
statistical information included therein, as to which no
opinion need be rendered) as of their respective effective or
issue dates, complied as to form in all material respects with
the requirements of the 1933 Act and the Regulations
thereunder.
(xi) (A) The statements in the Prospectus under the
headings "ERISA Considerations" and "Federal Income Tax
Consequences" and the statements in the applicable Prospectus
Supplement under the headings "Federal Income Tax
Considerations" and "ERISA Considerations", to the extent that
they describe matters of United States federal income tax law
or ERISA or legal conclusions with respect thereto, have been
prepared or reviewed by such counsel and are accurate in all
material respects and (B) the statements in the Prospectus
under the heading "Certain Legal Aspects of the Mortgage
Loans," to the extent they constitute matters of United States
federal law or legal conclusions with respect thereto, while
not purporting to discuss all possible consequences of
investment in the Certificates, are accurate in all material
respects with respect to those consequences or matters
discussed therein.
(xii) The statements in the Prospectus and the
applicable Prospectus Supplement under the caption
"Description of the Certificates", insofar as they purport to
summarize certain terms of the Certificates and the applicable
Pooling and Servicing Agreement, constitute a fair summary of
the provisions purported to be summarized.
(xiii) The Trust Fund created by the applicable
Pooling and Servicing Agreement is not, and will not as a
result of the offer and sale of the Certificates as
contemplated in the Prospectus and in this Agreement become,
an "investment company" required to be registered under the
1940 Act.
(xiv) The Classes of Certificates so designated in
the Prospectus Supplement will be "mortgage related
securities", as defined in Section3(a)(41) of the 1934 Act, so
long as the Certificates are rated in one of the two highest
grades by at least one nationally recognized statistical
rating organization.
(xv) If a REMIC election is to be made with respect
to the Trust Fund, assuming (a) ongoing compliance with all of
the provisions of the Pooling and
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<PAGE> 15
Servicing Agreement and (b) the filing of an election, in
accordance with the Pooling and Servicing Agreement, to be
treated as a "real estate mortgage investment conduit" (a
"REMIC") pursuant to Section 860D of the Internal Revenue Code
of 1986, as amended (the "Code") for Federal income tax
purposes, the Trust Fund will qualify as a REMIC as of the
Closing Date and will continue to qualify as a REMIC for so
long as it complies with amendments after the date hereof to
any applicable provisions of the Code and applicable Treasury
Regulations.
(xvi) Assuming that the Trust Fund is treated as a
REMIC for Federal income tax purposes, it will not be subject
as an entity to any tax imposed on income, franchises or
capital stock by Chapter 60 of the Consolidated Laws of New
York.
Such counsel shall deliver to you such additional opinions addressing
the transfer by the Company to the Trustee of its right, title and interest in
and to the Mortgage Loans and other property included in the Trust Fund at the
Closing Time as may be required by each Rating Agency rating the Certificates.
Such counsel shall state that it has participated in conferences with
officers and other representatives of the Company, your counsel, representatives
of the independent accountants for the Company and you 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
responsibility for, the factual accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (except as
stated in paragraphs (xi) and (xii) above) and has made no independent check or
verification thereof for the purpose of rendering its opinion, on the basis of
the foregoing, nothing has come to their attention that leads such counsel to
believe that either the Registration Statement, at the time it became effective
and at the applicable Closing Time, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or that the Prospectus
contained or contains as of the date thereof and at the applicable Closing Time
any untrue statement of a material fact or omitted or omits to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that such counsel need
express no view with respect to the financial statements, schedules and other
financial and statistical data included in or incorporated by reference into the
Registration Statement, the Prospectus or the Prospectus Supplement.
Such counsel may state that their opinions relate only to laws of the
State of New York, the Federal laws of the United States and the General
Corporation Law of the State of Delaware.
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<PAGE> 16
In rendering such opinions, such counsel may rely, as to matters of
fact, to the extent deemed proper and stated therein, on certificates of
responsible officers of the Company, the Trustee or public officials.
(2) The favorable opinion of counsel to the Trustee,
dated as of the applicable Closing Time, addressed to you and
in form and scope satisfactory to your counsel, to the effect
that:
(i) The Trustee is a __________, duly
organized and validly existing in good standing under the laws
of the __________, and has all requisite power and authority
to enter into the Pooling and Servicing Agreement and to
perform its obligations thereunder.
(ii) To the knowledge of such counsel, there
is no action, suit, proceeding or investigation pending or
threatened against the Trustee that could materially adversely
affect the ability of the Trustee to perform its obligations
under the Pooling and Servicing Agreement.
(iii) The Trustee has duly authorized,
executed and delivered the applicable Pooling and Servicing
Agreement and such Pooling and Servicing Agreement will
constitute the legal, valid and binding obligation of the
Trustee.
(iv) The Trustee has full power and
authority to execute and deliver the applicable Pooling and
Servicing Agreement and to perform its obligations thereunder.
(v) No consent, approval or authorization
of, or registration, declaration or filing with, any court or
governmental agency or body of the jurisdiction of its
organization is required for the execution, delivery or
performance by the Trustee of the Pooling and Servicing
Agreement.
(vi) The Certificates have been duly and
validly executed, authenticated and delivered by the Trustee
in accordance with the Pooling and Servicing Agreement.
(vii) The performance by the Trustee of its
duties pursuant to the Pooling and Servicing Agreement does
not conflict with or result in a breach or violation of any
term or provision of, or constitute a default under, any
statute or regulation currently governing the Trustee.
In rendering such opinion, such counsel may rely, as to
matters of fact, to the extent deemed proper and stated therein, on certificates
of responsible officers of the Trustee or public officials.
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<PAGE> 17
(3) The favorable opinion of counsel to the Servicer,
dated as of the applicable Closing Time, addressed to you and
in form and scope satisfactory to your counsel, to the effect
that:
(i) The Servicer is validly existing as a
corporation in good standing under the laws of the
jurisdiction of its incorporation.
(ii) The execution and delivery by the
Servicer of this Agreement and the applicable Pooling and
Servicing Agreement is within the corporate power of the
Servicer and has been duly authorized by all necessary
corporate action on the part of the Servicer; and to the
knowledge of such counsel, neither the execution and delivery
of either such instrument, nor the consummation of the
transactions provided for therein, nor compliance with the
provisions thereof, will conflict with or constitute a breach
of, or default under, any contract, indenture, mortgage, loan
agreement, note, lease, deed of trust, or other instrument to
which the Servicer is a party or by which it may be bound, nor
will such action result in any violation of the provisions of
the charter or by-laws of the Servicer or to the knowledge of
such counsel, any law, administrative regulation or
administrative or court decree.
(iii) This Agreement and the applicable
Pooling and Servicing Agreement have been duly executed and
delivered by the Servicer and each constitutes a legal, valid
and binding obligation of the Servicer enforceable against the
Servicer in accordance with its terms, except that such
enforceability thereof may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity
(regardless whether enforcement is sought in a proceeding in
equity or at law).
(iv) To the knowledge of such counsel, the
execution, delivery and performance by the Servicer of this
Agreement and the applicable Pooling and Servicing Agreement
do not require the consent or approval of, the giving of
notice to, the registration with, or the taking of any other
action in respect of any federal, state or other governmental
agency or authority which has not previously been effected.
(v) To the knowledge of such counsel, there
is no action, suit or proceeding of which such counsel is
aware before or by any court or governmental agency or body,
domestic or foreign, now pending or threatened against the
Servicer which might materially and adversely affect the
performance by the Servicer under, or the validity or
enforceability of, this Agreement or the applicable Pooling
and Servicing Agreement.
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<PAGE> 18
(vi) The description of the Servicer in the
applicable Prospectus Supplement is true and correct in all
material respects.
(4) The favorable opinion or opinions, dated as of
the applicable Closing Time, of counsel for the Underwriters,
acceptable to the Underwriters.
(c) At the applicable Closing Time you shall have received a
certificate of the President or a Vice President and the Treasurer or
the Secretary of each of the Company and HomeSide, dated as of such
Closing Time, to the effect that the representations and warranties of
the Company or HomeSide, as the case may be, contained in Section 1 are
true and correct with the same force and effect as though such Closing
Time were a Representation Date and that the Company or HomeSide, as
the case may be, has complied with all agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Time.
(d) You shall have received from Arthur Andersen, KPMG Peat
Marwick, or other independent certified public accountants acceptable
to you, letters, dated as of the date of the applicable Terms Agreement
and as of the applicable Closing Time, delivered at such times, in the
form and substance reasonably satisfactory to you.
(e) At the applicable Closing Time, with respect to a Series
of Certificates, each of the representations and warranties of the
Servicer set forth in the related Pooling and Servicing Agreement will
be true and correct and you shall have received a Certificate of an
Executive Vice President, Senior Vice President or Vice President of
the Servicer, dated as of such Closing Time, to such effect.
(f) At the applicable Closing Time, with respect to a Series
of Certificates, the Certificates shall have received the certificate
rating or ratings specified in the related Terms Agreement.
(g) At the applicable Closing Time, counsel for the
Underwriters shall have been furnished with such other documents and
opinions as they may reasonably require for the purpose of enabling
them to pass upon the issuance and sale of the Certificates as herein
contemplated and related proceedings or in order to evidence the
accuracy and completeness of any of the representations and warranties,
or the fulfillment of any of the conditions, herein contained; and all
proceedings taken by the Company in connection with the issuance and
sale of the Certificates as herein contemplated shall be reasonably
satisfactory in form and substance to you and counsel for the
Underwriters.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled or, if any of the opinions and
certificates required hereby shall not be in all material respects reasonably
satisfactory to you and your counsel, the applicable Terms Agreement may be
terminated by you by notice to the Company at any time at or prior to the
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<PAGE> 19
applicable Closing Time, and such termination shall be without liability of any
party to any other party except as provided in Section 5.
SECTION 5. Payment of Expenses. The Company covenants and
agrees with the Underwriters that the Company will pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement;
provided, however, that DLJ covenants and agrees to pay the following costs and
expenses in connection with each Series:
(i) the reasonable fees and expenses of Morgan, Lewis &
Bockius LLP, issuer's counsel to the Company; DLJ's obligation under
this paragraph (i), subject to a maximum of $55,000 per Series unless
DLJ introduces a material change in the deal structure which causes a
material increase in legal fees and expenses.
(ii) the fees of the rating agencies assigning ratings to any
of the Certificates, each of which shall be selected by DLJ;
(iii) the Trustee's securitization acceptance fee and
reasonable counsel fees and expenses;
(iv) the cost of printing the Prospectus Supplement and
Prospectus with respect to such Series, using a printer to be selected
by DLJ;
(v) the fees and expenses of KPMG Peat Marwick (or other
independent certified public accountants acceptable to the Company and
DLJ) in connection with delivering the accounting "comfort" letter
relating to the structure and mortgage pool statistics in the
Prospectus Supplement; and
(vi) DLJ's underwriting and due diligence expenses.
In addition, without limiting the foregoing, the Underwriters will pay all of
their own costs and expenses, including the fees of their counsel, transfer
taxes on resale of any of the Certificates by them and any advertising expenses
connected with any offers they may make.
SECTION 6. Indemnification.
(a) The Company and HomeSide, jointly and severally, will
indemnify and hold harmless the Underwriters and each person, if any,
who controls the Underwriters within the meaning of the 1933 Act,
against any losses, claims, damages, expenses or liabilities, joint or
several, to which such Underwriter or such controlling person may
become subject, under the 1933 Act or otherwise, insofar as such
losses, claims, damages, expenses or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto) or the Prospectus (or any
amendment
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or supplement thereto), or arise out of or are based upon the omission
or alleged omission to state therein a 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 in each
case in respect of the relevant Certificates, and will reimburse each
such indemnified party for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such
action or claim; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
such document in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the
Underwriters expressly for use therein. This indemnity agreement will
be in addition to any liability which the Company may otherwise have.
(b) The Underwriters, severally and not jointly, will
indemnify and hold harmless the Company, each of its officers who
signed the Registration Statement, its directors, and any person
controlling the Company within the meaning of the 1933 Act against any
losses, claims, damages, expenses or liabilities to which the Company
or any such officer, director or controlling person may become subject,
under the 1933 Act or otherwise, insofar as such losses, claims,
damages, expenses or liabilities (or actions in respect thereof) arise
out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement
(or any amendment thereto) or the Prospectus (or any amendment or
supplement thereto), or arise out of or are based upon the omission or
alleged omission to state therein a 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, in each case
to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to
the Company by or on behalf of the Underwriters expressly for use
therein and will reimburse the Company or any such director, officer or
controlling person for any legal or other expenses reasonably incurred
by the Company, any such officer, director or controlling person in
connection with investigating or defending any such action or claim.
This indemnity agreement is in addition to any liability which the
Underwriters may otherwise have. The Company acknowledges that, unless
otherwise set forth in the applicable Terms Agreement, the statements
set forth in the last paragraph of the cover page, the first and second
sentences of the third paragraph under the caption "Underwriting" and
in the first paragraph on page S-4 relating to DLJ's intention to
create a secondary market, each as included in the applicable
Prospectus Supplement relating to a Series of Certificates, together
with the DLJ Information (as defined in Section 10 hereof) relating to
a Series of Certificates constitute the only information furnished in
writing by or on behalf of the Underwriters expressly for use in the
Registration Statement relating to such Series of Certificates as
originally filed or in any amendment thereof, any related preliminary
prospectus or the Prospectus or in any amendment thereof or supplement
thereto, as the case may be.
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<PAGE> 21
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against an
indemnifying party under this Section, notify such indemnifying party
in writing of the commencement thereof; but the omission so to notify
the indemnifying party shall not relieve it from any liability which it
may have to any indemnified party otherwise than under this Section. In
case any such action shall be brought against any indemnified party and
it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying
party); and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under
this Section for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party,
in connection with the defense thereof other than reasonable costs of
investigation. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any
such case and the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel
shall have been authorized in writing by the indemnifying party in
connection with the defense of such action, (ii) the indemnifying party
shall not have employed counsel to have charge of the defense of such
action within a reasonable time after notice of commencement of the
action, or (iii) the indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them and/or
other indemnified parties which are different from or additional to
those available to the indemnifying party (in which case the
indemnifying party shall not have the right to direct the defense of
such action on behalf of the indemnified party). Anything in this
subsection to the contrary notwithstanding, an indemnifying party shall
not be liable for any settlement of any claim or action effected
without its written consent; provided, however, that such consent was
not unreasonably withheld.
(d) If the indemnification provided for in this Section 6 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages, expenses or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of
such losses, claims, damages, expenses or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Certificates to
which such loss, claim, damage, expense or liability (or actions in
respect thereof) relates. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law, then
each indemnifying party shall contribute to such amount paid or payable
by such indemnified party in such proportion as is appropriate to
reflect not only such
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<PAGE> 22
relative benefits but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the
statements or omissions which resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by
the Company on the one hand and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from such
offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions (or in the case of a
public offering in negotiated transactions, the difference between the
proceeds to the Company and the aggregate price received from the
public) received by such Underwriters. The relative fault of the
Company on the one hand and the Underwriters on the other shall be
determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by
the Company on the one hand or such Underwriters on the other and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Notwithstanding anything to the contrary in this Section 6(d), if the
losses, claims, damages or liabilities (or actions in respect thereof)
referred to in this Section 6(d) arise out of an untrue statement or
alleged untrue statement of a material fact contained in any DLJ 8-K
(as such term is defined in Section 10 hereof) then each indemnifying
party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect the relative fault of the Company on the one
hand and the Underwriters on the other (determined in accordance with
the preceding sentence) in connection with the statements or omissions
in such DLJ 8-K which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other
equitable considerations. The Company and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this
subsection (d) were determined by pro rata allocation even if the
Underwriters were treated as one entity for such purpose or by any
other method of allocation which does not take account of the equitable
considerations referred to in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to
above in this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigation or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter
shall be required to contribute any amount in excess of the amount by
which the total price at which the Certificates underwritten by it and
distributed to the public were sold to the public exceeds the amount of
any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the 1933 Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters to contribute
pursuant to this subsection (d) are
-22-
<PAGE> 23
several in proportion to their respective underwriting obligations with
respect to such Certificates and not joint.
SECTION 7. Representations, Warranties, and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement, or contained in certificates of officers of the Company submitted
pursuant hereto, shall remain operative and in full force and effect, regardless
of any termination of this Agreement, or the applicable Terms Agreement or any
investigation made by or on behalf of the Underwriters or any controlling person
thereof, or by or on behalf of the Company, its officers or directors and shall
survive delivery of any Certificates to the Underwriters.
SECTION 8. Termination of Agreement. This Agreement may be terminated
for any reason at any time by either the Company or you upon the giving of
thirty days' notice of such termination to the other party hereto; provided,
however, that if a Terms Agreement has been entered into with respect to a
particular transaction, this Agreement and the Terms Agreement may not be
terminated in the manner set forth in this sentence with respect to such
particular transaction. You, as Representative of the Underwriters named in any
Terms Agreement may also terminate such Terms Agreement, immediately upon notice
to the Company, at any time at or prior to the applicable Closing Time (i) if
there has been, since the date of such Terms Agreement or since the respective
dates as of which information is given in the Registration Statement or
Prospectus, any change, or any development involving a prospective change, in or
affecting the condition, financial or otherwise, earnings, affairs or business
of the Company or HomeSide, whether or not arising in the ordinary course of
business, which in your judgment would materially impair the market for, or the
investment quality of, the Certificates, or (ii) if there has occurred any
material outbreak or escalation of hostilities or other calamity or crisis the
effect of which on the financial markets of the United States is such as to make
it, in your reasonable judgment, impracticable to market the Certificates or
enforce contracts for the sale of the Certificates, or (iii) if trading in
securities generally on either the New York Stock Exchange or the American Stock
Exchange has been suspended or materially limited or any setting of minimum
prices shall have been established, (iv) if a general moratorium of commercial
banking activities has been declared by either Federal or New York State
authorities or (v) there shall have occurred any outbreak or escalation of
hostilities or other calamity or crisis the effect of which on the financial
markets is such as to make it, in your reasonable judgment, impracticable to
market the Certificates on the terms specified in this Agreement and the Terms
Agreement. In the event of any such termination, (A) the covenants set forth in
Section 3 with respect to any offering of Certificates shall remain in effect so
long as the Underwriters own any such Certificates purchased from the Company
pursuant to the applicable Terms Agreement and (B) the covenant set forth in
Section 3(c), the provisions of Section 5, the indemnity agreement and
contribution provisions set forth in Section 6, and the provisions of Sections 7
and 12 shall remain in effect.
SECTION 9. Default by One or More of the Underwriters.
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<PAGE> 24
(a) If one or more of the Underwriters participating in an
offering of Certificates shall fail at the applicable Closing Time to
purchase the Certificates which it or they are obligated to purchase
hereunder and under the applicable Terms Agreement (the "Defaulted
Certificates"), then such of you as are named therein may in your
discretion arrange for you or another party or other parties to
purchase the Defaulted Certificates upon the terms contained herein. If
within thirty-six hours after such default by any Underwriter you do
not arrange for the purchase of such Defaulted Certificates, then the
Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to
you to purchase such Defaulted Certificates on the terms contained
herein. In the event that, within the respective prescribed periods,
you notify the Company that you have so arranged for the purchase of
such Defaulted Certificates, or the Company notifies you that it has so
arranged for the purchase of such Defaulted Certificates, you or the
Company shall have the right to postpone the Closing Time for a period
of not more than seven days, in order to effect whatever changes may
thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company
agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your opinion may thereby be made necessary. The
term "Underwriter" as used in this Agreement shall include any person
substituted under this Section with like effect as if such person had
originally been party to this Agreement with respect to the
Certificate.
(b) If, after giving effect to any arrangements for the
purchase of Defaulted Certificates of a defaulting Underwriter or
Underwriters by you and the Company as provided in subsection (a)
above, the aggregate principal amount of such Defaulted Certificates
which remains unpurchased does not exceed 10% of the aggregate
principal amount of the Certificates to be purchased pursuant to the
applicable Terms Agreement, then the Company shall have the right to
require each non-defaulting Underwriter to purchase the principal
amount of Certificates which such Underwriter agreed to purchase
hereunder and, in addition, to require each non-defaulting Underwriter
to purchase its pro rata share (based on the principal amount of
Certificates which such Underwriter agreed to purchase pursuant to the
applicable Terms Agreement) of the Defaulted Certificates of the
defaulting Underwriter or Underwriters for which such arrangements have
not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Defaulted Certificates of the defaulting Underwriter or
Underwriters by you and the Company as provided in subsection (a)
above, the aggregate principal amount of such Defaulted Certificates
which remains unpurchased exceeds 10% of the aggregate principal amount
of the Certificates to be purchased pursuant to the applicable Terms
Agreement, or if the Company shall not exercise the right described in
subsection (b) above to require non-defaulting Underwriters to purchase
Defaulted Certificates of a defaulting Underwriter or Underwriters,
then this Agreement shall thereupon terminate,
-24-
<PAGE> 25
without liability on the part of any non-defaulting Underwriter or the
Company, except for the expenses to be borne by the Company and the
Underwriters as provided in Section 5 hereof and the indemnity
agreement and contribution provisions in Section 6 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its
default.
SECTION 10. Computational Materials and ABS Term Sheets.
(a) The parties acknowledge that, subsequent to the date on
which the Registration Statement became effective and up to and
including the date on which the Prospectus Supplement and Prospectus
with respect to a Series of Certificates is first made available to the
Underwriters, the Underwriters may furnish to various potential
investors in such Series of Certificates, in writing: (i)
"Computational Materials", as defined in a no-action letter (the
"Kidder No-Action Letter") issued by the staff of the Commission on May
20, 1994 to Kidder, Peabody Acceptance Corporation I, et al., as
modified by a no-action letter (the "First PSA No-Action Letter")
issued by the staff of the Commission on May 27, 1994 to the Public
Securities Association (the "PSA") and as further modified by a
no-action letter (the "Second PSA No-Action Letter", and together with
the Kidder No-Action Letter and the First PSA No-Action Letter, the
"No-Action Letters") issued by the staff of the Commission on February
17, 1995 to the PSA; (ii) "Structural Term Sheets" as defined in the
Second PSA No-Action Letter; and/or (iii) "Collateral Term Sheets" as
defined in the Second PSA No-Action Letter.
(b) In connection with each Series of Certificates, DLJ shall
furnish to the Company (via hard copy and computer disk), at least one
(1) business day prior to the time of filing of the Prospectus pursuant
to Rule 424 under the 1933 Act, all Computational Materials used by DLJ
and required to be filed with the Commission in accordance with the
No-Action Letters (such Computational Materials, the "DLJ Furnished
Computational Materials").
(c) In connection with each Series of Certificates, DLJ shall
furnish to the Company (via hard copy and computer disk), at least one
(1) business day prior to the time of filing of the Prospectus pursuant
to Rule 424 under the Act, all Structural Term Sheets used by DLJ and
required to be filed with the Commission in accordance with the
No-Action Letters (such Structural Term Sheets, the "DLJ Furnished
Structural Term Sheets").
(d) In connection with each Series of Certificates, DLJ shall
furnish to the Company (via hard copy and computer disk), within one
(1) business day after the first use thereof, all Collateral Term
Sheets used by DLJ and required to be filed with the Commission in
accordance with the No-Action Letters (such Collateral Term Sheets, the
"DLJ Furnished Collateral Term Sheets") and shall advise the Company of
the date on which each such Collateral Term Sheet was first used.
-25-
<PAGE> 26
(e) The Company shall prepare and file with the Commission, in
accordance with the No-Action Letters, one or more current reports on
Form 8-K (collectively, together with any amendments and supplements
thereto, the "DLJ 8-K," and each a "DLJ 8-K") which shall include as
one or more exhibits thereto the DLJ Furnished Computational Materials,
the DLJ Furnished Structural Term Sheets and the DLJ Furnished
Collateral Term Sheets.
(f) DLJ shall cooperate with the Company and with KPMG Peat
Marwick in obtaining a letter, in form and substance satisfactory to
the Company and DLJ, of KPMG Peat Marwick regarding the information in
any DLJ 8-K consisting of DLJ Furnished Computational Materials and/or
DLJ Furnished Structural Term Sheets, in each case in EDGAR format as
formatted by the Company. Any such letter shall be obtained prior to
the filing of any such DLJ 8-K with the Commission at DLJ's sole
expense.
(g) DLJ represents and warrants to, and covenants with, the
Company that the DLJ Information (defined below) is not misleading and
not inaccurate in any material respect and that any Pool Information
(defined below) contained in any DLJ 8-K which is not otherwise
inaccurate in any material respect is not presented in the DLJ 8-K in a
way that is either misleading or inaccurate in any material respect.
DLJ further covenants with the Company that if any Computational
Materials or ABS Term Sheets (as such term is defined in the Second PSA
No-Action Letter) contained in any DLJ 8-K are found to include any
information that is misleading or inaccurate in any material respect,
DLJ promptly shall inform the Company of such finding, provide the
Company with revised and/or corrected Computational Materials or ABS
Term Sheets, as the case may be, and promptly prepare and deliver to
the Company (in hard copy and "EDGAR" format) for filing with the
Commission in accordance herewith, revised and/or corrected
Computational Materials or ABS Term Sheets, as the case may be.
(h) DLJ covenants that all Computational Materials and ABS
Term Sheets used by it shall contain the following legend:
"THIS INFORMATION IS FURNISHED TO YOU SOLELY BY DONALDSON,
LUFKIN & JENRETTE SECURITIES CORPORATION AND NOT BY THE ISSUER
OR ANY OF ITS AFFILIATES. NEITHER THE ISSUER NOR ANY OF ITS
AFFILIATES MAKES ANY REPRESENTATION AS TO THE ACCURACY OR
COMPLETENESS OF THE INFORMATION HEREIN. THE INFORMATION HEREIN
IS PRELIMINARY, AND WILL BE SUPERSEDED BY THE APPLICABLE
PROSPECTUS SUPPLEMENT AND BY ANY OTHER INFORMATION
SUBSEQUENTLY FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION.
(i) DLJ covenants that all Collateral Term Sheets used by it
shall contain the following additional legend:
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<PAGE> 27
"THE INFORMATION CONTAINED HEREIN WILL BE SUPERSEDED BY
THE DESCRIPTION OF THE MORTGAGE LOANS CONTAINED IN THE
PROSPECTUS SUPPLEMENT."
(j) DLJ covenants that all Collateral Term Sheets (other than
the initial Collateral Term Sheet) shall contain the following
additional legend:
"THE INFORMATION CONTAINED HEREIN SUPERSEDES THE
INFORMATION IN ALL PRIOR COLLATERAL TERM SHEETS, IF ANY."
(k) For purposes of this Agreement, the term "DLJ Information"
means such portion, if any, of the information contained in the DLJ 8-K
that is not Pool Information. "Pool Information" means the information
furnished to the Underwriters by the Company regarding the Mortgage
Loans; provided, however, that if any information that would otherwise
constitute Pool Information is presented in the DLJ 8-K in a way that
is either inaccurate or misleading in any material respect, such
information shall not be Pool Information.
(l) If the Underwriters do not provide any Computational
Materials or ABS Term Sheets to the Company pursuant to subsections (b)
- (d) above, the Underwriters shall be deemed to have represented, as
of the Closing Time, that they did not provide any prospective
investors with any information in written or electronic form in
connection with the offering of the Certificates that is required to be
filed with the Commission in accordance with the No-Action Letters, and
the Underwriters shall provide the Company with a certification to that
effect at the Closing Time.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed,
delivered, telexed, or telegraphed and confirmed or transmitted by any standard
form of telecommunication. Notices to the Underwriters shall be directed to you
at the address set forth on the first page hereof, to the attention of Paul J.
Najarian, with a copy to the General Counsel's office on the 23rd floor. Notices
to the Company shall be directed to HomeSide Mortgage Securities, Inc., 7301
Baymeadows Way, Jacksonville, Florida 32256, Attention: Robert J. Jacobs.
SECTION 12. Parties. This Agreement shall be binding upon and inure
solely to the benefit of you and the Company and to the extent provided in
Section 6 hereof, the officers and directors of the Company and each person who
controls the Company or any Underwriter and their respective heirs, executors,
administrators, successors and assigns and any Terms Agreement shall be binding
upon and inure solely to the benefit of the Company and any Underwriter who
becomes a party to a Terms Agreement and to the extent provided in Section 6
hereof, the officers and directors of the Company and each person who controls
the Company or any Underwriter and their respective heirs, executors,
administrators, successors and assigns. Nothing expressed or mentioned in this
Agreement or a Terms Agreement is intended or shall be
-27-
<PAGE> 28
construed to give any person, firm or corporation, other than the parties hereto
or thereto and their respective successors and the controlling person and
officers and directors referred to in Section 6 hereof and their heirs any legal
or equitable right, remedy or claim under or with respect to this Agreement or a
Terms Agreement or any provision herein or therein contained.
SECTION 13. Governing Law and Time. This Agreement and each Terms
Agreement shall be governed by and construed in accordance with the laws of the
State of New York. Specified times of day refer to New York City time.
SECTION 14. Counterparts. This Agreement and any Terms Agreement may be
executed in any number of counterparts (which execution may take the form of an
exchange of any standard form of written telecommunication between you and the
Company), each of which shall constitute an original of any party whose
signature appears on it, and all of which shall together constitute a single
instrument.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
-28-
<PAGE> 29
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument along with all counterparts will become a binding agreement between
you and the Company in accordance with its terms.
Very truly yours,
HOMESIDE MORTGAGE SECURITIES, INC.
By:
-------------------------------
Name:
Title:
HOMESIDE LENDING, INC.
By:
-------------------------------
Name:
Title:
CONFIRMED AND ACCEPTED, as of
the date first above written:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:_______________________________
Name:
Title:
-29-
<PAGE> 30
EXHIBIT A
PASS-THROUGH CERTIFICATES
HOMESIDE MORTGAGE SECURITIES, INC., DEPOSITOR
TERMS AGREEMENT
Dated: _________, 19__
To: HomeSide Mortgage Securities, Inc.
Re: Underwriting Agreement, dated as of January __, 1998 (the "Underwriting
Agreement")
Ladies and Gentlemen:
The undersigned (being herein called the "Underwriters"), understand
that HomeSide Mortgage Securities, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell $_________ original principal amount of Pass-Through
Certificates described below (the "Certificates"). The Certificates will be
issued under a Pooling and Servicing Agreement dated as of _______________ among
the Company, as depositor, _______________, as servicer and _____________ as
trustee. The terms of the Certificates are summarized below and are more fully
described in the Company's Prospectus supplement prepared with respect to the
Certificates.
All the provisions (including defined terms) contained in the
Underwriting Agreement are incorporated by reference herein in their entirety
and shall be deemed to be part of this Terms Agreement to the same extent as if
such provisions had been set forth in full herein. The Closing Time referred to
in Section 2 of the Underwriting Agreement shall be _______ a.m., New York City
time, on _____________. Subject to the terms and conditions set forth or
incorporated by reference herein, the Company hereby agrees to sell and the
Underwriters agree to purchase [, severally and not jointly,] the [respective]
original principal amount[ s] of Certificates set forth opposite [its] [their]
name[s] in Exhibit I hereto at the purchase price set forth below.
The Underwriters will offer the Certificates for sale upon the terms
and conditions set forth in the Prospectus.
Subject to the terms and conditions set forth or incorporated by
reference herein, the Underwriters will pay for the Certificates at the time and
place and in the manner set forth in the Underwriting Agreement.
Series Designation: ____________
-1-
<PAGE> 31
Terms of the Certificates and Underwriting Compensation:
Original
Principal Remittance Price to
Classes Amount* Rate Public
- ------- ------- ---- ------
**
* Approximate. Subject to permitted variance in each case of plus or
minus 5%.
** The [Class A] Certificates are being offered by the
Underwriter from time to time in negotiated transactions or
otherwise at varying prices to be determined, in each case, at
the time of sale.
Certificate Rating:
_____ by [Rating Agency]
_____ by [Rating Agency]
REMIC Election:
The Company [does not] intend[s] to cause the Mortgage Pool
to be treated as a REMIC.
Credit Enhancement:
Cut-off Date:
The Cut-off Date is ___________, 19__.
Remittance Date:
The ____ day of each month (or, if such ____ day is not a
business day, the business day immediately following) commencing __________,
19__.
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<PAGE> 32
Purchase Price:
The purchase price payable by the Underwriter for the [Class
A] Certificates is ___% of the aggregate principal balance of the [Class A]
Certificates as of the Closing Date plus accrued interest at the per annum rate
of ___% from __________, 19__ up to but not including the Closing Date.
Underwriting Commission:
Notwithstanding anything to the contrary in the Underwriting
Agreement, no additional underwriting commission shall be payable by the Company
to the Underwriter in connection with the purchase of the Certificates.
Information Provided by Underwriter:
Closing Date and Location:
__________ 19__ at the offices of Morgan, Lewis &
Bockius LLP.
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<PAGE> 33
Please confirm your agreement by having an authorized Officer
sign a copy of this Agreement in the space set forth below and returning a
signed copy to us.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By:
--------------------------------------
Name:
Title:
ACCEPTED:
HOMESIDE MORTGAGE SECURITIES, INC.
By:
- ----------------------------------
Name:
Title:
HOMESIDE LENDING, INC.
By:
- ----------------------------------
Name:
Title:
<PAGE> 34
Exhibit I
Original
Principal
Amount of
Name Certificates
- ---- ------------
Total ==============
-5-
<PAGE> 1
EXHIBIT 4
EXECUTION COPY
HOMESIDE MORTGAGE SECURITIES, INC.,
DEPOSITOR,
HOMESIDE LENDING, INC.,
SERVICER
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
TRUSTEE
POOLING AND SERVICING AGREEMENT
Dated as of January 1, 1998
$389,851,349.26
Multi-Class Mortgage Pass-Through Certificates
Series 1998-1
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C>
ARTICLE I
DEFINITIONS........................................................................................... 1
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TRUST FUND.............................................................. 36
Section 2.01. Conveyance of Mortgage Loans........................................................ 36
Section 2.02. Acceptance by Trustee............................................................... 39
Section 2.03. Trust Fund; Authentication of Certificates.......................................... 40
Section 2.04. REMIC Election...................................................................... 40
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR AND
THE SERVICER; REPURCHASE OF MORTGAGE LOANS............................................................ 43
Section 3.01. Representations and Warranties of the Depositor with respect to the
Mortgage Loans...................................................................... 43
Section 3.02. Representations and Warranties of the Depositor..................................... 51
Section 3.03. Representations and Warranties of the Servicer...................................... 52
Section 3.04. Option to Substitute................................................................ 53
ARTICLE IV
THE CERTIFICATES...................................................................................... 54
Section 4.01. The Certificates.................................................................... 54
Section 4.02. Registration of Transfer and Exchange of Certificates............................... 56
Section 4.03. Mutilated, Destroyed, Lost or Stolen Certificates................................... 60
Section 4.04. Persons Deemed Owners............................................................... 60
Section 4.05. Establishment of Certificate Account; Deposit in Certificate Account................ 61
Section 4.06. Permitted Withdrawals from the Certificate Account.................................. 61
Section 4.07. Authenticating Agents............................................................... 62
ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS........................................................ 64
Section 5.01. Servicer to Service Mortgage Loans.................................................. 64
Section 5.02. Sub-Servicing Agreements Between Servicer and Sub-Servicers;
Enforcement of Sub-Servicer's Obligations........................................... 65
Section 5.03. Successor Sub-Servicers............................................................. 65
Section 5.04. Liability of the Servicer........................................................... 66
Section 5.05. No Contractual Relationship Between Sub-Servicer and Trustee or
Certificateholders.................................................................. 66
Section 5.06. Termination of Sub-Servicing Agreement.............................................. 66
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
Section 5.07. Collection of Mortgage Loan Payments................................................ 66
Section 5.08. Establishment of Collection Account; Deposit in Collection Account.................. 66
Section 5.09. Permitted Withdrawals from the Collection Account................................... 68
Section 5.10. Establishment of Escrow Account; Deposits in Escrow Account......................... 69
Section 5.11. Permitted Withdrawals from Escrow Account........................................... 69
Section 5.12. Payment of Taxes, Insurance and Other Charges....................................... 70
Section 5.13. Transfer of Accounts................................................................ 70
Section 5.14. Year 2000 Compliance................................................................ 70
Section 5.15. Maintenance of the Primary Insurance Policies....................................... 70
Section 5.16. Maintenance of Standard Hazard Policies............................................. 71
Section 5.17. Reports of Foreclosures and Abandonment of Mortgaged Properties..................... 72
Section 5.18. [Reserved].......................................................................... 72
Section 5.19. Fidelity Bond and Errors and Omissions Insurance.................................... 72
Section 5.20. Collections under Insurance Policies; Enforcement of Due-On-Sale
Clauses; Assumption Agreements...................................................... 72
Section 5.21. Income and Realization from Defaulted Mortgage Loans................................ 73
Section 5.22. Trustee to Cooperate; Release of Mortgage Files..................................... 75
Section 5.23. Servicing and Other Compensation.................................................... 76
Section 5.24. [Reserved].......................................................................... 76
Section 5.25. Annual Statement as to Compliance................................................... 76
Section 5.26. Annual Independent Public Accountants' Servicing Report............................. 77
Section 5.27. Access to Certain Documentation; Rights of the Depositor in Respect of
the Servicer........................................................................ 77
Section 5.28. REMIC-Related Covenants............................................................. 78
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS.................................................................... 79
Section 6.01. Distributions....................................................................... 79
Section 6.02. Statements to the Certificateholders................................................ 89
Section 6.03. Advances by the Servicer............................................................ 91
Section 6.04. Allocation of Realized Losses....................................................... 92
Section 6.05. Compensating Interest; Allocation of Certain Interest Shortfalls.................... 92
Section 6.06. Subordination....................................................................... 93
ARTICLE VII
[RESERVED]............................................................................................ 94
ARTICLE VIII
THE DEPOSITOR AND THE SERVICER........................................................................ 94
Section 8.01. Indemnification; Third Party Claims................................................. 94
Section 8.02. Merger or Consolidation of the Depositor or the Servicer............................ 94
Section 8.03. Limitation on Liability of the Depositor, the Servicer, the Trustee and
Others.............................................................................. 95
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
Section 8.04. Depositor and Servicer Not to Resign................................................ 96
Section 8.05. Successor to the Servicer........................................................... 96
Section 8.06. Maintenance of Ratings.............................................................. 98
ARTICLE IX
DEFAULT............................................................................................... 98
Section 9.01. Events of Default................................................................... 98
Section 9.02. Waiver of Defaults.................................................................. 99
Section 9.03. Trustee to Act; Appointment of Successor............................................ 99
Section 9.04. Notification to Certificateholders and the Rating Agencies......................... 100
ARTICLE X
CONCERNING THE TRUSTEE............................................................................... 100
Section 10.01. Duties of Trustee.................................................................. 100
Section 10.02. Certain Matters Affecting the Trustee.............................................. 101
Section 10.03. Trustee Not Liable for Certificates or Mortgage Loans.............................. 102
Section 10.04. Trustee May Own Certificates....................................................... 102
Section 10.05. Fees and Expenses.................................................................. 103
Section 10.06. Eligibility Requirements for Trustee............................................... 103
Section 10.07. Resignation and Removal of the Trustee............................................. 103
Section 10.08. Successor Trustee.................................................................. 104
Section 10.09. Merger or Consolidation of Trustee................................................. 105
Section 10.10. Appointment of Co-Trustee or Separate Trustee...................................... 105
Section 10.11. Appointment of Office or Agency.................................................... 106
Section 10.12. 1934 Act Reports................................................................... 106
ARTICLE XI
TERMINATION.......................................................................................... 106
Section 11.01. Termination........................................................................ 106
ARTICLE XII
MISCELLANEOUS PROVISIONS............................................................................. 108
Section 12.01. Severability of Provisions......................................................... 108
Section 12.02. Limitation on Rights of Certificateholders......................................... 108
Section 12.03. Amendment.......................................................................... 109
Section 12.04. Counterparts....................................................................... 110
Section 12.05. Duration of Agreement.............................................................. 110
Section 12.06. Governing Law...................................................................... 110
Section 12.07. Notices............................................................................ 110
</TABLE>
iii
<PAGE> 5
EXHIBIT A MORTGAGE LOAN SCHEDULE
EXHIBIT A-1 HOMESIDE MORTGAGE LOANS
EXHIBIT A-2 CHASE MORTGAGE LOANS
EXHIBIT B CONTENTS OF MORTGAGE FILE
EXHIBIT C FORMS OF CLASS A CERTIFICATES
EXHIBIT D FORM OF CLASS M CERTIFICATE
EXHIBIT E FORMS OF CLASS B CERTIFICATES
EXHIBIT F FORM OF CLASS A-R CERTIFICATE
EXHIBIT G FORM OF TRUSTEE CERTIFICATION
EXHIBIT H FORM OF INVESTMENT LETTER
EXHIBIT I FORM OF RULE 144A INVESTMENT LETTER
EXHIBIT J FORM OF SPECIAL SERVICING AGREEMENT
EXHIBIT K FORM OF CLASS A-R TRANSFER LETTER
EXHIBIT L REQUEST FOR RELEASE
ANNEX 1 ADDITIONAL MORTGAGE LOAN INFORMATION
APPENDIX A PLANNED PRINCIPAL BALANCES
TARGETED PRINCIPAL BALANCES
PERCENTAGE REDUCTION FACTORS
iv
<PAGE> 6
This Pooling and Servicing Agreement, dated as of January 1,
1998, is executed among HomeSide Mortgage Securities, Inc., as seller (together
with its permitted successors and assigns, the "Depositor"), HomeSide Lending,
Inc., as servicer (together with its permitted successors and assigns, the
"Servicer") and Norwest Bank Minnesota, National Association, as trustee
(together with its permitted successors and assigns, the "Trustee").
In consideration of the premises and the mutual agreements
hereinafter set forth, the Depositor, the Servicer and the Trustee agree as
follows:
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
ACCEPTED SERVICING PRACTICES: With respect to any Mortgage
Loan, those mortgage servicing practices (including collection procedures) of
prudent mortgage banking institutions which service mortgage loans of the same
type as such Mortgage Loan in the jurisdiction where the related Mortgaged
Property is located, and which are in accordance with FNMA servicing practices
and procedures, for MBS pool mortgages, as defined in the FNMA Guides including
future updates.
ADJUSTED LOCK-OUT PERCENTAGE: Equals (i) for any Distribution
Date prior to the Distribution Date in February 2003, 0% and (ii) for any
Distribution Date on or after the Distribution Date in February 2003, the
Lock-out Percentage.
ADVANCE: The aggregate of the advances made by the Servicer
with respect to a particular Distribution Date pursuant to Section 6.03.
AGGREGATE CLASS A INTEREST ACCRUAL AMOUNT: On any
Distribution Date, an amount equal to the sum of the Class A-1 Interest Accrual
Amount, the Class A-2 Interest Accrual Amount, the Class A-3 Interest Accrual
Amount, the Class A-4 Interest Accrual Amount, the Class A-5 Interest Accrual
Amount, the Class A-6 Interest Accrual Amount, the Class A-7 Interest Accrual
Amount, the Class A-8 Interest Accrual Amount, the Class A-9 Interest Accrual
Amount, the Class A-10 Interest Accrual Amount, the Class A-R Interest Accrual
Amount and the Class A-X Interest Accrual Amount.
AGGREGATE CLASS A INTEREST SHORTFALL: On any Distribution
Date, an amount equal to the sum of the Class A-1 Shortfall, the Class A-2
Shortfall, the Class A-3 Shortfall, the Class A-4 Shortfall, the Class A-5
Shortfall, the Class A-6 Shortfall, the Class A-7 Shortfall, the Class A-8
Shortfall, the Class A-9 Shortfall, the Class A-10 Interest Shortfall, the Class
A-R Shortfall and the Class A-X Shortfall.
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AGREEMENT: This Pooling and Servicing Agreement and all
amendments hereof and supplements hereto.
APPRAISED VALUE: The value set forth in an appraisal made in
connection with the origination of the related Mortgage Loan as the value of the
Mortgaged Property.
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice
of transfer or equivalent instrument, in recordable form, sufficient under the
laws of the jurisdiction where the related Mortgaged Property is located to
reflect of record the sale and assignment of the Mortgage Loan to the Trustee,
which assignment, notice of transfer or equivalent instrument may, if permitted
by law, be in the form of one or more blanket assignments covering Mortgages
secured by Mortgaged Properties located in the same county.
AVAILABLE DISTRIBUTION AMOUNT: On any Distribution Date, an
amount equal to the amount on deposit in the Collection Account as of the close
of business on the related Servicer Remittance Date except:
(a) amounts received on particular Mortgage Loans as late
payments or other recoveries of principal or interest (including
Liquidation Proceeds, Insurance Proceeds and condemnation awards) and
respecting which the Servicer previously made an unreimbursed Advance
of such amounts;
(b) reimbursement for Nonrecoverable Advances and other
amounts permitted to be withdrawn by the Servicer pursuant to Section
5.09 from, or not required to be deposited in, the Certificate Account;
(c) amounts representing the Servicing Fee with respect to
such Distribution Date;
(d) amounts representing all or part of a Monthly Payment due
(i) after the related Due Period or (ii) on or prior to the Cut-off
Date;
(e) all Repurchase Proceeds, Principal Prepayments,
Liquidation Proceeds, Insurance Proceeds and condemnation awards with
respect to Mortgage Loans received after the related Principal
Prepayment Period, and all related payments of interest representing
interest for any period of time after the last day of the related Due
Period for such Mortgage Loans; and
(f) all income from Eligible Investments held in the
Collection Account for the account of the Servicer.
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BANKRUPTCY AMOUNT: As of any date of determination,
$149,777.00 minus all Bankruptcy Losses on the Mortgage Loans, if any,
previously allocated solely to the Certificates in accordance with Section 6.04.
BANKRUPTCY LOSS: With respect to any Mortgage Loan, a Realized
Loss resulting from a Deficient Valuation or Debt Service Reduction.
BOOK-ENTRY CERTIFICATES: The Non-PO Class A Certificates
(other than the Class A-R Certificate), referred to collectively.
BUSINESS DAY: Any day other than (a) a Saturday or Sunday, (b)
a legal holiday in the State of New York or (c) a day on which banking
institutions in the State of New York, the State of Minnesota or the State of
Florida are authorized or obligated by law or executive order to be closed.
CARRY-OVER SUBORDINATED PRINCIPAL AMOUNT: As of any
Distribution Date, with respect to any Class of Subordinated Certificates, an
amount, if any, equal to the amount of principal distributable to such Class on
any prior Distribution Date that has not been so distributed.
CASH LIQUIDATION: Recovery of all cash proceeds by the
Servicer with respect to the liquidation of any Mortgage Loan, including
Insurance Proceeds and other payments or recoveries (whether made at one time or
over a period of time) which the Servicer deems to be finally recoverable, in
connection with the sale, assignment or satisfaction of such Mortgage Loan,
trustee's sale, foreclosure sale or otherwise, but only if title to the related
Mortgaged Property was not acquired by foreclosure or deed in lieu of
foreclosure by the Servicer pursuant to Section 5.21.
CERTIFICATE: Any Class A, Class M or Class B Certificate.
CERTIFICATE ACCOUNT: The account created and maintained
pursuant to Section 4.05.
CERTIFICATEHOLDER or HOLDER: The person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purposes of giving any consent, waiver, request or demand pursuant to this
Agreement, any Certificate registered in the name of the Depositor, the
Servicer, any Sub-Servicer, or any of their respective affiliates shall be
disregarded and the undivided Percentage Interest evidenced thereby shall not be
taken into account in determining whether the requisite amount of Percentage
Interests necessary to effect any such consent, waiver, request or demand has
been obtained. The Trustee shall be entitled to conclusively rely upon the
certificate of the Depositor or the Servicer as to the determination of which
Certificates are registered in the name of such affiliates.
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CERTIFICATE OWNER: Any Person who is the beneficial owner of a
Book- Entry Certificate registered in the name of the Depository or its nominee.
CERTIFICATE RATE: The per annum rate of interest borne by each
Class of Certificates (other than the Class A-P Certificates), which rate shall
equal (i) 6.75% with respect to the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-6, Class A-7, Class A-9, Class A-10, Class A-R, Class M, Class B-1,
Class B-2, Class B-3, Class B-4 and Class B-5 Certificates; (ii) 6.65% with
respect to the Class A-5 Certificates; (iii) 8.50% with respect to the Class A-8
Certificates and (iv) with respect to the Class A-X Certificates, the weighted
average, expressed as a percentage, of the Stripped Interest Rate on each of the
Mortgage Loans having a Stripped Interest Rate exceeding zero as of the Due Date
in the month immediately preceding the month in which such Distribution Date
occurs, weighted on the basis of the respective Principal Balances of the
Mortgage Loans, which Principal Balances shall be the Principal Balances of the
Mortgage Loans at the close of business on the immediately preceding
Distribution Date after giving effect to distributions thereon allocable to
principal (or, in the case of the Certificate Rate for the initial Distribution
Date, at the close of business on the Cut-off Date). Interest with respect to
each Class of Certificates (other than the Class A-P Certificates) at the
Certificate Rate shall be calculated based on a year of 360 days comprised of
twelve 30-day months.
CERTIFICATE REGISTER: The register maintained pursuant to
Section 4.02.
CHASE MORTGAGE LOANS: The Mortgage Loans listed on Exhibit A-1
hereto, together with any Mortgage Loans substituted therefor pursuant to
Section 3.04.
CLASS: Pertaining to the Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10,
Class A-P, Class A-R, Class A-X, Class M, Class B-1, Class B-2, Class B-3, Class
B-4 or Class B-5 Certificates, as the case may be.
CLASS A, CLASS M OR CLASS B: Pertaining to Class A
Certificates, Class M Certificates or Class B Certificates, as the case may be.
CLASS A-P AMOUNT: With respect to any Distribution Date, the
meaning specified in Section 6.01(b)(ii).
CLASS A CERTIFICATES: The Class A-1, Class A-2, Class A-3,
Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class A-10,
Class A-P, Class A-R and Class A-X Certificates, referred to collectively.
CLASS A-1 CERTIFICATE: Any one of the Class A-1 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
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<PAGE> 10
CLASS A-2 CERTIFICATE: Any one of the Class A-2 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-3 CERTIFICATE: Any one of the Class A-3 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-4 CERTIFICATE: Any one of the Class A-4 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-5 CERTIFICATE: Any one of the Class A-5 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-6 CERTIFICATE: Any one of the Class A-6 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-7 CERTIFICATE: Any one of the Class A-7 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-8 CERTIFICATE: Any one of the Class A-8 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-9 CERTIFICATE: Any one of the Class A-9 Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-10 CERTIFICATE: Any one of the Class A-10
Certificates, executed by the Trustee and authenticated by the Trustee, senior
in right of payment to the Class M and Class B Certificates, substantially in
the form of the Class A Certificate set forth in Exhibit C hereto.
CLASS A-P CERTIFICATE: Any one of the Class A-P Certificates,
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
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<PAGE> 11
CLASS A-R CERTIFICATE: The Class A-R Certificate executed by
the Trustee and authenticated by the Trustee, which represents the Master
Residual Interest and the Subsidiary Residual Interest, substantially in the
form of the Class A-R Certificate set forth in Exhibit F hereto.
CLASS A-X CERTIFICATE: Any one of the Class A-X Certificates
executed by the Trustee and authenticated by the Trustee, senior in right of
payment to the Class M and Class B Certificates, substantially in the form of
the Class A Certificate set forth in Exhibit C hereto.
CLASS A-5 COMPONENT ONE: The principal portion of the Class
A-5 Certificates so designated in Section 4.01(d).
CLASS A-5 COMPONENT TWO: The principal portion of the Class
A-5 Certificates so designated in Section 4.01(d).
CLASS A-7 COMPONENT ONE: The principal portion of the Class
A-7 Certificates so designated in Section 4.01(d).
CLASS A-7 COMPONENT TWO: The principal portion of the Class
A-7 Certificates so designated in Section 4.01(d).
CLASS A-7 COMPONENT ONE ACCRETION TERMINATION DATE: The
earliest to occur of (i) the Distribution Date following the Distribution Date
on which Class A-7 Component One receives any amount of principal, (ii) the
Distribution Date following the Credit Support Depletion Date and (iii) the
Collateral Reduction Trigger Date.
CLASS A-7 COMPONENT TWO ACCRETION TERMINATION DATE: The
earliest to occur of (i) the Distribution Date following the Distribution Date
on which Class A-7 Component Two receives any amount of principal, (ii) the
Distribution Date following the Credit Support Depletion Date and (iii) the
Collateral Reduction Trigger Date.
CLASS A-P DEFERRED AMOUNT: With respect to any Mortgage Loan
which has become a Liquidated Mortgage Loan, the amount, if any, by which (A)
the product of (i) the Principal Balance of such Mortgage Loan and (ii) the PO
Percentage with respect to such Mortgage Loan exceeds (B) the Net Liquidation
Proceeds with respect to such Mortgage Loan.
CLASS A-1 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-1 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-1 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class A-1 Certificates on such Distribution
Date pursuant to Section 6.05(c).
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CLASS A-2 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-2 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-2 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class A-2 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS A-3 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-3 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-3 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class A-3 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS A-4 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-4 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-4 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class A-4 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS A-5 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-5 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-5 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class A-5 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS A-6 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-6 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-6 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class A-6 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS A-7 COMPONENT ONE INTEREST ACCRUAL AMOUNT: With
respect to any Distribution Date, one month's interest at the Certificate Rate
on the Outstanding Certificate Principal Balance of Class A-7 Component One
minus (i) any Compensating Interest Shortfall allocated to Class A-7 Component
One on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized
Loss Interest Shortfall allocated to Class A-7 Component One on such
Distribution Date pursuant to Section 6.05(c).
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CLASS A-7 COMPONENT TWO INTEREST ACCRUAL AMOUNT: With
respect to any Distribution Date, one month's interest at the Certificate Rate
on the Outstanding Certificate Principal Balance of Class A-7 Component Two
minus (i) any Compensating Interest Shortfall allocated to Class A-7 Component
Two on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized
Loss Interest Shortfall allocated to Class A-7 Component Two on such
Distribution Date pursuant to Section 6.05(c).
CLASS A-7 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, the sum of (i) the Class A-7 Component One Interest Accrual
Amount and (ii) the Class A-7 Component Two Interest Accrual Amount.
CLASS A-8 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-8 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-8 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class A-8 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS A-9 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the Class A-9
Notional Balance minus (i) any Compensating Interest Shortfall allocated to the
Class A-9 Certificates on such Distribution Date pursuant to Section 6.05(b) and
(ii) any Realized Loss Interest Shortfall allocated to the Class A-9
Certificates on such Distribution Date pursuant to Section 6.05(c).
CLASS A-10 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-10 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-10 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class A-10 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS A-R INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class A-R Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class A-R Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class A-R Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS A-X INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the Class A-X
Notional Balance minus (i) any Compensating Interest Shortfall allocated to the
Class A-X Certificates on such Distribution Date pursuant to Section 6.05(b) and
(ii) any Realized Loss Interest Shortfall allocated to the Class A-X
Certificates on such Distribution Date pursuant to Section 6.05(c).
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<PAGE> 14
CLASS A-9 NOTIONAL BALANCE: With respect to any Distribution
Date, an amount equal to 1.4814814815% of the Outstanding Certificate Principal
Balance of Class A-5 Component Two, calculated as of the related Determination
Date.
CLASS A-X NOTIONAL BALANCE: With respect to any Distribution
Date, an amount equal to the aggregate Scheduled Principal Balance of the
Non-Discount Mortgage Loans.
CLASS A PERCENTAGE: As of any Distribution Date, the
percentage obtained by dividing the Class A Principal Balance by the Mortgage
Pool Principal Balance, but not more than 100%.
CLASS A PRINCIPAL BALANCE: As of any Distribution Date, (a)
the Class A Principal Balance for the immediately preceding Distribution Date
less (b) amounts distributed to the Class A Certificateholders on such preceding
Distribution Date allocable to principal (including the principal portion of
Advances of the Servicer made pursuant to Section 6.03 and Realized Losses
allocated to the Class A Certificates pursuant to Sections 6.04 and 6.01(b)(v));
provided that the Class A Principal Balance on the first Distribution Date shall
be the Original Class A Principal Balance.
CLASS A-1 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class A-1 Interest Accrual Amount
over the amount actually distributed to the Class A-1 Certificateholders on such
Distribution Date pursuant to Section 6.01(b)(i)(A).
CLASS A-2 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class A-2 Interest Accrual Amount
over the amount actually distributed to the Class A-2 Certificateholders on such
Distribution Date pursuant to Section 6.01(b)(i)(B).
CLASS A-3 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class A-3 Interest Accrual Amount
over the amount actually distributed to the Class A-3 Certificateholders on such
Distribution Date pursuant to Section 6.01(b)(i)(C).
CLASS A-4 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class A-4 Interest Accrual Amount
over the amount actually distributed to the Class A-4 Certificateholders on such
Distribution Date pursuant to Section 6.01(b)(i)(D).
CLASS A-5 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class A-5 Interest Accrual Amount
over the amount actually
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<PAGE> 15
distributed to the Class A-5 Certificateholders on such Distribution Date
pursuant to Section 6.01(b)(i)(E).
CLASS A-6 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class A-6 Interest Accrual Amount
over the amount actually distributed to the Class A-6 Certificateholders on such
Distribution Date pursuant to Section 6.01(b)(i)(F).
CLASS A-7 COMPONENT ONE SHORTFALL: With respect to any
Distribution Date, the amount equal to the excess, if any, of the Class A-7
Component One Interest Accrual Amount over the amount actually distributed to
Class A-7 Component One or added to the Outstanding Certificate Principal
Balance of Class A-7 Component One, as the case may be, pursuant to Section
6.01(b)(i)(G).
CLASS A-7 COMPONENT TWO SHORTFALL: With respect to any
Distribution Date, the amount equal to the excess, if any, of the Class A-7
Component Two Interest Accrual Amount over the amount actually distributed to
Class A-7 Component Two or added to the Outstanding Certificate Principal
Balance of Class A-7 Component Two, as the case may be, pursuant to Section
6.01(b)(i)(H).
CLASS A-8 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class A-8 Interest Accrual Amount
over the amount actually distributed to the Class A-8 Certificateholders on such
Distribution Date pursuant to Section 6.01(b)(i)(I).
CLASS A-9 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class A-9 Interest Accrual Amount
over the amount actually distributed to the Class A-9 Certificateholders on such
Distribution Date pursuant to Section 6.01(b)(i)(J).
CLASS A-10 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class A-10 Interest Accrual
Amount over the amount actually distributed to the Class A-10 Certificateholders
on such Distribution Date pursuant to Section 6.01(b)(i)(K).
CLASS A-R SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class A-R Interest Accrual Amount
over the amount actually distributed to the Class A-R Certificateholders on such
Distribution Date pursuant to Section 6.01(b)(i)(L).
CLASS A-X SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class A-X Interest Accrual Amount
over the amount actually
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<PAGE> 16
distributed to the Class A-X Certificates on such Distribution Date pursuant to
Section 6.01(b)(i)(M).
CLASS A-P SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the amount calculated pursuant to
Section 6.01(b)(ii)(A) and (B) over the amount actually distributed to the Class
A-P Certificates on such Distribution Date pursuant to such Section.
CLASS B CERTIFICATES: The Class B-1, Class B-2, Class B-3,
Class B-4 and Class B-5 Certificates, referred to collectively.
CLASS B-1 CERTIFICATE: Any one of the Class B-1 Certificates
executed by the Trustee and authenticated by the Trustee, subordinated in right
of payment to the Class A and Class M Certificates, substantially in the form of
the Class B Certificate set forth in Exhibit E hereto.
CLASS B-2 CERTIFICATE: Any one of the Class B-2 Certificates
executed by the Trustee and authenticated by the Trustee, subordinated in right
of payment to the Class A, Class M and Class B-1 Certificates, substantially in
the form of the Class B Certificate set forth in Exhibit E hereto.
CLASS B-3 CERTIFICATE: Any one of the Class B-3 Certificates
executed by the Trustee and authenticated by the Trustee, subordinated in right
of payment to the Class A, Class M, Class B-1 and Class B-2 Certificates,
substantially in the form of the Class B Certificate set forth in Exhibit E
hereto.
CLASS B-4 CERTIFICATE: Any one of the Class B-4 Certificates
executed by the Trustee and authenticated by the Trustee, subordinated in right
of payment to the Class A, Class M, Class B-1, Class B-2 and Class B-3
Certificates, substantially in the form of the Class B Certificate set forth in
Exhibit E hereto.
CLASS B-5 CERTIFICATE: Any one of the Class B-5 Certificates
executed by the Trustee and authenticated by the Trustee, subordinated in right
of payment to the Class A, Class M, Class B-1, Class B-2, Class B-3 and Class
B-4 Certificates, substantially in the form of the Class B Certificate set forth
in Exhibit E hereto.
CLASS B-1 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class B-1 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class B-1 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class B-1 Certificates on such Distribution
Date pursuant to Section 6.05(c).
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CLASS B-2 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class B-2 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class B-2 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class B-2 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS B-3 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class B-3 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class B-3 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class B-3 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS B-4 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class B-4 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class B-4 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class B-4 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS B-5 INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class B-5 Certificates minus
(i) any Compensating Interest Shortfall allocated to the Class B-5 Certificates
on such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class B-5 Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS B-1 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class B-1 Interest Accrual Amount
over the amount actually distributed to the Class B-1 Certificates on such
Distribution Date pursuant to Section 6.01(d)(i)(1) (A) and (B).
CLASS B-2 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class B-2 Interest Accrual Amount
over the amount actually distributed to the Class B-2 Certificates on such
Distribution Date pursuant to Section 6.01(d)(i)(2) (A) and (B).
CLASS B-3 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class B-3 Interest Accrual Amount
over the amount actually distributed to the Class B-3 Certificates on such
Distribution Date pursuant to Section 6.01(d)(i)(3) (A) and (B).
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CLASS B-4 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class B-4 Interest Accrual Amount
over the amount actually distributed to the Class B-4 Certificates on such
Distribution Date pursuant to Section 6.01(d)(i)(4) (A) and (B).
CLASS B-5 SHORTFALL: With respect to any Distribution Date,
the amount equal to the excess, if any, of the Class B-5 Interest Accrual Amount
over the amount actually distributed to the Class B-5 Certificates on such
Distribution Date pursuant to Section 6.01(d)(i)(5) (A) and (B).
CLASS B PERCENTAGE: As of any Distribution Date, the
difference between 100% and the sum of (i) the Class A Percentage and (ii) the
Class M Percentage for such Distribution Date.
CLASS B PRINCIPAL BALANCE: As of any Distribution Date, the
excess of the Mortgage Pool Principal Balance (together with the principal
portion of any Monthly Payment due but not paid with respect to which an Advance
has not been made) over the sum of (i) the Class A Principal Balance and (ii)
the Class M Principal Balance.
CLASS M CERTIFICATE: Any one of the Class M Certificates
executed by the Trustee and authenticated by the Trustee, subordinated in right
of payment to the Class A Certificates, substantially in the form of the Class M
Certificate set forth in Exhibit D hereto.
CLASS M INTEREST ACCRUAL AMOUNT: With respect to any
Distribution Date, one month's interest at the Certificate Rate on the
Outstanding Certificate Principal Balance of the Class M Certificates minus (i)
any Compensating Interest Shortfall allocated to the Class M Certificates on
such Distribution Date pursuant to Section 6.05(b) and (ii) any Realized Loss
Interest Shortfall allocated to the Class M Certificates on such Distribution
Date pursuant to Section 6.05(c).
CLASS M PERCENTAGE: As of any Distribution Date, the
percentage obtained by dividing the Class M Principal Balance by the Mortgage
Pool Principal Balance, but not more than 100%; provided, however, that on any
Distribution Date on which the Class B Percentage equals 0%, the Class M
Percentage shall equal 100% minus the Class A Percentage.
CLASS M PRINCIPAL BALANCE: As of any Distribution Date, (a)
the Class M Principal Balance for the immediately preceding Distribution Date
less (b) amounts distributed to the Class M Certificateholders on such preceding
Distribution Date allocable to principal (including the principal portion of
Advances of the Servicer made pursuant to Section 6.03 and Realized Losses
allocated to the Class M Certificates pursuant to Sections 6.04 and
6.01(c)(ii)); provided that the Class M Principal Balance on the first
Distribution Date shall be the Original Class M Principal Balance, and provided
further that if the aggregate Outstanding Certificate Principal Balance of the
Class B Certificates has been reduced to zero, as of any
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Distribution Date, the Class M Principal Balance will equal the excess of the
Mortgage Pool Principal Balance (together with the portion of any Monthly
Payment due but not paid with respect to which an Advance has not been made)
over the Class A Principal Balance.
CLASS M SHORTFALL: With respect to any Distribution Date, the
amount equal to the excess, if any, of the Class M Interest Accrual Amount over
the amount actually distributed to the Class M Certificateholders on such
Remittance Date pursuant to Section 6.01(c)(i) (A) and (B).
CLOSING DATE: January 29, 1998.
CODE: The Internal Revenue Code of 1986, as amended from time
to time, and any successor statutes thereto, and applicable U.S. Department of
Treasury temporary or final regulations promulgated thereunder.
COLLATERAL REDUCTION TRIGGER DATE: The first Distribution Date
on which (X) the portion of the Available Distribution Amount representing
payments in respect of principal for such Distribution Date exceeds (Y) the
product of (i) the Percentage Reduction Factor for such Distribution Date and
(ii) the aggregate Scheduled Principal Balance of the Mortgage Loans as of the
preceding Distribution Date (or as of the Cut-Off Date, in the case of the
Distribution Date in February 1998).
COLLECTION ACCOUNT: The account created and maintained
pursuant to Section 5.08.
COMPENSATING INTEREST: The meaning specified in Section
6.05(a).
COMPENSATING INTEREST SHORTFALL: The meaning specified in
Section 6.05(b).
COMPONENT: Any of Class A-5 Component One, Class A-5 Component
Two, Class A-7 Component One or Class A-7 Component Two.
CORPORATE TRUST OFFICE: The principal office of the Trustee at
which at any particular time its corporate trust business shall be administered,
which office at the date of execution of this instrument is located at Sixth
Street and Marquette Avenue, Minneapolis, Minnesota 55479-0070.
CREDIT SUPPORT: With respect to each Class of Subordinated
Certificates (other than the Class B-5 Certificates), the level of credit
support supporting such Class, expressed as a percentage of the aggregate
Outstanding Certificate Principal Balance of all Classes of Certificates (other
than the Class A-P Certificates). With respect to each Distribution Date, Credit
Support for each such Class will equal in each case the percentage, rounded to
two
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decimal places, obtained by dividing the aggregate Outstanding Certificate
Principal Balances immediately prior to such Distribution Date of all Classes of
Subordinated Certificates having higher numerical class designations than such
Class (for this purpose, each Class of Class M Certificates shall be deemed to
have a lower numerical class designation than each Class of Class B
Certificates) by the aggregate Outstanding Certificate Principal Balance of all
Classes of Certificates (other than the Class A-P Certificates) immediately
prior to such Distribution Date.
CREDIT SUPPORT DEPLETION DATE: The first Distribution Date on
which the aggregate outstanding principal balance of the Subordinated
Certificates has been or will be reduced to zero.
CUT-OFF DATE: January 1, 1998.
DEBT SERVICE REDUCTION: With respect to any Mortgage Loan, a
reduction in the scheduled Monthly Payment for such Mortgage Loan by a court of
competent jurisdiction in a proceeding under the Bankruptcy Code, other than
such a reduction resulting from a Deficient Valuation.
DEFAULTED MORTGAGE LOAN: As of any date of determination, any
Mortgage Loan as to which the related Mortgagor has failed to make full payments
as required under the related Note for three consecutive months.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a
valuation of the related Mortgaged Property by a court of competent jurisdiction
in an amount less than the then outstanding principal balance of the Mortgage
Loan, which valuation results from a proceeding initiated under the Bankruptcy
Code.
DEFINITIVE CERTIFICATES: The Certificates referred to in
Section 4.01(c).
DEPOSITOR: HomeSide Mortgage Securities, Inc., a Delaware
corporation, or its successor in interest or any successor under this Agreement
appointed as herein provided.
DEPOSITORY: The Depository Trust Company, the nominee of which
is Cede & Co.
DEPOSITORY AGREEMENT: The agreement referred to in Section
4.01(b).
DEPOSITORY PARTICIPANT: A broker, dealer, bank or other
financial institution or other Person for whom from time to time the Depository
effects book-entry transfers and pledges of securities deposited with the
Depository.
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DETERMINATION DATE: The later of the sixteenth day of the
month in which the related Distribution Date occurs (or, if such sixteenth day
is not a Business Day, the preceding Business Day).
DISQUALIFIED ORGANIZATION: An organization referred to in
section 860E(e)(5) of the Code.
DISTRIBUTION DATE: The 25th day of any month, or if such 25th
day is not a Business Day, the first Business Day immediately following,
beginning with February 25, 1998.
DUE DATE: The first day of each month, being the day of the
month on which each Monthly Payment is due on a Mortgage Loan, exclusive of any
days of grace.
DUE PERIOD: With respect to any Distribution Date, the period
from the second day of the month preceding the month in which such Distribution
Date occurs through the first day of the month in which such Distribution Date
occurs.
ELIGIBLE ACCOUNT: An account that is (i) maintained with a
depository institution the long-term unsecured debt obligations of which are
rated by each Rating Agency and S&P in one of its two highest rating categories,
or (ii) maintained with the corporate trust department of a national bank which
has a rating of at least BBB- or A-2 by S&P, or (iii) an account or accounts the
deposits in which are fully insured by the FDIC, or (iv) an account or accounts
in a depository institution in which such accounts are insured by the FDIC (to
the limit established by the FDIC), the uninsured deposits in which accounts are
otherwise secured such that, as evidenced by an Opinion of Counsel delivered to
and acceptable to the Trustee and each Rating Agency, the Certificateholders
have a claim with respect to the funds in such account and a perfected first
security interest against any collateral (which shall be limited to Eligible
Investments) securing such funds that is superior to claims of any other
depositors or creditors of the depository institution with which such account is
maintained, or (v) otherwise acceptable to each Rating Agency without reduction
or withdrawal of the rating of any Class of Certificates, as evidenced by a
letter from each Rating Agency.
ELIGIBLE CERTIFICATEHOLDER: As defined in Section 6.02(b).
ELIGIBLE FUNDS: With respect to any Distribution Date, the
following amounts distributable (before giving effect to any amounts
distributable on such Distribution Date pursuant to Section 6.01(b)(ii)(C)) to
the Subordinated Certificates: (1) amounts distributable to the Class B-5
Certificates pursuant to Section 6.01(d)(i)(5)(C), (D) and (E); (2) amounts
distributable to the Class B-4 Certificates pursuant to Section
6.01(d)(i)(4)(C), (D) and (E); (3) amounts distributable to the Class B-3
Certificates pursuant to Section 6.01(d)(i)(3)(C), (D) and (E); (4) amounts
distributable to the Class B-2 Certificates pursuant to Section
6.01(d)(i)(2)(C), (D) and (E); (6) amounts distributable to the Class B-1
Certificates pursuant to Section 6.01(d)(i)(l)(C), (D) and (E); and (7) amounts
distributable to the Class M Certificates
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pursuant to Section 6.01(c)(i)(C) and (D). On any Distribution Date, any
reduction in funds available for distribution to the Subordinated Certificates
resulting from a distribution of the Class A-P Deferred Amount to the Class A-P
Certificates shall (A) be allocated to the Classes of Subordinated Certificates
in the order of priority set forth above and (B) reduce the Subordinated Optimal
Principal Amount as follows: first, by the amounts described in clause (b)(iv)
of the definition thereof, second, by the amounts described in clause (b)(i) of
the definition thereof, third, by the amounts described in clause (b)(iii) of
the definition thereof, fourth, by the amounts described in clause (b)(v) of the
definition thereof, and fifth, by the amounts described in clause (b)(ii) of the
definition thereof.
ELIGIBLE INVESTMENTS: One or more of the following:
(i) obligations of, or guaranteed as to principal and interest
by, the United States or obligations of any agency or instrumentality
thereof when such obligations are backed by the full faith and credit
of the United States; provided that any such obligation held as a "cash
flow investment" within the meaning of section 860G(a)(6) of the Code
shall not have a remaining maturity of more than 45 days;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than two months from the date of acquisition
thereof, provided that the long-term unsecured obligations of the party
agreeing to repurchase such obligations are at the time rated by each
Rating Agency in one of its two highest rating categories and the
short-term debt obligations of the party agreeing to repurchase are
rated A-1 by S&P and F-1+ by Fitch, if rated by Fitch;
(iii) federal funds, certificates of deposit, time deposits
and bankers' acceptances (which shall each have an original maturity of
not more than 60 days and, in the case of bankers' acceptances, shall
in no event have an original maturity of more than 365 days) of any
United States depository institution or trust company incorporated
under the laws of the United States or any state, provided that the
long-term unsecured debt obligations of such depository institution or
trust company at the date of acquisition thereof have been rated by
each Rating Agency in one of its two highest rating categories and the
short-term obligations of such depository institution or trust company
are rated A- 1 by S&P and F-1+ by Fitch, if rated by Fitch;
(iv) commercial paper (having original maturities of not more
than 365 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by each Rating Agency in its highest short-term unsecured
commercial paper rating category; provided that such commercial paper
shall have a remaining maturity of not more than 45 days; and
(vi) other obligations or securities that are "permitted
investments" within the meaning of Section 860G(a)(5) of the Code and
acceptable to each Rating Agency and
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S&P rating the Certificates as an Eligible Investment hereunder and
will not result in a reduction or withdrawal in the then current rating
of any Class of Certificates, as evidenced by a letter to such effect
from each Rating Agency.
provided that no such instrument shall be an Eligible Investment if such
instrument evidences either (a) a right to receive only interest payments with
respect to the obligations underlying such instrument, or (b) both principal and
interest payments derived from obligations underlying such instrument where the
interest and principal payments with respect to such instrument provide a yield
to maturity of greater than 120% of the yield to maturity at par of such
underlying obligations.
ERISA: The Employee Retirement Income Security Act of 1974, as
amended.
ESCROW ACCOUNT: The account or accounts created and maintained
pursuant to Section 5.10.
ESCROW PAYMENTS: The amounts constituting applicable ground
rents, taxes, assessments, water rates, Standard Hazard Policy premiums and
other payments required to be escrowed by the Mortgagor with the mortgagee
pursuant to a Mortgage Loan.
EVENT OF DEFAULT: Any of the events specified in Section 9.01.
EXCEPTION REPORT: The report of the Trustee referred to in
Section 2.02.
EXCESS BANKRUPTCY LOSS: Any Bankruptcy Loss, or portion
thereof, which exceeds the then applicable Bankruptcy Amount.
EXCESS FRAUD LOSS: Any Fraud Loss, or portion thereof, which
exceeds the then applicable Fraud Loss Amount.
EXCESS LOSSES: Excess Bankruptcy Losses, Excess Fraud Losses
and Excess Special Hazard Losses, referred to collectively.
EXCESS PROCEEDS: All amounts (net of the related Servicing
Advances) received on any Mortgage Loan (whether as regular principal payments,
Principal Prepayments, Repurchase Proceeds, Liquidation Proceeds, Insurance
Proceeds, condemnation awards, or with respect to a disposition of a Mortgaged
Property which has been acquired by foreclosure or deed in lieu of foreclosure
or otherwise) in excess of the Principal Balance at the Cut-off Date of such
Mortgage Loan and accrued interest thereon at its Mortgage Rate to the Due Date
immediately succeeding the date of prepayment, repurchase or liquidation, as the
case may be.
EXCESS SPECIAL HAZARD LOSS: Any Special Hazard Loss, or
portion thereof, that exceeds the then applicable Special Hazard Amount.
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FDIC: The Federal Deposit Insurance Corporation or any
successor organization.
FHLMC: The Federal Home Loan Mortgage Corporation or any
successor organization.
FIDELITY BOND: A fidelity bond and errors and omissions
insurance to be maintained by the Servicer pursuant to Section 5.19.
FITCH: Fitch IBCA, Inc., or its successor in interest.
FNMA: The Federal National Mortgage Association, or any
successor organization.
FNMA GUIDES: The FNMA Sellers' Guide and the FNMA Servicers'
Guide, and all amendments or additions thereto.
FRAUD LOSS: Any Realized Loss or portion thereof sustained by
reason of a default arising from fraud, dishonesty or misrepresentation in
connection with the related Mortgage Loan, including by reason of the denial of
coverage under any related Primary Insurance Policy.
FRAUD LOSS AMOUNT: As of any date of determination after the
Cut-off Date, an amount equal to: (X) prior to the first anniversary of the
Cut-off Date, 2.00% (initially, $7,797,027.00) of the aggregate outstanding
principal balance of all of the Mortgage Loans as of the Cut-off Date minus the
aggregate amount of Fraud Loss on the Mortgage Loans allocated to the
Certificates in accordance with Section 6.04 since the Cut-off Date up to such
date of determination and (Y) from the first to the fifth anniversary of the
Cut-off Date, (1) 1.00% of the aggregate outstanding principal balance of all of
the Mortgage Loans as of the most recent anniversary of the Cut-off Date minus
(2) the Fraud Losses allocated to the Certificates in accordance with Section
6.04 since the most recent anniversary of the Cut-off Date up to such date of
determination. On and after the fifth anniversary of the Cut-off Date, the Fraud
Loss Amount shall be zero.
HOMESIDE MORTGAGE LOANS: The Mortgage Loans listed on Exhibit
A-1 hereto, together with any Mortgage Loans substituted therefor pursuant to
Section 3.03.
INDIRECT PARTICIPANT: A broker, dealer, bank or other
financial institution or other Person that clears through or maintains a
custodial relationship with a Depository Participant.
INSURANCE PROCEEDS: Proceeds paid by any insurer pursuant to
any insurance policy covering a Mortgage Loan, net of costs of collecting such
proceeds and net of amounts released to the Mortgagor or applied to the
restoration of the Mortgaged Property.
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INSURED EXPENSES: Expenses covered by any insurance policy.
LATE COLLECTIONS: With respect to any Mortgage Loan, all
amounts received during any Due Period, whether as late payments of Monthly
Payments or as Liquidation Proceeds, condemnation proceeds, Insurance Proceeds,
or with respect to a disposition of a Mortgaged Property which has been acquired
by foreclosure or deed in lieu of foreclosure or otherwise, which represent late
payments or collections of Monthly Payments due but delinquent for a previous
Due Period and not previously recovered.
LIQUIDATED MORTGAGE LOAN: Any Mortgage Loan (a) as to which
the Servicer has determined that all amounts which it expects to recover from or
on account of such Mortgage Loan or property acquired in respect thereof have
been recovered, (b) as to which a Cash Liquidation has taken place or (c) with
respect to which the Mortgaged Property has been acquired by foreclosure or deed
in lieu of foreclosure and a disposition (the term disposition shall include,
for purposes of a repurchase pursuant to Section 11.01, any repurchase of a
Mortgaged Property pursuant to such Section) of such Mortgaged Property has
occurred.
LIQUIDATION EXPENSES: Expenses which are incurred by the
Servicer or any Sub-Servicer in connection with the liquidation of any defaulted
Mortgage Loan or property acquired in respect thereof including, without
limitation, legal fees and expenses, any unreimbursed amount expended by the
Servicer pursuant to Sections 5.16 and 5.21 respecting the related Mortgage Loan
and any related and unreimbursed expenditures for real estate property taxes or
for property restoration or preservation.
LIQUIDATION PRINCIPAL: With respect to any Distribution Date,
the principal portion of Net Liquidation Proceeds received with respect to each
Mortgage Loan which became a Liquidated Mortgage Loan (but not in excess of the
Principal Balance thereof) during the calendar month preceding the month of such
Distribution Date, exclusive of the portion thereof attributable to the Class
A-P Amount.
LIQUIDATION PROCEEDS: Cash (including Insurance Proceeds)
received by the Servicer in connection with the liquidation of any Mortgage Loan
or Mortgaged Property acquired in respect thereof, whether through the sale or
assignment of such Mortgage Loan (other than pursuant to Section 5.21),
trustee's sale, foreclosure sale or otherwise, or the sale of the Mortgaged
Property if the Mortgaged Property is acquired in satisfaction of the Mortgage
Loan other than amounts required to be paid to the Mortgagor pursuant to law or
the terms of the applicable Mortgage Note.
LOAN-TO-VALUE RATIO: The fraction, expressed as a percentage,
the numerator of which is the outstanding principal amount of the related
Mortgage Loan at the time of origination (or, (i) for purposes of Section 5.15,
at the time of determination and (ii) for purposes of a Mortgage Loan with
respect to which a conversion from adjustable rate to fixed rate has occurred,
at the time of initial origination) and the denominator of which is the
appraised
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value of the related Mortgaged Property at the time of origination or, in the
case of a Mortgage Loan financing the acquisition of the Mortgaged Property, the
sales price of the Mortgaged Property, if such sales price is less than such
appraised value.
LOCK-OUT LIQUIDATION AMOUNT: With respect to any Distribution
Date, the aggregate, for each Mortgage Loan which became a Liquidated Mortgage
Loan during the calendar month preceding the month of such Distribution Date, of
the lesser of (i) the Lock-out Percentage of the PO Percentage of such Mortgage
Loan and (ii) the Lock-out Percentage on any Distribution Date occurring prior
to the fifth anniversary of the first Distribution Date, and the Lock-out
Prepayment Percentage on any Distribution Date thereafter, in each case, of the
Net Liquidation Proceeds with respect to such Mortgage Loan.
LOCK-OUT PERCENTAGE: With respect to any Distribution Date,
the outstanding principal balance of the Class A-4 Certificates divided by the
aggregate outstanding principal balance of the Certificates (other than the
Class A-P Certificates), in each case immediately prior to the Distribution
Date.
LOCK-OUT PREPAYMENT PERCENTAGE: The product of (a) the
Lock-out Percentage and (b) the Step Down Percentage.
LOCK-OUT PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Distribution Date, the sum of (i) the Adjusted Lock-out Percentage of the
principal portion of Monthly Payments, whether or not received, which were due
on the related Due Date on outstanding Mortgage Loans as of such Due Date, (ii)
the Lock-out Prepayment Percentage of the applicable Non-PO Percentage of the
principal portion of Principal Prepayments, Insurance Proceeds, condemnation
awards and other cash proceeds from sources other than Mortgagors, and
Repurchase Proceeds, in each case received during the related Principal
Prepayment Period and (iii) the Lock-out Liquidation Amount.
MASTER REMIC: The pool of assets consisting of the Subsidiary
Regular Interests and all payments of principal or interest on or with respect
to the Subsidiary Regular Interests after the Cut-off Date.
MASTER RESIDUAL INTEREST: The interest in the Master REMIC
represented by amounts, if any, remaining in the Certificate Account following
termination of the Trust Fund after payments to the Class A Certificateholders
(other than the Class A-R Certificateholders), the Class M Certificateholders,
the Class B Certificateholders and the Class A-R Certificateholder with respect
to their interests in the Subsidiary Residual Interest (or the holders of any
separate certificates representing the Subsidiary Residual Interest).
MODIFIED MORTGAGE LOAN: Any Mortgage Loan which the Servicer
has modified pursuant to Section 5.01.
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MONTHLY PAYMENT: The minimum required monthly payment of
principal and interest due on a Mortgage Loan as specified in the Mortgage Note
for any Due Date (before any adjustment to such scheduled amount by reason of
any bankruptcy or similar proceeding or any moratorium or similar waiver or
grace period). Monthly Payments shall be deemed due on an Outstanding Mortgage
Loan until such time as it becomes a Liquidated Mortgage Loan.
MOODY'S: Moody's Investors Service, Inc., or its successor in
interest.
MORTGAGE: The mortgage, deed of trust or other instrument
creating a first lien or a first priority ownership interest in an estate in fee
simple in real property securing a Mortgage Note.
MORTGAGE FILE: As to each Mortgage Loan, the items referred to
in Exhibit B annexed hereto.
MORTGAGE LOAN: An individual mortgage loan and all rights with
respect thereto, evidenced by a Mortgage and a Mortgage Note, sold and assigned
by the Depositor to the Trustee and which is subject to this Agreement and
included in the Trust Fund. The Mortgage Loans originally sold and subject to
this Agreement are identified on the Mortgage Loan Schedule.
MORTGAGE LOAN SCHEDULE: The schedule of Mortgage Loans
attached hereto as Exhibit A and also provided to the Trustee in a mutually
acceptable electronic format, as it may be amended in accordance with Section
3.04, setting forth the following information as to each Mortgage Loan: (i) the
Mortgage Loan identifying number; (ii) the street address of the Mortgaged
Property including the zip code; (iii) an indication of whether the Mortgaged
Property is owner-occupied; (iv) the property type of the Mortgaged Property;
(v) the original number of months to stated maturity and the number of months
remaining to stated maturity from the Cut-off Date; (vi) (a) the appraised value
of the Mortgaged Property as set forth in an appraisal which was delivered at
the time of the origination of the Mortgage Loan, or, in the event the Mortgage
Loan was made in connection with the acquisition of the Mortgaged Property by
the Mortgagor, the lesser of such appraised value and the purchase price of the
Mortgaged Property actually paid by the Mortgagor at the time of the origination
of the Mortgage Loan, and (b) the percentage of the original principal amount of
the Mortgage Loan to the amount specified in (a) above; (vii) the original
principal balance of the Mortgage Loan; (viii) the unpaid principal balance of
the Mortgage Loan as of the close of business on the Cut-off Date; (ix) the
Mortgage Rate; (x) the amount of the current Monthly Payment; and (xi) the PO
Percentage with respect to such Mortgage Loan.
MORTGAGE NOTE: The note or other evidence of the indebtedness
of a Mortgagor secured by a Mortgage.
MORTGAGE POOL: The pool of Mortgage Loans held in the Trust
Fund.
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MORTGAGE POOL PRINCIPAL BALANCE: As of any date on which the
Mortgage Pool Principal Balance is determined, the aggregate of the Principal
Balances of each Outstanding Mortgage Loan on such date of determination less
the principal portion of any Monthly Payment due but not paid with respect to
which an Advance has not been made.
MORTGAGED PROPERTY: The property securing a Mortgage Note.
MORTGAGE RATE: With respect to each Mortgage Loan, the per
annum rate of interest borne by the Mortgage Loan, as specified in the Mortgage
Note.
MORTGAGOR: The obligor on a Mortgage Note.
NET LIQUIDATION PROCEEDS: As to any Liquidated Mortgage Loan,
Liquidation Proceeds net of Liquidation Expenses.
NET MORTGAGE RATE: With respect to each Mortgage Loan, a per
annum rate of interest for the applicable period equal to the Mortgage Rate less
the sum of (i) the Servicing Fee and (ii) the Trustee Fee.
NON-DISCOUNT MORTGAGE LOANS: The Mortgage Loans having Net
Mortgage Rates in excess of the Remittance Rate.
NON-PO ALLOCATED AMOUNT: At the time of any determination, the
amount derived by (i) multiplying the Principal Balance of each Mortgage Loan on
such date of determination by the Non-PO Percentage with respect to such
Mortgage Loan and (ii) summing the results.
NON-PO CLASS A CERTIFICATES: The Class A-1, Class A-2, Class
A-3, Class A-4, Class A-5, Class A-6, Class A-7, Class A-8, Class A-9, Class
A-10, Class A-R and Class A-X Certificates, referred to collectively.
NON-PO CLASS A OPTIMAL PRINCIPAL AMOUNT: With respect to any
Distribution Date, the lesser of (a) the Non-PO Class A Principal Balance and
(b) the sum of:
(i) the Non-PO Class A Percentage of the applicable Non-PO
Percentage of the principal portion of all Monthly Payments, whether or
not received, which were due during the related Due Period on Mortgage
Loans which were outstanding during such Due Period;
(ii) the Non-PO Class A Prepayment Percentage of the
applicable Non-PO Percentage of all Principal Prepayments made on any
Mortgage Loan during the related Principal Prepayment Period;
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(iii) with respect to each Mortgage Loan not described in (iv)
below, the Non-PO Class A Percentage of the applicable Non-PO
Percentage of the principal portion of all Insurance Proceeds,
condemnation awards and any other cash proceeds from a source other
than the applicable Mortgagor, to the extent required to be deposited
in the Collection Account pursuant to Section 5.08(iv) and (v), which
were received during the related Principal Prepayment Period, net of
related unreimbursed Servicing Advances and net of any portion thereof
which, as to any such Mortgage Loan, constitutes Late Collections that
have been the subject of an Advance on any prior Distribution Date;
(iv) with respect to each Mortgage Loan which has become a
Liquidated Mortgage Loan during the related Principal Prepayment
Period, the least of (A) the Non-PO Class A Percentage of applicable
Non-PO Percentage of an amount equal to the Principal Balance of such
Liquidated Mortgage Loan as of the Due Date immediately preceding the
date on which it became a Liquidated Mortgage Loan, (B) the Non-PO
Class A Prepayment Percentage of the applicable Non-PO Percentage of
the Net Liquidation Proceeds with respect to such liquidated Mortgage
Loan (net of any unreimbursed Advances) and (C) in the case of a
Discount Mortgage Loan, the Non-PO Class A Prepayment Percentage of the
Net Liquidation Proceeds with respect to such Liquidated Mortgage Loan
(net of any unreimbursed Advances) exclusive of amounts distributable
to the Class A-P Certificates;
(v) with respect to each Mortgage Loan repurchased during the
related Principal Prepayment Period pursuant to Section 2.02, 3.01,
5.21 or 11.01, an amount equal to the Non-PO Class A Prepayment
Percentage of the applicable Non-PO Percentage of the principal portion
of the Purchase Price (net of amounts with respect to which a
distribution of principal has previously been made to the Non-PO Class
A Certificateholders); and
(vi) during such time as the aggregate Outstanding Certificate
Principal Balance of the Subordinated Certificates equals zero, the
excess of the Non-PO Class A Principal Balance (calculated after giving
effect to reductions thereof on such Distribution Date with respect to
the amounts described in (i) - (v) above) over the Non-PO Allocated
Amount, if any, as of the preceding Distribution Date.
NON-PO CLASS A PERCENTAGE: As of any Distribution Date, the
fraction, expressed as a percentage (which shall never exceed 100%),
the numerator of which is the Non-PO Class A Principal Balance and the
denominator of which is the Non-PO Allocated Amount as of the
immediately preceding Due Date.
NON-PO CLASS A PREPAYMENT PERCENTAGE: As of any Distribution
Date up to and including the Step-down Date, 100%; as of any Distribution Date
during the first year thereafter, the Non-
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<PAGE> 30
PO Class A Percentage plus 70% of the Subordinated Percentage for such
Distribution Date; as of any Distribution Date during the second year
thereafter, the Non-PO Class A Percentage plus 60% of the Subordinated
Percentage for such Distribution Date; as of any Distribution Date during the
third year thereafter, the Non-PO Class A Percentage plus 40% of the
Subordinated Percentage for such Distribution Date; as of any Distribution Date
during the fourth year thereafter, the Non-PO Class A Percentage plus 20% of the
Subordinated Percentage for such Distribution Date; and as of any Distribution
Date after the fourth year thereafter, the Non-PO Class A Percentage; provided
that if the Non-PO Class A Percentage as of any such Distribution Date is
greater than the Non-PO Class A Percentage on the first Distribution Date, the
Non-PO Class A Prepayment Percentage shall be 100%; and provided further that
whenever the Non-PO Class A Percentage equals 0%, the Non-PO Class A Prepayment
Percentage shall equal 0%.
NON-PO CLASS A PRINCIPAL BALANCE: As of any Distribution Date,
(a) the Non-PO Class A Principal Balance for the immediately preceding
Distribution Date less (b) amounts distributed (or deemed distributed) to the
Non-PO Class A Certificateholders on such preceding Distribution Date allocable
to principal (including the principal portion of Advances of the Servicer made
pursuant to Section 6.03 and Realized Losses allocated to the Non-PO Class A
Certificates pursuant to Sections 6.04 and 6.01(b)(v)); provided that the Non-PO
Class A Principal Balance on the first Distribution Date shall be the Original
Non-PO Class A Principal Balance.
NON-PO CLASS A PRINCIPAL DISTRIBUTION AMOUNT: As defined in
Section 6.01(a)(iii)(A).
NON-PO PERCENTAGE: With respect to each Mortgage Loan, the
fraction, expressed as a percentage (but not greater than 100%), the numerator
of which equals the applicable Net Mortgage Rate and the denominator of which
equals the Remittance Rate.
NONRECOVERABLE ADVANCE: Any Advance previously made or
proposed to be made in respect of a Mortgage Loan by the Servicer pursuant to
Section 6.03 which, in the good faith judgment of the Servicer, will not or, in
the case of a proposed Advance, would not, ultimately be recoverable by the
Servicer from Late Collections or otherwise. The determination by the Servicer
that it has made, or would be making, a Nonrecoverable Advance shall be
evidenced by a certificate of a Servicing Officer of the Servicer delivered to
the Trustee, any co-trustee and the Depositor and detailing the reasons for such
determination.
OFFICERS' CERTIFICATE: A certificate signed by two of the
Chairman of the Board, the Vice Chairman of the Board, the President or a Vice
President, the Treasurer or the Secretary or one of the Assistant Treasurers or
Assistant Secretaries or any other duly authorized officer of the Depositor or
the Servicer, and delivered to the Trustee.
OPINION OF COUNSEL: A written opinion of counsel, who may be
counsel for the Depositor or the Servicer and who is reasonably acceptable to
the Trustee.
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ORIGINAL CERTIFICATE PRINCIPAL BALANCE: With respect to any
Class of Certificates, the amount specified for such Class in Section 4.01(d).
<TABLE>
<S> <C>
ORIGINAL CLASS A PRINCIPAL BALANCE: $ 373,282,666.08
ORIGINAL CLASS M PRINCIPAL BALANCE: $ 8,186,879.00
ORIGINAL CLASS B PRINCIPAL BALANCE: $ 8,381,804.18
ORIGINAL NON-PO CLASS A PRINCIPAL
BALANCE: $ 373,281,334.00
</TABLE>
ORIGINAL CREDIT SUPPORT: With respect to any Class of
Subordinated Certificates (other than the Class B-5 Certificates), the level of
Credit Support indicated below:
<TABLE>
<S> <C>
Class M: 2.15%
Class B-1: 1.30%
Class B-2: 0.85%
Class B-3: 0.50%
Class B-4: 0.25%
</TABLE>
OUTSTANDING CERTIFICATE PRINCIPAL BALANCE: With respect to any
Class (other than the Class A-9 or Class A-X Certificates) or Component of
Certificates and any Distribution Date, the Original Certificate Principal
Balance of such Class or Component minus the sum of (i) any distributions of
principal made on such Class or Component prior to such Distribution Date and
(ii) any Realized Losses allocated to such Class or Component prior to such
Distribution Date plus, with respect to Class A-7 Component One and Class A-7
Component Two, the Class A-7 Component One Interest Accrual Amount or Class A-7
Component Two Interest Accrual Amount, respectively, for all prior Distribution
Dates until the occurrence of the Class A-7 Component One Accretion Termination
Date or the Class A-7 Component Two Accretion Termination Date, as the case may
be; provided, however, that (I) with respect to the Class of Class B
Certificates then outstanding having the highest numerical class designation,
the Outstanding Certificate Principal Balance of such Class shall equal the
excess of the Mortgage Pool Principal Balance (together with the principal
portion of any Monthly Payment due but not paid with respect to which an Advance
has not been made) over the sum of the Outstanding Certificate Principal
Balances of all Classes of Certificates (other than the Class of Class B
Certificates then outstanding having the highest numerical class designation);
and (II) during such time as the Outstanding Certificate Principal Balance of
the Class B-1 Certificates equals zero, with respect to the Class M
Certificates, the Outstanding Certificate Principal Balance of such Class shall
equal the excess of the Mortgage Pool Principal Balance (together with the
principal portion of any Monthly Payment due but not paid with respect to which
an Advance has not been made) over the Class A Principal Balance.
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<PAGE> 32
OUTSTANDING MORTGAGE LOAN: As to any Distribution Date, a
Mortgage Loan which was not paid in full during the related or any previous
Principal Prepayment Period, which did not become a Liquidated Mortgage Loan
during the related or any previous Principal Prepayment Period and which was not
repurchased under Section 2.02, 3.01, 5.21 or 11.01 during the related or any
previous Principal Prepayment Period.
PASS-THRU ENTITY: A "Pass-Thru Entity" as defined in Section
860E(e)(6) of the Code.
PERCENTAGE INTEREST: As to any Certificate (other than a Class
A-X Certificate), the percentage interest evidenced thereby in distributions
required to be made hereunder, such percentage interest being equal, with
respect to any Class or Component, to the percentage obtained by dividing the
denomination of such Certificate by the aggregate of the denominations of all
the Certificates of such Class or Component and with respect to all
Certificates, the percentage obtained by dividing the denomination of such
Certificate by the aggregate of the denominations of all the Certificates. With
respect to any Class A-9 or Class AX Certificate, the percentage interest
specified on the face of such Certificate.
PERCENTAGE REDUCTION FACTOR: With respect to any Distribution
Date, the percentage specified for such Distribution Date on Appendix A hereto.
PERSON: Any individual, corporation, partnership, limited
liability company, limited liability partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
PLANNED PRINCIPAL BALANCE: With respect to any Distribution
Date, the amount specified for such Distribution Date in Appendix A hereto.
PO ALLOCATED AMOUNT: At the time of any determination, the
amount derived by (i) multiplying the Principal Balance of each Mortgage Loan by
the PO Percentage with respect to such Mortgage Loan and (ii) summing the
results.
PO PERCENTAGE: The PO Percentage with respect to each Mortgage
Loan as identified on the Mortgage Loan Schedule, such percentage being equal to
the fraction, expressed as a percentage (but not less than 0%), the numerator of
which equals the excess of the Remittance Rate over the applicable Net Mortgage
Rate and the denominator of which equals the Remittance Rate.
PREMIUM MORTGAGE LOAN: Any Mortgage Loan having a Net Mortgage
Rate in excess of the Remittance Rate.
PRIMARY INSURANCE POLICY: Each primary policy of mortgage
guaranty insurance or any replacement policy therefor referred to in Section
5.15 hereof.
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<PAGE> 33
PRINCIPAL BALANCE: At the time of any determination, the
principal balance of a Mortgage Loan remaining to be paid at the close of
business on the Cut-off Date (after deduction of all principal payments due on
or before the Cut-off Date whether or not paid) (or, in the case of a substitute
Mortgage Loan included in the Trust Fund pursuant to Section 3.04, the close of
business as of the date of substitution) reduced by all amounts previously
distributed to Certificateholders that are allocable to payments of principal on
such Mortgage Loan (including the principal portion of Advances of the Servicer
made pursuant to Section 6.03).
PRINCIPAL PREPAYMENT: Any payment or other recovery of
principal on a Mortgage Loan (other than Late Collections) which is received
other than as part of a Monthly Payment; provided, however, that the term
Principal Prepayment does not include Insurance Proceeds, Liquidation Proceeds,
condemnation awards or other cash proceeds from a source other than the
applicable Mortgagor.
PRINCIPAL PREPAYMENT PERIOD: With respect to any Distribution
Date, the period beginning on the first day of the month preceding the month in
which such Distribution Date occurs and ending on the last day of such month.
PURCHASE PRICE: With respect to any Mortgage Loan required to
be purchased on any date pursuant to Section 2.02, 3.01, 5.01, 5.21 or 11.01, an
amount equal to the sum of (a) 100% of the Principal Balance thereof, (b) unpaid
accrued interest at the Mortgage Rate thereon from the Due Date on which
interest was last paid by the Mortgagor or Advanced by the Servicer to the Due
Date next following the date of repurchase and (c) the aggregate of any
unreimbursed Advances.
QUALIFIED INSURER: An insurance company duly qualified as such
under the laws of the states in which the Mortgaged Properties are located, duly
authorized and licensed in such states to transact the applicable insurance
business and to write the insurance provided, approved as an insurer by FNMA and
FHLMC and whose claims-paying ability is rated in the two highest rating
categories by S&P, Moody's and Fitch with respect to primary mortgage insurance
and in the two highest rating categories for general policyholder rating and
financial performance index rating by Best's with respect to hazard and flood
insurance.
RATING AGENCY: Any nationally recognized statistical rating
organization, or its successor, that rated one or more Classes of Certificates
at the request of the Depositor at the time of the initial issuance of the
Certificates. If such organization or a successor is no longer in existence,
"Rating Agency" shall be such nationally recognized statistical rating
organization, or other comparable Person, designated by the Depositor, notice of
which designation shall be given to the Trustee and the Servicer. References
herein to the two highest long-term debt rating categories of a Rating Agency
shall mean AA or better in the case of S&P and AA or better in the case of
Fitch.
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<PAGE> 34
REALIZED LOSS: With respect to (i) a Liquidated Mortgage Loan,
the amount, if any, by which the unpaid Principal Balance and accrued interest
thereon at a rate equal to the Net Mortgage Rate exceeds the amount actually
recovered by the Servicer with respect thereto (net of reimbursement of Advances
and Servicing Advances) at the time such Mortgage Loan became a Liquidated
Mortgage Loan or (ii) with respect to a Mortgage Loan which is not a Liquidated
Mortgage Loan, any amount of principal that the Mortgagor is no longer legally
required to pay (except for the extinguishment of debt that results from the
exercise of remedies due to default by the Mortgagor).
REALIZED LOSS INTEREST SHORTFALL: The meaning specified in
Section 6.05(c).
RECORD DATE: The close of business of the last Business Day of
the month preceding the month of the related Distribution Date.
RELEVANT MORTGAGE LOAN: The meaning specified in Section 5.01.
REMIC: A "real estate mortgage investment conduit," as such
term is defined in Section 860D of the Code. References herein to "the REMIC"
shall mean the REMIC created hereunder.
REMIC POOL: Either of the Master REMIC or the Subsidiary
REMIC.
REMIC PROVISIONS: Provisions of the federal income tax law
relating to REMICs which appear at Sections 860A through 860G of Part IV of
Subchapter M of Chapter 1 of Subtitle A of the Code, and related provisions, and
U.S. Department of the Treasury temporary, proposed or final regulations and
rulings promulgated thereunder, as the foregoing are in effect (or with respect
to proposed regulations, are proposed to be in effect) from time to time.
REMITTANCE RATE: 6.75% per annum.
REPURCHASE PROCEEDS: All proceeds of any Mortgage Loan or
property acquired in respect thereof repurchased pursuant to Section 2.02, 3.01,
5.01, 5.21 or 11.01.
RESPONSIBLE OFFICER: When used with respect to the Trustee,
any Senior Vice President, any Vice President, any Assistant Vice President, any
Senior Trust Officer, any Trust Officer or any other officer of the Trustee in
its Corporate Trust Office customarily performing functions similar to those
performed by any of the above designated officers and also, with respect to a
particular matter, any other officer in its Corporate Trust Office to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject.
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<PAGE> 35
S&P: Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc. or its successor in interest.
SCHEDULED PRINCIPAL BALANCE: With respect to any Mortgage Loan
as of any Distribution Date, the unpaid principal balance of such Mortgage Loan
as specified in the amortization schedule at the time relating thereto (before
any adjustment to such schedule by reason of bankruptcy or similar proceeding or
any moratorium or similar waiver or grace period) as of the Due Date in the
month preceding the month of such Distribution Date, or as the Cut-off Date,
with respect to the first Distribution Date, after giving effect to any
previously applied prepayments, the payment of principal due on such first day
of the month and any reduction of the principal balance of such Mortgage Loan by
a bankruptcy court, irrespective of any delinquency in payment by the related
Mortgagor.
SELLER: With respect to the HomeSide Mortgage Loans, HomeSide
Lending, Inc.; with respect to the Chase Mortgage Loans, Chase Manhattan
Mortgage Corporation.
SENIOR LIQUIDATION AMOUNT: For any Distribution Date, the
aggregate, for each Mortgage Loan which became a Liquidated Mortgage Loan during
the calendar month preceding the month of such Distribution Date, of the lesser
of (i) the Non-PO Class A Percentage of the applicable Non-PO Percentage of the
principal balance of such Mortgage Loan and (ii) the Non-PO Class A Prepayment
Percentage of the Liquidation Principal with respect to such Mortgage Loan.
SERVICER: HomeSide Lending, Inc. or its successor in interest
or any successor under this Agreement as herein provided.
SERVICER REMITTANCE DATE: With respect to any Distribution
Date, the 24th day of the month in which such Distribution Date occurs, or if
such 24th day is not a Business Day, the Business Day preceding such 24th day.
SERVICING ADVANCES: All customary, reasonable and necessary
"out of pocket" costs and expenses incurred in the performance by the Servicer
of its servicing obligations and which are "unanticipated expenses" of the
REMIC, as defined in the REMIC Provisions, including, but not limited to, the
cost of (i) the preservation, restoration and protection of the Mortgaged
Property, (ii) any enforcement or judicial proceedings, including foreclosures,
(iii) the management and liquidation of the Mortgaged Property if the Mortgaged
Property is acquired in satisfaction of the Mortgage, (iv) taxes and assessments
on the Mortgaged Properties subject to the Mortgage Loans and (v) compliance
with the obligations under Section 5.21.
SERVICING FEE: The amount of the monthly fee paid for the
servicing of the Mortgage Loans, equal to, as of any Distribution Date, the
total of, with respect to each Mortgage Loan, one-twelfth of 0.25% per annum of
the Principal Balance thereof as of the Determination
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<PAGE> 36
Date in the preceding month, subject to adjustment as provided in Section 6.05.
The Servicing Fee shall be payable only at the time of and with respect to those
Mortgage Loans for which payment is in fact made of the entire amount of the
Monthly Payments that shall have come due and only at the time such Monthly
Payment shall be made. The right to receive the Servicing Fee is limited to, and
the Servicing Fee is payable solely from, the interest portion of such Monthly
Payments (or the interest portion of any Principal Prepayment in full) collected
by the Servicer, or as otherwise provided under Section 5.09 or 5.23.
SERVICING OFFICER: Any officer of the Servicer or any
Sub-servicer involved in, or responsible for, the administration and servicing
of the Mortgage Loans whose name appears on a written certificate listing
servicing officers furnished to the Trustee by the Servicer on or prior to the
Closing Date, and signed on behalf of the Servicer or any Sub-servicer by its
President, any Vice President or its Treasurer, as such certificate may from
time to time be amended.
SINGLE CERTIFICATE: A Certificate of any Class that evidences
the smallest permissible original denomination for such Class of Certificates as
specified in Section 4.01(d).
SPECIAL HAZARD AMOUNT: Initially, $2,294,187.00. As of the
first anniversary of the Cut-off Date, the Special Hazard Amount shall be
reduced, but not increased, to the lesser of (i) the initial Special Hazard
Amount less the sum of all amounts allocated to the Subordinated Certificates in
respect of Special Hazard Losses on the Mortgage Loans during such year or (ii)
the Adjustment Amount for such anniversary. As of each subsequent anniversary of
the Cut-off Date, the Special Hazard Amount on the immediately preceding
anniversary of the Cut-off Date less the sum of all amounts allocated to the
Subordinated Certificates in respect of Special Hazard Losses on the Mortgage
Loans during such year and (ii) the Adjustment Amount for such anniversary. The
"Adjustment Amount" with respect to each anniversary of the Cut-off Date will be
equal to the greatest of (i) 1.00% multiplied by the aggregate outstanding
principal balance of the Mortgage Loans, (ii) the aggregate outstanding
principal balance of the Mortgage Loans secured by Mortgaged Properties located
in the California postal zip code area in which the highest percentage of
Mortgage Loans by Principal Balance are located and (iii) twice the outstanding
principal balance of the Mortgage Loan having the largest outstanding principal
balance.
SPECIAL HAZARD LOSS: Any Realized Loss or portion thereof
resulting from direct physical loss or damage to the Mortgaged Property, which
is not insured against under the Standard Hazard Policy required to be
maintained hereunder.
STANDARD HAZARD POLICY: Each standard hazard insurance policy
or replacement therefor referred to in Section 5.16.
STARTUP DAY: The meaning specified in Section 2.04(a).
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<PAGE> 37
STEP-DOWN DATE: The earliest of the Distribution Date in
February 2003 or any succeeding Distribution Date on which the following
conditions are satisfied as of the last day of the month preceding such
Distribution Date:
(a) the aggregate outstanding Principal Balance of Outstanding
Mortgage Loans 60 days or more delinquent (including loans in
foreclosure and with respect to owned real estate) does not exceed 50%
of the aggregate Outstanding Certificate Balance of the Subordinated
Certificates as of such date; and
(b) Realized Losses through the last day of the month
preceding such Distribution Date (including Nonrecoverable Advances) do
not exceed the following thresholds:
(i) if such Distribution Date occurs between and
including February 2003 and January 2004, 30% of the
Subordinated Percentage of the Mortgage Pool Principal Balance
as of the Cut-off Date;
(ii) if such Distribution Date occurs between and
including February 2004 and January 2005, 35% of the
Subordinated Percentage of the Mortgage Pool Principal Balance
as of the Cut-off Date;
(iii) if such Distribution Date occurs between and
including February 2005 and January 2006, 40% of the
Subordinated Percentage of the Mortgage Pool Principal Balance
as of the Cut-off Date;
(iv) if such Distribution Date occurs between and
including February 2006 and January 2007, 45% of the
Subordinated Percentage of the Mortgage Pool Principal Balance
as of the Cut-off Date; and
(v) if such Distribution Date occurs after January
2007, 50% of the Subordinated Percentage of the Mortgage Pool
Principal Balance as of the Cut-off Date.
STEP DOWN PERCENTAGE: With respect to any Distribution Date,
the percentage indicated below:
DISTRIBUTION DATE OCCURRING IN STEP DOWN PERCENTAGE
February 1998 through January 2003......................... 0%
February 2003 through January 2004......................... 30%
February 2004 through January 2005......................... 40%
February 2005 through January 2006......................... 60%
February 2006 through January 2007......................... 80%
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<PAGE> 38
February 2007 and thereafter.............................. 100%
STRIPPED INTEREST RATE: For each Mortgage Loan, the excess, if
any, of the Net Mortgage Rate for such Mortgage Loan over the Remittance Rate.
SUBORDINATED CERTIFICATES: The Class M and Class B
Certificates, referred to collectively.
SUBORDINATED LOCK-OUT AMOUNT: With respect to any Distribution
Date, the amounts described in clause (b)(ii) of the definition of Subordinated
Optimal Principal Amount.
SUBORDINATED OPTIMAL PRINCIPAL AMOUNT: With respect to any
Distribution Date, the lesser of (a) the aggregate Outstanding Certificate
Principal Balance of the Subordinated Certificates (before giving effect to any
distributions of principal on such Distribution Date) and (b) the sum of:
(i) the Subordinated Percentage of the applicable Non-PO
Percentage of the principal portion of all Monthly Payments, whether or
not received, which were due during the related Due Period on Mortgage
Loans which were outstanding during such Due Period;
(ii) the Subordinated Prepayment Percentage of the applicable
Non-PO Percentage of all Principal Prepayments made on any Mortgage
Loan during the related Principal Prepayment Period;
(iii) with respect to each Mortgage Loan not described in (iv)
below, the Subordinated Percentage of the applicable Non-PO Percentage
of the principal portion of all Insurance Proceeds, condemnation awards
and any other cash proceeds from a source other than the applicable
Mortgagor, to the extent required to be deposited in the Certificate
Account pursuant to Section 5.08(iv) and (v), which were received
during the related Principal Prepayment Period, net of related
unreimbursed Servicing Advances and net of any portion thereof which,
as to any such Mortgage Loan, constitutes Late Collections that have
been the subject of an Advance on any prior Remittance Date;
(iv) with respect to each Mortgage Loan which has become a
Liquidated Mortgage Loan during the related Principal Prepayment
Period, an amount equal to the portion (if any) of the Net Liquidation
Proceeds with respect to such liquidated Mortgage Loan (net of any
unreimbursed Advances) that was not included in the Class A-P Amount or
the Non-PO Class A Optimal Principal Amount with respect to such
Distribution Date;
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<PAGE> 39
(v) with respect to each Mortgage Loan repurchased during the
related Principal Prepayment Period pursuant to Section 2.02, 3.01,
5.21 or 11.01, an amount equal to the Subordinated Prepayment
Percentage of the applicable Non-PO Percentage of the principal portion
of the Purchase Price (net of amounts with respect to which a
distribution of principal has previously been made to the Subordinated
Certificateholders).
SUBORDINATED PERCENTAGE: As of any Distribution Date, the
difference between 100% and the Non-PO Class A Percentage.
SUBORDINATED PREPAYMENT PERCENTAGE: As of any Distribution
Date, the difference between 100% and the Non-PO Class A Prepayment Percentage.
SUB-SERVICER: Any Person with whom the Servicer enters into a
Sub-Servicing Agreement.
SUB-SERVICING AGREEMENT: Any agreement between the Servicer
and any Sub-Servicer, relating to servicing or administration of certain
Mortgage Loans as provided in Section 5.02, in such form as has been approved by
the Servicer and the Depositor.
SUBSIDIARY REGULAR INTEREST: There shall be five Subsidiary
Regular Interests. The first subsidiary regular interest (the "First Subsidiary
Regular Interest") shall have the same characteristics as the Class A-1, Class
A-2, Class A-3, Class A-4, Class A-6, Class A-7, Class M and Class B
Certificates, and shall have the right to receive distributions from the
Mortgage Pool in the amounts necessary to make all required distributions with
respect to such Certificates. The second subsidiary regular interest (the
"Second Subsidiary Regular Interest") shall have the same characteristics as
Class A-5 Component One and the Class A-8 Certificates, and shall have the right
to receive distributions from the Mortgage Pool in the amounts necessary to make
all required distributions with respect to Class A-5 Component One and the Class
A-8 Certificates. The third subsidiary regular interest (the "Third Subsidiary
Regular Interest") shall have the same characteristics as Class A-5 Component
Two and the Class A-9 and Class A-10 Certificates, and shall have the right to
receive distributions from the Mortgage Pool in the amounts necessary to make
all required distributions with respect to Class A-5 Component Two and the Class
A-9 Certificates. The fourth subsidiary regular interest (the "Fourth Subsidiary
Regular Interest") shall have the same characteristics as the Class A-P
Certificates, and shall have the right to receive distributions from the
Mortgage Pool in the amounts necessary to make all required distributions with
respect to the Class A-P Certificates. The fifth subsidiary regular interest
(the "Fifth Subsidiary Regular Interest") shall have the same characteristics as
the Class A-X Certificates, and shall have the right to receive distributions of
the Stripped Interest Rates with respect to the Mortgage Loans.
SUBSIDIARY REMIC: The pool of assets consisting of the Trust
Fund.
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<PAGE> 40
SUBSIDIARY RESIDUAL INTEREST: The interest in the Subsidiary
REMIC consisting of Excess Proceeds and Substitute Excess Interest, and with
respect to each Mortgage Loan, any amounts payable or received with respect to
such Mortgage Loan after payment in full of the Subsidiary Regular Interests.
SUBSTITUTE EXCESS INTEREST: As defined in Section 3.04.
TARGETED PRINCIPAL BALANCE: With respect to any Distribution
Date, the amount specified for such Distribution Date in Appendix A hereto.
TRUST: The Trust created pursuant to this Agreement.
TRUST FUND: The corpus of the Trust consisting of (i) the
Mortgage Loans, (ii) such assets as shall from time to time be identified as
deposited in the Collection Account and the Certificate Account, (iii) property
which secured a Mortgage Loan and which has been acquired by foreclosure or deed
in lieu of foreclosure, (iv) Standard Hazard Policies and any other insurance
policies, and the proceeds thereof and (v) any proceeds of any of the foregoing.
TRUSTEE: Norwest Bank Minnesota, National Association, a
national banking association and its successors and any corporation resulting
from or surviving any consolidation or merger to which it or its successors may
be a party, and any successor trustee at the time serving as successor trustee
hereunder, appointed as herein provided.
TRUSTEE FEE: The amount of the monthly fee paid to the Trustee
as compensation for the services rendered hereunder by it, equal to, as of any
Distribution Date, the total of, with respect to each Mortgage Loan, one-twelfth
of 0.01% per annum of the Principal Balance of such Mortgage Loan at the opening
of business on the related Determination date.
U.S. PERSON: A "United States Person" as defined in Section
7701(a)(30) of the Code.
[End of Article I]
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<PAGE> 41
ARTICLE II
CONVEYANCE OF MORTGAGE LOANS; TRUST FUND
Section 2.01. Conveyance of Mortgage Loans. The Depositor, concurrently
with the execution and delivery hereof, does hereby sell, transfer, assign, set
over and convey to the Trustee without recourse all the right, title and
interest of the Depositor in and to the Mortgage Loans, including all interest
and principal received on or with respect to the Mortgage Loans on or after the
Cut-off Date (other than Monthly Payments due on the Mortgage Loans on or before
the Cut-off Date).
In connection with such assignment, the Depositor does hereby deliver
to, and deposit with, the Trustee the following documents or instruments with
respect to each Mortgage Loan so assigned:
(A) (I) Original Mortgage Note (or a lost note affidavit
(including a copy of the original Mortgage Note)) or (II) original
Consolidation, Extension and Modification Agreement (or a lost note
affidavit (including a copy of the original Consolidation, Extension
and Modification Agreement), in either case endorsed, "Pay to the order
of Norwest Bank Minnesota, National Association, as trustee, without
recourse."
(B) The original Mortgage (including all riders thereto) with
evidence of recording thereon, or a copy thereof certified by the
public recording office in which such mortgage has been recorded or, if
the original Mortgage has not been returned from the applicable public
recording office, a true certified copy, certified by the Seller, of
the original Mortgage together with a certificate of the Seller
certifying that the original Mortgage has been delivered for recording
in the appropriate public recording office of the jurisdiction in which
the Mortgaged Property is located.
(C) The original or certified to be true copy, certified by
the Seller, of the Primary Insurance Policy, if required.
(D) The original Assignment of Mortgage to "Norwest Bank
Minnesota, National Association, as trustee," which assignment shall be
in form and substance acceptable for recording, or a copy certified by
the Seller as a true and correct copy of the original Assignment which
has been sent for recordation. Subject to the foregoing, such
assignments may, if permitted by law, be by blanket assignments for
Mortgage Loans covering Mortgaged Properties situated within the same
county. If the Assignment of Mortgage is in blanket form, a copy of the
Assignment of Mortgage shall be included in the related individual
Mortgage File.
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<PAGE> 42
(E) The original policy of title insurance, including riders
and endorsements thereto, or if the policy has not yet been issued, a
written commitment or interim binder or preliminary report of title
issued by the title insurance or escrow company.
(F) Originals of all recorded intervening Assignments of
Mortgage, or copies thereof, certified by the public recording office
in which such Assignments or Mortgage have been recorded showing a
complete chain of title from the originator to the Depositor, with
evidence of recording, thereon, or a copy thereof certified by the
public recording office in which such Assignment of Mortgage has been
recorded or, if the original Assignment of Mortgage has not been
returned from the applicable public recording office, a true certified
copy, certified by the Seller of the original Assignment of Mortgage
together with a certificate of the Seller certifying that the original
Assignment of Mortgage has been delivered for recording in the
appropriate public recording office of the jurisdiction in which the
Mortgaged Property is located.
(G) Originals, or copies thereof certified by the public
recording office in which such documents have been recorded, of each
assumption, extension, modification, written assurance or substitution
agreements, if applicable, or if the original of such document has not
been returned from the applicable public recording office, a true
certified copy, certified by the Seller, of such original document
together with certificate of Seller certifying the original of such
document has been delivered for recording in the appropriate recording
office of the jurisdiction in which the Mortgaged Property is located.
(H) If the Mortgaged Note or Mortgage or any other material
document or instrument relating to the Mortgaged Loan has been signed
by a person on behalf of the Mortgagor, the original power of attorney
or other instrument that authorized and empowered such person to sign
bearing evidence that such instrument has been recorded, if so required
in the appropriate jurisdiction where the Mortgaged Property is located
(or, in lieu thereof, a duplicate or conformed copy of such instrument,
together with a certificate of receipt from the recording office,
certifying that such copy represents a true and complete copy of the
original and that such original has been or is currently submitted to
be recorded in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located), or if the
original power of attorney or other such instrument has been delivered
for recording in the appropriate public recording office of the
jurisdiction in which the Mortgaged Property is located.
If in connection with any Mortgage Loan the Depositor cannot
deliver the Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, with evidence of recording thereon
concurrently with the execution and delivery of this Agreement solely because of
a delay caused by the public recording office where such Mortgage, Assignments
of Mortgage or assumption, consolidation or modification, as the case may be,
has been delivered for recordation, the Depositor shall deliver or cause to be
delivered to the Trustee
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written notice stating that such Mortgage, Assignments of Mortgage or
assumption, consolidation or modification, as the case may be, has been
delivered to the appropriate public recording office for recordation.
Thereafter, the Depositor shall deliver or cause to be delivered to the Trustee
such Mortgage, Assignments of Mortgage or assumption, consolidation or
modification, as the case may be, with evidence of recording indicated thereon
upon receipt thereof from the public recording office.
The Servicer shall cause to be recorded in the appropriate
public recording office for real property records each Assignment of Mortgage
referred to in this Section 2.01 as soon as practicable. While each Assignment
of Mortgage to be recorded is being recorded, the Servicer shall deliver to the
Trustee a photocopy of such document. If any such Assignment of Mortgage is
returned unrecorded to the Servicer because of any defect therein, the Servicer
shall cause such defect to be cured and such document to be recorded in
accordance with this paragraph. The Depositor shall deliver or cause to be
delivered each original recorded Assignment of Mortgage and intermediate
assignment to the Trustee within 270 days of the Closing Date or shall deliver
to the Trustee on or before such date an Officer's Certificate stating that such
document has been delivered to the appropriate public recording office for
recordation, but has not been returned solely because of a delay caused by such
recording office. In any event, the Depositor shall use all reasonable efforts
to cause each such document with evidence of recording thereon to be delivered
to the Trustee within 300 days of the Closing Date.
The ownership of each Mortgage Note, the Mortgage and the
contents of the related Mortgage File is vested in the Trustee. Neither the
Depositor nor the Servicer shall take any action inconsistent with such
ownership and shall not claim any ownership interest therein. The Depositor and
the Servicer shall respond to any third party inquiries with respect to
ownership of the Mortgage Loans by stating that such ownership is held by the
Trustee on behalf of the Certificateholders. Mortgage documents relating to the
Mortgage Loans not delivered to the Trustee are and shall be held in trust by
the Servicer or any Sub-Servicer, for the benefit of the Trustee as the owner
thereof, and the Servicer's or such Sub-Servicer's possession of the contents of
each Mortgage File so retained is for the sole purpose of servicing the related
Mortgage Loan, and such retention and possession by the Servicer or such
Sub-Servicer is in a custodial capacity only. The Depositor agrees to take no
action inconsistent with the Trustee's ownership of the Mortgage Loans, to
promptly indicate to all inquiring parties that the Mortgage Loans have been
sold and to claim no ownership interest in the Mortgage Loans. Each Mortgage
File and the mortgage documents relating to the Mortgage Loans contain
proprietary business information of the Servicer and its customers. The Trustee
and the Depositor agree that they will not use such information for business
purposes without the express written consent of the Servicer and that all such
information shall be kept strictly confidential.
It is the intention of this Agreement that the conveyance of
the Depositor's right, title and interest in and to the Trust Fund pursuant to
this Agreement shall constitute a purchase and sale and not a loan. If the
conveyance of the Mortgage Loans from the Depositor to the Trustee is
characterized as a pledge, it is the intention of this Agreement that this
Agreement
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shall constitute a security agreement under applicable law, and that the
Depositor shall be deemed to have granted to the Trustee a first priority
security interest in all of the Depositor's right, title and interest in, to and
under the Mortgage Loans, all payments of principal of or interest on such
Mortgage Loans, all other rights relating to and payments made in respect of the
Trust Fund, and all proceeds of any thereof. If the trust created by this
Agreement terminates prior to the satisfaction of the claims of any Person in
any Certificates, the security interest created hereby shall continue in full
force and effect and the Trustee shall be deemed to be the collateral agent for
the benefit of such Person.
In addition to the conveyance made in the first paragraph of
this Section 2.01, the Depositor does hereby convey, assign and set over to the
Trustee all of its right, title and interest in that portion of the Trust Fund
described in items (ii), (iii), (iv) and (v) of the definition thereof.
Section 2.02. Acceptance by Trustee. Except as set forth in
the Exception Report delivered contemporaneously herewith (the "Exception
Report"), the Trustee acknowledges receipt of the Mortgage Note for each
Mortgage Loan and delivery of a Mortgage File (but does not acknowledge receipt
of all documents required to be included in such Mortgage File) with respect to
each Mortgage Loan and declares that it holds and will hold such documents and
any other documents constituting a part of the Mortgage Files delivered to it in
trust for the use and benefit of all present and future Certificateholders. The
Depositor will repurchase any Mortgage Loans to which an exception was taken in
the Exception Report unless such exception is cured to the satisfaction of the
Trustee within 45 Business Days of the Closing Date.
The Trustee agrees, for the benefit of Certificateholders, to
review each Mortgage File delivered to it within 270 days after the Closing Date
to ascertain that all documents required by Section 2.01 have been executed and
received, and that such documents relate to the Mortgage Loans identified in
Exhibit A that have been conveyed to it. If the Trustee finds any document or
documents constituting a part of a Mortgage File to be missing or defective
(that is, mutilated, damaged, defaced or unexecuted) in any material respect,
the Trustee shall promptly (and in any event within no more than five Business
Days) after such finding so notify the Servicer and the Depositor. In addition,
the Trustee shall also notify the Servicer and the Depositor, if (a) in
examining the Mortgage Files, the documentation shows on its face (i) any
adverse claim, lien or encumbrance, (ii) that any Mortgage Note was overdue or
had been dishonored, (iii) any evidence on the face of any Mortgage Note or
Mortgage of any security interest or other right or interest therein, or (iv)
any defense against or claim to the Mortgage Note by any party or (b) the
original Mortgage with evidence of recording thereon with respect to a Mortgage
Loan is not received within 270 days of the Closing Date. The Trustee shall
request that the Depositor correct or cure such omission, defect or other
irregularity, or substitute a Mortgage Loan pursuant to the provisions of
Section 3.03, within 60 days from the date the Depositor was notified of such
omission or defect and, if the Depositor does not correct or cure such omission
or defect within such period, that the Depositor purchase such Mortgage Loan
from the Trustee within 90 days from the date the Trustee notified the Depositor
of such
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omission, defect or other irregularity at the Purchase Price of such Mortgage
Loan. The Purchase Price for any Mortgage Loan purchased pursuant to this
Section 2.02 shall be paid to the Servicer and deposited by the Servicer in the
Collection Account promptly upon receipt, and, upon receipt by the Trustee of
written notification of such deposit signed by a Servicing Officer, the Trustee
shall promptly release to the Depositor the related Mortgage File and the
Trustee shall execute and deliver such instruments of transfer or assignment,
without recourse, as shall be necessary to vest in the Depositor or its
designee, as the case may be, any Mortgage Loan released pursuant hereto, and
the Trustee shall have no further responsibility with regard to such Mortgage
Loan. It is understood and agreed that the obligation of the Depositor to
purchase, cure or substitute any Mortgage Loan as to which a material defect in
or omission of a constituent document exists shall constitute the sole remedy
respecting such defect or omission available to the Trustee on behalf of
Certificateholders. The Trustee shall be under no duty or obligation to inspect,
review and examine such documents, instruments, certificates or other papers to
determine that they are genuine, enforceable or appropriate to the represented
purpose, or that they have actually been recorded, or that they are other than
what they purport to be on their face. The Trustee shall keep confidential the
name of each Mortgagor and shall not solicit any such Mortgagor for the purpose
of refinancing the related Mortgage Loan.
Within 270 days of the Closing Date, the Trustee shall deliver
to the Depositor and the Servicer the Trustee's Certification, substantially in
the form of Exhibit G attached hereto, setting forth the status of the Mortgage
Files as of such date.
Section 2.03. Trust Fund; Authentication of Certificates. The
Trustee acknowledges and accepts the assignment to it of the Trust Fund created
pursuant to this Agreement in trust for the use and benefit of all present and
future Certificateholders. The Trustee acknowledges the assignment to it for the
benefit of the Trust Fund of the Mortgage Loans and has caused to be
authenticated and delivered to or upon the order of the Depositor, in exchange
for the Mortgage Loans, Certificates duly authenticated by the Trustee in
authorized denominations evidencing ownership of the entire Trust Fund.
Section 2.04. REMIC Election.
(a) The Depositor hereby instructs and authorizes the Trustee
to make appropriate elections to treat each of the Subsidiary REMIC and the
Master REMIC as a REMIC. This Agreement shall be construed so as to carry out
the intention of the parties that each REMIC Pool be treated as a REMIC at all
times prior to the date on which the Trust Fund is terminated. The Closing Date
is hereby designated as the "startup day" of each REMIC Pool within the meaning
of Section 860G(a)(9) of the Code. The "regular interests" (within the meaning
of Section 860G(a)(1) of the Code) in the Master REMIC shall consist of the
Class A Certificates, the Class M Certificates and the Class B Certificates, and
the "residual interest" (within the meaning of Section 860G(a)(2) of the Code)
in the Master REMIC shall consist of the Master Residual Interest, and all such
interests shall be designated as such on the Startup Day. The "regular
interests" (within the meaning of Section 860G(a)(1) of the Code) in the
Subsidiary
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REMIC shall consist of the Subsidiary Regular Interests and the "residual
interest" (within the meaning of Section 860G(a)(2) of the Code) in the
Subsidiary REMIC shall consist of the Subsidiary Residual Interest and all such
interests shall be designated as such on the Startup Date. The regular interests
in the Subsidiary REMIC shall be held by the Master REMIC at all times and shall
not be transferable under any circumstances.
(b) All payments with respect to the Class A-1, Class A-2,
Class A-3, Class A-4, Class A-6, Class A-7, Class M and Class B Certificates
shall be considered to have been made solely from the First Subsidiary Regular
Interest. All payments with respect to Class A-5 Component One and the Class A-8
Certificates shall be considered to have been made solely from the Second
Subsidiary Regular Interest. All payments with respect to Class A-5 Component
Two and the Class A-9 Certificates shall be considered to have been made solely
from the Third Subsidiary Regular Interest. All payments with respect to the
Class A-P Certificates shall be considered to have been made solely from the
Fourth Subsidiary Regular Interest. All payments with respect to the Class A-X
Certificates shall be considered to have been made solely from the Fifth
Subsidiary Regular Interest.
The principal amount of the regular interests in the Master REMIC is
equal to the sum of the Original Class A Principal Balance, the Original Class M
Principal Balance and the Original Class B Principal Balance. The original
principal balance of the First Subsidiary Regular Interest is equal to the
aggregate principal balance of the Class A-1, Class A-2, Class A-3, Class A-4,
Class A-6, Class A-7, Class M and Class B Certificates. The original principal
balance of the Second Subsidiary Regular Interest is equal to the aggregate
principal balance of Class A-5 Component One and the Class A-8 Certificates. The
original principal balance of the Third Subsidiary Regular Interest is equal to
the aggregate principal balance of Class A-5 Component Two. The original
principal balance of the Fourth Subsidiary Regular Interest is equal to the
principal balance of the Class A-P Certificates. The original principal balance
of the Fifth Subsidiary Regular Interest is zero.
The interest rate on the First Subsidiary Regular Interest, the Second
Subsidiary Regular Interest and the Third Subsidiary Regular Interest is 6.75%.
The interest rate on the Fourth Subsidiary Regular Interest is 0.00%. The
interest rate on the Fifth Subsidiary Interest is equal to the aggregate of the
Stripped Interest Rates.
(c) The assets of the Subsidiary REMIC shall consist of the
pool of assets consisting of the Trust Fund. The assets of the Master REMIC
shall consist of the pool of assets consisting of the Subsidiary Regular
Interests and all payments or principal or interest on or with respect to the
Subsidiary Regular Interests after the Cut-off Date.
(d) Solely for the purposes of Section 1.860G-1(a)(4)(iii) of
the Treasury regulations, the "latest possible maturity date" by which the
Outstanding Certificate Principal Balance of each Class of Certificates
representing a regular interest in the Master REMIC would
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be reduced to zero is February 25, 2028, which is the Distribution Date
immediately following the latest scheduled maturity of any Mortgage Loan.
(e) The "tax matters person" with respect to each REMIC Pool
for purposes of the REMIC provisions shall be the beneficial owner of the Class
A-R Certificate having the largest Percentage Interest of such Class; provided,
however, that such largest beneficial owner and, to the extent relevant, each
other Holder of a Class A-R Certificate, by it acceptance thereof, irrevocably
appoints the Trustee as its agent and attorney-in-fact to act as "tax matters
person" with respect to each REMIC Pool for purposes of the REMIC provisions.
(f) It is intended that each REMIC Pool shall constitute, and
that the affairs of the Trust Fund shall be conducted so as to qualify each
REMIC Pool as, a "real estate mortgage investment conduit" as defined in and in
accordance with the REMIC Provisions. In furtherance of such intention, the
Trustee covenants and agrees that it shall act as agent (and the Trustee is
hereby appointed to act as agent) on behalf of the Trust Fund and the respective
Holders of the Class A-R Certificates and that in such capacity it shall:
(i) prepare and file, or cause to be prepared and
filed, in a timely manner, a U.S. Real Estate Mortgage Investment
Conduit Income Tax Return (Form 1066) and prepare and file or cause to
be prepared and filed with the Internal Revenue Service and applicable
state or local tax authorities income tax or information returns for
each taxable year with respect to each REMIC Pool, using the calendar
year as the taxable year and the accrual method of accounting,
containing such information and at the times and in the manner as may
be required by the Code or state or local tax laws, regulations, or
rules, and shall furnish or cause to be furnished to Certificateholders
the schedules, statements or information at such times and in such
manner as may be required thereby;
(ii) within thirty days of the Closing Date, shall
furnish or cause to be furnished to the Internal Revenue Service, on
Form 8811 or as otherwise may be required by the Code, the name, title,
address, and telephone number of the person that the holders of the
Certificates may contact for tax information relating thereto (and the
Trustee shall act as the representative of each REMIC Pool for this
purpose), together with such additional information as may be required
by such Form, and shall update such information at the time or times in
the manner required by the Code;
(iii) make or cause to be made elections, on behalf
of each REMIC Pool, to be treated as a REMIC, and make the appropriate
designations, if applicable, in accordance with this Section 2.04 on
the federal tax return of each REMIC Pool for its first taxable year
(and, if necessary, under applicable state law);
(iv) prepare and forward, or cause to be prepared and
forwarded, to the Certificateholders and to the Internal Revenue
Service and, if necessary, state tax
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authorities, all information returns or reports, or furnish or cause to
be furnished by telephone, mail, publication or other appropriate
method such information, as and when required to be provided to them in
accordance with the REMIC Provisions, including without limitation, the
calculation of any original issue discount;
(v) provide information necessary for the computation
of tax imposed on the transfer of the Class A-R Certificate to a
Disqualified Organization, or an agent (including a broker, nominee or
other middleman) of a Disqualified Organization, or a pass-through
entity in which a Disqualified Organization is the record holder of an
interest (the reasonable cost of computing and furnishing such
information may be charged to the Person liable for such tax);
(vi) ensure that federal, state or local income tax
or information returns shall be signed by the Trustee or such other
person as may be required to sign such returns by the Code or state or
local laws, regulations or rules; and
(vii) maintain such records relating to each REMIC
Pool, as may be required by the Code and, as may be necessary to
prepare the foregoing returns, schedules, statements or information.
[End of Article II]
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR AND
THE SERVICER; REPURCHASE OF MORTGAGE LOANS
Section 3.01. Representations and Warranties of the Depositor
with respect to the Mortgage Loans.
References in this Section to percentages of Mortgage Loans
refer in each case to the percentage of the aggregate principal balance of the
Mortgage Loans as of the Cut-off Date, based on the outstanding balances of the
Mortgage Loans as of the Cut-off Date, and giving effect to scheduled Monthly
Payments due on or prior to the Cut-off Date, whether or not received.
References to percentages of Mortgaged Properties refer, in each case, to the
percentages of expected aggregate principal balances of the related Mortgage
Loans (determined as described in the preceding sentence). The Depositor hereby
represents and warrants to the Trustee for the benefit of the
Certificateholders, as to each Mortgage Loan, as of the Closing Date as follows:
(a) The information set forth in the Mortgage Loan Schedule is
complete, true and correct in all material respects;
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(b) The Mortgage creates a first lien or a first priority
ownership interest in an estate in fee simple in real property securing the
related Mortgage Note;
(c) All payments due prior to the Cut-off Date for such
Mortgage Loan have been made as of the Closing Date, the Mortgage Loan is not
delinquent in payment more than 30 days and has not been dishonored; (i) with
respect to the HomeSide Mortgage Loans there are no material defaults under the
terms of the Mortgage Loan and (ii) with respect to the Chase Mortgage Loans, to
the best of the Seller's knowledge, there are no material defaults under the
terms of the Mortgage Loan; the Seller has not advanced funds, or induced,
solicited or knowingly received any advance of funds from a party other than the
owner of the Mortgaged Property subject to the Mortgage, directly or indirectly,
for the payment of any amount required by the Mortgage Loan; there has been no
more than one delinquency in excess of 30 days during the preceding twelve-month
period;
(d) To the best of the Seller's knowledge, all taxes,
governmental assessments, insurance premiums, water, sewer and municipal
charges, leasehold payments or ground rents which previously became due and
owing have been paid, or escrow funds have been established in an amount
sufficient to pay for every such escrowed item which remains unpaid and which
has been assessed but is not yet due and payable;
(e) The terms of the Mortgage Note and the Mortgage have not
been impaired, waived, altered or modified in any respect, except by written
instruments. No Mortgagor has been released, in whole or in part, from the terms
thereof except in connection with an assumption agreement and which assumption
agreement is part of the Mortgage File and the terms of which are reflected in
the Mortgage Loan Schedule;
(f) The Mortgage Note and the Mortgage are not subject to any
right of rescission, set-off, counterclaim or defense, including, without
limitation, the defense of usury, nor will the operation of any of the terms of
the Mortgage Note or Mortgage, or the exercise of any right thereunder, render
the Mortgage Note or Mortgage unenforceable, in whole or in part, or subject to
any right of rescission, set-off, counterclaim or defense, including the defense
of usury, and no such right of rescission, set-off, counterclaim or defense has
been asserted with respect thereto, and the Mortgagor was not a debtor in any
state or federal bankruptcy or insolvency proceeding at the time the Mortgage
Loan was originated;
(g) All buildings or other customarily insured improvements
upon the Mortgaged Property are insured by an insurer acceptable under the FNMA
Guides against loss by fire, hazards of extended coverage and such other hazards
as are provided for in the FNMA Guides or by FHLMC. All such standard hazard
policies are in full force and effect and on the date of origination contained a
standard mortgagee clause naming the Seller and its successors in interest and
assigns as loss payee and such clause is still in effect and all premiums due
thereon have been paid. If required by the Flood Disaster Protection Act of
1973, as amended, the Mortgage Loan is covered by a flood insurance policy
meeting the requirements of the current
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guidelines of the Federal Insurance Administration which policy conforms to FNMA
and FHLMC requirements. The Mortgage obligates the Mortgagor thereunder to
maintain all such insurance at the Mortgagor's cost and expense, and on the
Mortgagor's failure to do so, authorizes the holder of the Mortgage to maintain
such insurance at the Mortgagor's cost and expense and to seek reimbursement
therefor from the Mortgagor;
(h) Any and all requirements of any federal, state or local
law including, without limitation, usury, truth-in-lending, real estate
settlement procedures, consumer credit protection, equal credit opportunity or
disclosure laws applicable to the Mortgage Loan have been complied with in all
material respects;
(i) The Mortgage has not been satisfied, canceled or
subordinated, in whole or in part, or rescinded, and the Mortgaged Property has
not been released from the lien of the Mortgage, in whole or in part nor has any
instrument been executed that would effect any such release, cancellation,
subordination or rescission;
(j) The Mortgage is a valid, subsisting, enforceable and
perfected first lien on the Mortgaged Property, including, all buildings on the
Mortgaged Property and all installations and mechanical, electrical, plumbing,
heating and air conditioning systems affixed to such buildings, and all
additions, alterations and replacements made at any time with respect to the
foregoing securing the Mortgage Note's original principal balance. The Mortgage
and the Mortgage Note do not contain any evidence of any security interest or
other interest or right thereto. Such lien is free and clear of all adverse
claims, liens and encumbrances having priority over the first lien of the
Mortgage subject only to (1) the lien of non-delinquent current real property
taxes and assessments not yet due and payable, (2) covenants, conditions and
restrictions, rights of way, easements and other matters of the public record as
of the date of recording which are acceptable to mortgage lending institutions
generally and either (A) which are referred to or otherwise considered in the
appraisal made for the originator of the Mortgage Loan, or (B) which do not
adversely affect the appraised value of the Mortgaged Property as set forth in
such appraisal, and (3) other matters to which like properties are commonly
subject which do not materially interfere with the benefits of the security
intended to be provided by the Mortgage or the use, enjoyment, value or
marketability of the related Mortgaged Property. Any security agreement, chattel
mortgage or equivalent document related to and delivered in connection with the
Mortgage Loan establishes and creates a valid, subsisting, enforceable and
perfected first lien and first priority security interest on the property
described therein, and the Depositor has the full right to sell and assign the
same to the Trustee for the benefit of the Certificateholders;
(k) The Mortgage Note and the related Mortgage are original
and genuine and each is the legal, valid and binding obligation of the maker
thereof, enforceable in all respects in accordance with its terms subject to
bankruptcy, insolvency and other laws of general application affecting the
rights of creditors and the Depositor has taken all action necessary to transfer
such rights of enforceability to the Trustee for the benefit of the
Certificateholders. All parties to the
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Mortgage Note and the Mortgage had the legal capacity to enter into the Mortgage
Loan and to execute and deliver the Mortgage Note and the Mortgage. The Mortgage
Note and the Mortgage have been duly and property executed by such parties. The
proceeds of the Mortgage Loan have been fully disbursed and there is no
requirement for future advances thereunder, and any and all requirements as to
completion of any on-site or off-site improvements and as to disbursements of
any escrow funds therefor have been complied with;
(1) The Depositor is the sole owner of record and holder of
the Mortgage Loan and the indebtedness evidenced by the Mortgage Note, except
for the Assignments of Mortgage which have been sent for recording, and upon
recordation the Depositor will be the owner of record of the Mortgage and the
indebtedness evidenced by the Mortgage Note, and upon the sale of the Mortgage
Loan to the Trust for the benefit of the Certificateholders, the Depositor will
retain the Mortgage File or any part thereof with respect thereto not delivered
to the Trust for the benefit of the Certificateholders or its designee in trust
only for the purpose of servicing and supervising the servicing of the Mortgage
Loan. Immediately prior to the transfer and assignment to the Trust for the
benefit of the Certificateholders, the Mortgage Loan, including the Mortgage
Note and the Mortgage, were not subject to an assignment or pledge, and the
Depositor had good and marketable title to and was the sole owner thereof and
had full right to transfer and sell the Mortgage Loan to the Trustee for the
benefit of the Certificateholders free and clear of any encumbrance, equity,
lien, pledge, charge, claim or security interest and has the full right and
authority subject to no interest or participation of, or agreement with, any
other party, to sell and assign the Mortgage Loan pursuant to this Agreement and
following the sale of the Mortgagee Loan, the Trustee for the benefit of the
Certificateholders will own such Mortgage Loan free and clear of any
encumbrance, equity, participation interest, lien, pledge, charge, claim or
security interest;
(m) The Mortgage Loan is covered by an ALTA lender's title
insurance policy or other generally acceptable form of policy or insurance
acceptable to FNMA or FHLMC, issued by a title insurer acceptable to FNMA or
FHLMC and qualified to do business in the jurisdiction where the Mortgaged
Property is located, insuring (subject to the exceptions contained in (j) (1),
(2) and (3) above) the Seller, its successors and assigns, as to the first
priority lien of the Mortgage in the original principal amount of the Mortgage
Loan. Such lender's title insurance policy insures ingress and egress by or upon
the Mortgaged Property or any interest therein. Where required by state law or
regulation, the Mortgagor has been given the opportunity to choose the carrier
of the required mortgage title insurance. The Seller, its successors and
assigns, are the sole insureds of such lender's title insurance policy, such
title insurance policy has been duly and validly endorsed to the Trustee for the
benefit of the Certificateholders or the assignment to the Trustee for the
benefit of the Certificateholders of the Seller's interest therein does not
require the consent of or notification to the insurer and such lender's title
insurance policy is in full force and effect and will be in full force and
effect upon the consummation of the transactions contemplated by this Agreement.
No claims have been made under such lender's title insurance policy, and no
prior holder of the related Mortgage, including the Seller, has done,
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by act or omission, anything which would impair the coverage of such lender's
title insurance policy;
(n) There is no default, breach, violation or event of
acceleration existent, under the Mortgage or the related Mortgage Note and no
event which, with the passage of time or with notice and the expiration of any
grace or cure period, would constitute a default, breach, violation or event
permitting acceleration; and neither the Seller nor any prior mortgagee has
waived any default, breach, violation or event permitting acceleration;
(o) There are no mechanics', or similar liens or claims which
have been filed for work, labor or material (and no rights are outstanding that
under law could give rise to such liens) affecting the related Mortgaged
Property which are or may be liens prior to or equal to the lien of the related
Mortgage;
(p) All improvements subject to the Mortgage which were
considered in determining the Appraised Value of the Mortgaged Property lie
wholly within the boundaries and building restriction lines of the Mortgaged
Property (and wholly within the project with respect to a condominium unit) and
no improvements on adjoining properties encroach upon the Mortgaged Property
except those which are insured against by the title insurance policy referred to
in clause (m) above and all improvements on the property comply with all
applicable zoning and subdivision laws and ordinances; the Mortgaged Property is
lawfully occupied under applicable law;
(q) The Mortgage Loan complies in all material respects with
all the terms, conditions and requirements of the Seller's underwriting
standards in effect at the time of origination of such Mortgage Loan. The
Mortgage Notes and Mortgages (exclusive of any riders) are on forms generally
acceptable to FNMA or FHLMC. Monthly Payments under the Mortgage Note are due
and payable on the first day of each month. The Mortgage contains the usual and
enforceable provisions of the originator at the time of origination for the
acceleration of the payment of the unpaid principal amount of the Mortgage Loan
if the related Mortgaged Property is sold without the prior consent of the
mortgagee thereunder;
(r) With respect to the Chase Mortgage Loans, to the best of
the Seller's knowledge, the Mortgaged Property is not subject to any material
damage by waste, fire, earthquake, windstorm, flood or other casualty. With
respect to the HomeSide Mortgage Loans, the Mortgaged Property is not subject to
any material damage by waste, fire, earthquake, windstorm, flood or other
casualty. With respect to the Chase Mortgage Loans, to the best of the Seller's
knowledge, at origination of the Mortgage Loan there was, and there currently
is, no proceeding pending for the total or partial condemnation of the Mortgaged
Property. With respect to the HomeSide Mortgage Loans, at origination of the
Mortgage Loan there was, and there currently is, no proceeding pending for the
total or partial condemnation of the Mortgaged Property;
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(s) The related Mortgage contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the Mortgaged Property of the benefits of
the security provided thereby, including, (l) in the case of a Mortgage
designated as a deed of trust, by trustee's sale, and (2) otherwise by judicial
foreclosure. There is no homestead or other exemption available to the Mortgagor
which would interfere with the right to sell the Mortgaged Property at a
trustee's sale or the right to foreclose the Mortgage;
(t) If the Mortgage constitutes a deed of trust, a trustee,
authorized and duly qualified if required under applicable law to act as such,
has been properly designated and currently so serves and is named in the
Mortgage, and no fees or expenses, except as may be required by local law, are
or will become payable by, the Purchaser to the trustee under the deed of trust,
except in connection with a trustee's sale or attempted sale after default by
the Mortgagor;
(u) The Mortgage File contains an appraisal of the related
Mortgaged Property signed prior to the final approval of the mortgage loan
application by an appraiser approved by the Seller who had no interest, direct
or indirect, in the Mortgaged Property or in any loan made on the security
thereof, and whose compensation is not affected by the approval or disapproval
of the Mortgage Loan. The appraisal is in a form acceptable to FNMA or FHLMC;
(v) All parties which have had any interest in the Mortgage,
whether as mortgagee, assignee, pledgee or otherwise, are (or, during the period
in which they held and disposed of such interest, were) (A) in substantial
compliance with any and all applicable licensing requirements of the laws of the
state wherein the Mortgaged Property is located, and (B) (1) organized under the
laws of such state, or (2) qualified to do business in such state, or (3)
federal savings and loan associations or national banks or a Federal Home Loan
Bank or savings bank having principal offices in such state, or (4) not doing
business in such state;
(w) The related Mortgage Note is not and has not been secured
by any collateral except the lien of the corresponding Mortgage and the security
interest of any applicable security interest of any applicable agreement or
chattel mortgage referred to above and such collateral does not serve as
security for any other obligation;
(x) The Mortgagor has received all disclosure materials
required by applicable law with respect to the making of such mortgage loans;
(y) The Mortgage Loan does not contain "graduated payment"
features;
(z) The Mortgagor is not in bankruptcy and, to the best of the
Depositor's knowledge, the Mortgagor is not insolvent;
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(aa) The Mortgage Loans are fixed rate mortgage loans. The
Mortgage Loans have an original term to maturity of not more than thirty (30)
years, with interest payable in arrears on the first day of each month. Each
Mortgage Note is payable in equal monthly installments of principal and interest
which is sufficient to amortize the Mortgage Loan fully by the stated maturity
date. No Mortgage Loan contains terms or provisions which would result in
negative amortization;
(bb) Each Mortgage Note, each Mortgage, each Assignment of
Mortgage and any other documents required pursuant to this Agreement to be
delivered to the Trustee on behalf of the Certificateholders or its designee, or
its assignee for each Mortgage Loan, have been, on or before the Closing Date,
delivered to the Trustee on behalf of the Certificateholders or its designee, or
its assignee;
(cc) All escrow payments have been collected in full
compliance with state and federal law and the provisions of the related Mortgage
Note and Mortgage. As to any Mortgage Loan that is the subject of an escrow,
escrow of funds is not prohibited by applicable law and has been established in
an amount sufficient to pay for every escrowed item that remains unpaid and has
been assessed but is not yet due and payable. No escrow deposits or other
charges or payments due under the Mortgage Note have been capitalized under any
Mortgage or the related Mortgage Note. Any interest required to be paid pursuant
to state, federal and local law has been properly paid and credited;
(dd) [Reserved];
(ee) In the event the Mortgage Loan has a Loan-to-Value Ratio
greater than 80%, the excess of the principal balance of the Mortgage Loan over
75% of the Appraised Value, with respect to a refinanced Mortgage Loan, or the
lesser of the Appraised Value or the purchase price of the Mortgaged Property,
with respect to a purchase money Mortgage Loan, is and will be insured as to
payment defaults by a Primary Insurance Policy issued by a Qualified Insurer.
All provisions of such Primary Insurance Policy have been and are being complied
with such policy is in full force and effect, and all premiums due thereunder
have been paid. No action, inaction, or event has occurred and no state of facts
exists that has, or will result in the exclusion from, denial of, or defense to
coverage. Any Mortgage Loan subject to a Primary Insurance Policy obligates the
Mortgagor thereunder to maintain the Primary Insurance Policy and to pay all
premiums and charges in connection therewith. The Mortgage Rate for the Mortgage
Loan as set forth on the Mortgage Loan Schedule is net of any such insurance
premium;
(ff) The assignment of Mortgage is in recordable form and is
acceptable for recording under the laws of the jurisdiction in which the
Mortgaged Property is located;
(gg) As to Mortgage Loans that are not secured by an interest
in a leasehold estate, the Mortgaged Property is located in the state identified
in the Mortgage Loan Schedule and consists of a single parcel of real property
with a detached single family residence erected
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thereon, or a townhouse, or a two-to four-family dwelling, or an individual
condominium unit in a condominium project, or an individual unit in a planned
unit development or a de minimis planned unit development, provided, however,
that no residence or dwelling is a single parcel of real property with a mobile
home thereon. As of the date of origination, no portion of the Mortgaged
Property was used for commercial purposes, and since the date of origination, to
the best of the Depositor's knowledge, no portion of the Mortgaged Property is
used for commercial purposes;
(hh) If the Mortgaged Property is a condominium unit or a
planned unit development (other than a de minimis planned unit development) such
condominium or planned unit development project meets the Seller's eligibility
requirements, as set forth in the Seller's underwriting guidelines;
(ii) To the best of the Seller's knowledge, there is no
pending action or proceeding directly involving the Mortgaged Property in which
compliance with any environmental law, rule or regulation is an issue;
(jj) The Mortgagor has not notified the Seller, and the
Depositor has no knowledge of any relief requested or allowed to the Mortgagor
under the Soldiers' and Sailors' Civil Relief Act of 1940;
(kk) No Mortgage Loan was made in connection with the
construction or rehabilitation of a Mortgaged Property or facilitating the
trade-in or exchange of a Mortgaged Property;
(ll) No action has been taken or failed to be taken by
Depositor, on or prior to the Closing Date which has resulted or will result in
an exclusion from, denial of, or defense to coverage under any Primary Insurance
Policy (including, without limitation, any exclusions, denials or defenses which
would limit or reduce the availability of the timely payment of the full amount
of the loss otherwise due thereunder to the insured) whether arising out of
actions, representations, errors, omissions, negligence, or fraud of the
Depositor, or for any other reason under such coverage;
(mm) The Mortgage Loan was originated by a mortgagee approved
by the Secretary of Housing and Urban Development pursuant to Sections 203 and
211 of the Act, a savings and loan association, a savings bank, a commercial
bank, credit union, insurance company or similar institution which is supervised
and examined by a federal or state authority;
(nn) Principal payments on the Mortgage Loan commenced no more
than sixty (60) days after funds were disbursed in connection with the Mortgage
Loan. The Mortgage Note is payable on the first day of each month in equal
monthly installments of principal and interest, with interest calculated and
payable in arrears, sufficient to amortize the Mortgage Loan fully by
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the stated maturity date, over an original term of not more than thirty years
from commencement of amortization; and
(oo) The Mortgage Loan is a "qualified mortgage" within the
meaning of Section 860G(a)(3) of the Code (without regard to Treasury
Regulations Section 1.860G-2(f) or any similar rule that provides that a
defective obligation is a qualified mortgage for a temporary period);
Upon discovery by any of the Depositor, the Servicer or the
Trustee of a breach of any of the foregoing representations and warranties which
materially and adversely affects the value of a Mortgage Loan or the interest of
the Certificateholders (or which materially and adversely affects the interests
of the Certificateholders in the related Mortgage Loan in the case of a
representation and warranty relating to a particular Mortgage Loan), the party
discovering such breach shall give prompt written notice to the other parties,
which notice shall specify the date of discovery. The Depositor shall within 90
days from the earlier of (i) the date specified in the notice as the date of
discovery of such breach or (ii) the date the Depositor otherwise discovers such
breach, cure such breach, substitute a Mortgage Loan pursuant to the provisions
of Section 3.04 or, if the breach relates to a particular Mortgage Loan,
purchase such Mortgage Loan from the Trustee at the Purchase Price. The Purchase
Price for the purchased Mortgage Loan shall be paid to the Servicer and shall be
deposited by the Servicer in the Collection Account promptly upon receipt, and,
upon receipt by the Trustee of written notification of such deposit signed by a
Servicing Officer, the Trustee shall promptly release to the Depositor the
related Mortgage File, and the Trustee shall execute and deliver such
instruments of transfer or assignment as may be provided to it by the Servicer,
without recourse, as shall be necessary to vest in the Depositor or its
designee, as the case may be, any Mortgage Loan released pursuant hereto, and
the Trustee shall have no further responsibility with regard to such Mortgage
Loan. It is understood and agreed that the obligation of the Depositor to cure,
substitute or purchase any Mortgage Loan as to which such a breach has occurred
shall constitute the sole remedy respecting such breach available to
Certificateholders or the Trustee on behalf of Certificateholders.
Section 3.02. Representations and Warranties of the Depositor.
The Depositor represents and warrants to, and covenants with, the Trustee for
the benefit of the Certificateholders that as of the Closing Date:
(a) The Depositor is a corporation duly chartered and validly
existing in good standing under the laws of the State of Delaware;
(b) The execution and delivery of this Agreement by the
Depositor and its performance and compliance with the terms of this
Agreement will not violate the Depositor's corporate charter or by-laws
or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in the
breach
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of, any material contract, agreement or other instrument to which the
Depositor is a party or which may be applicable to the Depositor or any
of its assets;
(c) This Agreement, assuming due authorization, execution and
delivery by the Trustee and the Servicer, constitutes a valid, legal
and binding obligation of the Depositor, enforceable against it in
accordance with the terms hereof subject to applicable bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally and to general principles of
equity, regardless of whether such enforcement is considered in a
proceeding in equity or at law;
(d) The 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 might
have consequences that would materially and adversely affect the
condition (financial or other) or operations of the Depositor or its
properties or might have consequences that would affect its performance
hereunder; and
(e) No litigation is pending or, to the best of the
Depositor's knowledge, threatened against the Depositor which would
prohibit its entering into this Agreement or performing its obligations
under this Agreement.
It is understood and agreed that the representations and
warranties set forth in this Section 3.02 shall survive the issuance and
delivery of the Certificates and shall be continuing as long as any Certificate
shall be outstanding or this Agreement has been terminated.
Section 3.03. Representations and Warranties of the Servicer.
The Servicer represents and warrants to, and covenants with, the Trustee for the
benefit of the Certificateholders that as of the Closing Date:
(a) The Servicer is a corporation duly chartered and validly
existing in good standing under the laws of the State of Florida, and
the Servicer is duly qualified or registered as a foreign corporation
in good standing in each jurisdiction in which the ownership or lease
or its properties or or the conduct of its business requires such
qualification;
(b) The execution and delivery of this Agreement by the
Servicer and its performance and compliance with the terms of this
Agreement will not violate the Servicer's corporate charter or by-laws
or constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, or result in the
breach of, any material contract, agreement or other instrument to
which the Servicer is a party or which may be applicable to the
Servicer or any of its assets;
(c) This Agreement, assuming due authorization, execution and
delivery by the Trustee and the Depositor, constitutes a valid, legal
and binding obligation of the
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Servicer, enforceable against it in accordance with the terms hereof
subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other laws affecting the enforcement of creditors'
rights generally and to general principles of equity, regardless of
whether such enforcement is considered in a proceeding in equity or at
law;
(d) The Servicer is not in default with respect to any order
or decree of any court or any order, regulation or demand of any
federal, state, municipal or governmental agency, which default might
have consequences that would materially and adversely affect the
condition (financial or other) or operations of the Servicer or its
properties or might have consequences that would affect its performance
hereunder; and
(e) No litigation is pending or, to the best of the Servicer's
knowledge, threatened against the Servicer which would prohibit its
entering into this Agreement or performing its obligations under this
Agreement.
It is understood and agreed that the representations and
warranties set forth in this Section 3.03 shall survive the issuance and
delivery of the Certificates and shall be continuing as long as any Certificate
shall be outstanding or this Agreement has been terminated.
Section 3.04. Option to Substitute. If the Depositor is
required to repurchase any Mortgage Loan pursuant to Section 2.02 or 3.01, the
Depositor may, at its option, within two years from the Closing Date, remove
such defective Mortgage Loan from the terms of this Agreement and substitute
another mortgage loan for such defective Mortgage Loan, in lieu of repurchasing
such defective Mortgage Loan. Any substitute Mortgage Loan shall (a) have a
Principal Balance at the time of substitution not in excess of the Principal
Balance of the removed Mortgage Loan (the amount of any difference, plus one
month's interest thereon at the Mortgage Rate borne by the removed Mortgage
Loan, being paid by the Depositor and deemed to be a Principal Prepayment to be
deposited by the Servicer in the Collection Account), (b) have a Mortgage Rate
not less than, and not more than one percentage point greater than, the Mortgage
Rate of the removed Mortgage Loan (provided, however, that if the Mortgage Rate
on the substitute Mortgage Loan exceeds the Mortgage Rate on the removed
Mortgage Loan, the amount of that excess interest (the "Substitute Excess
Interest") shall be payable to the Subsidiary Residual Interest), (c) have a
remaining term to stated maturity not later than, and not more than one year
less than, the remaining term to stated maturity of the removed Mortgage Loan,
(d) be, in the reasonable determination of the Servicer, of the same type,
quality and character (including location of the Mortgaged Property) as the
removed Mortgage Loan as if the breach had not occurred, (e) have a
Loan-to-Value Ratio at origination no greater than that of the removed Mortgage
Loan and (f) be, in the reasonable determination of the Servicer, in material
compliance with the representations and warranties contained in Section 3.01, as
of the date of substitution.
The Servicer shall amend the Mortgage Loan Schedule to reflect
the withdrawal of the removed Mortgage Loan from this Agreement and the
substitution of such substitute
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Mortgage Loan therefor and shall send a copy of such amended Mortgage Loan
Schedule to the Trustee. Upon such amendment the Depositor shall be deemed to
have made as to such substitute Mortgage Loan the representations and warranties
set forth in Section 3.01 as of the date of such substitution, which shall be
continuing as long as any Certificate shall be outstanding or this Agreement has
not been terminated, and the remedies for breach of any such representation or
warranty shall be as set forth in Section 3.01. Upon such amendment, the Trustee
shall review the Mortgage File delivered to it relating to the substitute
Mortgage Loan, within the time and in the manner and with the remedies specified
in Section 2.02, except that for purposes of this Section 3.04 (other than the
two-year period specified in the first sentence of this Section), such time
shall be measured from the date of the applicable substitution. In the event of
such a substitution, accrued interest on the substitute Mortgage Loan for the
month in which the substitution occurs and any Principal Prepayments made
thereon during such month shall be the property of the Trust Fund, and accrued
interest for such month on the Mortgage Loan for which the substitution is made
and any Principal Prepayments made thereon during such month shall be the
property of the Depositor. The principal payment on a substitute Mortgage Loan
due on the Due Date in the month of substitution shall be the property of the
Depositor, and the principal payment on the Mortgage Loan for which the
substitution is made due on such date shall be the property of the Trust Fund.
[End of Article III]
ARTICLE IV
THE CERTIFICATES
Section 4.01. The Certificates. (a) The Class A, Class M and
Class B Certificates shall be substantially in the forms thereof included within
Exhibits C, D, E and F and shall, on original issue, be executed by the Trustee
and authenticated by the Trustee upon receipt by the Trustee of the documents
specified in Section 2.01, delivered to or upon the order of the Depositor.
(b) The Depository, the Depositor and the Trustee have entered
into a Depository Agreement dated as of January 29, 1998 (the "Depository
Agreement"). Except as provided in paragraph (c) below, the Book-Entry
Certificates shall at all times remain registered in the name of the Depository
or its nominee and at all times: (i) registration of the Book-Entry Certificates
may not be transferred by the Trustee except to a successor to the Depository;
(ii) ownership and transfers of registration of the Book-Entry Certificates on
the books of the Depository shall be governed by applicable rules established by
the Depository; (iii) the Depository may collect its usual and customary fees,
charges and expenses from its Depository Participants; (iv) the Trustee shall
deal with the Depository, Depository Participants and Indirect Participants as
representatives of the Certificate Owners of the Book-Entry Certificates for
purposes of exercising the rights of such Holders under this Agreement, and
requests and directions for and votes of such representatives shall not be
deemed to be inconsistent if they are
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<PAGE> 60
made with respect to different Certificate Owners; and (v) the Trustee may rely
and shall be fully protected in relying upon information furnished by the
Depository with respect to its Depository Participants and furnished by the
Depository Participants with respect to Indirect Participants and persons shown
on the books of such Indirect Participants as direct or indirect Certificate
Owners. The Depository Agreement provides that the Depository shall maintain
book-entry records with respect to the Certificate Owners and with respect to
ownership and transfers of such Certificates.
All transfers by Certificate Owners of Book-Entry Certificates
shall be made in accordance with the procedures established by the Depository
Participant or brokerage firm representing such Certificate Owners. Each
Depository Participant shall only transfer Book-Entry Certificates of
Certificate Owners it represents or of brokerage firms for which it acts as
agent in accordance with the Depository's normal procedures.
(c) If (i)(A) the Depositor advises the Trustee in writing
that the Depository is no longer willing or able to properly discharge its
responsibilities as Depository and (B) the Trustee or the Depositor are unable
after exercise of their reasonable best efforts to locate a qualified successor
or (ii) the Depositor at its option advises the Trustee in writing that it
elects to terminate the book-entry system through the Depository, the Trustee
shall notify all Certificate Owners, through the Depository, of the occurrence
of any such event and of the availability of definitive, fully registered
Certificates (the "Definitive Certificates") to Certificate Owners requesting
the same. Upon surrender to the Trustee of the Book-Entry Certificates by the
Depository for registration and receipt by the Trustee of an adequate supply of
certificates from the Depositor, the Trustee shall issue the Definitive
Certificates based on information received from the Depository. Neither the
Depositor, the Servicer nor the Trustee shall be liable for any delay in
delivery of such instructions and may conclusively rely on, and shall be
protected in relying on, such instructions.
(d) The Certificates shall be issuable in the minimum original
dollar denominations (and integral multiples of $1,000 in excess of such amount)
and aggregate original dollar denominations per Class as set forth in the
following table (except that one Class A-P Certificate and one of each Class of
Class B Certificates may be issued in a different denomination).
<TABLE>
<CAPTION>
Aggregate Original Certificate
Minimum Principal Balance of all
Original Certificates of the CUSIP
Class Denomination Indicated Class Number
----- ------------ ----------------- ------
<S> <C> <C> <C>
A-1 $25,000 $175,500,000.00 437609 AA 8
A-2 $1,000 $40,501,000.00 437609 AB 6
A-3 $1,000 $11,012,000.00 437609 AC 4
A-4 $25,000 $37,328,000.00 437609 AD 2
</TABLE>
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<PAGE> 61
<TABLE>
<CAPTION>
Aggregate Original Certificate
Minimum Principal Balance of all
Original Certificates of the CUSIP
Class Denomination Indicated Class Number
----- ------------ ----------------- ------
<S> <C> <C> <C>
A-5(1) $25,000 $75,481,062.00 437609 AE 0
A-6 $25,000 $23,954,379.00 437609 AF 7
A-7(2) $1,000 $4,978,135.00 437609 AG 5
A-8 $25,000 $3,477,523.00 437609 AH 3
A-9 (3) (3) 437609 AJ 9
A-10 $25,000 $1,049,002.00 437609 AK 6
A-P $1,000 $1,332.08 437609 AU 4
A-R(4) $100 $100 437609 AL 4
A-X (5) (5) 437609 AM 2
M $25,000 $8,186,879.00 437609 AN 0
B-1 $25,000 $3,313,736.00 437609 AP 5
B-2 $25,000 $1,754,331.00 437609 AQ 3
B-3 $100,000 $1,364,480.00 437609 AR 1
B-4 $100,000 $974,628.00 437609 AS 9
B-5 $100,000 $974,629.18 437609 AT 7
</TABLE>
- ---------------
(1) The Original Certificate Principal Balances of Class A-5 Component One
and Class A-5 Component Two are $60,856,641.00 and $14,669,045.00,
respectively.
(2) The Original Certificate Principal Balances of Class A-7 Component One
and Class A-7 Component Two are $3,309,090.00 and $1,669,045.00,
respectively.
(3) The Class A-9 Certificates have no Principal Balance, but will accrue
interest on the Class A-9 Notional Balance (initially, $216,658.09).
(4) The Class A-R Certificate represents the Master Residual Interest and
the Subsidiary Residual Interest.
(5) The Class A-X Certificates have no Principal Balance, but accrue
interest on the Class A-X Notional Balance (initially, $45,403,635.28).
The Certificates shall be signed by manual or facsimile
signature on behalf of the Trustee by a Responsible Officer of the Trustee.
Certificates bearing the manual or facsimile signatures of individuals who were
at the time of signature Responsible Officers of the Trustee shall bind the
Trustee, notwithstanding that such individuals or any of them have ceased to be
a Responsible Officer prior to the authentication and delivery of such
Certificate or did not hold such offices at the date of such Certificates. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Certificate a manual
authentication by a Responsible Officer of the Trustee and such authentication
upon any Certificate shall be conclusive evidence, and the only evidence, that
such Certificate has been
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<PAGE> 62
duly authenticated and delivered hereunder. All Certificates shall be dated the
date of their authentication.
Section 4.02. Registration of Transfer and Exchange of
Certificates. (a) The Trustee shall cause to be kept at its Corporate Trust
Office, or at the office of its designated agent, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Components of any Class shall
not be separately transferable.
(b) Upon surrender for registration of transfer of any
Certificate at any office or agency of the Trustee maintained for such purpose,
the Depositor shall execute and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, a Certificate of a like
Class and aggregate Percentage Interest and dated the date of authentication by
the Trustee.
(c) No transfer of a Class B-3, Class B-4 or Class B-5
Certificate shall be made unless such transfer is made pursuant to an effective
registration statement or otherwise in accordance with the requirements under
the Securities Act of 1933, as amended. If such a transfer is to be made in
reliance upon an exemption from said Act, (i) the Trustee or the Depositor may
require (except with respect to the initial transfer of a Class B-3, Class B-4
or Class B-5 Certificate from Donaldson, Lufkin & Jenrette Securities
Corporation and except if the transferee executes a certificate substantially in
the form of Exhibit I hereto) a written opinion of independent counsel
acceptable to and in form and substance satisfactory to the Trustee and the
Depositor that such transfer may be made pursuant to an exemption, describing
the applicable exemption and the basis therefor, from said Act and laws or is
being made pursuant to said Act and laws, which opinion of counsel shall not be
an expense of the Trust Fund, the Trustee, the Depositor or the Servicer, and
(ii) the Trustee shall require the transferee to execute a certification
substantially in the form of Exhibit H or Exhibit I. The Trustee shall notify
each Rating Agency upon any transfer of a Class B Certificate.
(d) No transfer of a Subordinated Certificate shall be made to
any employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of such plan or using the assets of such
plan. No transfer of a Subordinated Certificate shall be made unless the Trustee
shall have received either (i) a representation letter from the transferee of
such Certificate acceptable to and in form and substance satisfactory to the
Trustee and the Depositor, to the effect that (A) such transferee is not an
employee benefit plan subject to Section 406 of ERISA or Section 4975 of the
Code, nor a person acting on behalf of any such plan or using the assets of such
plan, or, alternatively, in the case of an insurance company, the assets of any
separate accounts to effect such acquisition, or alternatively, (B) the source
of funds for the purchase of such Certificate is an "insurance company general
account" within the meaning of Prohibited Transaction Class Exemption 95-60
("PTCE 95-60"), 60 Fed. Reg. 35925 (July 12, 1995), and the conditions set forth
in Section I and III of PTCE 95-60 are satisfied with
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respect to the purchase and holding of such Certificate, which representation
letter shall not be an expense of the Trustee, the Depositor or the Servicer, or
(ii) in the case of a Subordinated Certificate presented for registration in the
name of an employee benefit plan subject to ERISA or Section 4975 of the Code
(or comparable provisions of any subsequent enactments) or a trustee of any such
plan or any other Person who is using the assets of any such plan to effect such
acquisition, an Opinion of Counsel satisfactory to the Trustee and the Depositor
to the effect that the purchase or holding of such Subordinated Certificate will
not result in the assets of the Trust Fund being deemed to be "plan assets"
pursuant to the Department of Labor Plan Asset Regulations set forth in 29
C.F.R. Section 2510.3-101 and subject to the fiduciary responsibility provisions
of ERISA or the prohibited transaction provisions of the Code, will not
constitute or result in a prohibited transaction within the meaning of Section
406 or Section 407 of ERISA or Section 4975 of the Code, and will not subject
the Trustee, the Depositor or the Servicer to any obligation in addition to
those undertaken in this Agreement, which opinion of counsel shall not be an
expense of the Trustee, the Depositor or the Servicer.
(e) At the option of a Certificateholder, a Certificate may be
exchanged for another Certificate or Certificates of authorized denominations of
a like Class, upon surrender of the Certificate to be exchanged at any office or
agency of the Trustee maintained for such purpose. Whenever the Certificate is
so surrendered for exchange, the Depositor shall execute and the Trustee shall
authenticate and deliver, the Certificate which the Certificateholder making the
exchange is entitled to receive. Every Certificate presented or surrendered for
transfer or exchange shall (if so required by the Trustee) be duly endorsed by,
or be accompanied by a written instrument of transfer in the form satisfactory
to the Trustee duly executed by, the Holder thereof or his attorney duly
authorized in writing.
(f) No service charge shall be made to the Holder for any
transfer or exchange of a Certificate, but the Trustee may require payment by
the Certificateholders of a sum sufficient to cover any tax or governmental
charge that may be imposed in connection with any transfer or exchange of such
Certificate.
(g) All Certificates surrendered for transfer or exchange
shall be destroyed by the Trustee in accordance with the Trustee's standard
procedures.
(h) At the option of the Holder of the Class A-R Certificate,
the Subsidiary Residual Interest and the Master Residual Interest may be severed
and represented by separate certificates; provided, however, that such separate
certification may not occur until the Trustee receives an Opinion of Counsel to
the effect that separate certification in the form and manner proposed would not
result in the imposition of federal tax upon either REMIC Pool or cause either
REMIC Pool to fail to qualify as a REMIC; and provided further, that the
provisions of Sections 4.02(c), 4.02(d), 4.02(i) and 7.02(b) will apply to each
such separate certificate as if the separate certificate were a Class A-R
Certificate. If, as evidenced by an Opinion of Counsel, it is necessary to
preserve the REMIC status of either REMIC Pool, the Subsidiary Residual Interest
and the Master Residual Interest shall be severed and represented by separate
certificates.
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(i) A Disqualified Organization is prohibited from acquiring
beneficial ownership of a Class A-R Certificate. Notwithstanding anything to the
contrary contained herein, unless and until the Trustee shall have received an
Opinion of Counsel, satisfactory in form and substance to the Trustee, to the
effect that the absence of the conditions contained in this Section 4.02(i)
would not result in the imposition of federal tax upon either REMIC Pool or
cause either REMIC Pool to fail to qualify as a REMIC, no transfer, sale or
other disposition of the Class A-R Certificate (including for purposes of this
section any beneficial interest therein) may be made without the express written
consent of the Trustee, which consent is to be granted by the Trustee only upon
compliance with the requirements of this Section and a copy of which written
consent shall be supplied to the Servicer. As a condition to granting its
consent to a transfer of a Class A-R Certificate, the Trustee shall require the
proposed transferee of such Certificate (including, in the case of the initial
issuance of the Class A-R Certificate, the initial Holder thereof) to execute a
letter and affidavit substantially in the form attached hereto as Exhibit K.
As a condition to the granting of the consent referred to in
this Section 4.02(i), prior to the transfer, sale, pledge, hypothecation or
other disposition of the Class A-R Certificate or any interest therein, the
Trustee shall require that the proposed transferee deliver to the Servicer and
the Trustee (1) its taxpayer identification number and state, under penalties of
perjury that such number is the social security or employee identification
number, as the case may be, of the transferee or provide an affidavit under
penalties of perjury stating that as of the date of such transfer such
transferee is not and has no intention of becoming a Disqualified Organization,
(2) an affidavit stating (i) that such transferee is not acquiring such Class
A-R Certificate as an agent, broker, nominee, or middleman for a Disqualified
Organization, (ii) if the Residual Interest is a "non-economic residual
interest" within the meaning of Treas. Reg. Section 1.860E-1(c)(2), (X) that no
purpose of the acquisition of the Class A-R Certificate is to avoid or impede
the assessment or collection of tax, (Y) that such transferee has historically
paid its debts as they came due and will continue to pay its debts as they come
due, and (Z) that such transferee represents that it understands that, as the
holder of the non-economic residual interest, the transferee may incur tax
liabilities in excess of any cash flows generated by the interest and that the
transferee intends to pay taxes associated with holding the residual interest,
and (iii) unless the Trustee consents to the transfer of the Class A-R
Certificate to a Person who is not a U.S. Person, that it is a U.S. Person, and
(3) the transferor deliver to the Trustee and the Servicer a written
certification that as of the date of such transfer it has no knowledge and no
reason to know that the affirmations described in clauses (1) and (2) were
false. The Trustee shall not grant the consent referred to in this Section
4.02(i) if it has actual knowledge that any statement made in the affidavit
issued pursuant to the preceding sentence is not true. Notwithstanding any
purported transfer, sale or other disposition of the Class A-R Certificate to a
Disqualified Organization, such transfer, sale or other disposition shall be
deemed to be of no legal force or effect whatsoever and such Disqualified
Organization shall not be deemed to be a Class A-R Certificateholder for any
purpose hereunder, including, but not limited to, the receipt of distributions
on such Class A-R Certificate. If any purported transfer shall be in violation
of the provisions of this Section 4.02(i) then the prior holder of the Class A-R
Certificate shall, upon discovery that the transfer of such Class A-R
Certificate was not in fact permitted by this Section
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4.02(i), be restored to all rights as a Holder thereof retroactive to the date
of the purported transfer of such Class A-R Certificate. The Trustee and the
Servicer shall be under no liability to any Person for any registration or
transfer of a Class A-R Certificate that is not permitted by this Section
4.02(i) or for making payments due on such Class A-R Certificate to the
purported Holder thereof or taking any other action with respect to such
purported Holder under the provisions of this Agreement so long as the transfer
was not registered under the written certification of the Servicer as described
in this Section 4.02(i). The prior Holder shall be entitled to recover from any
purported Holder of a Class A-R Certificate that was in fact not a permitted
purported transferee under this Section 4.02(i) at the time it became a
purported Holder all payments made to such purported Holder on such Class A-R
Certificate; provided that the Servicer shall not be responsible for such
recovery. Each Class A-R Certificateholder, by the acceptance of the Class A-R
Certificate, shall be deemed for all purposes to have consented to the
provisions of this Section 4.02(i) and to any amendment to this Agreement deemed
necessary by counsel of the Trustee or the Servicer to ensure that the Class A-R
Certificate is not transferred to a Disqualified Organization and that any
transfer of such Class A-R Certificate will not cause the imposition of a tax
upon either REMIC Pool or cause either REMIC Pool to fail to qualify as a REMIC.
The restrictions on transfer of the Class A-R Certificate will cease to apply
and be void upon receipt by the Trustee of an Opinion of Counsel to the effect
that such restrictions on transfer are no longer necessary to avoid the risk of
material federal taxation to either REMIC Pool or prevent either REMIC Pool from
qualifying as a REMIC.
(j) The Servicer shall make available upon written request to
each Holder and each proposed transferee of a Class B-3, Class B-4 or Class B-5
Certificate such information as may be required to permit the proposed transfer
to be effected pursuant to Rule 144A under the Securities Act of 1933.
Section 4.03. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) 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 (b) there is delivered to the Trustee such
security or indemnity as may be required by it to save it harmless, then, in the
absence of notice to the Trustee that such Certificate has been acquired by a
bona fide purchaser, 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 tenor and Class. Upon the issuance of any new Certificate
under this Section, the Trustee may require of the Certificateholder the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses connected therewith. Any
replacement Certificate of any Class issued pursuant to this Section shall
constitute complete and indefeasible evidence of ownership of the Percentage
Interest in the distributions to which the Certificateholders of such Class are
entitled, as if originally issued, whether or not the mutilated, destroyed, lost
or stolen Certificate shall be found at any time, and such mutilated, destroyed,
lost or stolen Certificate shall be of no force or effect under this Agreement,
to the extent permitted by law.
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Section 4.04. Persons Deemed Owners. Prior to due presentation
of a Certificate of any Class for registration of transfer, the Depositor, the
Servicer and the Trustee may treat the person in whose name any Certificate is
registered on the Record Date as the owner of such Certificate and the
Percentage Interest in the distributions to which the Certificateholders of such
Class are entitled on the relevant date as the Holder of such Certificate and
the Percentage Interest represented by such Certificate for the purpose of
receiving remittances pursuant to Section 6.01 and for all other purposes
whatsoever, and neither the Depositor, the Servicer nor the Trustee shall be
affected by notice to the contrary.
Section 4.05. Establishment of Certificate Account; Deposit in
Certificate Account. The Trustee shall establish and maintain one or more
Certificate Accounts for the benefit of the Certificateholders (collectively,
the "Certificate Account") which are Eligible Accounts, in the form of a trust
account, in the name of "Norwest Bank Minnesota, National Association, as
Trustee, in trust for and for the benefit of the Certificateholders of
Multi-Class Mortgage Pass-Through Certificates, HomeSide Mortgage Securities,
Inc. Series 1998-1 Certificate Account." Such Certificate Account shall be
established with a commercial bank, a savings bank or a savings and loan
association.
By 1:00 p.m. New York time on each Servicer Remittance Date,
the Servicer shall cause to be deposited in the Certificate Account, from funds
on deposit in the Collection Account, (a) an amount equal to the Available
Distribution Amount for the related Distribution Date and (b) Advances for such
Distribution Date required to be made pursuant to Section 6.03. Upon becoming
aware of any failure of the Servicer to make any such required deposit, the
Trustee shall promptly give written notice of such failure to the Servicer.
The Trustee may invest, or cause the institution maintaining
the Certificate Account to invest, moneys in the Certificate Account in Eligible
Investments, which shall mature not later than the Business Day next preceding
the Distribution Date next following the date of such investment (except that if
such Eligible Investment is an obligation of the institution that maintains the
Certificate Account, then, such Eligible Investment shall mature not later than
the related Distribution Date) and shall not be sold or disposed of prior to its
maturity. All income and gain realized from any such investment shall be for the
benefit of the Trustee as additional compensation and shall be subject to its
withdrawal or order from time to time. The amount of any losses incurred in
respect of any such investments (to the extent not offset by income from other
such investments) shall be deposited in the Certificate Account by the Trustee
out of its own funds immediately as realized.
Section 4.06. Permitted Withdrawals from the Certificate
Account. The Trustee may, from time to time, make withdrawals from the
Certificate Account for the following purposes:
(i) to make payments in the amounts and in the manner provided
for in Section 6.01;
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(ii) to reimburse itself for expenses incurred by it and
reimbursable pursuant to Section 8.03 and to reimburse the Depositor or
the Servicer for expenses incurred by either of them and reimbursable
pursuant to Section 8.03;
(iii) to pay to the Seller with respect to each Mortgage Loan
or property acquired in respect thereof that has been repurchased or
replaced pursuant to Section 2.02 or 3.01 or to pay to the Servicer
with respect to each Mortgage Loan or property acquired in respect
thereof that has been purchased pursuant to Section 11.01 all amounts
received thereon and not required to be distributed as of the date on
which the related Purchase Price was determined;
(iv) to reimburse the Servicer for unreimbursed Advances made
by it with respect to previous Distribution Dates, to the extent such
reimbursement is permitted to be made from the Collection Account
pursuant to Section 5.09(iv) and only if such reimbursement has not
been made from the Collection Account;
(v) to pay itself any interest earned on or investment income
earned with respect to funds in the Certificate Account;
(vi) to return to the Collection Account any amount deposited
in the Certificate Account that was not required to be deposited
therein; and
(vii) to clear and terminate the Certificate Account pursuant
to Section 11.01.
The Trustee shall keep and maintain an accurate accounting of
all withdrawals from the Certificate Account pursuant to each of the
subparagraphs listed above.
Section 4.07. Authenticating Agents. (a) The Trustee may
appoint one or more Authenticating Agents (each, an "Authenticating Agent")
which shall be authorized to act on behalf of the Trustee in authenticating the
Certificates. Wherever reference is made in this Agreement to the authentication
of Certificates by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication on behalf of the
Trustee by an Authenticating Agent and a certificate of authentication executed
on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent
must be an entity organized and doing business under the laws of the United
States of America or of any state, having a combined capital and surplus of at
least $15,000,000, authorized under such laws to do a trust business and subject
to supervision or examination by federal or state authorities.
(b) Any Person into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any Person resulting from any
merger, conversion or consolidation to which any Authenticating Agent shall be a
party, or any Person succeeding to the corporate agency business of any
Authenticating Agent, shall continue to be the
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Authenticating Agent without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
(c) Any Authenticating Agent may at any time resign by giving at least
30 days' advance written notice of resignation to the Trustee and the Depositor.
The Trustee may at any time terminate the agency of any Authenticating Agent by
giving written notice of termination to such Authenticating Agent and the
Depositor. Upon receiving a notice of resignation or upon such a termination, or
in case at any time any Authenticating Agent shall cease to be eligible in
accordance within the provisions of this Section 4.07, the Trustee may appoint a
successor Authenticating Agent, shall give written notice of such appointment to
the Depositor and shall mail notice of such appointment to all Holders of
Certificates. Any successor Authenticating Agent upon acceptance of its
appointment hereunder shall become vested with all the rights, powers, duties
and responsibilities of its predecessor hereunder, with like effect as if
originally named as Authenticating Agent. No successor Authenticating Agent
shall be appointed unless eligible under the provisions of this Section 4.07. No
Authenticating Agent shall have responsibility or liability for any action taken
by it as such at the direction of the Trustee. Any Authenticating Agent shall be
entitled to reasonable compensation for its services and any such compensation
shall be payable solely by the Trustee, without any right of reimbursement from
the Depositor, the Servicer or the Trust Fund.
[End of Article IV]
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ARTICLE V
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01. Servicer to Service Mortgage Loans. The Servicer
shall service and administer the Mortgage Loans and shall have full power and
authority, acting alone or through Sub-Servicers as provided in Section 5.02, to
do any and all things which it may deem necessary or desirable in connection
with such servicing and administration, all in accordance with Accepted
Servicing Practices. Without limiting the generality of the foregoing, the
Servicer in its own name or in the name of a Sub-Servicer shall, pursuant to a
power of attorney granted hereby by the Trustee for such purposes, when the
Servicer or the Sub-Servicer, as the case may be, believes it appropriate in its
best judgment, to execute and deliver, on behalf of the Certificateholders and
the Trustee or any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge and all other
comparable instruments, with respect to the Mortgage Loans and with respect to
the Mortgaged Properties; provided, however, that subject to the provisions of
this paragraph, the Servicer may allow a modification with respect to a Mortgage
Loan if the Servicer would take such action in the ordinary course of its
business if it were the owner of the Mortgage Loan. The Servicer may agree to a
modification of any Mortgage Loan (the "Relevant Mortgage Loan") upon the
request of the related Mortgagor, provided that (i) the modification is in lieu
of a refinancing and the Mortgage Rate on the Relevant Mortgage Loan, as
modified, is approximately a prevailing market rate of newly-originated mortgage
loans having similar terms, (ii) the aggregate of the adjusted bases of all
Modified Mortgage Loans (including the Relevant Mortgage Loans) plus the
aggregate adjusted bases of any assets that are not qualified mortgages or
permitted investments under Section 860G(a) of the Code that are assets of the
Trust Fund established hereunder at all times on any day is less than one
percent of the aggregate of the adjusted bases of all assets of the Trust Fund
(including such Modified Mortgage Loans) on such day, and (iii) the Servicer
purchases the Relevant Mortgage Loan from the Trust Fund as described below.
Effective immediately after such modification, and, in any event, on the same
Business Day on which the modification occurs, all right, title and interest of
the Trustee in and to the Modified Mortgage Loan shall automatically be deemed
transferred and assigned to the Servicer and all benefits and burdens of
ownership thereof, including without limitation the right to accrued interest
thereon from and including the date of modification and the risk of default
thereon, shall pass to the Servicer. To confirm such transfer and assignment,
the Servicer, as servicer hereunder, as soon as practicable shall execute an
instrument of assignment of the Modified Mortgage Loan without recourse in
customary form to the Servicer in its individual capacity. The Servicer shall
deposit the Purchase Price for any Modified Mortgage Loan in the Collection
Account pursuant to Section 5.08. Upon receipt by the Trustee of written
notification of any such deposit signed by a Servicing Officer, the Trustee
shall release to the Servicer the related Mortgage File and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse, as shall be necessary more fully to vest in the Servicer any Modified
Mortgage Loan previously transferred and assigned pursuant thereto.
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The Servicer shall furnish to the Trustee for execution and
redelivery to the Servicer or, at the request of the Servicer, a Sub-Servicer,
such documents necessary or appropriate to enable the Servicer to service and
administer the Mortgage Loans and the Trustee shall not be responsible for the
Servicer's application thereof. The Servicer agrees to remain eligible as either
a FNMA or FHLMC seller/servicer, or both, for so long as it is Servicer.
All Servicing Advances made by the Servicer in effecting the
timely payment of taxes, insurance and assessments on the properties subject to
the Mortgage Loans shall not, for the purpose of calculating monthly
distributions to Certificateholders, be added to the amount owing under the
related Mortgage Loans, notwithstanding that the terms of such Mortgage Loan so
permit, and such Servicing Advances shall be recoverable by the Servicer to the
extent permitted by Sections 5.09 and 5.23.
Section 5.02. Sub-Servicing Agreements Between Servicer and
Sub-Servicers; Enforcement of Sub-Servicer's Obligations. (a) The Servicer may
enter into Sub-Servicing Agreements with Sub-Servicers for the servicing and
administration of all or part of the Mortgage Loans. References in this
Agreement to actions taken or to be taken by the Servicer in servicing the
Mortgage Loans include actions taken or to be taken by a Sub-Servicer on behalf
of the Servicer. Each Sub-Servicing Agreement will be upon such terms and
conditions as are not inconsistent with this Agreement and as the Servicer and
the Sub-Servicer have agreed. The Servicer shall notify the Trustee in writing
promptly upon the appointment of any Sub-Servicer. For purposes of this
Agreement, the receipt by the Sub-Servicer of any amount with respect to a
Mortgage Loan (other than amounts representing servicing compensation or
reimbursement for an advance) shall be treated as the receipt by the Servicer of
such amount. The Sub-Servicer shall deposit all such funds in an Eligible
Account.
(b) As part of its servicing activities hereunder, the
Servicer, for the benefit of the Trustee and the Certificateholders, shall
enforce the obligations of each Sub-Servicer under the related Sub-Servicing
Agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of Sub-Servicing Agreements as appropriate,
and the pursuit of other remedies, shall be in such form and carried out to such
an extent and at such time as the Servicer, in its good faith business judgment,
would require were it the owner of the related Mortgage Loans. The Servicer
shall pay the costs of such enforcement at its own expense but shall be
reimbursed therefor only (i) from a general recovery resulting from such
enforcement only to the extent, if any, that such recovery exceeds all amounts
due in respect of the related Mortgage Loans or (ii) from a specific recovery of
costs, expenses or attorneys' fees against the party against whom such
enforcement is directed.
Section 5.03. Successor Sub-Servicers. The Servicer shall be
entitled to terminate any Sub-Servicing Agreement that may exist in accordance
with the terms and conditions of such Sub-Servicing Agreement and without any
limitation by virtue of this Agreement.
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Section 5.04. Liability of the Servicer. Notwithstanding any
Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer and a Sub-Servicer or reference
to actions taken through a Sub-Servicer or otherwise, the Servicer shall remain
obligated and liable to the Trustee and Certificateholders for the servicing and
administering of the Mortgage Loans in accordance with the provisions of this
Agreement without diminution of such obligation or liability by virtue of such
Sub-Servicing Agreements or arrangements or by virtue of indemnification from
the Sub-Servicer and to the same extent and under the same terms and conditions
as if the Servicer alone were servicing and administering the Mortgage Loans.
The Servicer shall be entitled to enter into any agreement with a Sub-Servicer
for indemnification of the Servicer and nothing contained in this Agreement
shall be deemed to limit or modify such indemnification.
Section 5.05. No Contractual Relationship Between Sub-Servicer
and Trustee or Certificateholders. Any Sub-Servicing Agreement that may be
entered into and any other transactions or services relating to the Mortgage
Loans involving a Sub-Servicer in its capacity as such and not as an originator
shall be deemed to be between the Sub-Servicer and the Servicer alone, and the
Trustee and Certificateholders shall not be deemed parties thereto and shall
have no claims, rights, obligations, duties or liabilities with respect to the
Sub-Servicer.
Section 5.06. Termination of Sub-Servicing Agreement. If the
Servicer shall for any reason no longer be the Servicer hereunder (including by
reason of any Event of Default), the Servicer shall thereupon terminate each
Sub-Servicing Agreement that may have been entered into, and the Trustee, its
designee or the successor servicer and the Trustee shall not be deemed to have
assumed any of the Servicer's interest therein or to have replaced the Servicer
as a party to any such Sub-Servicing Agreement.
Section 5.07. Collection of Mortgage Loan Payments.
Continuously from the date hereof until the principal and interest on all
Mortgage Loans are paid in full, the Servicer will proceed diligently to collect
all payments due under each of the Mortgage Loans when the same shall become due
and payable and shall, to the extent such procedures shall be consistent with
this Agreement, follow such collection procedures as it follows with respect to
conventional mortgage loans held in its own portfolio. Any such arrangements
shall not diminish or otherwise affect the Servicer's obligation to make
Advances pursuant to Section 6.03.
Section 5.08. Establishment of Collection Account; Deposit in
Collection Account. With respect to all of the Mortgage Loans, the Servicer
shall segregate and hold all funds collected and received pursuant to a Mortgage
Loan separate and apart from any of its own funds and general assets and shall
establish and maintain one or more Collection Accounts for the benefit of the
Certificateholders (collectively, the "Collection Account") which are Eligible
Accounts, in the form of a trust account, in the name of "Norwest Bank
Minnesota, National Association, as Trustee, in trust for and for the benefit of
the Certificateholders of Multi-Class Mortgage Pass-Through Certificates,
HomeSide Mortgage Securities, Series 1998-1 - Collection Account." Such
Collection Account shall be established with a commercial bank, a savings bank
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or a savings and loan association. The Servicer may invest, or cause the
institution maintaining the Collection Account to invest, moneys in the
Collection Account in Eligible Investments, which shall mature not later than
the Business Day next preceding the Servicer Remittance Date next following the
date of such investment and shall not be sold or disposed of prior to its
maturity. All income and gain realized from any such investment shall be for the
benefit of the Servicer as additional compensation and shall be subject to its
withdrawal or order from time to time. The amount of any losses incurred in
respect of any such investments (to the extent not offset by income from other
such investments) shall be deposited in the Collection Account by the Servicer
out of its own funds immediately as realized; provided, however, that if the
Trustee becomes Servicer, the Trustee shall not be required to deposit the
amount of any loss incurred prior to it becoming Servicer.
The Servicer shall deposit or cause to be deposited in the
Collection Account on a daily basis (and not later than the second Business Day
following receipt), and retain therein:
(i) All payments which were received after the Cut-off Date on
account of principal of the Mortgage Loans (other than the principal
portion of Monthly Payments due on or before the Cut-off Date), and all
Principal Prepayments collected on or after the Cut-off Date;
(ii) All payments which were received after the Cut-off Date
on account of interest on the Mortgage Loans (net of the Servicing
Fee)(other than the interest portion of Monthly Payments due on or
before the Cut-off Date);
(iii) Net Liquidation Proceeds;
(iv) All Insurance Proceeds received by the Servicer under any
title, hazard or other insurance policy, including amounts required to
be deposited pursuant to Sections 5.16 and 5.20, other than proceeds to
be held in the Escrow Account or applied to the restoration or repair
of the Mortgaged Property or released to the Mortgagor in accordance
with the Servicer's normal servicing procedures or otherwise applied or
held as required by applicable law;
(v) All awards or settlements in respect of condemnation
proceedings affecting any Mortgaged Property which are not released to
the Mortgagor in accordance with the Servicer's normal servicing
procedures;
(vi) All Repurchase Proceeds;
(vii) All Advances made by the Servicer pursuant to Section
6.03;
(viii) All amounts representing revenues under the insurance
provided pursuant to Section 5.19 to the extent of any losses borne by
any Certificateholder;
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(ix) All revenues from any Mortgaged Property acquired by the
Servicer by foreclosure or deed in lieu of foreclosure net of any
Servicing Advances with respect to such Mortgaged Property; and
(x) Any other amounts required to be deposited therein
pursuant to this Agreement.
The Servicer shall maintain accounting records on a
loan-by-loan basis with respect to the Collection Account. The Servicer shall
give notice to the Trustee and the Depositor and each Rating Agency of any
change in the location of the Collection Account, prior to the use thereof.
Notwithstanding anything to the contrary herein, no Monthly Payment or any
portion thereof shall be permitted to remain in the Collection Account for more
than 12 months. Any Monthly Payment or any portion thereof that has remained in
the Collection Account for 12 months shall be deemed a Principal Prepayment and
distributed to Certificateholders pursuant to the provisions of this Agreement
on the Distribution Date immediately following the end of such 12 month period.
Section 5.09. Permitted Withdrawals from the Collection
Account. The Servicer may, from time to time, withdraw funds from the Collection
Account for the following purposes:
(i) to reimburse itself for Advances made pursuant to Section
6.03 (including amounts to reimburse the related Sub-Servicer for advances made
pursuant to the applicable Sub-Servicing Agreement), the Servicer's and the
Sub-Servicer's right to receive reimbursement pursuant to this subclause (i)
being limited to amounts received on particular Mortgage Loans which represent
Late Collections (net of the Servicing Fees) with respect to those particular
Mortgage Loans;
(ii) to pay itself the Servicing Fee;
(iii) to reimburse itself for unreimbursed Servicing Advances,
or to pay the related Sub-Servicer any unreimbursed Servicing Advances,
the Servicer's right to receive reimbursement or make payments to the
Sub-Servicer pursuant to this subclause (iii) with respect to any
Mortgage Loan being limited to related Liquidation Proceeds, Insurance
Proceeds, and condemnation awards;
(iv) to reimburse itself (or the related Sub-Servicer) or the
Depositor for expenses incurred by and recoverable by or reimbursable
to it pursuant to Section 5.01 or 5.16;
(v) to reimburse itself (or the related Sub-Servicer) for any
Nonrecoverable Advances;
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(vi) to pay to itself (or the related Sub-Servicer) income
earned on the investment of funds deposited in the Collection Account;
(vii) to make deposits into the Certificate Account in the
amounts and in the manner provided for herein;
(viii) to make payments to itself or others pursuant to any
provision of this Agreement, and to clear and terminate the Collection
Account upon the termination of this Agreement; and
(ix) to withdraw amounts deposited in error.
Section 5.10. Establishment of Escrow Account; Deposits in
Escrow Account. With respect to those Mortgage Loans on which the Servicer or
any Sub-Servicer collects Escrow Payments, if any, the Servicer shall, and shall
cause the Sub-Servicer to, segregate and hold all funds collected and received
pursuant to each such Mortgage Loan which constitute Escrow Payments separate
and apart from any of its own funds and general assets and shall establish and
maintain one or more Escrow Accounts, in the form of trust accounts. Such Escrow
Accounts shall be established with a commercial bank, a mutual savings bank or a
savings and loan association the deposits of which are insured by the FDIC in a
manner which shall provide maximum available insurance thereunder, and which may
be drawn on by the Servicer. The Servicer shall give notice to the Trustee of
the location of any Escrow Account, and of any change thereof, prior to the use
thereof. Nothing in this paragraph shall be deemed to require the Servicer to
collect Escrow Payments in the absence of a provision in the related Mortgage
requiring such collection.
The Servicer shall deposit, or cause to be deposited, in any
Escrow Account or Accounts on a daily basis, and retain therein, (i) all Escrow
Payments collected on account of any Mortgage Loans, for the purpose of
effecting timely payment of any such items as required under the terms of this
Agreement and (ii) all amounts representing proceeds of any hazard insurance
policy which are to be applied to the restoration or repair of any Mortgaged
Property. The Servicer shall make withdrawals therefrom only to effect such
payments as are required under this Agreement, and for such other purposes as
are set forth in Section 5.11. The Servicer shall be entitled to retain any
interest paid on funds deposited in the Escrow Account by the depository
institution other than interest on escrowed funds required by law to be paid to
the related Mortgagor and, to the extent required by law, the Servicer shall pay
interest on escrowed funds to the related Mortgagor notwithstanding that the
Escrow Account is non-interest-bearing or that interest paid thereon is
insufficient for such purposes.
Section 5.11. Permitted Withdrawals from Escrow Account.
Withdrawals from any Escrow Account or Accounts may be made by the Servicer only
(i) to effect timely payments of ground rents, taxes, assessments, water rates,
Standard Hazard Policy premiums, or other items constituting Escrow Payments for
the related Mortgage, (ii) to reimburse the Servicer for
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any Servicing Advance made by the Servicer, with respect to a related Mortgage
Loan but only from amounts received on the related Mortgage Loan which represent
late payments or collections of Escrow Payments thereunder, (iii) to refund to
any Mortgagor any funds found to be in excess of the amounts required under the
terms of the related Mortgage Loan or under applicable law, (iv) for application
to restoration or repair of the property subject to the related Mortgage, (v) to
pay to the Servicer, or to the Mortgagor to the extent required by law, any
interest paid on the funds deposited in the Escrow Account, (vi) to clear and
terminate the Escrow Account on the termination of this Agreement or (vii) to
withdraw amounts deposited in error.
Section 5.12. Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Servicer shall maintain, or cause to be
maintained, accurate records reflecting any delinquencies or nonpayments with
regard to taxes, assessments and Standard Hazard Policy premiums. The Servicer
assumes full responsibility for ensuring the payment of all such bills and shall
effect payments of all such bills irrespective of each Mortgagor's faithful
performance in the payment of same or the making of the Escrow Payments and
shall make advances from its own funds to effect such payments.
Section 5.13. Transfer of Accounts. The Servicer may transfer
the Collection Account or Escrow Account to an Eligible Account maintained with
a different depository institution from time to time.
Section 5.14. Year 2000 Compliance. The Servicer covenants
that its computer and other systems used in servicing the Mortgage Loans will be
modified to operate in a manner such that on and after January 1, 2000 (i) the
Servicer can service the Mortgage 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. The Servicer shall certify in writing to the
Trustee no later than June 30, 1999 that it is in compliance with this Section
5.14.
Section 5.15. Maintenance of the Primary Insurance Policies.
The Servicer shall not take, or permit any Sub-Servicer to take, any action
which would result in non-coverage under any applicable Primary Insurance Policy
of any loss which, but for the actions of the Servicer or Sub-Servicer, would
have been covered thereunder. Except as otherwise required by applicable law, to
the extent coverage is available and until the Loan-to-Value Ratio of the
related Mortgage Loan is reduced to 80%, the Servicer shall keep or cause to be
kept in full force and effect each such Primary Insurance Policy in an amount
equal to the amount by which the unpaid principal balance of the related
Mortgage Loan exceeds 75% of the value (as described in the definition of
Loan-to-Value Ratio) of the related Mortgaged Property. The Servicer shall not
cancel or refuse to renew any such Primary Insurance Policy or consent to any
Sub-Servicer canceling or refusing to renew any such Primary Insurance Policy
applicable to a Mortgage Loan subserviced by it, that is in effect at the date
of the initial issuance of the Certificates and is required to be kept in force
hereunder unless the replacement Primary Insurance Policy for such canceled or
non-renewed policy is maintained with an insurer whose claims-paying ability is
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rated at least as high as the original insurer or is acceptable to each Rating
Agency as confirmed in writing by each such Rating Agency, unless otherwise
required by law.
Section 5.16. Maintenance of Standard Hazard Policies. (a) The
Servicer shall cause to be maintained for each Mortgage Loan a Standard Hazard
Policy with extended coverage as is prudent in the area where the Mortgaged
Property is located in an amount which is equal to the greater of (i) the lesser
of (A) 100% of the maximum insurable value of the improvements securing such
Mortgage Loan or (B) the principal balance owing on such Mortgage Loan, or (ii)
such amount required to prevent the Mortgagor or mortgagee from becoming a
co-insurer. If the Mortgaged Property is in an area identified at the time of
origination in the Federal Register by the Federal Emergency Management Agency
as having special flood hazards (and such flood insurance has been made
available) the Servicer will cause to be maintained a flood insurance policy
meeting the requirements of the current guidelines of the Federal Insurance
Administration with a generally acceptable insurance carrier, in an amount
representing coverage not less than the least of (i) the outstanding Principal
Balance of the Mortgage Loan, (ii) the full insurable value or (iii) the maximum
amount of insurance which is available under the Flood Disaster Protection Act
of 1973. The Servicer shall also maintain on property acquired upon foreclosure,
or by deed in lieu of foreclosure, of any Mortgage Loan, fire and hazard
insurance with extended coverage in an amount which is not less than the lesser
of (i) the outstanding principal balance of the Mortgage Loan or (ii) the
maximum insurable value of the improvements which are a part of such property,
liability insurance, and, to the extent available, flood insurance in an amount
as provided above. Any amounts collected by the Servicer under any such policies
(other than amounts to be applied to the restoration or repair of the property
subject to the related Mortgage or property acquired in liquidation of the
Mortgage Loan, or released to the Mortgagor in accordance with the Servicer's
normal servicing procedures) shall be deposited, subject to applicable law, in
the Collection Account. It is understood and agreed that no earthquake or other
additional insurance need be required by the Servicer of any Mortgagor or
maintained on property acquired in respect of a Mortgage Loan, other than
pursuant to such applicable laws and regulations as shall at any time be in
force and as shall require such additional insurance. All such Standard Hazard
Policies and other policies shall be endorsed with standard mortgagee clauses
with loss payable to the Servicer or its designee. Any such Standard Hazard
Policies or other policies may be in the form of blanket policies; provided,
however, that in the event of any claim arising in connection with a hazard loss
the Servicer shall be obligated, in the case of blanket insurance policies, to
deposit in the Certificate Account any amount not payable under such blanket
policy because of a deductible clause in such policy and not otherwise payable
under an individual policy. The Servicer shall not interfere with the
Mortgagor's freedom of choice in selecting either his insurance carrier or
agent; provided, however, that the Servicer shall not accept any such insurance
policies from insurance companies unless such companies are acceptable insurers
in the discretion of the Servicer.
(b) Any cost incurred by the Servicer in maintaining any of
the foregoing insurance shall not, for the purpose of calculating monthly
distributions to Certificateholders, be
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added to the amount owing under the Mortgage Loan, notwithstanding that the
terms of the Mortgage Loan so permit. Such costs (other than the costs of
maintaining a blanket hazard insurance policy not attributable to a specific
Mortgaged Property) shall be recoverable by the Servicer from the Mortgagor or
out of Insurance Proceeds or Liquidation Proceeds or to the extent permitted by
Section 5.09.
Section 5.17. Reports of Foreclosures and Abandonment of
Mortgaged Properties. On or before February 28 of each year beginning in 1999,
the Servicer shall file the reports of foreclosures and abandonments of any
Mortgaged Property required by Code Section 6050J with the Internal Revenue
Service and provide a copy of such filing to the Trustee. The reports from the
Servicer shall be in form and substance sufficient to meet the reporting
requirements imposed by such Section 6050J.
Section 5.18. [Reserved]
Section 5.19. Fidelity Bond and Errors and Omissions
Insurance. The Servicer shall maintain, at its own expense, a blanket fidelity
bond and an errors and omissions insurance policy, with broad coverage with
responsible companies on all officers, employees or other persons acting on
behalf of the Servicer in any capacity with regard to the Mortgage Loans to
handle funds, money, documents and papers relating to the Mortgage Loans. Any
such fidelity bond and errors and omissions insurance shall protect and insure
the Servicer against losses, including forgery, theft, embezzlement, fraud,
errors and omissions and negligent acts of such persons and shall be maintained
at a level acceptable to FNMA. No provision of this Section 5.19 requiring such
fidelity bond and errors and omissions insurance shall diminish or relieve the
Servicer from its duties and obligations as set forth in this Agreement. Upon
request of the Trustee, the Servicer shall cause to be delivered to the Trustee
a certification evidencing coverage under such fidelity bond and insurance
policy. Promptly upon receipt of any notice from the surety or the insurer that
such fidelity bond or insurance policy has been terminated or modified in a
materially adverse manner, the Servicer shall notify the Trustee and each Rating
Agency of any such termination or modification.
Section 5.20. Collections under Insurance Policies;
Enforcement of Due-On-Sale Clauses; Assumption Agreements. (a) In connection
with its activities as administrator and servicer of the Mortgage Loans, the
Servicer agrees to present, on behalf of itself, the Trustee and the
Certificateholders, claims to the insurer under any Standard Hazard Policies
and, in this regard, to take such reasonable action as shall be necessary to
permit recovery under any insurance policies. Pursuant to Section 5.08, the
Servicer shall deposit Insurance Proceeds in the Collection Account.
(b) When any Mortgaged Property is conveyed by the Mortgagor,
the Servicer shall enforce any due-on-sale clause contained in any Mortgage Note
or Mortgage, to the extent permitted by such Mortgage Note or Mortgage,
applicable law and governmental regulations. Subject to the foregoing, the
Servicer is authorized to take or enter into an assumption or
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substitution agreement from or with the Person to whom such property has been or
is about to be conveyed. In connection with such assumption or substitution, the
Servicer shall apply such underwriting standards and follow such practices and
procedures as shall be normal and usual and as it applies to mortgage loans
owned solely by it.
Notwithstanding the foregoing paragraph or any other provision
of this Agreement, the Servicer shall not be deemed to be in default, breach or
any other violation of its obligations hereunder by reason of any conveyance by
the Mortgagor of the Mortgaged Property or any assumption of a Mortgage Loan by
operation of law which the Servicer in good faith determines it may be
restricted by law from preventing, for any reason whatsoever.
(c) Subject to the Servicer's duty to enforce any due-on-sale
clause to the effect set forth in Section 5.20(b), in any case in which a
Mortgaged Property is to be conveyed to a Person by a Mortgagor, and such Person
is to enter into an assumption agreement or modification agreement or supplement
to the Mortgage Note or Mortgage, the Servicer shall so notify the Trustee by
forwarding to the Trustee the original copy of such assumption or substitution
agreement, which copy shall be added by the Trustee to the related Mortgage File
and shall, for all purposes, be considered a part of such Mortgage File to the
same extent as all other documents and instruments constituting a part thereof.
In connection with any such assumption, modification agreement or substitution
agreement, the interest rate of the related Mortgage Note shall not be changed,
the principal amount of the Mortgage Note shall not be increased or decreased
and the maturity of the Mortgage Note shall not be extended, nor shall it be
shortened by more than one year. Any fee collected by the Servicer for entering
into an assumption or substitution of liability agreement with respect to such
Mortgage Loan shall be retained by the Servicer as additional servicing
compensation.
Section 5.21. Income and Realization from Defaulted Mortgage
Loans. The Servicer, on behalf of the Trustee, shall foreclose upon or otherwise
comparably convert the ownership of Mortgaged Properties securing such of the
Mortgage Loans as come into and continue in default and as to which no
satisfactory arrangements can be made for collection of delinquent payments
pursuant to Section 5.07, shall manage, conserve, protect and operate such
Mortgaged Properties for the purposes of their prompt disposition and sale, and
shall dispose of such Mortgaged Properties on such terms and conditions as it
deems in the best interests of the Certificateholders. The Servicer shall sell
such property within two years from such foreclosure or conversion or such
longer period as would not prevent such Mortgaged Property from constituting
"foreclosure property" within the meaning of Section 860G(a)(8) of the Code. In
connection with such activities, the Servicer shall follow such practices and
procedures as it shall deem necessary or advisable, as shall be normal and usual
in its general mortgage servicing activities, including its management of
foreclosed properties for a temporary period as contemplated herein. The
foregoing is subject to the provisions of Section 5.28 of this Agreement and to
the proviso that the Servicer shall not be required to expend its own funds in
connection with any management, foreclosure or towards the restoration of any
property unless it shall determine that such management, restoration or
foreclosure will increase the Liquidation
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Proceeds of the Mortgage Loan to Certificateholders after reimbursement to
itself for such expenses (respecting which it shall have priority for purposes
of withdrawals from the Collection Account pursuant to Section 5.09). The income
earned from the management of such Mortgaged Properties, net of reimbursement to
the Servicer for expenses (including any taxes) incurred in connection with such
management, shall be applied to the payment of principal of and interest on the
related defaulted Mortgage Loans (with interest accruing and principal
amortizing as though such Mortgage Loans were still current) and all such income
shall be deemed, for all purposes in this Agreement, to be payments on account
of principal and interest on the related Mortgage Notes and shall be deposited
into the Collection Account. To the extent the income received is in excess of
the amount attributable to amortizing principal and accrued interest at the Net
Mortgage Rate on the related Mortgage Loan, such excess shall be deposited in
the Collection Account. In lieu of foreclosure, the Servicer may (but is not
obligated to) purchase any Defaulted Mortgage Loan at the Purchase Price. In the
event of such purchase, the Purchase Price for the purchased Mortgage Loan shall
be paid by the Servicer and shall be deposited by the Servicer in the Collection
Account promptly upon receipt and, upon receipt by the Trustee of written
notification of such deposit signed by a Servicing Officer, the Trustee shall
promptly release to the Servicer the related Mortgage File and the Trustee shall
execute and deliver such instruments of transfer or assignment as may be
provided to it by the Servicer, without recourse, as shall be necessary to vest
in the Servicer or its designee, as the case may be, any Mortgage Loan released
pursuant hereto, and the Trustee shall have no further responsibility with
regard to such Mortgage Loan.
The Servicer shall take into account the existence of any
hazardous substances, hazardous wastes or solid wastes, as such terms are
defined in the Comprehensive Environmental Response Compensation and Liability
Act, the Resources Conservation and Recovery Act of 1976, or other federal,
state or local environmental legislation, on a Property in determining whether
to foreclose upon or otherwise comparably convert the ownership of such
property. To the extent that the Servicer has actual knowledge of any such
substance or waste, it shall consult with the Trustee regarding the appropriate
course of action. The Servicer shall not institute foreclosure actions with
respect to a property containing substance or waste as described above if it
reasonably believes that such action would not be consistent with its servicing
standards, and in no event shall the Servicer manage, operate or take any other
action with respect thereto which the Servicer in good faith believes will
result in "clean-up" or other liability under applicable law. The net income
from the rental or sale of a REO Property shall be deposited in the Collection
Account within two (2) Business Days after receipt thereof by the Servicer.
The Servicer may enter into a special servicing agreement with
an unaffiliated holder of 100% Percentage Interest of a Class B Certificate or a
holder of a class of securities representing interests in such Class B
Certificate and/or other subordinate mortgage pass-through certificates, such
agreement to be (i) substantially in the form of Exhibit J hereto or (ii)
subject to each Rating Agency's acknowledgment that the ratings of the
Certificates in effect immediately prior to the entering into of such agreement
would not be qualified, downgraded or withdrawn and the Certificates wold not be
placed on credit review status (except for possible upgrading) as
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a result of such agreement. Any such agreement may contain provisions whereby
such holder may instruct the Servicer to commence or delay foreclosure
proceedings with respect to delinquent Mortgage Loans and will contain
provisions for the deposit of cash by the holder that would be available for
distribution to Certificateholders if Liquidation Proceeds are less than they
otherwise may have been had the Servicer acted in accordance with its normal
procedures.
Section 5.22. Trustee to Cooperate; Release of Mortgage Files.
(a) Upon becoming aware of the payment in full of any Mortgage Loan, or upon the
receipt by the Servicer of a notification that payment in full will be made in a
manner customary for such purposes, the Servicer shall immediately notify the
Trustee (if the Trustee holds the related Mortgage File) by a certification
(which certification shall include a statement to the effect that all amounts
received or to be received in connection with such payment which are required to
be deposited in the Collection Account pursuant to Section 5.08 have been or
will be so deposited) of a Servicing Officer and shall request delivery to it of
the Mortgage File. Upon receipt of such certification and request, within five
Business Days the Trustee shall release the related Mortgage File to the
Servicer and execute and deliver to the Servicer the request for reconveyance,
deed of reconveyance or release or satisfaction of mortgage or such other
instruments releasing the lien of the Mortgage as have been provided by the
Servicer to the Trustee, together with the Mortgage Note with written evidence
of cancellation thereon, and the Trustee shall have no further responsibility
with respect to said Mortgage File. Upon any such payment in full, or the
receipt of such notification, the Servicer is authorized to procure from the
Trustee under the deed of trust which secured the Mortgage Note, if any, a deed
of full reconveyance covering the property encumbered by such deed of trust,
which assignment of deed of trust, except as otherwise provided by any
applicable law, shall be recorded by the Servicer in the appropriate land
records in the jurisdiction in which the assignment of deed of trust is
recorded, or, as the case may be, to procure from the Trustee an instrument of
satisfaction or, if the Mortgagor so requests, an assignment without recourse,
which deed of reconveyance, instrument of satisfaction or assignment shall be
delivered by the Servicer to the Person or Persons entitled thereto. No expenses
incurred in connection with any instrument of satisfaction or deed of
reconveyance shall be chargeable to the Collection Account or to the Trustee.
(b) From time to time as is appropriate for the servicing or
foreclosure of any Mortgage Loan, the Servicer shall deliver to the Trustee a
certificate of a Servicing Officer requesting that possession of the Mortgage
File be released to the Servicer and certifying as to the reason for such
release and that such release will not invalidate any insurance coverage
provided in respect of the Mortgage Loan under any of the insurance policies
required by this Agreement. With such certificate, the Servicer shall require
that the Trustee release the Mortgage File, and, within five Business Days, the
Trustee shall deliver the Mortgage File or any document therein to the Servicer.
The Servicer shall cause each Mortgage File so released to be returned to the
Trustee when the need therefor by the Servicer no longer exists, unless (i) the
Mortgage Loan has been liquidated and the Net Liquidation Proceeds relating to
the Mortgage Loan have been deposited in the Collection Account or (ii) the
Mortgage File has been delivered to an attorney, or to a public trustee or other
public official as required by law, for purposes of
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initiating or pursuing legal action or other proceedings for the foreclosure of
the Mortgaged Property either judicially or non-judicially, and the Servicer has
delivered to the Trustee a certificate of a Servicing Officer in the form of
Exhibit L hereto certifying as to the name and address of the Person to which
such Mortgage File was delivered and the purpose or purposes of such delivery.
(c) Upon written request of the Servicer, the Trustee shall
execute and deliver to the Servicer any court pleadings, requests for trustee's
sale or other documents prepared by and delivered by the Servicer to the Trustee
necessary to the foreclosure or trustee's sale in respect of a Mortgaged
Property or to any legal action brought to obtain judgment against any Mortgagor
on the Mortgage Note or Mortgage or to obtain a deficiency judgment, or to
enforce any other remedies or rights provided by the Mortgage Note or Mortgage
or otherwise available at law or in equity. Together with such documents or
pleadings, the Servicer shall deliver to the Trustee a certificate of a
Servicing Officer requesting that such pleadings or documents be executed by the
Trustee and certifying as to the reason such documents or pleadings are required
and that the execution and delivery thereof by the Trustee will not invalidate
any insurance coverage under the insurance policies required under this
Agreement or invalidate or otherwise affect the lien of the Mortgage, except for
the termination of such a lien upon completion of the foreclosure or trustee's
sale.
Section 5.23. Servicing and Other Compensation. The Servicer,
as compensation for its activities hereunder, shall be entitled to receive, on
or prior to each Distribution Date, the amounts provided for as the Servicing
Fee and as reimbursement for Nonrecoverable Advances, Servicing Advances and
reimbursement for Advances, all as specified by Section 5.09. The amount of
compensation or reimbursement provided for shall be accounted for on a Mortgage
Loan-by-Mortgage Loan basis.
Additional servicing compensation in the form of assumption
fees, prepayment fees and late payment charges shall be retained by the
Servicer, to the extent permitted by applicable law. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder (including the fees and expenses of the Trustee and any
Sub-Servicer) and shall not be entitled to reimbursement therefor except as
specifically provided in Sections 5.09 and 5.21.
Section 5.24. [Reserved]
Section 5.25. Annual Statement as to Compliance.
The Servicer will deliver to the Depositor and the Trustee on
or before May 31 of each year, beginning with May 31 in the year which begins
not less than three months after the Closing Date, an Officers' Certificate
stating, as to each signer thereof, that (i) a review of the activities of the
Servicer during the preceding calendar year and of performance under this
Agreement has been made under such officer's supervision, (ii) to the best of
such officer's
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knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement throughout such year, or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof and (iii) to the best of such
officer's knowledge, each Sub-Servicer has fulfilled its obligations under its
Sub-Servicing Agreement in all material respects, or if there has been a
material default in the fulfillment of such obligations, specifying such default
known to such officers and the nature and status thereof. Copies of such
statement shall be provided to each Rating Agency by the Servicer. Copies of
such statement shall also be provided by the Servicer to any Certificateholder
upon request. If the Servicer shall fail to provide such copies and a
Responsible Officer of the Trustee is aware that the Servicer has not so
provided copies, the Trustee shall provide such copies at the Servicer's expense
if the Trustee has received such statement.
Section 5.26. Annual Independent Public Accountants' Servicing
Report. On or before May 31 of each year, beginning with May 31 in the year
which begins not less than three months after the Closing Date, the Servicer at
its expense shall cause a firm of independent public accountants which is a
member of the American Institute of Certified Public Accountants to furnish a
statement to the Depositor and the Trustee to the effect that such firm has
examined certain documents and records relating to the servicing of the Mortgage
Loans and that, on the basis of such examination conducted substantially in
compliance with the Uniform Single Audit Program for Mortgage Bankers, such
servicing has been conducted in compliance with the manner of servicing set
forth in pooling and servicing agreements substantially similar to this
Agreement, except for (i) such exceptions as such firm shall believe to be
immaterial and (ii) such other exceptions as shall be set forth in such
statement. Copies of such statement shall be provided to each Rating Agency,
and, upon request, to the Certificateholders, by the Servicer, or by the Trustee
at the Servicer's expense if the Trustee has received such statement and the
Servicer shall fail to provide such copies and the Trustee is aware that the
Servicer has not so provided copies. In the event such firm requires the Trustee
to agree to the procedures performed by such firm, the Servicer shall direct the
Trustee in writing to so agree; it being understood and agreed that the Trustee
will deliver such letter of agreement in conclusive reliance upon the direction
of the Servicer, and the Trustee shall not make any independent inquiry or
investigation as to, and shall have no obligation or liability in respect of,
the sufficiency validity or correctness of such procedures.
Section 5.27. Access to Certain Documentation; Rights of the
Depositor in Respect of the Servicer. The Servicer shall provide access to the
Trustee, Certificateholders which are savings and loan associations, banks or
insurance companies or examiners of any federal or state banking or insurance
regulatory authority to the documentation regarding the Mortgage Loans if so
required by applicable regulations of any regulatory authority, such access to
be afforded subject to reimbursement for expenses without charge but only upon
reasonable request and during normal business hours at the offices of the
Servicer designated by it. The Depositor may, but is not obligated to, enforce
the obligations of the Servicer under this Agreement and may, but is not
obligated to, appoint and cause a designee to perform, any
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defaulted obligations of the Servicer hereunder or exercise the rights of the
Servicer hereunder; provided that the Servicer shall not be relieved of any of
its obligations hereunder by virtue of the appointment of a designee by the
Depositor or its designee. The Depositor shall not assume any responsibility or
liability for any action or failure to take action by the Servicer and is not
obligated to supervise the performance of the Servicer under this Agreement or
otherwise.
Section 5.28. REMIC-Related Covenants. For as long as either
REMIC Pool shall exist, the Servicer and the Trustee shall act in accordance
herewith to assure continuing treatment of each REMIC Pool as a REMIC. In
particular:
(a) Neither the Trustee nor the Servicer shall create, or
permit the creation of, any "interests" in either REMIC Pool within the meaning
of Section 860G(a) of the Code other than the "regular interests" in each REMIC
Pool designated as such in Section 2.04(a) and the Residual Interest.
(b) As of all times as may be required by the Code, the
Servicer and the Trustee each will ensure that substantially all of the assets
of each REMIC Pool will consist of "qualified mortgages" as defined in section
860G(a)(3) of the Code and "permitted investments" as defined in section
860G(a)(5) of the Code. The Trustee also will maintain records that are
sufficient to indicate each REMIC Pool's compliance with applicable requirements
of the Code (and applicable Proposed, Temporary or final Treasury Regulations)
relating to the assets held by such REMIC Pool. Further, the Trustee shall not
accept the transfer or substitution of any Mortgage Loan other than pursuant to
Section 3.04, 5.01 or 5.21 of this Agreement, and the Trustee shall, in any
case, not permit substitution later than two years from the Closing Date unless
the Trustee has received an Opinion of Counsel, which will not be an expense of
the Trust Fund, that such transfer or substitution would not adversely affect
the REMIC status of each REMIC Pool or would not otherwise be prohibited by this
Agreement;
(c) The Trustee shall ensure that neither REMIC Pool receives
a fee or other compensation for services and that neither REMIC Pool receives
any income from assets other than "qualified mortgages" within the meaning of
section 860G(a)(3) of the Code or "permitted investments" within the meaning of
section 860G(a)(5) of the Code, and shall take whatever action it deems
necessary to avoid any material tax imposed by the Code on either REMIC Pool;
provided, however, that neither REMIC Pool shall be prohibited from recognizing
its "net income from foreclosure property," as provided in section 860G(c) of
the Code with respect to any Mortgage Loan foreclosed upon as provided in
Section 5.21;
(d) The Trustee shall not sell or permit the sale of all or
any portion of the Mortgage Loans or of any Eligible Investment unless such sale
is as a result of a repurchase of the Mortgage Loans pursuant to this Agreement
or the Trustee has received an Opinion of Counsel, which will not be an expense
of the Trust Fund or the Trustee, to the effect that such sale (i) is pursuant
to a "qualified liquidation" as defined in section 860F(a)(4) of the Code and as
described in Section 11.01 hereof, or (ii) would not be treated as a "prohibited
transaction"
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within the meaning of section 860F(a)(2) of the Code that results in the
realization of a material amount of gain or loss for federal income tax
purposes;
(e) The Trustee shall not accept any contribution to either
REMIC Pool after the Startup Day without an Opinion of Counsel (which shall not
be an expense of the Trustee) that such contribution is included within the
exceptions provided in Section 860G(d)(2) of the Code and, therefore, will not
be subject to the tax imposed by Section 860G(d)(1) of the Code; and
(f) Notwithstanding anything to the contrary in this
Agreement, the Servicer and the Trustee shall take any other action or refuse to
take any action otherwise required (including adjusting the Purchase Price for
any Mortgage Loan) where the Servicer or the Trustee deems such action or
inaction reasonably necessary to ensure the REMIC status of each REMIC Pool
under the Code and applicable regulations or to avoid the imposition of any
material tax liability on either REMIC Pool that will affect amounts
distributable to the Certificateholders.
[End of Article V]
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01. Distributions. (a) On each Distribution Date,
the Trustee shall apply an amount equal to the Available Distribution Amount in
the following order of priority:
(i) to the Trustee, the Trustee Fee with respect to such
Distribution Date;
(ii) to the Non-PO Class A Certificateholders, all
distributable amounts up to the sum of (A) the Aggregate Class A
Interest Accrual Amount and (B) the Aggregate Class A Interest
Shortfall;
(iii) the balance, if any, of the Available Distribution
Amount shall be allocated, pro rata (in accordance with the maximum
amounts distributable in accordance with this clause (iii)) between (A)
the Non-PO Class A Certificateholders, the amounts distributable
pursuant to (b)(iii) below, up to the Non-PO Class A Optimal Principal
Amount (such amount, the "Non-PO Class A Principal Distribution
Amount"), and (B) the Class A-P Certificateholders, the Class A-P
Amount, in accordance with (b)(ii) below;
(iv) to the Class M Certificateholders, the balance, if any,
of the Available Distribution Amount after making the distributions
provided for in paragraphs (i), (ii) and
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(iii) above, in accordance with, and up to the amount calculated
pursuant to, Section 6.01(c) below;
(v) to the Class B Certificateholders, the balance, if any, of
the Available Distribution Amount after making the distributions
provided for in paragraphs (i) through (iv) above, in accordance with,
and up to the amounts calculated pursuant to, Section 6.01(d) below;
and
(vi) to the Class A-R Certificateholders the balance, if any,
of the Available Distribution Amount remaining after the distributions
provided for in paragraphs (i) through (v) above.
(b) Amounts payable to the Class A Certificateholders on any
Distribution Date shall be distributed as follows:
(i) to the extent the amount available for distribution
pursuant to (a)(ii) is sufficient:
(A) to the Class A-1 Certificateholders, (1) the
Class A-1 Interest Accrual Amount plus (2) the Class A-1
Shortfall from the preceding Distribution Date;
(B) to the Class A-2 Certificateholders, (1) the
Class A-2 Interest Accrual Amount plus (2) the Class A-2
Shortfall from the preceding Distribution Date;
(C) to the Class A-3 Certificateholders, (1) the
Class A-3 Interest Accrual Amount plus (2) the Class A-3
Shortfall from the preceding Distribution Date;
(D) to the Class A-4 Certificateholders, (1) the
Class A-4 Interest Accrual Amount plus (2) the Class A-4
Shortfall from the preceding Distribution Date;
(E) to the Class A-5 Certificateholders, (1) the
Class A-5 Interest Accrual Amount plus (2) the Class A-5
Shortfall from the preceding Distribution Date;
(F) to the Class A-6 Certificateholders, (1) the
Class A-6 Interest Accrual Amount plus (2) the Class A-6
Shortfall from the preceding Distribution Date;
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(G) to Class A-7 Component One, (1) the Class A-7
Component One Interest Accrual Amount plus (2) the Class A-7
Component One Shortfall from the preceding Distribution Date;
provided, however, that on each Distribution Date prior to the
Class A-7 Component One Accretion Termination Date, amounts
calculated pursuant to this clause (G) will be added to the
Outstanding Certificate Principal Balance of Class A-7
Component One and distributed, as principal, in accordance
with Section 6.01(b)(i)(N);
(H) to Class A-7 Component Two, (1) the Class A-7
Component Two Interest Accrual Amount plus (2) the Class A-7
Component Two Shortfall from the preceding Distribution Date;
provided, however, that on each Distribution Date prior to the
Class A-7 Component Two Accretion Termination Date, amounts
calculated pursuant to this clause (H) will be added to the
Outstanding Certificate Principal Balance of Class A-7
Component One and distributed, as principal, in accordance
with Section 6.01(b)(i)(O);
(I) to the Class A-8 Certificateholders, (1) the
Class A-8 Interest Accrual Amount plus (2) the Class A-8
Shortfall from the preceding Distribution Date;
(J) to the Class A-9 Certificateholders, (1) the
Class A-9 Interest Accrual Amount plus (2) the Class A-9
Shortfall from the preceding Distribution Date;
(K) to the Class A-10 Certificateholders, (1) the
Class A-10 Interest Accrual Amount plus (2) the Class A-10
Shortfall from the preceding Distribution Date;
(L) to the Class A-R Certificateholders, (1) the
Class A-R Interest Accrual Amount plus (2) the Class A-R
Shortfall from the preceding Distribution Date;
(M) to the Class A-X Certificateholders, (1) the
Class A-X Interest Accrual Amount plus (2) the Class A-X
Shortfall from the preceding Distribution Date;
(N) on each Distribution Date prior to the Class A-7
Component One Accretion Termination Date, the Class A-7
Component One Interest Accrual Amount will be distributed, as
principal, as follows:
first, to the Class A-6 Certificates, to the extent necessary
to reduce the Outstanding Certificate Principal Balance of such Class
to the Targeted Principal Balance for such Distribution Date; and
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second, to the Class A-7 Component One, until the Outstanding
Certificate Principal Balance of such Component has been reduced to
zero; and
(O) on each Distribution Date prior to the Class A-7
Component Two Accretion Termination Date, the Class A-7
Component Two Interest Accrual Amount will be distributed, as
principal, as follows:
first, to the Class A-6 Certificates, to the extent necessary
to reduce the Outstanding Certificate Principal Balance of such Class
to the Targeted Principal Balance for such Distribution Date; and
second, to the Class A-7 Component One, until the Outstanding
Certificate Principal Balance of such Component has been reduced to
zero; and
third, to the Class A-6 Certificates, until the Outstanding
Certificate Principal Balance of such Class has been reduced to zero;
and
fourth, to the Class A-7 Component Two, until the Outstanding
Certificate Principal Balance of such Component has been reduced to
zero;
(ii) to the Class A-P Certificates, an amount (the "Class A-P
Amount") equal to the sum of (A) the difference between (1) the PO
Allocated Amount as of the first day of the related Due Period and (2)
the PO Allocated Amount as of the last day of the related Due Period
(after application of payments which were received or were the subject
of an Advance applicable to such Due Period), (B) the Class A-P
Shortfall from the preceding Distribution Date and (C) any Class A-P
Deferred Amount which has not been previously distributed to the Class
A-P Certificateholders (provided, however, that no amounts in respect
of Class A-P Deferred Amounts shall be distributed to the Class A-P
Certificateholders except from Eligible Funds), but in no event more
than the Outstanding Certificate Principal Balance of the Class A-P
Certificates; and
(iii) Distributions of principal to the Non-PO Class A
Certificates, in an amount up to the Non-PO Class A Optimal Principal
Amount, shall be made as follows:
(A) If the Credit Support Depletion Date has not
occurred:
first, to the Class A-R Certificates, until the Outstanding
Certificate Principal Balance of the Class A-R Certificates has been
reduced to zero;
second, to the Class A-4 Certificates, up to the Lock-out
Principal Distribution Amount, until the Outstanding Certificate
Principal Balance of such Class has been reduced to zero;
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third, (A) if the Collateral Reduction Trigger Date has not
occurred:
(i) For so long as the Class A-1 Certificates are outstanding:
(a) 63.4320357254% to the Class A-1 Certificates until the
Outstanding Certificate Principal Balance of such Class has been reduced to
zero;
(b) 23.2526893973% to Class A-5 Component One and the Class
A-8 Certificates, pro rata based upon the respective Outstanding Certificate
Principal Balances of such Component and such Class until the Outstanding
Certificate Principal Balances of such Component and such Class have been
reduced to zero; and
(c) 13.3152748773% as follows:
(I) first, to Class A-5 Component Two and the Class
A-10 Certificates, pro rata based upon the respective
Outstanding Certificate Principal Balances of such
Component and such class, until the Outstanding
Certificate Principal Balances of such Component and
such Class have been reduced to their respective
Planned Principal Balances;
(II) second, to the Class A-6 Certificates, until the
Outstanding Certificate Principal Balance of such
Class has been reduced to its Targeted Principal
Balance;
(III) third, to Class A-7 Component One, until the
Outstanding Certificate Principal Balance of such
Component has been reduced to zero;
(IV) fourth, to the Class A-6 Certificates, until the
Outstanding Certificate Principal Balance of such
Class has been reduced to zero;
(V) fifth, to Class A-7 Component Two, until the
Outstanding Certificate Principal Balance of such
Component has been reduced to zero; and
(VI) sixth, to Class A-5 Component Two and the Class
A-10 Certificates, pro rata based upon the respective
Outstanding Certificate Principal Balances of such
Component and such class, until the aggregate
Outstanding Certificate Principal Balance of such
Component and such Class have been reduced to zero;
(ii) After the Outstanding Certificate Principal Balance of the
Class A-1 and Class A-8 Certificates and Class A-5 Component
One have been reduced to zero and for so long as the Class A-2
Certificates are outstanding:
(a) 83.9102921264% to the Class A-2 Certificates until the
Outstanding Certificate Principal Balance of such Class has been reduced to
zero; and
(b) 16.0897078736% as follows:
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<PAGE> 89
(I) first, to Class A-5 Component Two and the Class
A-10 Certificates, pro rata based upon the respective
Outstanding Certificate Principal Balances of such
Component and such Class until the Outstanding
Certificate Principal Balances of such Component and
such Class, have been reduced to their respective
Planned Principal Balances;
(II) second, to the Class A-6 Certificates, until the
Outstanding Certificate Principal Balance of such
Class has been reduced to its Targeted Principal
Balance;
(III) third, to Class A-7 Component One, until the
Outstanding Certificate Principal Balance of such
Component has been reduced to zero;
(IV) fourth, to the Class A-6 Certificates, until the
Outstanding Certificate Principal Balance of such
Class has been reduced to zero;
(V) fifth, to Class A-7 Component Two, until the
Outstanding Certificate Principal Balance of such
Component has been reduced to zero; and
(VI) sixth, to Class A-5 Component Two and the Class
A-10 Certificates, pro rata based upon the respective
Outstanding Certificate Principal Balances of such
Component an such Class, until the aggregate
Outstanding Certificate Principal Balance of such
Component and such Class have been reduced to zero;
and
(iii) After the Outstanding Certificate Principal Balance of the Class
A-2 Certificates has been reduced to zero, to the Class A-3
Certificates, until the Outstanding Certificate Principal Balance of
such Class has been reduced to zero; and
(B) if the Collateral Reduction Trigger Date has occurred:
(i) For so long as the Class A-1 Certificates are outstanding:
(a) 63.4320357254% to the Class A-1 Certificates until the
Outstanding Certificate Principal Balance of such Class has been reduced to
zero;
(b) 23.2526893973% to Class A-5 Component One and the Class
A-8 Certificates, pro rata based upon the respective outstanding principal
balances of such Component and such Class until the Outstanding Certificate
Principal Balances of such Component and such Class have been reduced to zero;
and
(c) 13.3152748773% as follows:
(I) first, to Class A-5 Component Two and the Class
A-10 Certificates, pro rata based upon the respective
Outstanding Certificate Principal Balances of such
Component and such Class, until the Outstanding
Certificate Principal Balances
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of such Component and such Class have been reduced to
their respective Planned Principal Balances;
(II) second, to Class A-7 Component Two, until the
Outstanding Certificate Principal Balance of such
Component has been reduced to zero;
(III) third, to Class A-7 Component One, until the
Outstanding Certificate Principal Balance of such
Component has been reduced to zero;
(IV) fourth, to the Class A-6 Certificates, until the
Outstanding Certificate Principal Balance of such
Class has been reduced to zero; and
(V) fifth, to Class A-5 Component Two, until the
Outstanding Certificate Principal Balance of such
Component have been reduced to zero;
(ii) After the principal balances of the Class A-1 and Class A-8
Certificates and Class A-5 Component One have been reduced to
zero and for so long as the Class A-2 Certificates are
outstanding:
(a) 83.9102921264% to the Class A-2 Certificates until the
Outstanding Certificate Principal Balance of such Class has been reduced to
zero; and
(b) 16.0897078736% as follows:
(I) first, to Class A-5 Component Two and the Class
A-10 Certificates, pro rata based upon the respective
Outstanding Certificate Principal Balances of such
Component and such Class, until the Outstanding
Certificate Principal Balances of such Component and
such Class have been reduced to their respective
Planned Principal Balances;
(II) second, to Class A-7 Component Two, until the
Outstanding Certificate Principal Balance of such
Class has been reduced to zero;
(III) third, to Class A-7 Component One, until the
Outstanding Certificate Principal Balance of such
Component has been reduced to zero; and
(IV) fourth, to the Class A-6 Certificates, until the
Outstanding Certificate Principal Balance of such
Class has been reduced to zero; and
(V) fifth, to Class A-5 Component Two and the Class
A-10 Certificates, pro rata based upon the respective
Outstanding Certificate Principal Balances of such
Component and such Class, until the aggregate
Outstanding Certificate Principal Balance of such
Component and such Class has been reduced to zero;
and
(iii) After the Outstanding Certificate Principal Balance of the Class
A-2 Certificates has been reduced to zero, to the Class A-3
Certificates, until the Outstanding Certificate Principal Balance of
such Class has been reduced to zero.
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(B) On or after the Credit Support Depletion Date,
distributions pursuant to this Section 6.01(b)(iii) shall be made pro
rata among the outstanding Classes of Non-PO Class A Certificates in
relation to the respective Outstanding Certificate Principal Balances
of such outstanding Classes, and not in accordance with the sequence of
payments among such Classes set forth in Section 6.01(b)(iii)(A).
(iv) If the Available Distribution Amount is insufficient to
make the distributions set forth in (b)(i) above, the Trustee shall
distribute the Available Distribution Amount to the Non-PO Class A
Certificateholders pro rata in accordance with the amounts otherwise
distributable to them pursuant to (b)(i)(A)-(O) above.
(v) After the Credit Support Depletion Date, if any Realized
Loss has occurred, the amount of such Realized Loss allocable to
principal shall be deemed a principal distribution to the Holders of
the outstanding Classes of Class A Certificates as follows. The Class
A-P Certificates shall bear the portion, if any, of such Realized Loss
equal to the product of (A) the PO Percentage with respect to the
applicable Mortgage Loan and (B) the amount of the principal portion of
the Realized Loss allocable to principal; and the Non-PO Class A
Certificates shall bear the remaining portion of such Realized Loss
allocable to principal pro rata by reference to the Outstanding
Certificate Principal Balances of their Certificates (or Components, in
the case of the Class A-5 Certificates) and the Outstanding Certificate
Principal Balances of such Certificates (or Components in the case of
the Class A-5 Certificates) shall be reduced accordingly until such
Outstanding Certificate Principal Balances have been reduced to zero.
In the event that a recovery is made with respect to any such Realized
Loss, the amount of such recovery shall be distributed on the next
Distribution Date to the Class A Certificateholders pro rata in
relation to the amount by which the Outstanding Certificate Principal
Balances of their Certificates (or Components in the case of the Class
A-5 Certificates) were reduced pursuant to the preceding sentence. To
the extent a Realized Loss results in a reduction in the aggregate
Outstanding Certificate Principal Balance of the Subordinated
Certificates to zero, any amounts of such Realized Loss in excess of
the amount necessary to reduce the aggregate Outstanding Certificate
Principal Balance of the Subordinated Certificates to zero shall be
subject to the provisions of this paragraph.
(c) (i) Amounts payable on any Distribution Date to the Class M
Certificateholders shall be distributed up to an amount equal to (A) the Class M
Interest Accrual Amount plus (B) the Class M Shortfall from the preceding
Distribution Date plus (C) the portion of the Subordinated Optimal Principal
Amount allocable (pursuant to Section 6.01(e)) to the Class M Certificates plus
(D) any Carry-over Subordinated Principal Amounts with respect to the Class M
Certificates.
(ii) During such time as the aggregate Outstanding Certificate
Principal Balance of the Class B Certificates equals zero, if a Realized Loss
has occurred with respect to a Liquidated
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Mortgage Loan, the amount of such Realized Loss allocable to principal shall be
borne entirely by the Class M Certificates and the Outstanding Certificate
Principal Balance of the Class M Certificates shall be reduced accordingly. In
the event that a recovery is made with respect to any such Realized Loss, the
amount of such recovery shall be distributed on the next Distribution Date to
the Class M Certificateholders pro rata in relation to the amount by which the
Outstanding Certificate Principal Balances of their Certificates were reduced
pursuant to the preceding sentence; provided, however, that the amount of any
such recovery shall be distributed first to the Class A Certificateholders up to
the amount, if any, to which such Realized Loss was allocated to the Class A
Certificateholders. To the extent a Realized Loss results in a decrease in the
aggregate Outstanding Certificate Principal Balance of the Class B Certificates
to zero, any amount of Realized Loss in excess of the amount necessary to
decrease the aggregate Outstanding Certificate Principal Balance of the Class B
Certificates to zero shall be subject to the provisions of this paragraph.
(d) (i) Amounts payable on any Distribution Date to the Class B
Certificateholders pursuant to Section 6.01(a)(v) shall be distributed in the
following priority:
(1) first, to the Class B-1 Certificateholders, up to an
amount equal to (A) the Class B-1 Interest Accrual Amount plus (B) the Class B-1
Shortfall from the preceding Distribution Date plus (C) the pro rata portion, if
any, of the Subordinated Optimal Principal Amount allocable to the Class B-1
Certificates in accordance with Section 6.01(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-1 Certificates plus
(E) any portion of the Subordinated Optimal Principal Amount allocated to the
Class M Certificates in excess of the Outstanding Certificate Principal Balance
of such Class;
(2) second, to the Class B-2 Certificateholders, up to an
amount equal to (A) the Class B-2 Interest Accrual Amount plus (B) the Class B-2
Shortfall from the preceding Distribution Date plus (C) the pro rata portion, if
any, of the Subordinated Optimal Principal Amount allocable to the Class B-2
Certificates in accordance with Section 6.01(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-2 Certificates plus
(E) any portion of the Subordinated Optimal Principal Amount allocated to the
Class B-1 Certificates in excess of the Outstanding Certificate Principal
Balance of such Class;
(3) third, to the Class B-3 Certificateholders, up to an
amount equal to (A) the Class B-3 Interest Accrual Amount plus (B) the Class B-3
Shortfall from the preceding Distribution Date plus (C) the pro rata portion, if
any, of the Subordinated Optimal Principal Amount allocable to the Class B-3
Certificates in accordance with Section 6.01(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-3 Certificates plus
(E) any portion of the Subordinated Optimal Principal Amount allocated to the
Class B-2 Certificates in excess of the Outstanding Certificate Principal
Balance of such Class;
(4) fourth, to the Class B-4 Certificateholders, up to an
amount equal to (A) the Class B-4 Interest Accrual Amount plus (B) the Class B-4
Shortfall from the preceding
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Distribution Date plus (C) the pro rata portion, if any, of the Subordinated
Optimal Principal Amount allocable to the Class B-4 Certificates in accordance
with Section 6.01(e) plus (D) any Carry-over Subordinated Principal Amounts with
respect to the Class B-4 Certificates plus (E) any portion of the Subordinated
Optimal Principal Amount allocated to the Class B-3 Certificates in excess of
the Outstanding Certificate Principal Balance of such Class; and
(5) fifth, to the Class B-5 Certificateholders, up to an
amount equal to (A) the Class B-5 Interest Accrual Amount plus (B) the Class B-5
Shortfall from the preceding Distribution Date plus (C) the pro rata portion, if
any, of the Subordinated Optimal Principal Amount allocable to the Class B-5
Certificates in accordance with Section 6.01(e) plus (D) any Carry-over
Subordinated Principal Amounts with respect to the Class B-5 Certificates plus
(E) any portion of the Subordinated Optimal Principal Amount allocated to the
Class B-4 Certificates in excess of the Outstanding Certificate Principal
Balance of such Class.
(ii) During such time as the Class B Percentage is greater
than 0%, if any Realized Loss has occurred with respect to a Liquidated Mortgage
Loan, the amount of such Realized Loss allocable to principal shall be borne
entirely by the Class B Certificates, and their Outstanding Certificate
Principal Balance shall be reduced, accordingly, in the following order of
priority: first, by the Class B-5 Certificates until their Outstanding
Certificate Principal Balance has been reduced to zero; second, by the Class B-4
Certificates until their Outstanding Certificate Principal Balance has been
reduced to zero; third, by the Class B-3 Certificates until their Outstanding
Certificate Principal Balance has been reduced to zero; fourth, by the Class B-2
Certificates until their Outstanding Certificate Principal Balance has been
reduced to zero; and fifth, by the Class B-1 Certificates until their
Outstanding Certificate Principal Balance has been reduced to zero.
(e) On each Distribution Date, the Subordinated Optimal
Principal Amount shall be allocated among the Classes of Subordinated
Certificates pro rata based upon the Outstanding Certificate Principal Balances
of such Classes; provided, however, that the portion of the Subordinated Optimal
Principal Amount consisting of the Subordinated Lock-out Amount will be
allocated only among those Classes of Subordinated Certificates entitled,
pursuant to the next succeeding sentence, to an allocation of the Subordinated
Lock-out Amount on such Distribution Date. With respect to the Subordinated
Certificates, on each Distribution Date, the Subordinated Lock-out Amount shall
be distributable to (1) any Class of Subordinated Certificates which has current
Credit Support (before giving effect to any distribution of principal and any
Realized Losses allocable on such Distribution Date) greater than or equal to
the Original Credit Support for such Class; (2) the Class having the lowest
numerical class designation of any outstanding Class of Subordinated
Certificates which does not meet the criteria in (1) above; and (3) the Class
B-5 Certificates if all other outstanding Classes of Subordinated Certificates
meet the criteria in (1) above or if no other Class of Subordinated Certificates
is outstanding; provided, however, that no Class of Subordinated Certificates
shall receive any distributions with respect to the Subordinated Lock-out Amount
if any Class of Subordinated Certificates having a lower numerical class
designation than such Class fails to
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meet the criteria in (1) above. For purposes of this paragraph, the Class M
Certificates shall be deemed to have a lower numerical class designation than
each Class of Class B Certificates.
(f) Based on the information received from the Servicer
pursuant to Section 6.02, the Trustee shall make all calculations necessary to
make the distributions described in this Section 6.01. All distributions made to
Certificateholders of any Class on each Distribution Date will be made to the
Certificateholders of the respective Class of record on the next preceding
Record Date, except that the final distribution with respect to each Class shall
be made as provided in the forms of Certificates. All distributions made to
Certificateholders shall be based on the Percentage Interest of the Class
represented by their respective Certificates, and shall be made either by wire
transfer in immediately available funds to the account of such Holder at a bank
or other financial or depository institution having appropriate facilities
therefor, if such Holder has so notified the Trustee in writing at least 10
Business Days prior to the first Distribution Date for which distribution by
wire transfer is to be made and such Holder's Certificates of such Class in the
aggregate evidence an original denomination of not less than $5,000,000 or such
Holder holds a 100% Percentage Interest of such Class or, if not, by check
mailed to the address of the Person entitled thereto as it appears on the
Certificate Register, except that the final distribution in retirement of the
Certificates will be made only upon presentation and surrender of the
Certificates at the Corporate Trust Office or such other agency of the Trustee
specified in the final distribution notice to Certificateholders. If on any
Determination Date, the Trustee determines that there are no Mortgage Loans
outstanding and no other funds or assets in the Trust Fund other than the funds
in the Certificate Account, the Trustee shall promptly send the final
distribution notice to each Certificateholder specifying the manner in which the
final distribution will be made.
Section 6.02. Statements to the Certificateholders. (a) Not
later than the second Business Day following each Determination Date, the
Servicer shall send to the Trustee (by such electronic or other means as the
Servicer and the Trustee shall agree from time to time) the information
specified in items (iii), (iv), (v), (vi), (vii), (viii), (ix), (xi) and (xiv)
below. Not later than each Distribution Date, the Trustee shall send to each
Certificateholder, the Depositor, the Servicer, any co-trustee, and each Rating
Agency a statement setting forth the following information, after giving effect
to the distributions to be made by the Trustee pursuant to Section 6.01 on or as
of such Distribution Date:
(i) with respect to each Class and Component of Certificates
the amount of such distribution to Holders of such Class and Component
allocable to principal;
(ii) with respect to each Class and Component of Certificates
the amount of such distribution to Holders of such Class and Component
allocable to interest;
(iii) the aggregate amount of any Principal Prepayments and
Repurchase Proceeds included in the distributions to
Certificateholders;
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(iv) the aggregate amount of any Advances by the Servicer
pursuant to Section 6.03;
(v) the number of Outstanding Mortgage Loans and the Mortgage
Pool Principal Balance as of the close of business as of the end of the
related Principal Prepayment Period;
(vi) the related amount of the Servicing Fees (as adjusted
pursuant to Section 6.05) retained or withdrawn from the Collection
Account by the Servicer;
(vii) the number and aggregate principal amounts of Mortgage
Loans (A) delinquent (1) one Monthly Payment, (2) two Monthly Payments
and (3) three or more Monthly Payments and (B) in foreclosure, in each
case, as of the end of the related Principal Prepayment Period;
(viii) the number and the principal balance of Mortgage Loans
with respect to any real estate acquired through foreclosure or grant
of a deed in lieu of foreclosure;
(ix) the aggregate amount of all Advances recovered during the
related Due Period;
(x) with respect to the following Distribution Date, the Class
A Percentage, the Class M Percentage, the Class B Percentage, the Class
A Principal Balance, the Class M Principal Balance, the Class B
Principal Balance, the Non-PO Class A Percentage, the Non-PO Class A
Prepayment Percentage, and the level of Credit Support, if any, with
respect to each class of Subordinated Certificates;
(xi) the aggregate amount of Realized Losses during the
related Due Period and the aggregate amount of Realized Losses since
the Cut-off Date;
(xii) the allocation to each Class and Component of
Certificates of any Realized Losses during the related Due Period;
(xiii) the Outstanding Certificate Principal Balance of each
Class and Component of Certificates after giving effect to the
distributions to each Class and Component on such Distribution Date;
and
(xiv) the amount of any Compensating Interest Shortfalls on
such Distribution Date.
The Trustee's responsibility for sending the above information
to the Certificateholders is limited to the availability, timeliness and
accuracy of the information derived from the Servicer.
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Upon reasonable advance notice in writing if required by
federal regulation, the Trustee will provide to each Certificateholder which is
a savings and loan association, bank or insurance company certain reports and
access during business hours to information and documentation regarding the
Mortgage Loans sufficient to permit such Certificateholder to comply with
applicable regulations of regulatory authorities with respect to investment in
the Certificates; provided, that the Trustee shall be entitled to be reimbursed
by each such Certificateholder for the Trustee's actual expenses incurred in
providing such reports and access.
(b) Within a reasonable period of time after the end of each
calendar year, the Trustee shall furnish to each Person who at any time during
the calendar year was a Certificateholder, if requested in writing by such
Person, such information as is reasonably necessary to provide to such Person a
statement containing the information set forth above, aggregated for such
calendar year or applicable portion thereof during which such Person was a
Certificateholder. Such obligation of the Trustee shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
prepared and furnished by the Trustee to Certificateholders pursuant to any
requirements of the Code as are in force from time to time.
(c) Upon request to the Trustee by any Certificateholder who
is a Holder thereof at the time of making such request (an "Eligible
Certificateholder"), the Trustee shall provide, in the form of a
computer-readable tape or disk, loan by loan data with respect to the payment
experience on the Mortgage Loans containing at least the fields of information
listed on Annex 1 hereto (based on information provided by the Servicer). In
addition, upon the written request of any Eligible Certificateholder, the
Trustee shall provide similar loan by loan data with respect to any prior
monthly remittance report to the Certificateholders pursuant to this Agreement
(as and when such information becomes available). The expense of providing any
tape or disk pursuant to this subsection shall be the expense of the Eligible
Certificateholder. The Trustee shall include in each monthly remittance report
pursuant to Section 6.02(a) a statement that the monthly loan by loan
information described in this subsection is available upon the request and at
the expense of any Eligible Certificateholder directed to the Trustee.
Section 6.03. Advances by the Servicer. If, on any
Determination Date, the Servicer determines that any Monthly Payments due on the
immediately preceding Due Date have not been received, the Servicer shall,
unless it determines in its sole discretion that such amounts will not be
recoverable from Late Collections, Liquidation Proceeds or otherwise, make an
Advance on or before the related Servicer Remittance Date in an amount equal to
the amount of such delinquent Monthly Payments, after adjustment of any
delinquent interest payment for the Servicing Fee. For purposes of this Section
6.03, the delinquent Monthly Payments referred to in the preceding sentence
shall be deemed to include an amount equal to the Monthly Payments that would
have been due on Mortgage Loans which have been foreclosed or otherwise
terminated and in connection with which the Servicer acquired and continues to
own the Mortgaged Properties on behalf of the Certificateholders. If the
Servicer makes an Advance, it shall on or prior to the related Servicer
Remittance Date either (i) deposit in the Collection Account an amount equal to
such Advance, (ii) cause to be made an appropriate entry in the
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records of the Collection Account that funds in such account being held for
future distribution or withdrawal have been, as permitted by this Section 6.03,
used by the Servicer to make such Advance or (iii) make Advances in the form of
any combination of clauses (i) and (ii) aggregating the amount of such Advance.
Any funds being held in the Collection Account for future distribution to
Certificateholders and so used pursuant to clause (ii) or (iii) above shall be
replaced by the Servicer from its own funds by deposit into the Collection
Account on or before any subsequent Servicer Remittance Date to the extent that
funds in the Collection Account on such Servicer Remittance Date shall be less
than the amount of payments required to be made to Certificateholders on the
related Distribution Date. Any such Advance shall be included with the
distribution to the Certificateholders on the related Distribution Date. If the
Servicer determines not to make a Nonrecoverable Advance, it shall on the
related Servicer Remittance Date furnish to the Trustee, any co-trustee, and
each Rating Agency notice of such determination. The Servicer shall be entitled
to be reimbursed from the Collection Account for all Advances and Nonrecoverable
Advances as provided in Section 5.09.
Section 6.04. Allocation of Realized Losses. (a) Prior to each
Determination Date, the Servicer shall determine (i) the total amount of
Realized Losses, if any, incurred during the related Principal Prepayment
Period; (ii) whether and to what extent such Realized Losses constitute Excess
Losses; and (iii) the respective portions of such Realized Losses allocable to
interest and to principal.
(b) The principal portion of any Realized Losses other than
Excess Losses shall be allocated by the Trustee as follows: first, to the Class
B Certificates, in accordance with Section 6.01(d)(ii), second to the Class M
Certificates (in each case until the Outstanding Certificate Principal Balance
thereof has been reduced to zero) and third, the remainder thereof shall be
allocated to the Class A Certificates. The principal portion of any Excess
Losses shall be allocated among all Classes of Certificates on a pro rata basis.
(c) As used herein, an allocation of a Realized Loss on a "pro
rata basis" among two or more specified Classes of Certificates means an
allocation on a pro rata basis, among the various Classes so specified, to each
such Class of Certificates on the basis of their then Outstanding Certificate
Principal Balances, prior to giving effect to distributions to be made on such
Distribution Date. All Realized Losses and all other losses allocated to a Class
of Certificates hereunder will be allocated among the Certificates and
Components of such Class in proportion to the Percentage Interests evidenced
thereby.
Section 6.05. Compensating Interest; Allocation of Certain
Interest Shortfalls.
(a) Upon a Principal Prepayment of a Mortgage Loan, the
Servicer shall deposit into the Collection Account from its own funds, as a
reduction of its servicing compensation hereunder, an amount, if any, by which
the amount of the interest that would otherwise accrue with respect to such
Mortgage Loan from the date of prepayment to the Due Date in the related Due
Period at the Net Mortgage Rate exceeds the amount of the interest
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(adjusted to the Net Mortgage Rate) collected from the Mortgagor with respect to
such period (such amount, "Compensating Interest"); provided, however, that the
Servicer's obligation to deposit any such amount is limited to the aggregate
Servicing Fees (without regard to the entitlement of the Servicer to a Servicing
Fee with respect to the Mortgage Loan being prepaid) received by the Servicer
for the related Distribution Date.
(b) On any Distribution Date, the excess, if any, of (X)
Compensating Interest with respect to such Distribution Date over (Y) the amount
deposited in the Collection Account pursuant to (a) above for such Distribution
Date shall equal the "Compensating Interest Shortfall" with respect to such
Distribution Date. On any Distribution Date, the Compensating Interest Shortfall
shall be allocated pro rata among the outstanding Classes and Components of
Class A, Class M and Class B Certificates based on the amount of interest to
which each such Class or Component would otherwise be paid (or, in the case of
the Class A-7 Certificates, have added to the Outstanding Certificate Principal
Balance thereof) on such Distribution Date had there been no such Compensating
Interest Shortfall.
(c) The interest portion of any Realized Losses ("Realized
Loss Interest Shortfall") shall be allocated as follows: first, to the Class B-5
Certificates, second, to the Class B-4 Certificates, third, to the Class B-3
Certificates, fourth, to the Class B-2 Certificates, fifth, to the Class B-1
Certificates, sixth, to the Class M Certificates, in each case until the
Outstanding Certificate Principal Balance thereof has been reduced to zero, and
seventh, the remainder thereof shall be allocated to the Non-PO Class A
Certificates pro rata among the outstanding Classes and Components of Non-PO
Class A Certificates based on the amount of interest to which each such Class or
Component would otherwise be paid (or, in the case of the Class A-7
Certificates, have added to the Outstanding Certificate Principal Balance
thereof) on such Distribution Date had there been no such Realized Loss Interest
Shortfall.
Section 6.06. Subordination. The rights of the Class B
Certificateholders to receive distributions in respect of the Class B
Certificates on any Distribution Date shall be subordinated to the rights of the
Class A and Class M Certificateholders to receive distributions in respect of
the Class A and Class M Certificates. The rights of the Class M
Certificateholders to receive distributions in respect of the Class M
Certificates on any Distribution Date shall be subordinated to the rights of the
Class A Certificateholders to receive distributions in respect of the Class A
Certificates. The rights of the Class B-1 Certificateholders to receive
distributions in respect of the Class B-1 Certificates on any Distribution Date
shall be subordinate to the rights of the Class A and Class M Certificateholders
to receive distributions in respect of such Class A and Class M Certificates.
Each Class of Class B Certificates (other than the Class B-1 Certificates) is
subordinated to the Class A Certificates, the Class M Certificates and each
Class of Class B Certificates having a lower numerical class designation than
such Class of Class B Certificates. The rights of the Servicer, as servicer, to
receive funds from the Collection Account, pursuant to Section 5.09, on account
of the Servicing Fee (except as provided in Section 6.05) in respect of each
Mortgage Loan, assumption fees, late payment charges and other mortgagor
charges, reimbursement of Advances and expenses or otherwise, shall not be
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subordinated to the rights of the Class A, Class M or Class B
Certificateholders. Amounts held by the Servicer or the Trustee for future
distribution to the Class M or Class B Certificateholders, including, without
limitation, in the Collection Account or the Certificate Account, shall not be
distributed in respect of the Class M or Class B Certificates except in
accordance with the terms of this Agreement. The Class B Certificateholders are
deemed to have granted a security interest in such amounts to the Class A and
Class M Certificateholders to secure the rights of the Class A and Class M
Certificateholders to receive distributions in priority over the Class B
Certificateholders. The Class M Certificateholders are deemed to have granted a
security interest in such amounts to the Class A Certificateholders to secure
the rights of the Class A Certificateholders to receive distributions in
priority over the Class A Certificateholders.
ARTICLE VII
[RESERVED]
ARTICLE VIII
THE DEPOSITOR AND THE SERVICER
Section 8.01. Indemnification; Third Party Claims. The
Servicer agrees to indemnify the Depositor and the Trustee and hold the
Depositor and the Trustee, their officers, directors, employees and agents
harmless against any and all claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Depositor or the Trustee may sustain in any way related to failure of
the Servicer to perform its duties and service the Mortgage Loans in compliance
with the terms of this Agreement; provided that no such indemnification shall be
required with respect to acts of a prior Servicer. The Servicer shall
immediately notify the Depositor and the Trustee if a claim is made by a third
party with respect to this Agreement or the Mortgage Loans, assume (with the
consent of the Depositor and the Trustee) the defense of any such claim and pay
all expenses in connection therewith, including counsel fees, and promptly pay,
discharge and satisfy any judgment or decree which may be entered against it,
the Depositor or the Trustee in respect of such claim. This right to
indemnification shall survive the termination of this Agreement.
Section 8.02. Merger or Consolidation of the Depositor or the
Servicer. The Depositor and the Servicer will each keep in full effect its
existence, rights and franchises as a corporation, and will obtain and preserve
its qualification to do business as a foreign corporation in each jurisdiction
in which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the Certificates or any of the Mortgage Loans
and to perform its duties under this Agreement. The Servicer will not sell all
or substantially all of its assets without the prior written consent of the
Depositor and the Trustee, it being expressly understood and agreed that no such
consent shall be required in connection with the sale to National Australia Bank
Limited of the Servicer's parent, HomeSide, Inc.
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Any person into which the Depositor or the Servicer may be
merged or consolidated, or to whom the Depositor or the Servicer has sold
substantially all of its assets, or any corporation resulting from any merger,
conversion or consolidation to which the Depositor or the Servicer shall be a
party, or any Person succeeding to the business of the Depositor or the
Servicer, shall be the successor of the Depositor or the Servicer hereunder,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding;
provided, however, that the successor or surviving Person to the Servicer shall
satisfy the requirements of Section 8.05 with respect to the qualifications of a
successor to the Servicer.
Notwithstanding anything else in this Section 8.02 and Section
8.04 to the contrary, the Servicer may assign its rights and delegate its duties
and obligations under this Agreement; provided that the Person accepting such
assignment or delegation shall be a Person which is qualified to service
mortgage loans on behalf of FNMA or FHLMC, is approved in advance in writing by
the Trustee and the Depositor, is willing to service the Mortgage Loans and
executes and delivers to the Depositor and the Trustee an agreement, in form and
substance reasonably satisfactory to the Depositor and the Trustee, which
contains an assumption by such Person of the due and punctual performance and
observance of each covenant and condition to be performed or observed by the
Servicer under this Agreement; provided further that each Rating Agency's rating
of any of the Classes of Certificates that have been rated in effect immediately
prior to such assignment and delegation will not be qualified or reduced or
withdrawn as a result of such assignment and delegation. In the case of any such
assignment and delegation, the Servicer shall be released from its obligations
as Servicer under this Agreement, except that the Servicer shall remain liable
for all liabilities and obligations incurred by it as Servicer hereunder prior
to the satisfaction of the conditions to such assignment and delegation set
forth in the next preceding sentence.
Section 8.03. Limitation on Liability of the Depositor, the
Servicer, the Trustee and Others. Neither the Depositor, the Servicer nor any of
the directors, officers, employees or agents of the Depositor or the Servicer
shall be under any liability to the Trustee or the Certificateholders for any
action taken, or for refraining from the taking of any action, in good faith
pursuant to this Agreement, or for errors in judgment; provided, however, that
this provision shall not protect the Depositor or the Servicer against any
breach of warranties or representations made herein, or failure to perform its
obligations in strict compliance with this Agreement, or any liability which
would otherwise be imposed by reason of any breach of the terms and conditions
of this Agreement. The Depositor, the Servicer, the Trustee, and any director,
officer, employee or agent of the Depositor, the Servicer or the Trustee may
rely in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising hereunder. Neither the
Depositor, the Trustee nor the Servicer shall be under any obligation to appear
in, prosecute or defend any legal action which is not incidental to its
respective duties to service the Mortgage Loans in accordance with this
Agreement and which in its opinion may cause it to incur any expenses or
liability; provided, however, that the Depositor, the Trustee or the Servicer
may in its discretion (and, in the case of
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the Depositor or the Servicer, with the consent of the Trustee, which consent
shall not be unreasonably withheld) undertake any such action which it may deem
necessary or desirable with respect to this Agreement and the rights and duties
of the parties hereto. In such event, the legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs and
liabilities payable from the Certificate Account and the Depositor, the Servicer
or the Trustee shall be entitled to be reimbursed therefor out of the
Certificate Account as provided by Section 4.06; provided that no such right of
reimbursement shall exist with respect to the Servicer when such claim relates
to the failure of the Servicer to service the Mortgage Loans in strict
compliance with the terms of this Agreement or to a breach of a representation
or warranty made by the Servicer hereunder.
Section 8.04. Depositor and Servicer Not to Resign. Except as
described in Section 8.02, neither the Depositor nor the Servicer shall assign
this Agreement or resign from the obligations and duties hereby imposed on it
except by mutual consent of the Depositor, the Servicer and all of the
Certificateholders unless the determination is made that its duties hereunder
are no longer permissible under applicable law and such incapacity cannot be
cured by the Depositor or the Servicer. Any such determination permitting the
resignation of the Depositor or the Servicer shall be evidenced by an opinion of
independent counsel to such effect delivered to the Trustee which opinion of
counsel shall be in form and substance acceptable to the Trustee. Upon any such
assignment or resignation, the Depositor or the Servicer, as appropriate, shall
send notice to all Certificateholders of the effect of such assignment or
resignation upon the then current rating of the Class of Certificates by each
Rating Agency whose rating on such Class is then in effect. No such resignation
shall become effective until a successor shall have assumed the Depositor's or
the Servicer's responsibilities and obligations hereunder in the manner provided
in Section 8.05. Any purported assignment or resignation which does not comply
with the requirements of this Section shall be of no effect.
Section 8.05. Successor to the Servicer. In connection with
the termination of the Servicer's responsibilities and duties under this
Agreement pursuant to Section 8.04 or 9.01, the Trustee shall (i) succeed to and
assume all of the Servicer's responsibilities, rights, duties and obligations as
Servicer (but not in any other capacity) under this Agreement (except that the
Trustee shall not be obligated to make Advances if prohibited by applicable law
nor to effectuate repurchases or substitutions of Mortgage Loans pursuant to
Section 2.02 and except that the Trustee makes no representations and warranties
pursuant to Sections 3.01, 3.02 and 3.03). Prior to the termination of the
Servicer's responsibilities, duties and liabilities under this Agreement, the
Trustee may appoint a successor having a net worth of not less than $15,000,000
and which is a FNMA or FHLMC approved seller/servicer in good standing and which
shall succeed to all rights and assume all of the responsibilities, duties and
liabilities of the Servicer under this Agreement, except as aforesaid, if the
Trustee receives a letter from each Rating Agency that such appointment would
not result in a reduction or withdrawal of the current rating of any Class of
Certificates that is rated by a Rating Agency. Any co-trustee appointed pursuant
to Section 10.10 for purposes of this Section 8.05 shall have an obligation to
make Advances pursuant to Section 6.03 during such time as the Trustee is the
Servicer, which obligation shall be joint and
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several with that of the Trustee as Servicer. If the Trustee has become the
successor to the Servicer in accordance with this Section or Section 9.03, then
notwithstanding the above, the Trustee may, if it shall be unwilling to so act,
or shall, if it is unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established housing and home finance institution
having a net worth of not less than $15,000,000 and which is a FNMA or FHLMC
approved seller/servicer in good standing as the successor to the Servicer
hereunder in the assumption of all of the responsibilities, duties or
liabilities of the Servicer hereunder. In connection with any such appointment
and assumption, the Trustee may make such arrangements for the compensation of
such successor out of payments on Mortgage Loans as it and such successor shall
agree or such court shall determine; provided, however, that no such
compensation shall be in excess of that permitted under this Agreement without
the consent of all of the Certificateholders. If the Servicer's duties,
responsibilities and liabilities under this Agreement should be terminated
pursuant to Section 8.02, 8.04 or 9.01, the Servicer shall discharge such duties
and responsibilities during the period from the date it acquires knowledge of
such termination until the effective date thereof with the same degree of
diligence and prudence which it is obligated to exercise under this Agreement,
and shall take no action whatsoever that might impair or prejudice the rights or
financial condition of its successor or the Trust Fund. The resignation or
removal of the Servicer pursuant to Section 8.02, 8.04 or 9.01 shall not become
effective until a successor shall be appointed pursuant to this Section and
shall in no event relieve the Servicer of liability for breach of the
representations and warranties made pursuant to Section 3.03.
Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Servicer and to the Trustee an instrument
accepting such appointment, whereupon such successor shall become fully vested
with all the rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer, with like effect as if originally named as a party
to this Agreement and the Certificates. Any termination or resignation of the
Servicer or this Agreement pursuant to Section 8.02, 8.04, 9.01 or 11.01 shall
not affect any claims that the Trustee may have against the Servicer for events
or actions taken or not taken by the Servicer arising prior to any such
termination or resignation.
The Servicer shall timely deliver to the successor the funds
that were, or were required to be, in the Certificate Account and the Escrow
Account, if any, and all Mortgage Files and related documents, statements and
recordkeeping held by it hereunder and the Servicer shall account for all funds
and shall execute and deliver such instruments and do such other things as may
reasonably be required to more fully and definitely vest and confirm in the
successor all such rights, powers, duties, responsibilities, obligations and
liabilities of the Servicer. The Servicer shall pay the reasonable expenses of
the successor Servicer relating to the transfer of servicing hereunder to such
successor.
Upon a successor's acceptance of appointment as such, the
Servicer shall notify, in writing, the Trustee, the Certificateholders and each
Rating Agency of such appointment.
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Section 8.06. Maintenance of Ratings. The Servicer shall
cooperate with the Depositor and take any action that may be reasonably
necessary to maintain the current rating or ratings on the Certificates.
[End of Article VIII]
ARTICLE IX
DEFAULT
Section 9.01. Events of Default. If one or more of the
following Events of Default shall occur and be continuing, that is to say:
(i) any failure by the Servicer to remit to the Trustee any
payment required to be made or distributed under the terms of this
Agreement which continues unremedied for a period of three Business
Days after the date upon which written notice of such failure,
requiring the same to be remedied, shall have been given to the
Servicer by the Trustee or the Depositor or to the Servicer, the
Trustee and the Depositor by the Holders of Certificates of any Class
evidencing, as to such Class, Percentage Interests aggregating not less
than 25%; or
(ii) a breach by the Servicer in a material respect of any
representation or warranty set forth in Section 3.03, or failure on the
part of the Servicer duly to observe or perform in any material respect
any other of the covenants or agreements on the part of the Servicer
set forth in this Agreement, which continues unremedied for a period of
60 days after the date on which written notice of such breach or
failure, requiring the same to be remedied, shall have been given to
the Servicer by the Trustee or the Depositor or to the Servicer, the
Trustee and the Depositor by the Holders of Certificates of any Class
evidencing, as to such Class, Percentage Interests aggregating not less
than 25%; or
(iii) the Servicer shall notify the Trustee in writing that it
is unable to make an Advance required to be made in accordance with
Section 6.03; or;
(iv) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for
the winding-up or liquidation of its affairs, shall have been entered
against the Servicer and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 days; or
(v) the Servicer shall consent to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment
of debt, marshalling of assets and liabilities
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or similar proceedings of or relating to the Servicer or of or relating
to all or substantially all of the Servicer's property; or
(vi) the Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations.
then, and in each and every such case, so long as an Event of Default shall not
have been remedied, the Trustee shall notify the Certificateholders and each
Rating Agency of such Event of Default. The Trustee may, and at the written
direction of the Holders of Certificates evidencing Percentage Interests
aggregating more than 50%, shall, by notice in writing to the Servicer,
terminate all the rights and obligations of the Servicer under this Agreement
and in and to the Mortgage Loans and the proceeds thereof. On or after the
receipt by the Servicer of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to the Mortgage Loans or
otherwise, shall pass to and be vested in the successor appointed pursuant to
Section 8.05. Upon written request from the Trustee, the Servicer shall prepare,
execute and deliver, any and all documents and other instruments, place in such
successor's possession all Mortgage Files, and do or accomplish all other acts
or things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Mortgage Loans and related documents, or otherwise, at the Servicer's sole
expense. The Servicer agrees to cooperate with the Trustee and any co-trustee in
effecting the termination of the Servicer's responsibilities and rights
hereunder, including, without limitation, the transfer to such successor for
administration by it of all cash amounts which shall at the time be credited or
should have been credited by the Servicer to the Certificate Account or Escrow
Account or thereafter received with respect to the Mortgage Loans. The Trustee
will have no obligation to take any action or institute, conduct or defend any
litigation under this Agreement at the request, order or direction of any of the
Holders of Certificates unless such Certificateholders have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which the Trustee may incur.
Section 9.02. Waiver of Defaults. The Trustee may waive any
default by the Servicer in the performance of its obligations hereunder and its
consequences, except that a default in the making of any required distribution
on any of the Certificates may only be waived by the holders of a majority of
the Percentage Interests of the affected Certificateholders. Upon any such
waiver of a past default, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereon except to the extent
expressly so waived.
Section 9.03. Trustee to Act; Appointment of Successor. On and
after the time the Servicer receives a notice of termination pursuant to Section
9.01, the Trustee or its
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appointed agent shall be the successor in all respects to the Servicer to the
extent provided in Section 8.05.
Section 9.04. Notification to Certificateholders and the
Rating Agencies.
(a) Upon any such termination pursuant to Section 9.01, the
Trustee shall give prompt written notice thereof to Certificateholders at their
respective addresses appearing in the Certificate Register and to each Rating
Agency.
(b) Within 60 days of a Responsible Officer of the Trustee
having received written notice of the occurrence of any Event of Default, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such Event of Default hereunder known to the Trustee, unless such Event of
Default shall have been cured or waived.
[End of Article IX]
ARTICLE X
CONCERNING THE TRUSTEE
Section 10.01. Duties of Trustee. The Trustee, prior to the
occurrence of an Event of Default and after the curing of all Events of Default
which may have occurred, undertakes to, and is empowered to, perform such duties
and only such duties as are specifically set forth in this Agreement. Any
permissive right of the Trustee as enumerated in this Agreement shall not be
construed as a duty; provided that in case an Event of Default has occurred
(which has not been cured), the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and use the same degree of care and skill
in their exercise as a prudent man would exercise or use under the circumstances
in the conduct of such man's own affairs.
No provision of this Agreement shall be construed to relieve
the Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, and, if the Trustee is acting as
the successor Servicer pursuant to Section 8.05 or 9.03, its own willful
misconduct with respect to its servicing obligations; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default which may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and,
in the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely, as to the truth of the statements and the
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correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) The Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer or Responsible Officers of
the Trustee, unless it shall be proved that the Trustee was negligent
in ascertaining the pertinent facts; and
(iii) The Trustee shall not be liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of Certificateholders of any Class
holding Certificates which evidence, as to such Class, Percentage
Interests aggregating not less than 25% as to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Agreement.
Section 10.02. Certain Matters Affecting the Trustee. Except
as otherwise provided in Section 10.01:
(a) The Trustee may rely upon and shall be protected in acting
or refraining from acting upon any resolution, Officers' Certificate,
certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) The Trustee may consult with counsel, and any advice or
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such advice or Opinion
of Counsel;
(c) The Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of any of the Certificateholders, pursuant
to the provisions of this Agreement, unless such Certificateholders
shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which may be incurred
therein or thereby; nothing contained herein shall, however, relieve
the Trustee of the obligation, upon the occurrence of an Event of
Default (which has not been cured), to exercise such of the rights and
powers vested in it by this Agreement, and to use the same degree of
care and skill in their exercise as a prudent man would exercise or use
under the circumstances in the conduct of such man's own affairs;
(d) Neither the Trustee nor any of its directors, officers,
employees or agents shall be personally liable for any action taken,
suffered or omitted by it in good faith and
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believed by it or any of them to be authorized or within the discretion
or rights or powers conferred upon the Trustee by this Agreement;
(e) Prior to the occurrence of an Event of Default hereunder
and after the curing of all Events of Default which may have occurred,
the Trustee shall not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval,
bond or other paper or document, unless requested in writing to do so
by Holders of Certificates of any Class evidencing, as to such Class,
Percentage Interests aggregating not less than 25% (in the case of
conflicting requests by two or more 25% or greater Percentage
Interests, the Trustee shall act in accordance with the first such
request); provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion
of the Trustee, not reasonably assured to the Trustee by the security
afforded to it by the terms of this Agreement, the Trustee may require
reasonable indemnity against such expense or liability as a condition
to such proceeding. The reasonable expense of every such examination
shall be paid by the Servicer, if an Event of Default shall have
occurred and is continuing, and otherwise by the Certificateholder
requesting the investigation;
(f) The Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys; and
(g) Nothing in this Agreement shall be construed to require
the Trustee (acting in its capacity as Trustee) to expend its own
funds.
Section 10.03. Trustee Not Liable for Certificates or Mortgage
Loans. The recitals contained herein and in the Certificates (other than the
authentication of the Certificates by an authorized signatory of the Trustee)
shall be taken as the statements of the Depositor or the Servicer, as the case
may be, and the Trustee assumes no responsibility for their correctness. The
Trustee makes no representations or warranties as to the validity or sufficiency
of this Agreement or of the Certificates (except that the Certificates shall be
duly and validly executed and authenticated by it) or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by the Depositor or the Servicer of any of the Certificates or of
the proceeds of such Certificates, or for the use or application of any funds
paid to the Depositor or the Servicer in respect of the Mortgage Loans or
deposited in or withdrawn from the Certificate Account by the Depositor or the
Servicer.
Section 10.04. Trustee May Own Certificates. The Trustee in
its individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not Trustee.
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Section 10.05. Fees and Expenses. On each Distribution Date,
the Trustee shall be entitled to receive, as compensation for all services
rendered by it in the execution of the trust hereby created and in the exercise
and performance of any of the powers and duties hereunder of the Trustee, the
Trustee Fee with respect to such Distribution Date, payable in accordance with
Section 6.01(a)(i). The Servicer agrees to indemnify the Trustee from, and hold
it harmless against, any and all losses, liabilities, damages, claims or
expenses arising in respect of this Agreement or the Certificates, other than
those resulting from the negligence, bad faith or intentional misconduct of the
Trustee.
Section 10.06. Eligibility Requirements for Trustee. The
Trustee hereunder shall at all times be an entity having its principal office in
a state and city acceptable to the Depositor and organized and doing business
under the laws of such state or the United States of America, authorized under
such laws to exercise corporate trust powers, having a combined capital and
surplus of at least $50,000,000 and subject to supervision or examination by
federal or state authority. The Trustee shall not be an affiliate of either
Seller or the Depositor. If such entity publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Trustee shall resign immediately in the manner
and with the effect specified in Section 10.07.
Section 10.07. Resignation and Removal of the Trustee. The
Trustee, and any co-trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Depositor, the
Servicer and each Rating Agency. Upon receiving such notice of resignation, the
Depositor shall promptly appoint a successor trustee or co-trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor trustee; provided that such
appointment does not result in a reduction or withdrawal of the rating of any of
the Classes of Certificates that have been rated. If no successor trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor trustee.
If at any time, the Trustee shall cease to be eligible in
accordance with the provisions of Section 10.06 and shall fail to resign after
written request therefor by the Depositor, or if at any time the Trustee shall
become incapable of acting, or shall be adjudged bankrupt or insolvent, or a
receiver of the Trustee or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Depositor may remove the Trustee and appoint a successor trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
Trustee so removed and one copy to the successor trustee.
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The Holders of Certificates evidencing in the aggregate more
than 50% of Percentage Interest may at any time remove the Trustee and appoint a
successor trustee by written instrument or instruments, in triplicate, signed by
such Holders or their attorneys-in-fact duly authorized, one complete set of
which instruments shall be delivered to the Depositor, one complete set to the
Trustee so removed and one complete set to the successor so appointed.
Any resignation or removal of the Trustee or any resignation
of any co-trustee and appointment of a successor trustee or co-trustee pursuant
to any of the provisions of this Section shall become effective upon acceptance
of appointment by the successor trustee as provided in Section 10.08, or upon
acceptance of appointment by a co-trustee, as applicable, unless with respect to
a co-trustee, the Trustee receives written notice from each Rating Agency that
the failure to appoint a successor co-trustee would not result in a withdrawal
or reduction of the rating of any of the Classes of Certificates that have been
rated, in which case the resignation of any co-trustee shall be effective upon
receipt of such written notice. Any co-trustee may not be removed unless the
Depositor and the Trustee each receive written notice from each Rating Agency
that such removal would not result in a withdrawal or reduction of the rating of
any of the Classes of Certificates that have been rated, in which case the
removal of any co-trustee shall be effective upon receipt of such written
notice.
Section 10.08. Successor Trustee. Any successor trustee
appointed as provided in Section 10.07 shall execute, acknowledge and deliver to
the Depositor and to its predecessor trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee shall become effective, and such successor trustee shall
become effective and such successor trustee, without any further act, deed or
conveyance, shall become fully vested with all the rights, powers, duties and
obligations of its predecessor hereunder, with the like effect as if originally
named as trustee herein. The predecessor trustee shall deliver to the successor
trustee all Mortgage Files and related documents and statements held by it
hereunder, and the Depositor, the Servicer and the predecessor trustee shall
execute and deliver such instruments and do such other things as may reasonably
be required for more fully and certainly vesting and confirming in the successor
trustee all such rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in
this Section unless at the time of such acceptance such successor trustee shall
be eligible under the provisions of Section 10.06. Prior to the appointment of
any successor trustee becoming effective, the Depositor shall have received from
each Rating Agency written confirmation that such appointment would not result
in a reduction of the rating of the Class A or Class M Certificates.
Upon acceptance of appointment by a successor trustee as
provided in this Section, the Depositor shall mail notice of the succession of
such trustee hereunder to all Holders of Certificates at their addresses as
shown in the Certificate Register, to the Servicer, any Sub-Servicer and to each
Rating Agency. If the Depositor fails to mail such notice within 10 days
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after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Depositor.
Section 10.09. Merger or Consolidation of Trustee. Any entity
into which the Trustee may be merged or converted or with which it may be
consolidated or any entity resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any entity succeeding to
the business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be eligible under the provisions of Section
10.06, without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
Section 10.10. Appointment of Co-Trustee or Separate Trustee.
At any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust Fund or property securing the same
may at the time be located, the Depositor and the Trustee acting jointly shall
have the power and shall execute and deliver all instruments to appoint one or
more Persons approved by the Trustee to act as co-trustee or co-trustees,
jointly with the Trustee, of any part of the Trust Fund, and to vest in such
Person or Persons, in such capacity, such title to the Trust Fund, or any part
thereof, and, subject to the other provisions of this Section 10.10, such
powers, duties, obligations, rights and trusts as the Depositor and the Trustee
may consider necessary or desirable. If the Depositor shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
or in case an Event of Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee hereunder shall be required to meet the terms of eligibility as
a successor trustee under Section 10.06, hereunder, and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 10.08 hereof.
In the case of any appointment of a co-trustee or separate
trustee pursuant to this Section 10.10, all rights, powers, duties and
obligations conferred or imposed upon the Trustee shall be conferred or imposed
upon and exercised or performed by the Trustee and such separate trustee or
co-trustee jointly and severally, except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed (whether as
Trustee hereunder or as successor to the Servicer hereunder), the Trustee shall
be incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of title to the
Trust Fund or any portion thereof in any such jurisdiction) shall be exercised
and performed by such separate trustee or co-trustee at the direction of the
Trustee.
Every instrument appointing any separate trustee or co-trustee
shall refer to this Agreement and the conditions of this Article X. Each
separate trustee and co-trustee, upon its acceptance of the trusts conferred,
shall be vested with the estates or property specified in its instrument of
appointment, either jointly with the Trustee or separately, as may be provided
therein, subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Trustee. Every such instrument
shall be filed with the Trustee.
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Any separate trustee or co-trustee may, at any time,
constitute the Trustee, its agent or attorney-in-fact, with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name.
Section 10.11. Appointment of Office or Agency. The Trustee
may appoint an office or agency in The City of New York where Certificates may
be surrendered for registration of transfer or exchange. The Trustee will
maintain an office at the address stated in Section 12.07 hereof where notices
and demands to or upon the Trustee in respect of the Certificates may be served.
Section 10.12. 1934 Act Reports. (a) The Trustee shall, on
behalf of the Trust, make all filings ("Periodic Reports") required to be made
by the Depositor or the Trust (other than the filings relating to the closing of
this transaction) with respect to the Class A Certificates, the Class M
Certificates, the Class B-1 Certificates and the Class B-2 Certificates pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act") and the
rules and regulations of the Securities and Exchange Commission (the
"Commission") thereunder.
(b) Within 30 days after the beginning of the first fiscal
year during which the Trust's obligation to file Periodic Reports pursuant to
the Exchange Act shall have been suspended, the Trustee shall prepare, or cause
to be prepared, a notice on Commission Form 15 ("Form 15") and is hereby
authorized to and shall execute such Form 15 on the Trust's behalf; provided,
however, that the Trustee shall be under no obligation to prepare such notice if
the number of Certificateholders exceeds 300. The Trustee shall file any notice
on Form 15 with the Commission in accordance with the provisions of Rule 15d-6
under the Exchange Act.
[End of Article X]
ARTICLE XI
TERMINATION
Section 11.01. Termination. The respective obligations and
responsibilities of the Depositor, the Servicer (except the duty to pay the
Trustee's fees and expenses and indemnification hereunder) and the Trustee shall
terminate upon (i) the later of the final payment or other liquidation (or any
Advance with respect thereto) of the last Mortgage Loan or the disposition of
all property acquired upon foreclosure or deed in lieu of foreclosure of any
Mortgage Loan and the remittance of all funds due hereunder; or (ii) at the
option of the Servicer, on any Distribution Date which occurs in the month next
following a Due Date on which the aggregate unpaid Principal Balance of all
Outstanding Mortgage Loans is less than 10% of the aggregate unpaid Principal
Balance of the Mortgage Loans on the Cut-off Date, so long as the Servicer
deposits or causes to be deposited in the Collection Account during the
Principal Prepayment Period related to such Distribution Date (and provides
notice to the Trustee of its intention to so deposit on or before the 20th day
of such Principal Prepayment Period) an amount
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<PAGE> 112
equal to the Purchase Price for each Outstanding Mortgage Loan, less any
unreimbursed Advances made with respect to any Mortgage Loan (which amount shall
offset completely any unreimbursed Advances for which the Servicer is otherwise
entitled to reimbursement), and, with respect to all property acquired in
respect of any Mortgage Loan remaining in the Trust Fund, an amount equal to the
fair market value of such property, as determined by an appraisal to be
conducted by an appraiser selected by the Trustee, less unreimbursed Advances
made with respect to any Mortgage Loan with respect to which property has been
acquired; provided, however, that in no event shall the trust created hereby
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Joseph P. Kennedy, the late ambassador of the United
States to the Court of St. James's, living on the date hereof. Notwithstanding
the foregoing, a termination may be effected by the making of such optional
repurchases only if the Trustee has received an Opinion of Counsel that the
termination of the Trust Fund will constitute a "qualified liquidation" of each
REMIC Pool within the meaning of Section 860F(a)(4) of the Code and that the
purchases of the Outstanding Mortgage Loans pursuant to the Section 11.01 will
not constitute "prohibited transactions" within the meaning of Section
860F(a)(2) of the Code.
Notice of any termination, specifying the Distribution Date
upon which all Certificateholders may surrender their Certificates to the
Trustee for payment and cancellation, shall be given promptly by the Trustee
(upon direction by the Depositor 10 days prior to the date such notice is to be
mailed) by signed letter to Certificateholders and each Rating Agency mailed no
later than the 25th day of the month preceding the month of such final
distribution specifying (i) the Distribution Date upon which final payment on
the Certificates will be made upon presentation and surrender of Certificates at
the office or agency of the Trustee therein designated, (ii) the amount of any
such final payment and (iii) that the Record Date otherwise applicable to such
Distribution Date is not applicable, payments being made only upon presentation
and surrender of the Certificates at the office or agency of the Trustee therein
specified. The Trustee shall indicate the date of adoption of the plan of
qualified liquidation (such plan having been prepared by the Servicer or its
designee) in a statement attached to the final federal income tax return of each
REMIC Pool. After giving such notice, the Trustee shall not register the
transfer or exchange of any Certificates. If such notice is given in connection
with the Servicer's election to purchase the Outstanding Mortgage Loans, the
Servicer shall deposit in the Collection Account after adoption of the plan
during the applicable Principal Prepayment Period an amount equal to the
purchase price as determined as provided in clause (ii) of the preceding
paragraph and on the Distribution Date on which such termination is to occur,
Certificateholders will be entitled to the amount of such purchase price but not
amounts in excess thereof, all as provided herein. Upon presentation and
surrender of the Certificates, the Trustee shall distribute to
Certificateholders an amount equal to (a) the amount otherwise distributable on
such Distribution Date, if not in connection with a purchase; or (b) if the
Servicer elected to so purchase, the purchase price determined as provided in
clause (ii) of the preceding paragraph. Following such final deposit the Trustee
shall promptly release to the Servicer the Mortgage Files for the remaining
Mortgage Loans, and the Trustee shall execute all assignments,
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endorsements and other instruments necessary to effectuate such transfer and
shall have no further responsibility with regard to said Mortgage Files.
If all of the Certificateholders shall not surrender their
Certificates for cancellation within three months after the time specified in
the above-mentioned written notice, at the close of the 90 day period beginning
after the written notice is given, each remaining Certificateholder will be
credited with an amount that would have been otherwise distributed to such
Certificateholder, and the Trustee shall give a second written notice to the
remaining Certificateholders to surrender their Certificates for cancellation
and receive the final distribution with respect thereto. If within three months
after the second notice all the Certificates shall not have been surrendered for
cancellation, the Trustee shall appoint an agent to take appropriate and
reasonable steps to contact the remaining Certificateholders concerning
surrender of their Certificates, and the cost thereof shall be paid out of the
funds and other assets which remain in the Trust Fund hereunder.
[End of Article XI]
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Severability of Provisions. If any one or more
of the covenants, agreements, provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions
or terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
Section 12.02. Limitation on Rights of Certificateholders. The
death or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust Fund, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding-up of the Trust Fund, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
No Certificateholder shall have any right to vote (except as
expressly provided herein) or in any manner otherwise control the operation and
management of the Trust Fund, or the obligations of the parties hereto, nor
shall anything herein set forth, or contained in the terms of the Certificates,
be construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor shall any Certificateholder be under
any liability to any third person by reason of any action taken by the parties
to this Agreement pursuant to any provision hereof.
No Certificateholder shall have any right by virtue of any
provision of this Agreement to institute any suit, action or proceeding in
equity or at law upon or under or with
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<PAGE> 114
respect to this Agreement, unless such Holder previously shall have given to the
Trustee a written notice of default and of the continuance thereof, as
hereinbefore provided, and the Holders of Certificates of any Class evidencing
in the aggregate not less than 25% of the Percentage Interests of such Class
shall have made written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder (in the case of conflicting
requests by two or more 25% or greater Percentage Interests, the Trustee shall
act in accordance with the first such request) and shall have offered to the
Trustee such reasonable indemnity as it may require against the costs, expenses
and liabilities to be incurred therein or thereby, and the Trustee, for 60 days
after its receipt of such notice, request and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; it being
understood and intended, and being expressly covenanted by each
Certificateholder with every other Certificateholder and the Trustee, that no
one or more Holders of Certificates of any Class shall have any right in any
manner whatever by virtue of any provision of this Agreement to affect, disturb
or prejudice the rights of the Holders of any other of such Certificates of such
Class or any other Class, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right under this
Agreement, except in the manner herein provided and for the common benefit of
Certificateholders of such Class or all Classes, as the case may be. For the
protection and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Section 12.03. Amendment. This Agreement may be amended from
time to time by the Depositor, the Servicer and the Trustee, without the consent
of any of the Certificateholders, to cure any ambiguity, to correct or
supplement any provisions herein which may be inconsistent with any other
provisions herein, to ensure continuing treatment of each REMIC Pool as a REMIC,
or to make any other provisions with respect to matters or questions arising
under this Agreement which shall not be materially inconsistent with the
provisions of this Agreement, provided that such actions shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests
of any Certificateholder of a Class having an Outstanding Certificate Principal
Balance of greater than zero or cause either REMIC Pool to fail to qualify as a
REMIC.
This Agreement may also be amended from time to time by the
Depositor, the Servicer and the Trustee with the consent of the Holders of
Certificates evidencing in the aggregate not less than 66-2/3% of the Percentage
Interest of each Class of Certificates having an Outstanding Certificate
Principal Balance greater than zero and affected thereby for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Holders of Certificates of such Class; provided, however, that no such amendment
shall (i) reduce in any manner the amount of, or delay the timing of, payments
received on Mortgage Loans which are required to be distributed on any
Certificate without the consent of the Holder of such Certificate, (ii) reduce
the aforesaid percentage of Certificates of any class the Holders of which are
required to consent to any such amendment or (iii) change the percentage
specified in clause (ii) of the first
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<PAGE> 115
paragraph of Section 11.01, without the consent of the Holders of all
Certificates of such Class then outstanding.
Promptly after the execution of any such amendment the Trustee
shall furnish written notification of the substance of such amendment to each
Certificateholder and each Rating Agency.
It shall not be necessary for the consent of
Certificateholders under this Section 12.03 to approve the particular form of
any proposed amendment but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable regulations as the Trustee may prescribe.
Section 12.04. Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 12.05. Duration of Agreement. This Agreement shall
continue in existence and effect until terminated as herein provided.
Section 12.06. Governing Law. This Agreement shall be
construed in accordance with the laws of the State of New York and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
Section 12.07. Notices. All demands, notices and
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered at or mailed by first class or registered
mail, postage prepaid, to (i) in the case of the Depositor, HomeSide Mortgage
Securities, Inc., 7301 Baymeadows Way, Jacksonville, Florida 32256, Attention:
General Counsel, (ii) in the case of the Servicer, HomeSide Lending, Inc., 7301
Baymeadows Way, Jacksonville, Florida 32256, Attention: General Counsel, (iii)
in the case of the Trustee, Norwest Bank Minnesota, National Association, Sixth
Street and Marquette Avenue, Minneapolis, Minnesota 55479-0070, Attn: Corporate
Trust Services - HomeSide 1998-1 with a copy to the Trustee at 11000 Broken Land
Parkway, Columbia, Maryland 21044 Attn: HomeSide 1998-1, (iv) in the case of
S&P, Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., 25 Broadway, New York, New York, 10004, (v) in the case of
Fitch, Fitch IBCA, Inc., 1 State Street Plaza, New York, New York 10004, and
(vi) in the case of any of the foregoing persons, such other addresses as may
hereafter be furnished by any such persons to the other parties to this
Agreement.
[End of Article XII]
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IN WITNESS WHEREOF, the Depositor, the Servicer and the
Trustee have caused their names to be signed hereto by their respective officers
thereunto duly authorized as of the day and year first above written.
HOMESIDE MORTGAGE SECURITIES, INC.
By:
-----------------------------------------
Name:
Title:
HOMESIDE LENDING, INC.
By:
-----------------------------------------
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By:
-----------------------------------------
Name:
Title:
111
<PAGE> 117
EXHIBIT A
MORTGAGE LOAN SCHEDULE
<PAGE> 118
EXHIBIT A-1
HOMESIDE MORTGAGE LOANS
<PAGE> 119
EXHIBIT A-2
CHASE MORTGAGE LOANS
<PAGE> 120
EXHIBIT B
CONTENTS OF MORTGAGE FILE
(A) (I) Original Mortgage Note (or a lost note affidavit (including a
copy of the original Mortgage Note)) or (II) original Consolidation, Extension
and Modification Agreement (or a lost note affidavit (including a copy of the
original Consolidation, Extension and Modification Agreement), in either case
endorsed, "Pay to the order of Norwest Bank Minnesota, National Association, as
trustee, without recourse."
(B) The original Mortgage (including all riders thereto) with evidence
of recording thereon, or a copy thereof certified by the public recording office
in which such mortgage has been recorded or, if the original Mortgage has not
been returned from the applicable public recording office, a true certified
copy, certified by the Seller, of the original Mortgage together with a
certificate of the Seller certifying that the original Mortgage has been
delivered for recording in the appropriate public recording office of the
jurisdiction in which the Mortgaged Property is located.
(C) The original or certified to be true copy, certified by the Seller,
of the Primary Insurance Policy, if required.
(D) The original Assignment of Mortgage to "Norwest Bank Minnesota,
National Association, as trustee," which assignment shall be in form and
substance acceptable for recording, or a copy certified by the Seller as a true
and correct copy of the original Assignment which has been sent for recordation.
Subject to the foregoing, such assignments may, if permitted by law, be by
blanket assignments for Mortgage Loans covering Mortgaged Properties situated
within the same county. If the Assignment of Mortgage is in blanket form, a copy
of the Assignment of Mortgage shall be included in the related individual
Mortgage File.
(E) The original policy of title insurance, including riders and
endorsements thereto, or if the policy has not yet been issued, a written
commitment or interim binder or preliminary report of title issued by the title
insurance or escrow company.
(F) Originals of all recorded intervening Assignments of Mortgage, or
copies thereof, certified by the public recording office in which such
Assignments or Mortgage have been recorded showing a complete chain of title
from the originator to the Depositor, with evidence of recording, thereon, or a
copy thereof certified by the public recording office in which such Assignment
of Mortgage has been recorded or, if the original Assignment of Mortgage has not
been returned from the applicable public recording office, a true certified
copy, certified by the Seller of the original Assignment of Mortgage together
with a certificate of the Seller certifying that the original
<PAGE> 121
Assignment of Mortgage has been delivered for recording in the appropriate
public recording office of the jurisdiction in which the Mortgaged Property is
located.
(G) Originals, or copies thereof certified by the public recording
office in which such documents have been recorded, of each assumption,
extension, modification, written assurance or substitution agreements, if
applicable, or if the original of such document has not been returned from the
applicable public recording office, a true certified copy, certified by the
Seller, of such original document together with certificate of Seller certifying
the original of such document has been delivered for recording in the
appropriate recording office of the jurisdiction in which the Mortgaged Property
is located.
(H) If the Mortgaged Note or Mortgage or any other material document or
instrument relating to the Mortgaged Loan has been signed by a person on behalf
of the Mortgagor, the original power of attorney or other instrument that
authorized and empowered such person to sign bearing evidence that such
instrument has been recorded, if so required in the appropriate jurisdiction
where the Mortgaged Property is located (or, in lieu thereof, a duplicate or
conformed copy of such instrument, together with a certificate of receipt from
the recording office, certifying that such copy represents a true and complete
copy of the original and that such original has been or is currently submitted
to be recorded in the appropriate governmental recording office of the
jurisdiction where the Mortgaged Property is located), or if the original power
of attorney or other such instrument has been delivered for recording in the
appropriate public recording office of the jurisdiction in which the Mortgaged
Property is located.
<PAGE> 122
EXHIBIT C
FORMS OF CLASS A CERTIFICATES
<PAGE> 123
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR INTEREST"
IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN HOMESIDE
MORTGAGE SECURITIES, INC., THE SERVICER OR THE TRUSTEE REFERRED TO BELOW OR ANY
OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR INTEREST
REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED
BY HOMESIDE MORTGAGE SECURITIES, INC., HOMESIDE LENDING, INC., THE TRUSTEE OR BY
ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-1 CLASS A-1
Number 98-1-A-1 Original Denomination:
$
--------------
Cut-off Date: January 1, 1998 Final Scheduled Distribution
Date: __________________
First Distribution Date:
February 25, 1998 Approximate Aggregate Original
Denomination of all Class A-1
Remittance Rate: 6.75% Certificates: $________________
evidencing an interest in distributions allocable to the Class A-1 Certificates
with respect to a pool of conventional one- to four-family mortgage loans formed
and sold by
HOMESIDE MORTGAGE SECURITIES, INC. CUSIP: ______________
<PAGE> 124
[Unless this Certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Trustee
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested by an
authorized representative of DTC (and any payment is made to Cede & Co. or to
such other entity as is requested by an authorized representative of DTC), ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest
herein.]
This certifies that [Cede & Co.] is the registered owner of the
ownership interest evidenced by this Certificate (obtained by dividing the
Original Denomination of this Certificate by the aggregate Original Denomination
of all Class A-1 Certificates) in certain monthly distributions with respect to
a pool (the "Mortgage Pool") of conventional one- to four-family adjustable rate
mortgage loans (the "Mortgage Loans") formed and sold by HomeSide Mortgage
Securities, Inc. (the "Company"), which Mortgage Loans are secured by Mortgaged
Properties, and in certain other property held in trust for the benefit of the
Certificateholders (collectively, the "Trust Fund"). The Mortgage Loans are
serviced by HomeSide Lending, Inc. (in such capacity, the "Servicer"). The Trust
Fund was created pursuant to a Pooling and Servicing Agreement dated as of
January 1, 1998 (the "Agreement") among the Company, the Servicer and Norwest
Bank Minnesota, National Association, as trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth below. To the extent
not defined herein, the capitalized terms used herein shall have the meanings
assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-1,
Class A (the "Class A Certificates") and is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound. Also issued under the Agreement are Certificates designated as
Multi-Class Mortgage Pass-Through Certificates, Series 1998-1, Class M (the
"Class M Certificates") and Class B (the "Class B Certificates"). The Class A
Certificates, the Class M Certificates and the Class B Certificates are
collectively referred to as the "Certificates".
Pursuant to the terms of the Agreement, the Trustee will distribute
from funds in the Certificate Account the amount as described on the reverse
hereof on the 25th day of each month or, if such 25th day is not a Business Day,
the Business Day immediately following (the "Distribution Date"), commencing on
February 25, 1998. Such distributions will be made to the Person in whose name
this Certificate is registered at the close of business on the last Business Day
of the month preceding the month in which such payment is made, or if such last
day is not a Business Day, the Business Day immediately preceding such last day
(the "Record Date").
Distributions on this Certificate will be made either by check mailed
to the address of the Person entitled thereto, as such name and address shall
appear on the Certificate Register, or by wire transfer in immediately available
funds to the account of such Holder at a
<PAGE> 125
bank or other financial or depository institution having appropriate facilities
therefor, if such Holder has so notified the Paying Agent in writing at least 10
Business Days prior to the first Distribution Date for which distribution by
wire transfer is to be made, and such Holder's Certificates evidence an
aggregate original principal balance of not less than $5,000,000.
Notwithstanding the above, the final distribution on this Certificate will be
made after due notice by the Trustee of the pendency of such distribution and
only upon presentation and surrender of this Certificate at the office of the
Trustee or agency appointed by the Trustee for the purpose and specified in such
notice of final distribution.
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
<PAGE> 126
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: January __, 1998 NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity, but solely
as Trustee
By ___________________________________
Certificate of Authentication
This is one of the Class [A-1] Certificates
referred to in the within-mentioned
Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Authenticating Agent
By _____________________________
Authorized Signatory
<PAGE> 127
REVERSE OF CERTIFICATE
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-1
This Certificate is one of a duly authorized issue of Certificates,
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-1,
issued in twelve Classes of Class A Certificates, one Class of Class M
Certificates and five Classes of Class B Certificates, each evidencing an
interest in certain distributions with respect to a pool of adjustable rate one-
to four-family first Mortgage Loans formed and sold by the Company and certain
other property conveyed by the Company to the Trustee. The Class A Certificates
evidence in the aggregate the Class A Percentage of distributions relating to
repayments of principal and interest on such Mortgage Loans. The Class M
Certificates evidence in the aggregate the Class M Percentage of distributions
relating to repayments of principal and interest on such Mortgage Loans.
Following the initial issuance of the Certificates, the Principal
Balance of this Certificate will be different from the Original Denomination
shown above. Anyone acquiring this Certificate may ascertain its current
Principal Balance by inquiry of the Trustee.
The Holder, by its acceptance of this Certificate, agrees that it will
look solely to the Trust Fund and certain amounts resulting from credit
enhancements for payment hereunder and that the Trustee is not liable to the
Holders for any amount payable under this Certificate or the Agreement or,
except as expressly provided in the Agreement, subject to any liability under
the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Trustee will cause to be kept at its Corporate Trust Office in
Minneapolis, Minnesota, or at the office of its designated agent, a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee will provide for the registration of Certificates and of transfers
and exchanges of Certificates. Upon surrender for registration of transfer of
any Certificate at any office or agency of the Trustee maintained for such
purpose, the Trustee will, subject to the limitations set forth in the
Agreement, authenticate and deliver, in the name of the designated transferee or
transferees, a Certificate of a like Class and dated the date of authentication
by the Trustee.
No service charge will be made to the Holder for any transfer or
exchange of the Certificate, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate. Prior to due
presentation of a Certificate for registration of transfer, the Company, the
Servicer and the Trustee may treat the person in whose name any Certificate is
registered as the
<PAGE> 128
owner of such Certificate and the Percentage Interest in the Trust Fund
evidenced thereby for the purpose of receiving distributions pursuant to the
Agreement and for all other purposes whatsoever, and neither the Company, the
Servicer nor the Trustee will be affected by notice to the contrary.
The Agreement may be amended from time to time by the Company, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC Pool as a REMIC, or to make any other provisions with
respect to matters or questions arising under the Agreement which are not
materially inconsistent with the provisions of the Agreement, provided that such
action does not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder.
The Agreement may also be amended from time to time by the Company, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) reduce the aforesaid
percentage of Certificates of any Class the Holders of which are required to
consent to any such amendment or (iii) change the percentage specified in clause
(ii) of the first paragraph of Section 11.01 of the Agreement, without the
consent of the Holders of all Certificates of such Class then outstanding.
The respective obligations and responsibilities of the Company, the
Servicer and the Trustee under the Agreement will terminate upon (i) the later
of the final payment or other liquidation (or any Advance with respect thereto)
of the last Mortgage Loan or the disposition of all property acquired upon the
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due thereunder; or (ii) at the option of the Servicer,
on any Distribution Date which occurs in the month following a Due Date on which
the aggregate unpaid Principal Balance of the Outstanding Mortgage Loans is less
than [10%] of the aggregate unpaid Principal Balance of the Mortgage Loans on
the Cut-off Date, so long as the Servicer deposits or causes to be deposited in
the Certificate Account during the Principal Prepayment Period related to such
Distribution Date an amount equal to the Purchase Price for each Mortgage Loan,
less any unreimbursed Advances made with respect to any Mortgage Loan, and with
respect to all property acquired in respect of any Mortgage Loan remaining in
the Trust Fund, an amount equal to the fair market value of such property, as
determined by an appraisal to be conducted by an appraiser selected by the
Trustee, less unreimbursed Advances made with respect to the Mortgage Loan with
respect to which property has been acquired; provided, however, that in no event
shall the trust created hereby continue beyond the earlier of (i) 32 years after
the Closing Date and (ii) the expiration of 21 years from the death of
<PAGE> 129
the last survivor of the descendants of Joseph P. Kennedy, the late ambassador
of the United States to the Court of St. James's, living on the date hereof.
<PAGE> 130
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
- ---------------------
- ---------------------
- -------------------------------------------------------------
(Please Print or Type Name and Address of Assignee)
- -------------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
__________________________________________________ Attorney to transfer the
within Certificate on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated:
(Signature guaranty) _______________________________
NOTICE: The signature to this assignment
must correspond with the name as it appears
upon the face of the within Certificate in
every particular, without alteration or
enlargement or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
<PAGE> 131
EXHIBIT D
FORM OF CLASS M CERTIFICATE
THIS CLASS M CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE CLASS A
CERTIFICATES AS DESCRIBED IN THE POOLING AND SERVICING AGREEMENT REFERRED TO
HEREIN.
SOLELY FOR FEDERAL INCOME TAX PURPOSES, THIS CERTIFICATE IS A "REGULAR INTEREST"
IN A "REAL ESTATE MORTGAGE INVESTMENT CONDUIT," AS THOSE TERMS ARE DEFINED,
RESPECTIVELY, IN SECTIONS 860G AND 860D OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED.
[THIS CERTIFICATE WAS ISSUED ON JANUARY __, 1998 AND IS TREATED AS HAVING BEEN
ISSUED WITH ORIGINAL ISSUE DISCOUNT ("OID") FOR FEDERAL INCOME TAX PURPOSES.
ASSUMING THAT THIS CERTIFICATE PAYS IN ACCORDANCE WITH PROJECTED CASH FLOWS
BASED ON CERTAIN ASSUMPTIONS USED IN PRICING THE CERTIFICATES: (I) THE AMOUNT OF
OID IS APPROXIMATELY [ ] PER [ ] OF THE ORIGINAL PRINCIPAL AMOUNT OF THIS
CERTIFICATE, (II) THE ANNUAL YIELD OF THIS CERTIFICATE FOR PURPOSES OF COMPUTING
OID IS APPROXIMATELY [ ] PER ANNUM (COMPOUNDED MONTHLY) AND (III) THE AMOUNT OF
OID ALLOCABLE TO THE INITIAL SHORT PERIOD IS [ ] PER $1,000 OF THE ORIGINAL
PRINCIPAL AMOUNT OF THIS CERTIFICATE USING THE EXACT METHOD. THE ACTUAL YIELD TO
MATURITY AND OID ON THIS CERTIFICATE MAY DIFFER FROM THE PROJECTED AMOUNTS. THE
PREPAYMENT ASSUMPTION USED IN DETERMINING THE ANNUAL YIELD FOR FEDERAL INCOME
TAX PURPOSES IS [ ] OF THE PREPAYMENT MODEL.]
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE EITHER (A) IS NOT AN EMPLOYEE
BENEFIT PLAN (A "PLAN") WITHIN THE MEANING OF SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), AND IS NOT
DIRECTLY OR INDIRECTLY PURCHASING ANY CERTIFICATE ON BEHALF OF, AS INVESTMENT
MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF OR WITH ASSETS OF A PLAN OR, IN
THE CASE OF AN INSURANCE COMPANY, THE ASSETS OF ANY SEPARATE ACCOUNTS TO EFFECT
SUCH ACQUISITION OR (B) THE SOURCE OF FUNDS FOR THE PURCHASE OF THE CERTIFICATES
IS AN "INSURANCE COMPANY GENERAL ACCOUNT" WITHIN THE MEANING OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"), 60 FED. REG. 35925 (JULY 12,
1995), AND THE CONDITIONS SET FORTH IN SECTION I AND SECTION III OF PTCE 95-60
ARE SATISFIED WITH RESPECT TO THE PURCHASE AND HOLDING OF THE CERTIFICATES, OR
(ii) IF THIS CERTIFICATE IS PRESENTED FOR
<PAGE> 132
REGISTRATION IN THE NAME OF A PLAN SUBJECT TO TITLE I OF ERISA, OR SECTION 4975
OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (OR COMPARABLE
PROVISIONS OF ANY SUBSEQUENT ENACTMENTS), OR A TRUSTEE OF ANY SUCH PLAN, OR ANY
OTHER PERSON WHO IS USING THE ASSETS OF ANY SUCH PLAN TO EFFECT SUCH
ACQUISITION, AN OPINION OF COUNSEL TO THE EFFECT THAT THE PURCHASE OR HOLDING OF
THIS CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING DEEMED TO
BE "PLAN ASSETS" PURSUANT TO THE DEPARTMENT OF LABOR PLAN ASSET REGULATIONS SET
FORTH IN 29 C.F.R. Section 2510.3-101 AND TO BE SUBJECT TO THE FIDUCIARY
RESPONSIBILITY PROVISIONS OF ERISA OR THE PROHIBITED TRANSACTION PROVISIONS OF
THE CODE, WILL NOT CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN THE
MEANING OF SECTION 406 OR SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE, AND
WILL NOT SUBJECT THE TRUSTEE, THE SERVICER, THE COMPANY OR ANY OF THEIR
AFFILIATES TO ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES
UNDER ERISA OR SECTION 4975 OF THE CODE) RELATING TO THE CERTIFICATES.
THIS CERTIFICATE DOES NOT REPRESENT AN OBLIGATION OF OR INTEREST IN HOMESIDE
MORTGAGE SECURITIES, INC., THE SERVICER OR THE TRUSTEE REFERRED TO BELOW OR ANY
OF THEIR AFFILIATES. NEITHER THIS CERTIFICATE, THE REMIC REGULAR INTEREST
REPRESENTED HEREBY NOR THE UNDERLYING MORTGAGE LOANS ARE GUARANTEED OR INSURED
BY HOMESIDE MORTGAGE SECURITIES, INC., HOMESIDE LENDING, INC., THE TRUSTEE OR BY
ANY OF THEIR AFFILIATES OR BY ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
<PAGE> 133
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-1, CLASS M
Number 98-1-M-1 Original Denomination
$
------------------
Cut-off Date: January 1, 1998 Final Scheduled Distribution
Date: _________________
First Distribution Date:
February 25, 1998 Approximate Aggregate Original
Denomination of all Class M
Remittance Rate: 6.75% Certificates: $_______________
evidencing an interest in distributions allocable to the Class M Certificates
with respect to a pool of conventional one- to four-family mortgage loans formed
and sold by
HOMESIDE MORTGAGE SECURITIES, INC. CUSIP: ____________
This certifies that _______________________________ is the registered
owner of the ownership interest evidenced by this Certificate (obtained by
dividing the Original Denomination of this Certificate by the aggregate Original
Denomination of all Class M Certificates) in certain monthly distributions with
respect to a pool (the "Mortgage Pool") of conventional one- to four-family
adjustable rate mortgage loans (the "Mortgage Loans") formed and sold by
HomeSide Mortgage Securities, Inc. (the "Company"), which Mortgage Loans are
secured by Mortgaged Properties, and in certain other property held in trust for
the benefit of the Certificateholders (collectively, the "Trust Fund"). The
Mortgage Loans are serviced by HomeSide Lending, Inc. (in such capacity, the
"Servicer"). The Trust Fund was created pursuant to a Pooling and Servicing
Agreement dated as of January 1, 1998 (the "Agreement") among the Company, the
Servicer and Norwest Bank Minnesota, National Association, as trustee (the
"Trustee"), a summary of certain of the pertinent provisions of which is set
forth below. To the extent not defined herein, the capitalized terms used herein
shall have the meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-1,
Class M (the "Class M Certificates") and is issued under and is subject to the
terms, provisions and conditions of the Agreement, to which Agreement the Holder
of this Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound. Also issued under the Agreement are Certificates designated as
Multi-Class Mortgage Pass-Through Certificates, Series 1998-1, Class A (the
"Class A Certificates") and Class B (the "Class B Certificates"). The Class A
Certificates are senior to, and the Class B Certificates are subordinate to, the
Class M Certificates in right of payment to the extent described herein and in
the Agreement. The Class A Certificates, Class M Certificates and Class B
Certificates are collectively referred to as the "Certificates".
<PAGE> 134
Pursuant to the terms of the Agreement, the Trustee will
distribute from funds in the Certificate Account the amount as described on the
reverse hereof on the 25th day of each month or, if such 25th day is not a
Business Day, the Business Day immediately following (the "Distribution Date"),
commencing on February 25, 1998. Such distributions will be made to the Person
in whose name this Certificate is registered at the close of business on the
last Business Day of the month preceding the month in which such payment is
made, or if such last day is not a Business Day, the Business Day immediately
preceding such last day (the "Record Date").
Distributions on this Certificate will be made either by check
mailed to the address of the Person entitled thereto, as such name and address
shall appear on the Certificate Register, or by wire transfer in immediately
available funds to the account of such Holder at a bank or other financial or
depository institution having appropriate facilities therefor, if such Holder
has so notified the Paying Agent in writing at least 10 Business Days prior to
the first Remittance Date for which distribution by wire transfer is to be made,
and such Holder's Certificates evidence an aggregate original principal balance
of not less than $5,000,000. Notwithstanding the above, the final distribution
on this Certificate will be made after due notice by the Trustee of the pendency
of such distribution and only upon presentation and surrender of this
Certificate at the office of the Trustee or agency appointed by the Trustee for
the purpose and specified in such notice of final distribution.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by
the Trustee, by manual signature, this Certificate shall not be entitled to any
benefit under the Agreement or be valid for any purpose.
<PAGE> 135
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: January __, 1998 NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity, but solely
as Trustee
By: ___________________________________
Certificate of Authentication
This is one of the Class M Certificates
referred to in the within-mentioned
Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Authenticating Agent
By: _____________________________
Authorized Signatory
<PAGE> 136
REVERSE OF CERTIFICATE
MORTGAGE PASS-THROUGH CERTIFICATE
SERIES 1998-1
This Certificate is one of a duly authorized issue of Certificates,
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-1,
issued in twelve Classes of Class A Certificates, one Class of Class M
Certificates and five Classes of Class B Certificates, each evidencing an
interest in certain distributions with respect to a pool of adjustable rate one-
to four-family first Mortgage Loans formed and sold by the Company and certain
other property conveyed by the Company to the Trustee. The Class A Certificates
evidence in the aggregate the Class A Percentage of distributions relating to
repayments of principal and interest on such Mortgage Loans. The Class M
Certificates evidence in the aggregate the Class M Percentage of distributions
relating to repayments of principal and interest on such Mortgage Loans.
Following the initial issuance of the Certificates, the Principal
Balance of this Certificate will be different from the Original Denomination
shown above. Anyone acquiring this Certificate may ascertain its current
Principal Balance by inquiry of the Trustee.
The Holder, by its acceptance of this Certificate, agrees that it will
look solely to the Trust Fund and certain amounts resulting from credit
enhancements for payment hereunder and that the Trustee is not liable to the
Holders for any amount payable under this Certificate or the Agreement or,
except as expressly provided in the Agreement, subject to any liability under
the Agreement.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for the interests, rights and limitations of
rights, benefits, obligations and duties evidenced hereby, and the rights,
duties and immunities of the Trustee.
The Trustee will cause to be kept at its Corporate Trust Office in
Minneapolis, Minnesota, or at the office of its designated agent, a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee will provide for the registration of Certificates and of transfers
and exchanges of Certificates. Upon surrender for registration of transfer of
any Certificate at any office or agency of the Trustee maintained for such
purpose, the Trustee will, subject to the limitations set forth in the
Agreement, authenticate and deliver, in the name of the designated transferee or
transferees, a Certificate of a like Class and dated the date of authentication
by the Trustee.
No service charge will be made to the Holder for any transfer or
exchange of the Certificate, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate. Prior to due
presentation of a Certificate for registration of transfer, the Company, the
Servicer and the Trustee may treat the person in whose name any Certificate is
registered as the
<PAGE> 137
owner of such Certificate and the Percentage Interest in the Trust Fund
evidenced thereby for the purpose of receiving distributions pursuant to the
Agreement and for all other purposes whatsoever, and neither the Company, the
Servicer nor the Trustee will be affected by notice to the contrary.
The Agreement may be amended from time to time by the Company, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein which may
be inconsistent with the other provisions therein, to ensure continuing
treatment of each REMIC Pool as a REMIC, or to make any other provisions with
respect to matters or questions arising under the Agreement which are not
materially inconsistent with the provisions of the Agreement, provided that such
action does not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder.
The Agreement may also be amended from time to time by the Company, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interests of
each Class of Certificates affected thereby for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Mortgage Loans which are required to be distributed on any Certificate without
the consent of the Holder of such Certificate, (ii) reduce the aforesaid
percentage of Certificates of any Class the Holders of which are required to
consent to any such amendment or (iii) change the percentage specified in clause
(ii) of the first paragraph of Section 11.01 of the Agreement, without the
consent of the Holders of all Certificates of such Class then outstanding.
The respective obligations and responsibilities of the Company, the
Servicer and the Trustee under the Agreement will terminate upon (i) the later
of the final payment or other liquidation (or any Advance with respect thereto)
of the last Mortgage Loan or the disposition of all property acquired upon the
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due thereunder; or (ii) at the option of the Servicer,
on any Distribution Date which occurs in the month following a Due Date on which
the aggregate unpaid Principal Balance of the Outstanding Mortgage Loans is less
than [10%] of the aggregate unpaid Principal Balance of the Mortgage Loans on
the Cut-off Date, so long as the Servicer deposits or causes to be deposited in
the Certificate Account during the Principal Prepayment Period related to such
Distribution Date an amount equal to the Purchase Price for each Mortgage Loan,
less any unreimbursed Advances made with respect to any Mortgage Loan, and with
respect to all property acquired in respect of any Mortgage Loan remaining in
the Trust Fund, an amount equal to the fair market value of such property, as
determined by an appraisal to be conducted by an appraiser selected by the
Trustee, less unreimbursed Advances made with respect to the Mortgage Loan with
respect to which property has been acquired; provided, however, that in no event
shall the trust created hereby continue beyond the earlier of (i) 32 years after
the Closing Date and (ii) the expiration of 21 years from the death of
<PAGE> 138
the last survivor of the descendants of Joseph P. Kennedy, the late ambassador
of the United States to the Court of St. James's, living on the date hereof.
<PAGE> 139
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
- ---------------------
- ---------------------
- -------------------------------------------------------------
(Please Print or Type Name and Address of Assignee)
- -------------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
__________________________________________________ Attorney to transfer the
within Certificate on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated:
(Signature guaranty) _______________________________
NOTICE: The signature to
this assignment must
correspond with the name as
it appears upon the face of
the within Certificate in
every particular, without
alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
<PAGE> 140
EXHIBIT E
FORMS OF CLASS B CERTIFICATES
THIS CLASS B-1 CERTIFICATE IS SUBORDINATED IN RIGHT OF PAYMENT TO THE
CLASS A CERTIFICATES AND THE CLASS M CERTIFICATES AS DESCRIBED IN THE
POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
THIS CLASS B-1 CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF
ANY STATE AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS SOLD OR
TRANSFERRED IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER
SUCH ACT OR UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE
WITH THE PROVISIONS OF SECTION 4.02 OF THE POOLING AND SERVICING
AGREEMENT REFERRED TO HEREIN.
CLASS B-1 CERTIFICATE
Original Denomination
$
------------------
Aggregate Original Principal
Balance of all Class B-1
Certificates: $____________
Cut-off Date: January 1, 1998 Number 98-1-B-1-1
First Distribution Date:
February 25, 1998
Remittance Rate: ___%
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
Series 1998-1
evidencing an ownership interest in distributions allocable to a pool of
conventional one- to four-family mortgage loans formed and sold by
HOMESIDE MORTGAGE SECURITIES, INC.
<PAGE> 141
This Certificate does not represent an obligation of or interest in
HomeSide Mortgage Securities, Inc. ("HSMSI"), the Servicer or the Trustee
referred to below or any of their affiliates. Neither this Certificate, the
REMIC regular interest represented hereby nor the underlying Mortgage Loans are
guaranteed or insured by HSMSI, HomeSide Lending, Inc., the Trustee or by any of
their affiliates or by any governmental agency or instrumentality.
FOLLOWING THE INITIAL ISSUANCE OF THE CERTIFICATES, THE PRINCIPAL BALANCE OF
THIS CERTIFICATE WILL BE DIFFERENT FROM THE ORIGINAL DENOMINATION SHOWN ABOVE.
ANYONE ACQUIRING THIS CERTIFICATE MAY ASCERTAIN ITS CURRENT PRINCIPAL BALANCE BY
INQUIRY OF THE TRUSTEE.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE EITHER (A) IS NOT AN EMPLOYEE
BENEFIT PLAN (A "PLAN") WITHIN THE MEANING OF SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), AND IS NOT
DIRECTLY OR INDIRECTLY PURCHASING ANY CERTIFICATE ON BEHALF OF, AS INVESTMENT
MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF OR WITH ASSETS OF A PLAN OR, IN
THE CASE OF AN INSURANCE COMPANY, THE ASSETS OF ANY SEPARATE ACCOUNTS TO EFFECT
SUCH ACQUISITION OR (B) THE SOURCE OF FUNDS FOR THE PURCHASE OF THE CERTIFICATES
IS AN "INSURANCE COMPANY GENERAL ACCOUNT" WITHIN THE MEANING OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"), 60 FED. REG. 35925 (JULY 12,
1995), AND THE CONDITIONS SET FORTH IN SECTION I AND SECTION III OF PTCE 95-60
ARE SATISFIED WITH RESPECT TO THE PURCHASE AND HOLDING OF THE CERTIFICATES, OR
(ii) IF THIS CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A PLAN
SUBJECT TO TITLE I OF ERISA, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE") (OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT
ENACTMENTS), OR A TRUSTEE OF ANY SUCH PLAN, OR ANY OTHER PERSON WHO IS USING THE
ASSETS OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION, AN OPINION OF COUNSEL TO THE
EFFECT THAT THE PURCHASE OR HOLDING OF THIS CERTIFICATE WILL NOT RESULT IN THE
ASSETS OF THE TRUST FUND BEING DEEMED TO BE "PLAN ASSETS" PURSUANT TO THE
DEPARTMENT OF LABOR PLAN ASSET REGULATIONS SET FORTH IN 29 C.F.R.
Section 2510.3-101 AND TO BE SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS
OF ERISA OR THE PROHIBITED TRANSACTION PROVISIONS OF THE CODE, WILL NOT
CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION
406 OR SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE, AND WILL NOT SUBJECT
THE TRUSTEE, THE SERVICER, THE COMPANY OR ANY OF THEIR AFFILIATES TO ANY
OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA OR
SECTION 4975 OF THE CODE) RELATING TO THE CERTIFICATES.
<PAGE> 142
This certifies that _____________________________ is the registered
owner of the ownership interest (the "Ownership Interest") evidenced by this
Certificate (obtained by dividing the Original Denomination of this Certificate
by the aggregate Original Denomination of all Class B-1 Certificates) in certain
distributions with respect to a pool of conventional one- to four-family first
mortgage loans (the "Mortgage Loans") formed and sold by HomeSide Mortgage
Securities, Inc. (hereinafter called the "Depositor"), and certain other
property held in trust for the benefit of Certificateholders (collectively, the
"Trust Fund"). The Mortgage Loans are serviced by HomeSide Lending, Inc. (the
"Servicer") and are secured by first mortgages on Mortgaged Properties. The
Trust Fund was created pursuant to a Pooling and Servicing Agreement (the
"Agreement"), dated as of January 1, 1998 among the Depositor, the Servicer and
Norwest Bank Minnesota, National Association, as trustee (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth hereafter.
To the extent not defined herein, the capitalized terms used herein have the
meanings assigned in the Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-1,
Class B-1 (the "Class B-1 Certificate") and is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which Agreement such Holder is bound. Also issued under the Agreement are
Certificates designated as Multi-Class Mortgage Pass-Through Certificates Series
1998-1, Class A (the "Class A Certificates"), which are senior to the Class B-1
Certificates in right of payment, and Multi-Class Mortgage Pass Through
Certificates, Series 1998-1, Class M (the "Class M Certificates"), which are
also senior to the Class B-1 Certificates in right of payment, each to the
extent described herein and in the Agreement. The Class A Certificates, the
Class M Certificates, the Class B Certificates and the Class A-R Certificates
are collectively referred to as the "Certificates".
Pursuant to the terms of the Agreement, the Paying Agent will
distribute from funds in the Certificate Account created pursuant to the
Agreement on the 25th day of each month or, if such 25th day is not a Business
Day, the Business Day immediately following (the "Distribution Date"),
commencing on February 25, 1998, to the Person in whose name this Certificate is
registered at the close of business on the last Business Day of the month
preceding the month in which such payment is made (the "Record Date"), an amount
equal (with certain exceptions set forth in the Agreement) to the balance of the
Available Distribution Amount remaining after distributions of Excess Interest
and to the Class A and Class M Certificateholders on such Distribution Date.
The rights of the Class B Certificateholders to receive distributions
in respect of the Class B Certificates on any Distribution Date are subordinated
to the rights of the Class A and Class M Certificateholders to receive
distributions in respect of the Class A and Class M Certificates to the extent,
and only to the extent, set forth in the Agreement. Amounts properly distributed
to the Class B Certificateholders pursuant to the Agreement will be deemed
released from the Trust Fund, and the Class B Certificateholders will not in any
event be required to refund any such distributed amounts. The final distribution
on this Certificate will be made after due notice by the Trustee of
<PAGE> 143
the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency appointed by the Trustee for that
purpose and specified in such notice of final distribution.
The Trustee will cause to be kept at its Corporate Trust Office in
Minneapolis, Minnesota, or at the office of its designated agent, a Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Trustee will provide for the registration of Certificates and of transfers
and exchanges of Certificates. Upon surrender for registration of transfer of
any Certificate at any office or agency of the Trustee maintained for such
purpose, the Trustee will, subject to the limitations set forth in the
Agreement, authenticate and deliver, in the name of the designated transferee or
transferees, a Certificate of a like class and dated the date of authentication
by the Trustee.
No service charge will be made to the Holder for any transfer or
exchange of the Certificate, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate. Prior to due
presentation of a Certificate for registration of transfer, the Depositor, the
Servicer and the Trustee may treat the person in whose name any Certificate is
registered as the owner of such Certificate and the Ownership Interest in the
Trust Fund evidenced thereby for the purpose of receiving distributions pursuant
to the Agreement and for all other purposes whatsoever, and neither the
Depositor, the Servicer nor the Trustee will be affected by notice to the
contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein, which
may be inconsistent with any other provisions therein, to ensure continuing
treatment of each REMIC Pool or its assets as a REMIC and to avoid the
imposition of certain tax liabilities, or to make any other provisions with
respect to matters or questions arising under the Agreement which are not
materially inconsistent with the provisions of the Agreement, provided that such
action does not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder.
The Agreement may also be amended from time to time by the Depositor,
the Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interest of each
Class of Certificates affected thereby for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
the Mortgage Loans which are required to be distributed on any Certificate
without the consent of the Holder of such Certificate, (ii) reduce the aforesaid
percentage of Certificates of any Class the Holders of which are required to
consent to any such amendment or (iii) change the percentage specified in clause
(ii) of the first paragraph of Section 11.01 of the Agreement, without the
consent of the Holders of all Certificates of such Class then outstanding.
<PAGE> 144
The respective obligations and responsibilities of the Depositor, the
Servicer and the Trustee under the Agreement will terminate upon: (i) the later
of the final payment or other liquidation (or any Advance with respect thereto)
of the last Mortgage Loan or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due thereunder; or (ii) at the option of the Servicer,
on any Distribution Date which occurs in the month next following a Due Date on
which the aggregate unpaid Principal Balance of the Outstanding Mortgage Loans
is less than 10% of the aggregate unpaid Principal Balance of the Mortgage Loans
on the Cut-off Date, so long as the Servicer deposits or causes to be deposited
in the Certificate Account during the Principal Prepayment Period related to
such Distribution Date an amount equal to the Purchase Price for each Mortgage
Loan, less any unreimbursed Advances made with respect to any Mortgage Loan and,
with respect to all property acquired in respect of any Mortgage Loan remaining
in the Trust Fund, an amount equal to the fair market value of such property, as
determined by an appraisal to be conducted by an appraiser selected by the
Trustee, less unreimbursed Advances made with respect to the Mortgage Loan with
respect to which property has been acquired; provided, however, that in no event
shall the trust created hereby continue beyond the earlier of (i) 32 years after
the Closing Date and (ii) the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late ambassador of the
United States to the Court of St. James's, living on the date hereof.
<PAGE> 145
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: January __, 1998 NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity, but solely
as trustee
By: ___________________________________
Authorized Officer
This is one of the Class B-1
Certificates referred to
in the within-mentioned
Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Authenticating Agent
By________________________
Authorized Signatory
<PAGE> 146
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
- ---------------------
- ---------------------
- -------------------------------------------------------------
(Please Print or Type Name and Address of Assignee)
- -------------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
__________________________________________________ Attorney to transfer the
within Certificate on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated:
(Signature guaranty) _______________________________
NOTICE: The signature to
this assignment must
correspond with the name as
it appears upon the face of
the within Certificate in
every particular, without
alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
<PAGE> 147
EXHIBIT F
FORM OF CLASS A-R CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
AND MAY NOT BE RESOLD OR TRANSFERRED UNLESS IT IS SOLD OR TRANSFERRED
IN TRANSACTIONS WHICH ARE EXEMPT FROM REGISTRATION UNDER SUCH ACT OR
UNDER APPLICABLE STATE LAW AND IS TRANSFERRED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT
REFERRED TO HEREIN.
AS MORE FULLY PROVIDED BY SECTION 4.02(i) OF THE AGREEMENT, CERTAIN
SPECIFIED ENTITIES INCLUDING (A) THE UNITED STATES, ANY STATE OR
POLITICAL SUBDIVISION THEREOF, ANY FOREIGN GOVERNMENT, ANY
INTERNATIONAL ORGANIZATION, OR ANY AGENCY OR INSTRUMENTALITY OF ANY OF
THE FOREGOING (OTHER THAN AN INSTRUMENTALITY THAT IS A CORPORATION ALL
OF WHOSE ACTIVITIES ARE SUBJECT TO TAX UNDER CHAPTER 1 OF SUBTITLE A OF
THE CODE AND (EXCEPT IN THE CASE OF FHLMC) A MAJORITY OF WHOSE BOARD OF
DIRECTORS IS NOT SELECTED BY THE UNITED STATES, OR ANY STATE OR
POLITICAL SUBDIVISION THEREOF), (B) ANY ORGANIZATION THAT IS EXEMPT
FROM TAX IMPOSED BY CHAPTER 1 OF SUBTITLE A OF THE CODE, OTHER THAN (X)
A TAX-EXEMPT FARMERS' COOPERATIVE WITHIN THE MEANING OF SECTION 521 OF
THE CODE OR (Y) AN ORGANIZATION THAT IS SUBJECT TO THE TAX IMPOSED BY
SECTION 511 OF THE CODE ON "UNRELATED BUSINESS INCOME", (C) A
CORPORATION OPERATING ON A COOPERATIVE BASIS THAT IS ENGAGED IN
FURNISHING ELECTRIC ENERGY OR PROVIDING TELEPHONE SERVICE TO PERSONS IN
RURAL AREAS (WITHIN THE MEANING OF SECTION 1381(a)(2)(C) OF THE CODE)
AND (D) CERTAIN FOREIGN PERSONS ARE PROHIBITED FROM ACQUIRING
BENEFICIAL OWNERSHIP OF A CLASS R CERTIFICATE.
CLASS A-R CERTIFICATE
Cut-off Date: January 1, 1998 Original Denomination
$100.00
First Distribution Date: Aggregate Original Principal
February 25, 1998 Balance of all Class B-1
Certificates: $100.00
Cut-off Date: January 1, 1998 Number 98-1-R-1
Remittance Rate: 6.75%
<PAGE> 148
MULTI-CLASS MORTGAGE PASS-THROUGH CERTIFICATE
Series 1998-1
evidencing an ownership interest in distributions allocable to the
Residual Interest Certificates with respect to a pool of conventional
one- to four-family first mortgage loans formed and sold by
HOMESIDE MORTGAGE SECURITIES, INC.
This Certificate does not represent an obligation of or
interest in HomeSide Mortgage Securities, Inc., the Servicer or the Trustee
referred to below or any of their affiliates. Neither this Certificate nor the
underlying Mortgage Loans are guaranteed or insured by HomeSide Mortgage
Securities, Inc., HomeSide Lending, Inc., the Trustee or by any of their
affiliates or by any governmental agency or instrumentality.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL HAVE
RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE TRANSFEREE OF THIS
CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE EITHER (A) IS NOT AN EMPLOYEE
BENEFIT PLAN (A "PLAN") WITHIN THE MEANING OF SECTION 406 OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), AND IS NOT
DIRECTLY OR INDIRECTLY PURCHASING ANY CERTIFICATE ON BEHALF OF, AS INVESTMENT
MANAGER OF, AS NAMED FIDUCIARY OF, AS TRUSTEE OF OR WITH ASSETS OF A PLAN OR, IN
THE CASE OF AN INSURANCE COMPANY, THE ASSETS OF ANY SEPARATE ACCOUNTS TO EFFECT
SUCH ACQUISITION OR (B) THE SOURCE OF FUNDS FOR THE PURCHASE OF THE CERTIFICATES
IS AN "INSURANCE COMPANY GENERAL ACCOUNT" WITHIN THE MEANING OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"), 60 FED. REG. 35925 (JULY 12,
1995), AND THE CONDITIONS SET FORTH IN SECTION I AND SECTION III OF PTCE 95-60
ARE SATISFIED WITH RESPECT TO THE PURCHASE AND HOLDING OF THE CERTIFICATES, OR
(ii) IF THIS CERTIFICATE IS PRESENTED FOR REGISTRATION IN THE NAME OF A PLAN
SUBJECT TO TITLE I OF ERISA, OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED (THE "CODE") (OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT
ENACTMENTS), OR A TRUSTEE OF ANY SUCH PLAN, OR ANY OTHER PERSON WHO IS USING THE
ASSETS OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION, AN OPINION OF COUNSEL TO THE
EFFECT THAT THE PURCHASE OR HOLDING OF THIS CERTIFICATE WILL NOT RESULT IN THE
ASSETS OF THE TRUST FUND BEING DEEMED TO BE "PLAN ASSETS" PURSUANT TO THE
DEPARTMENT OF LABOR PLAN ASSET REGULATIONS SET FORTH IN 29 C.F.R.
Section 2510.3-101 AND TO BE SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS
OF ERISA OR THE PROHIBITED TRANSACTION PROVISIONS OF THE CODE, WILL NOT
CONSTITUTE OR RESULT IN A PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION
406 OR SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE, AND WILL
<PAGE> 149
NOT SUBJECT THE TRUSTEE, THE SERVICER, THE COMPANY OR ANY OF THEIR AFFILIATES TO
ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER ERISA OR
SECTION 4975 OF THE CODE) RELATING TO THE CERTIFICATES.
This certifies that ____________________ is the registered owner of an
undivided interest in certain monthly distributions with respect to a pool (the
"Mortgage Pool) of conventional one- to four-family first mortgage loans (the
"Mortgage Loans") formed and sold by HomeSide Mortgage Securities, Inc.
(hereinafter called the "Depositor", which term includes any successor entity
under the Agreement referred to below) and certain other property held in trust
for the benefit of Certificateholders (collectively, the "Trust Fund"). The
Mortgage Loans are serviced by HomeSide Lending, Inc. (the "Servicer") and are
secured by first mortgages on Mortgaged Properties. The Trust Fund was created
pursuant to a Pooling and Servicing Agreement (the "Agreement") dated as of
January 1, 1998 among the Depositor, the Servicer and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth hereafter. To the extent not defined
herein, the capitalized terms used herein have the meanings assigned in the
Agreement.
This Certificate is one of a duly authorized issue of Certificates,
designated as Multi-Class Mortgage Pass-Through Certificates, Series 1998-1,
Class A-R (the "Class A-R Certificate") and is issued under and is subject to
the terms, provisions and conditions of the Agreement, to which Agreement the
Holder of this Certificate by virtue of the acceptance hereof assents and by
which Agreement such Holder is bound. All payments made under this Certificate
will be made in accordance with the terms of the Agreement. Also issued under
the Agreement are Certificates designated as Multi-Class Mortgage Pass-Through
Certificates Series 1998-1, Class A, Class M, Class B-1, Class B-2, Class B-3,
Class B-4 and Class B-5 Certificates. The Class A Certificates, the Class M
Certificates, the Class B Certificates and the Class A-R Certificates are
collectively referred to as the "Certificates".
The rights of the Class A-R Certificateholders to receive distributions
in respect of the Class A-R Certificates on any Distribution Date are governed
by the terms of the Agreement and are subordinated to the rights of the Class A,
Class M and Class B Certificateholders to receive distributions in respect of
the Class A and Class M Certificates to the extent, and only to the extent, set
forth in the Agreement. Amounts properly distributed to the Class A-R
Certificateholders pursuant to the Agreement will be deemed released from the
Trust Fund, and the Class A-R Certificateholders will not in any event be
required to refund any such distributed amounts. The final distribution on this
Certificate will be made after due notice by the Trustee of the pendency of such
distribution and only upon presentation and surrender of this Certificate at the
office or agency appointed by the Trustee for that purpose and specified in such
notice of final distribution.
The Trustee will cause to be kept at its Corporate Trust Office in
Minneapolis, Minnesota, or at the office of its designated agent, a Certificate
Register in which, subject to such
<PAGE> 150
reasonable regulations as it may prescribe, the Trustee will provide for the
registration of Certificates and of transfers and exchanges of Certificates.
Upon surrender for registration of transfer of any Certificate at any office or
agency of the Trustee maintained for such purpose, the Trustee will, subject to
the limitations set forth in the Agreement, authenticate and deliver, in the
name of the designated transferee or transferees, a Certificate of a like class
and dated the date of authentication by the Trustee.
No service charge will be made to the Holder for any transfer or
exchange of the Certificate, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of the Certificate. Prior to due
presentation of a Certificate for registration of transfer, the Depositor, the
Servicer and the Trustee may treat the person in whose name any Certificate is
registered as the owner of such Certificate and the Ownership Interest in the
Trust Fund evidenced thereby for the purpose of receiving distributions pursuant
to the Agreement and for all other purposes whatsoever, and neither the
Depositor, the Servicer nor the Trustee will be affected by notice to the
contrary.
The Agreement may be amended from time to time by the Depositor, the
Servicer and the Trustee, without the consent of any of the Certificateholders,
to cure any ambiguity, to correct or supplement any provisions therein, which
may be inconsistent with any other provisions therein, to ensure continuing
treatment of the Trust Fund or its assets as a REMIC and to avoid the imposition
of certain tax liabilities, or to make any other provisions with respect to
matters or questions arising under the Agreement which are not materially
inconsistent with the provisions of the Agreement, provided that such action
does not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Certificateholder.
The Agreement may also be amended from time to time by the Depositor,
the Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 66% of the Percentage Interest of each
Class of Certificates affected thereby for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of the
Agreement or of modifying in any manner the rights of the Holders of
Certificates of such Class; provided, however, that no such amendment may (i)
reduce in any manner the amount of, or delay the timing of, payments received on
the Mortgage Loans which are required to be distributed on any Certificate
without the consent of the Holder of such Certificate, (ii) reduce the aforesaid
percentage of Certificates of any Class the Holders of which are required to
consent to any such amendment or (iii) change the percentage specified in clause
(ii) of the first paragraph of Section 11.01 of the Agreement, without the
consent of the Holders of all Certificates of such Class then outstanding.
An election will be made to treat the Trust Fund as a REMIC for federal
income tax purposes. The Class A Certificates, the Class M Certificates, the
Class B Certificates will represent regular interests in the REMIC. The Class
A-R Certificates constitute the Residual Interest in the REMIC.
<PAGE> 151
The respective obligations and responsibilities of the Depositor, the
Servicer and the Trustee under the Agreement will terminate upon: (i) the later
of the final payment or other liquidation (or any Advance with respect thereto)
of the last Mortgage Loan or the disposition of all property acquired upon
foreclosure or deed in lieu of foreclosure of any Mortgage Loan and the
remittance of all funds due thereunder; or (ii) at the option of the Servicer,
on any Distribution Date which occurs in the month next following a Due Date on
which the aggregate unpaid Principal Balance of all Outstanding Mortgage Loans
is less than 10% of the aggregate unpaid Principal Balance of the Mortgage Loans
on the Cut-off Date, so long as the Servicer deposits or causes to be deposited
in the Certificate Account during the Principal Prepayment Period related to
such Distribution Date an amount equal to the Purchase Price for each Mortgage
Loan, less unreimbursed Advances made with respect to any Mortgage Loan and,
with respect to all property acquired in respect of any Mortgage Loan remaining
in the Trust Fund, an amount equal to the fair market value of such property, as
determined by an appraisal to be conducted by an appraiser selected by the
Trustee, less any Advances made with respect to the Mortgage Loan with respect
to which property has been acquired; provided, however, that in no event shall
the trust created hereby continue beyond the earlier of (i) 32 years after the
Closing Date and (ii) the expiration of 21 years from the death of the last
survivor of the descendants of Joseph P. Kennedy, the late ambassador of the
United States to the Court of St. James's, living on the date hereof.
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be duly
executed.
Dated: January __, 1998 NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
not in its individual capacity, but solely
as Trustee
By: ___________________________________
Authorized Officer
This is the Class A-R
Certificate referred to
in the within-mentioned
Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Authenticating Agent
By________________________
Authorized Signatory
<PAGE> 152
[FORM OF ASSIGNMENT]
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
(PLEASE INSERT SOCIAL SECURITY* OR TAXPAYER IDENTIFICATION NUMBER OF ASSIGNEE)
- ---------------------
- ---------------------
- -------------------------------------------------------------
(Please Print or Type Name and Address of Assignee)
- -------------------------------------------------------------
the within Certificate, and all rights thereunder, and hereby does irrevocably
constitute and appoint
__________________________________________________ Attorney to transfer the
within Certificate on the books kept for the registration thereof, with full
power of substitution in the premises.
Dated:
(Signature guaranty) _______________________________
NOTICE: The signature to
this assignment must
correspond with the name as
it appears upon the face of
the within Certificate in
every particular, without
alteration or enlargement
or any change whatever.
(*This information, which is voluntary, is being requested to ensure that the
assignee will not be subject to backup withholding under Section 3406 of the
Code.)
<PAGE> 153
EXHIBIT G
FORM OF TRUSTEE CERTIFICATION
[date]
HomeSide Mortgage Securities, Inc.
7301 Baymeadows Way
Jacksonville, FL 32256
Re: Pooling and Servicing Agreement dated as of January 1, 1998
among HomeSide Mortgage Securities, Inc., HomeSide Lending,
Inc. and Norwest Bank Minnesota, National Association, as
trustee, Multi- Class Mortgage Pass-Through Certificates,
Series 1998-1
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Pooling and
Servicing Agreement, the undersigned, as Trustee, hereby certifies that [,
except as set forth in Schedule A hereto,] as to each Mortgage Loan listed in
the Mortgage Loan Schedule attached hereto (other than any Mortgage Loan paid in
full or listed on the attachment hereto) it has reviewed the Mortgage File and
the Mortgage Loan Schedule and has determined that:
(i) All documents in the Mortgage File required to be delivered to the
Trustee pursuant to Section 2.01 of the Pooling and Servicing Agreement are in
its possession;
(ii) In connection with each Mortgage Loan or Assignment thereof as to
which documentary evidence of recording was not received on the Closing Date, it
has received evidence of such recording; and
(iii) Such documents have been reviewed by it and such documents do not
contain any material omissions or defects within the meaning of Section 2.01 or
2.02.
The Trustee further certifies that as to each Mortgage Loan, the
Trustee holds the Mortgage Note without any Responsible Officer of the Trustee
having received written notice (a) of any adverse claims, liens or encumbrances,
(b) that any Mortgage Note was overdue or has been dishonored, (c) of evidence
on the face of any Mortgage Note or Mortgage of any security interest therein,
or (d) of any defense against or claim to the Mortgage Note by any other party.
The Trustee has made no independent examination of any documents
contained in each Mortgage File beyond confirming (i) that the Mortgage Loan
number and the name of the Mortgagor in each Mortgage File conform to the
respective Mortgage Loan number and name listed
<PAGE> 154
on the Mortgage Loan Schedule and (ii) the existence in each Mortgage File of
each of the documents listed in subparagraphs (i)(A) through (H), inclusive, of
Section 2.01 in the Agreement. The Trustee makes no representations or
warranties as to the validity, legality, sufficiency, enforceability or
genuineness of any of the documents contained in each Mortgage Loan or the
collectibility, insurability, effectiveness or suitability of any such Mortgage
Loan.
Capitalized words and phrases used herein shall have the respective
meanings assigned to them in the above-captioned Pooling and Servicing
Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
as Trustee
By: ______________________________
Name: ____________________________
Title: _____________________________
<PAGE> 155
EXHIBIT H
FORM OF INVESTMENT LETTER
(ACCREDITED INVESTOR)
[date]
HomeSide Lending, Inc.
7301 Baymeadows Way
Jacksonville, Florida 32256
Norwest Bank Minnesota, National Association
as Trustee
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0070
Re: HomeSide Mortgage Securities, Inc.,
Multi-Class Mortgage Pass-Through
Certificates, Series 1998-1, [Class B- ]
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from
_________________________ (the "Transferor") $_______ by original principal
balance (the "Transferred Certificates") of Multi-Class Mortgage Pass-Through
Certificates, Series 1998-1, [Class B- ] (the "Certificates"), issued pursuant
to a pooling and servicing agreement, dated as of January 1, 1998 (the "Pooling
and Servicing Agreement"), among HomeSide Mortgage Securities, Inc. (the
"Depositor"), HomeSide Lending, Inc., as Servicer (the "Servicer"), and Norwest
Bank Minnesota, National Association, as trustee (the "Trustee"). [The Purchaser
intends to register the Transferred Certificate in the name of
____________________, as nominee for __________________.] All terms used and not
otherwise defined herein shall have the meanings set forth in the Pooling and
Servicing Agreement.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchaser certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:
1. The Purchaser understands that (a) the Certificates have not been
registered or qualified under the Securities Act of 1933, as amended (the
"Securities Act"), or the securities laws of any state, (b) neither the
Depositor nor the Trustee is required, and neither of them intends,
<PAGE> 156
to so register or qualify the Certificates, (c) the Certificates cannot be
resold unless (i) they are registered and qualified under the Securities Act and
the applicable state securities laws or (ii) an exemption from registration and
qualification is available and (d) the Pooling and Servicing Agreement contains
restrictions regarding the transfer of the Certificates.
2. The Certificates will bear a legend to the following effect:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), THE INVESTMENT COMPANY ACT OF 1940, AS
AMENDED (THE "1940 ACT") OR ANY STATE SECURITIES OR "BLUE SKY" LAWS,
AND MAY NOT, DIRECTLY OR INDIRECTLY, BE SOLD OR OTHERWISE TRANSFERRED,
OR OFFERED FOR SALE, UNLESS SUCH TRANSFER IS NOT SUBJECT TO
REGISTRATION UNDER THE ACT, THE 1940 ACT AND ANY APPLICABLE STATE
SECURITIES LAWS AND SUCH TRANSFER ALSO COMPLIES WITH THE OTHER
PROVISIONS OF SECTION 4.02 OF THE POOLING AND SERVICING AGREEMENT. NO
TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL
HAVE RECEIVED, IN FORM AND SUBSTANCE SATISFACTORY TO THE SERVICER AND
THE TRUSTEE (A) AN INVESTMENT LETTER FROM THE PROSPECTIVE INVESTOR; AND
(B) REPRESENTATIONS FROM THE TRANSFEROR REGARDING THE OFFERING AND SALE
OF THE CERTIFICATES.
NO TRANSFER OF THIS CERTIFICATE SHALL BE MADE UNLESS THE TRUSTEE SHALL
HAVE RECEIVED EITHER (i) A REPRESENTATION LETTER FROM THE TRANSFEREE OF
THIS CERTIFICATE TO THE EFFECT THAT SUCH TRANSFEREE EITHER (A) IS NOT
AN EMPLOYEE BENEFIT PLAN (A "PLAN") WITHIN THE MEANING OF SECTION 406
OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA"), AND IS NOT DIRECTLY OR INDIRECTLY PURCHASING ANY CERTIFICATE
ON BEHALF OF, AS INVESTMENT MANAGER OF, AS NAMED FIDUCIARY OF, AS
TRUSTEE OF OR WITH ASSETS OF A PLAN OR, IN THE CASE OF AN INSURANCE
COMPANY, THE ASSETS OF ANY SEPARATE ACCOUNTS TO EFFECT SUCH ACQUISITION
OR (B) THE SOURCE OF FUNDS FOR THE PURCHASE OF THE CERTIFICATES IS AN
"INSURANCE COMPANY GENERAL ACCOUNT" WITHIN THE MEANING OF PROHIBITED
TRANSACTION CLASS EXEMPTION 95-60 ("PTCE 95-60"), 60 FED. REG. 35925
(JULY 12, 1995), AND THE CONDITIONS SET FORTH IN SECTION I AND SECTION
III OF PTCE 95- 60 ARE SATISFIED WITH RESPECT TO THE PURCHASE AND
HOLDING OF THE CERTIFICATES, OR (ii) IF THIS CERTIFICATE IS PRESENTED
FOR REGISTRATION IN THE NAME OF A PLAN SUBJECT TO TITLE I OF ERISA, OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS
<PAGE> 157
AMENDED (THE "CODE") (OR COMPARABLE PROVISIONS OF ANY SUBSEQUENT
ENACTMENTS), OR A TRUSTEE OF ANY SUCH PLAN, OR ANY OTHER PERSON WHO IS
USING THE ASSETS OF ANY SUCH PLAN TO EFFECT SUCH ACQUISITION, AN
OPINION OF COUNSEL TO THE EFFECT THAT THE PURCHASE OR HOLDING OF THIS
CERTIFICATE WILL NOT RESULT IN THE ASSETS OF THE TRUST FUND BEING
DEEMED TO BE "PLAN ASSETS" PURSUANT TO THE DEPARTMENT OF LABOR PLAN
ASSET REGULATIONS SET FORTH IN 29 C.F.R. Section 2510.3-101 AND TO BE
SUBJECT TO THE FIDUCIARY RESPONSIBILITY PROVISIONS OF ERISA OR THE
PROHIBITED TRANSACTION PROVISIONS OF THE CODE, WILL NOT CONSTITUTE OR
RESULT IN A PROHIBITED TRANSACTION WITHIN THE MEANING OF SECTION 406 OR
SECTION 407 OF ERISA OR SECTION 4975 OF THE CODE, AND WILL NOT SUBJECT
THE TRUSTEE, THE SERVICER, THE COMPANY OR ANY OF THEIR AFFILIATES TO
ANY OBLIGATION OR LIABILITY (INCLUDING OBLIGATIONS OR LIABILITIES UNDER
ERISA OR SECTION 4975 OF THE CODE) RELATING TO THE CERTIFICATES.
3. The Purchaser is acquiring the Transferred Certificates for its own
account [for investment only]*/ and not with a view to or for sale or other
transfer in connection with any distribution of the Transferred Certificates in
any manner that would violate the Securities Act or any applicable state
securities laws, subject, nevertheless, to the understanding that disposition of
the Purchaser's property shall at all times be and remain within its control.
4. The Purchaser (a) is a substantial, sophisticated institutional
investor having such knowledge and experience in financial and business matters,
and in particular in such matters related to securities similar to the
Certificates, such that it is capable of evaluating the merits and risks of
investment in the Certificates, (b) is able to bear the economic risks of such
an investment and (c) is an "accredited investor" within the meaning of Rule
501(a) promulgated pursuant to the Securities Act.
5. The Purchaser will not nor has it authorized nor will it authorize
any person to (a) offer, pledge, sell, dispose of or otherwise transfer any
Certificate, any interest in any Certificate or any other similar security to
any person in any manner, (b) solicit any offer to buy or to accept a pledge,
disposition or other transfer of any Certificate, any interest in any
Certificate or any other similar security from any person in any manner, (c)
otherwise approach or negotiate with respect to any Certificate, any interest in
any Certificate or any other similar security with any person in any manner, (d)
make any general solicitation by means of general advertising or in any other
manner, or (e) take any other action, that would constitute a distribution of
any Certificate under the Securities Act or the Investment Company Act of 1940,
as amended (the "1940 Act"), that
- --------
*/ Not required of a broker/dealer purchaser.
<PAGE> 158
would render the disposition of any Certificate a violation of Section 5 of the
Securities Act or any state securities law, or that would require registration
or qualification pursuant thereto. Neither the Purchaser nor anyone acting on
its behalf has offered the Certificates for sale or made any general
solicitation by means of general advertising or in any other manner with respect
to the Certificates. The Purchaser will not sell or otherwise transfer any of
the Certificates, except in compliance with the provisions of the Pooling and
Servicing Agreement.
6. [This paragraph may be deleted if the Purchaser provides the Opinion
of Counsel referred to in clause (ii) of Section 4.02(d) of the Pooling and
Servicing Agreement.] The Purchaser either (A) is not an employee benefit plan
within the meaning of Section 3(3) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or a plan within the meaning of Section 4975
of the Internal Revenue Code of 1986, as amended (the "Code") (each, a "Plan"),
and is not directly or indirectly purchasing any Certificate on behalf of, as
investment manager of, as named fiduciary of, as trustee of or with assets of a
Plan or directly or indirectly purchasing any certificates with the assets of
any insurance company separate account or of any Plan or (B) is an insurance
company and the source of funds for the purchase of the certificates is an
"insurance company general account" within the meaning of Prohibited Transaction
Class Exemption 95-60 ("PTCE 95-60"), 60 Fed. Reg. 35925 (July 12, 1995), and
the conditions set forth in Section I and III of PTCE 95-60 are satisfied with
respect to the purchase and holding of the Certificates.
7. Prior to the sale or transfer by the Purchaser of any of the
Certificates, the Purchaser will obtain from any subsequent purchaser
substantially the same certifications, representations, warranties and covenants
contained in the foregoing paragraphs and in this letter or a letter
substantially in the form of Exhibit I to the Pooling and Servicing Agreement.
8. The Purchaser agrees to indemnify the Trustee, the Servicer and the
Depositor against any liability that may result from any misrepresentation made
herein.
Very truly yours,
[Purchaser]
By: _________________________
Name:
Title:
<PAGE> 159
EXHIBIT I
FORM OF RULE 144A INVESTMENT LETTER
(QUALIFIED INSTITUTIONAL BUYER)
[date]
HomeSide Lending, Inc.
7301 Baymeadows Way
Jacksonville, Florida 32256
Norwest Bank Minnesota, National Association,
as trustee
Northstar West Building
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0070
Re: HomeSide Mortgage Securities, Inc.,
Multi-Class Mortgage Pass-Through
Certificates, Series 1998-1, [Class B- ]
Ladies and Gentlemen:
______________ (the "Purchaser") intends to purchase from
_________________________ (the "Transferor") $_______ by original principal
balance (the "Transferred Certificates") of Multi-Class Mortgage Pass-Through
Certificates, Series 1998-1, [Class B- ] (the "Certificates"), issued pursuant
to a pooling and servicing agreement, dated as of January 1, 1998 (the "Pooling
and Servicing Agreement"), among HomeSide Mortgage Securities, Inc. (the
"Depositor"), HomeSide Lending, Inc., as Servicer (the "Servicer"), and Norwest
Bank Minnesota, National Association, as trustee (the "Trustee"). [The Purchaser
intends to register the Transferred Certificate in the name of
____________________, as nominee for __________________.] All terms used and not
otherwise defined herein shall have the meanings set forth in the Trust
Agreement.
For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the Purchaser certifies, represents and warrants
to, and covenants with, the Depositor and the Trustee that:
<PAGE> 160
HomeSide Lending, Inc.
Norwest Bank Minnesota, National Association,
as trustee
[date]
Page 2
In connection with our acquisition of the above Transferred
Certificates we certify that (a) we understand that the Certificates are not
being registered under the Securities Act of 1933, as amended (the "Act"), or
any state securities laws and are being transferred to us in a transaction that
is exempt from the registration requirements of the Act and any such laws, (b)
we have such knowledge and experience in financial and business matters that we
are capable of evaluating the merits and risks of investments in the
Certificates, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Transferred
Certificates and all matters relating thereto or any additional information
deemed necessary to our decision to purchase the Transferred Certificates, (d)
we are not an employee benefit plan within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended, or a plan within
the meaning of Section 4975 of the Internal Revenue Code of 1986, as amended
(each, a "Plan"), nor are we directly or indirectly purchasing any Certificate
on behalf of, as investment manager of, as named fiduciary of, as trustee of or
with assets of a Plan or directly or indirectly purchasing any certificates with
the assets of any insurance company separate account or of any Plan [or
alternatively, in the case of an insurance company, is an insurance company and
the source of funds for the purchase of the certificates is an "insurance
company general account" within the meaning of Prohibited Transaction Class
Exemption 95-60 ("PTCE 95-60"), 50 Fed. Reg. 35925 (July 12, 1995), and the
conditions set forth in Section I and Section III of PTCE 95-60 are satisfied
with respect to the purchase and holding of the Certificates, (e) we have not,
nor has anyone acting on our behalf offered, transferred, pledged, sold or
otherwise disposed of the Certificates, any interest in the Certificates or any
other similar security to, or solicited any offer to buy or accept a transfer,
pledge or other disposition of the Certificates, any interest in the
Certificates or any other similar security from, or otherwise approached or
negotiated with respect to the Certificates, any interest in the Certificates or
any other similar security with, any person in any manner, or made any general
solicitation by means of general advertising or in any other manner, or taken
any other action, that would constitute a distribution of the Certificates under
the Securities Act or that would render the disposition of the Certificates a
violation of Section 5 of the Securities Act or require registration pursuant
thereto, nor will act, nor has authorized or will authorize any person to act,
in such manner with respect to the Certificates, (f) we are a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act and have completed one of the forms of certification to that effect attached
hereto as Annex 1 or Annex 2. We are aware that the sale of the Transferred
Certificates to us is being made in reliance on Rule 144A. We are acquiring the
Transferred Certificates for our own account or for resale pursuant to Rule 144A
and further understand that such Certificates may be resold, pledged or
transferred only (i) to a person
<PAGE> 161
HomeSide Lending, Inc.
Norwest Bank Minnesota, National Association,
as trustee
[date]
Page 3
reasonably believed by us, based upon certifications of such purchaser or
information we have in our possession, to be a qualified institutional buyer
that purchases for its own account or for the account of a qualified
institutional buyer to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, or (ii) pursuant to another exemption
from registration under the Securities Act.
We agree to indemnify the Trustee, the Servicer and the Depositor
against any liability that may result from any misrepresentation made herein.
Very truly yours,
[Purchaser]
By: __________________________
Name:
Title:
<PAGE> 162
ANNEX 1
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees Other Than Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer, Senior Vice President or other executive officer of the
Buyer.
2. In connection with the purchases by the Buyer, the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A") because (i) the Buyer owned
and/or invested on a discretionary basis $____________*/ in securities (except
for the excluded securities referred to below) as of the end of the Buyer's most
recent fiscal year (such amount being calculated in accordance with Rule 144A)
and (ii) the Buyer satisfies the criteria in the category marked below.
____ Corporation, etc. The Buyer is a corporation (other
than a bank, savings and loan association or similar
institution), Massachusetts or similar business
trust, partnership, or charitable organization
described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended.
____ Bank. The Buyer (a) is a national bank or banking
institution organized under the laws of any State,
territory or the District of Columbia, the business
of which is substantially confined to banking and is
supervised by Federal, State or territorial banking
commission or similar official or is a foreign bank
or equivalent institution, and (b) has an audited net
worth of at least $25,000,000 as demonstrated in its
latest annual financial statements, a copy of which
is attached hereto.
____ Savings and Loan. The Buyer (a) is a savings and loan
association, building and loan association,
cooperative bank, homestead association or similar
institution, which is supervised and examined by a
State or Federal authority having supervision over
such institution or is a foreign savings and loan
- --------
* Buyer must own and/or invest on a discretionary basis at least
$100,000,000 in securities unless Buyer is a dealer, and, in that case,
Buyer must own and/or invest on a discretionary basis at least
$10,000,000 in securities.
<PAGE> 163
association or equivalent institution and (b) has an
audited net worth of at least $25,000,000 as
demonstrated in its latest annual financial
statements, a copy of which is attached hereto.
____ Broker-dealer. The Buyer is a dealer registered
pursuant to Section 15 of the Securities Exchange
Act of 1934, as amended.
____ Insurance Company. The Buyer is an insurance company
whose primary and predominant business activity is
the writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is
subject to supervision by the insurance commissioner
or a similar official or agency of the State,
territory or the District of Columbia.
____ State or Local Plan. The Buyer is a plan established
and maintained by a State, its political
subdivisions, or any agency or instrumentality of
the State or its political subdivisions, for the
benefit of its employees.
____ ERISA Plan. The Buyer is an employee benefit plan
within the meaning of Title I of the Employee
Retirement Income Security Act of 1974, as amended.
____ Investment Advisor. The Buyer is an investment
advisor registered under the Investment Advisors Act
of 1940, as amended.
____ Small Business Investment Company. Buyer is a small
business investment company licensed by the U.S.
Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958, as
amended.
____ Business Development Company. Buyer is a business
development company as defined in Section 202(a)(22)
of the Investment Advisors Act of 1940, as amended.
3. The term "securities" as used for purposes of the calculation of the
dollar amount in paragraph 2 excludes: (i) securities of issuers that are
affiliated with the Buyer, (ii) securities that are part of an unsold allotment
to or subscription by the Buyer, if the Buyer is a dealer, (iii) securities
issued or guaranteed by the U.S. or any instrumentality thereof, (iv) bank
deposit notes and certificates of deposit, (v) loan participations, (vi)
repurchase agreements, (vii) securities owned but subject to a repurchase
agreement and (viii) currency, interest rate and commodity swaps.
4. For purposes of determining the aggregate amount of securities owned
and/or invested on a discretionary basis by the Buyer, the Buyer used the cost
of such securities to the Buyer and did not include any of the securities
referred to in the preceding paragraph, except (i)
<PAGE> 164
where the Buyer reports its securities holdings in its financial statements on
the basis of their market value, and (ii) no current information with respect to
the cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market. Further, in
determining such aggregate amount, the Buyer may have included securities owned
by subsidiaries of the Buyer, but only if such subsidiaries are consolidated
with the Buyer in its financial statements prepared in accordance with generally
accepted accounting principles and if the investments of such subsidiaries are
managed under the Buyer's direction. However, such securities were not included
if the Buyer is a majority-owned, consolidated subsidiary of another enterprise
and the Buyer is not itself a reporting company under the Securities Exchange
Act of 1934, as amended.
5. The Buyer acknowledges that it is familiar with Rule 144A and
understands that the seller to it and other parties related to the Certificates
are relying and will continue to rely on the statements made herein because one
or more sales to the Buyer may be in reliance on Rule 144A.
6. Until the date of purchase of the Rule 144A Securities, the Buyer
will notify each of the parties to which this certification is made of any
changes in the information and conclusions herein. Until such notice is given,
the Buyer's purchase of the Certificates will constitute a reaffirmation of this
certification as of the date of such purchase. In addition, if the Buyer is a
bank or savings and loan as provided above, the Buyer agrees that it will
furnish to such parties updated annual financial statements promptly after they
become available.
By: __________________________
Name:
Title:
Date: _________________________
<PAGE> 165
ANNEX 2
QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A
[For Transferees That are Registered Investment Companies]
The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates with respect to the Certificates described therein:
1. As indicated below, the undersigned is the President, Chief
Financial Officer or Senior Vice President of the Buyer or, if the Buyer is a
"qualified institutional buyer" as that term is defined in Rule 144A under the
Securities Act of 1933, as amended ("Rule 144A"), because Buyer is part of a
Family of Investment Companies (as defined below), is such an officer of the
Adviser.
2. In connection with purchases by Buyer, the Buyer is a
"qualified institutional buyer" as defined in Rule 144A because (i) the Buyer is
an investment company registered under the Investment Company Act of 1940, as
amended and (ii) as marked below, the Buyer alone, or the Buyer's Family of
Investment Companies, owned at least $100,000,000 in securities (other than the
excluded securities referred to below) as of the end of the Buyer's most recent
fiscal year. For purposes of determining the amount of securities owned by the
Buyer or the Buyer's Family of Investment Companies, the cost of such securities
was used, except (i) where the Buyer or the Buyer's Family of Investment
Companies reports its securities holdings in its financial statements on the
basis of their market value, and (ii) no current information with respect to the
cost of those securities has been published. If clause (ii) in the preceding
sentence applies, the securities may be valued at market.
____ The Buyer owned $___________ in securities (other than
the excluded securities referred to below) as of the end
of the Buyer's most recent fiscal year (such amount being
calculated in accordance with Rule 144A).
____ The Buyer is part of a Family of Investment Companies
which owned in the aggregate $__________ in securities
(other than the excluded securities referred to below) as
of the end of the Buyer's most recent fiscal year (such
amount being calculated in accordance with Rule 144A).
3. The term "Family of Investment Companies" as used herein means
two or more registered investment companies (or series thereof) that have the
same investment adviser or investment advisers that are affiliated (by virtue of
being majority owned subsidiaries of the same parent or because one investment
adviser is a majority owned subsidiary of the other).
<PAGE> 166
4. The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Buyer or are part of the
Buyer's Family of Investment Companies, (ii) securities issued or guaranteed by
the U.S. or any instrumentality thereof, (iii) bank deposit notes and
certificates of deposit, (iv) loan participations, (v) repurchase agreements,
(vi) securities owned but subject to a repurchase agreement and (vii) currency,
interest rate and commodity swaps.
5. The Buyer is familiar with Rule 144A and understands that the
parties listed in the Rule 144A Transferee Certificate to which this
certification relates are relying and will continue to rely on the statements
made herein because one or more sales to the Buyer will be in reliance on Rule
144A. In addition, the Buyer will only purchase for the Buyer's own account.
6. Until the date of purchase of the Certificates, the
undersigned will notify the parties listed in the Rule 144A Transferee
Certificate to which this certification relates of any changes in the
information and conclusions herein. Until such notice is given, the Buyer's
purchase of the Certificates will constitute a reaffirmation of this
certification by the undersigned as of the date of such purchase.
By: ______________________________
Name:
Title:
IF AN ADVISER:
__________________________________
Print Name of Buyer
Date: ____________________________
<PAGE> 167
EXHIBIT J
FORM OF SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT
This SPECIAL SERVICING AND COLLATERAL FUND AGREEMENT (the
"Agreement") is made and entered into as of [DATE], between HomeSide Lending,
Inc., (the "Company") and _____________________ (the "Purchaser").
PRELIMINARY STATEMENT
__________________ (the "Owner") is the holder of the entire
interest in HomeSide Mortgage Securities, Inc. Multi-Class Mortgage Pass-Through
Certificates, Series 1998-1, Class B- 5 (the "Class B-5 Certificates"). The
Class B-5 Certificates were issued pursuant to a Pooling and Servicing Agreement
(the "Pooling and Servicing Agreement") among HomeSide Mortgage Securities,
Inc., the Company, as servicer thereunder (the "Servicer") and Norwest Bank
Minnesota, National Association, as trustee (the "Trustee").
The Owner intends to resell all of the Class B-5 Certificates
directly to the Purchaser on or promptly after the date hereof.
In connection with such sale, the parties hereto have agreed that
the Company, as Servicer, will engage in certain special servicing procedures
relating to foreclosures for benefit of the Purchaser, and that the Purchaser
will deposit funds in a collateral fund to cover any losses attributable to such
procedures as well as all advances and costs in connection therewith, as set
forth herein.
In consideration of the mutual agreements herein contained, the
receipt and sufficiency of which are hereby acknowledged, the Company and the
Purchaser agree to the following:
ARTICLE I.
DEFINITIONS
Section 1.01. Defined Terms.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
Business Day: Any day other than (i) a Saturday or a Sunday or
(ii) a day on which banking institutions in the State of New York are required
or authorized by law or executive order to be closed.
<PAGE> 168
Collateral Fund: The fund established and maintained pursuant to
Section 3.01 hereof.
Collateral Fund Permitted Investments: Either: (i) obligations of,
or obligations fully guaranteed as to principal and interest by, the United
States, or any agency or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States, (ii) a money market
fund rated in the highest rating category by a nationally recognized rating
agency selected by the Company, (iii) cash, (iv) mortgage pass-through
certificates issued or guaranteed by GNMA, FNMA or FHLMC, (v) commercial paper
(including both non-interest bearing discount obligations and interest bearing
obligations payable on demand or on a specified date), the issuer of which may
be an affiliate of the Company, having at the time of such investment a rating
of at least A-1 by Standard and Poor's Corporation ("S&P") or at least P-1 by
Moody's Investors Service, Inc. ("Moody's") and (vi) demand and time deposits
in, certificates of deposit of, any depository institution or trust company
(which may be an affiliate of the Company) incorporated under the laws of the
United States of America or any state thereof and subject to supervision and
examination by federal and/or state banking authorities, so long as at the time
of such investment either (x) the long-term debt obligations of such depository
institution or trust company have a rating of at least Aa2 by Moody's or AA by
S&P or (y) the certificate of deposit or other unsecured short-term debt
obligations of such depository institution or trust company have a rating of at
least P-1 by Moody's or A-1 by S&P and, for each of the preceding clauses (i),
(iv), (v) and (vi), the maturity thereof shall be not later than the earlier to
occur of (A) 30 days from the date of the related investment and (B) the next
succeeding Distribution Date.
Commencement of Foreclosure: The first official action required
under local law in order to commence foreclosure proceedings or to schedule a
trustee's sale under a deed of trust, including (i) in the case of a mortgage,
any filing or service of process necessary to commence an action to foreclose,
or (ii) in the case of a deed of trust, the posting, publishing, filing or
delivery of a notice of sale, but not including in either case (x) any notice of
default, notice of intent to foreclose or sell or any other action prerequisite
to the actions specified in (i) or (ii) above and upon the consent of the
Purchaser which will be deemed given unless expressly withheld within two
Business Days of notification, (y) the acceptance of a deed-in-lieu of
foreclosure (whether in connection with a sale of the related property or
otherwise) or (z) initiation and completion of a short pay-off.
Current Appraisal: With respect to any Mortgage Loan as to which
the Purchaser has made an Election to Delay Foreclosure, an appraisal of the
related Mortgaged Property obtained by the Purchaser at its expense from an
appraiser (which shall not be an affiliate of the Purchaser) acceptable to the
Company as nearly contemporaneously as practicable to the time of the
Purchaser's election, prepared based on the Company's customary requirements for
such appraisals.
Election to Delay Foreclosure: Any election by the Purchaser to
delay the Commencement of Foreclosure, made in accordance with Section 2.02(b).
<PAGE> 169
Election to Foreclose: Any election by the Purchaser to proceed
with the Commencement of Foreclosure, made in accordance with Section 2.03(a).
Required Collateral Fund Balance: As of any date of determination,
an amount equal to the aggregate of all amounts previously required to be
deposited in the Collateral Fund pursuant to Section 2.02(d) (after adjustment
for all withdrawals and deposits pursuant to Section 2.02(e)) and Section
2.03(b) (after adjustment for all withdrawals and deposits pursuant to Section
2.03(c)) and Section 3.02 to be reduced by all withdrawals therefrom pursuant to
Section 2.02(g) and Section 2.03(d).
Section 1.02. Definitions Incorporated by Reference.
All capitalized terms not otherwise defined in this Agreement
shall have the meanings assigned in the Pooling and Servicing Agreement.
ARTICLE II.
SPECIAL SERVICING PROCEDURES
Section 2.01. Reports and Notices.
(a) In connection with the performance of its duties under
the Pooling and Servicing Agreement relating to the realization upon defaulted
Mortgage Loans, the Company, as Servicer, shall provide to the Purchaser the
following notices and reports:
(i) Within five Business Days after each Distribution Date
(or included in or with the monthly statement to Certificateholders
pursuant to the Pooling and Servicing Agreement), the Company shall
provide to the Purchaser a report indicating for the Trust the number
of Mortgage Loans that are (A) thirty days, (B) sixty days, (C) ninety
days or more delinquent or (D) in foreclosure, and indicating for each
such Mortgage Loan the outstanding principal balance.
(ii) Prior to the Commencement of Foreclosure in connection
with any Mortgage Loan, the Company shall provide the Purchaser with a
notice (sent by telecopier) of such proposed and imminent foreclosure,
stating the loan number and the aggregate amount owing under the
Mortgage Loan.
(b) If requested by the Purchaser, the Company shall make its
servicing personnel available (during their normal business hours) to respond to
reasonable inquiries by the Purchaser in connection with any Mortgage Loan
identified in a report under subsection (a)(i)(B), (a)(i)(C), (a)(i)(D) or
(a)(ii) which has been given to the Purchaser; provided, that (1) the Company
shall only be required to provide information that is readily accessible to its
servicing personnel and
<PAGE> 170
is non-confidential and (2) the Company shall not be required to provide any
written information under this subsection.
(c) In addition to the foregoing, the Company shall provide
to the Purchaser such information as the Purchaser may reasonably request
concerning each Mortgage Loan that is at least sixty days delinquent and each
Mortgage Loan which has become real estate owned, through the final liquidation
thereof; provided that the Company shall only be required to provide information
that is readily accessible to its servicing personnel and is non-confidential.
(d) With respect to all Mortgage Loans which are serviced at
any time by the Company through a Subservicer, the Company shall be entitled to
rely for all purposes hereunder, including for purposes of fulfilling its
reporting obligations under this Section 2.01 on the accuracy and completeness
of any information provided to it by the applicable Subservicer.
Section 2.02. Purchaser's Election to Delay Foreclosure
Proceedings.
(a) The Purchaser directs the Company that in the event that
the Company does not receive written notice of the Purchaser's election pursuant
to subsection (b) below within 24 hours (exclusive of any intervening
non-Business Days) of transmission of the notice provided by the Company under
Section 2.01(a)(ii), subject to extension as set forth in Section 2.02(b), the
Company shall proceed with the Commencement of Foreclosure in respect of such
Mortgage Loan in accordance with its normal foreclosure policies without further
notice to the Purchaser. Any foreclosure that has been initiated may be
discontinued (i) without notice to the Purchaser, if the Mortgage Loan has been
brought current or if a refinancing or prepayment occurs with respect to the
Mortgage Loan (including by means of a short payoff approved by the Company)
(ii) with notice to the Purchaser if the Company has reached the terms of a
forbearance agreement with the borrower. In such latter case the Company may
complete such forbearance agreement unless instructed otherwise by the Purchaser
within one Business Day of notification.
(b) In connection with any Mortgage Loan with respect to
which a notice under Section 2.01(a)(ii) has been given to the Purchaser, the
Purchaser may elect, for reasonable cause as determined by the Purchaser, to
instruct the Company to delay the Commencement of Foreclosure until such term as
the Purchaser determines that the Company may proceed with the Commencement of
Foreclosure. Such election must be evidenced by written notice received within
24 hours (exclusive of any intervening non-Business Days) of transmission of the
notice provided by the Company under Section 2.01(a)(ii). Such 24 hour period
shall be extended for no longer than an additional four Business Days after the
receipt of the information if the Purchaser requests additional information
related to such foreclosure; provided, however that the Purchaser will have at
least one Business Day to respond to any requested additional information. Any
such additional information shall (i) not be confidential in nature and (ii) be
obtainable by the Company from existing reports, certificates or statements or
otherwise be readily accessible to its servicing personnel. The Purchaser agrees
that it has no right to deal with the mortgagor. If the Company's
<PAGE> 171
normal foreclosure policy includes acceptance of a deed-in-lieu of foreclosure
or short payoff, the Purchaser will be notified and given one Business Day to
respond.
(c) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the Purchaser shall obtain
a Current Appraisal as soon as practicable, and shall provide the Company with a
copy of such Current Appraisal.
(d) Within two Business Days of making any Election to Delay
Foreclosure, the Purchaser shall remit by wire transfer to the Company, for
deposit in the Collateral Fund, an amount, as calculated by the Company, equal
to the sum of (i) 125% of the greater of the outstanding Principal Balance of
the Mortgage Loan and the value shown in the Current Appraisal referred to in
subsection (c) above (or, if such Current Appraisal has not yet been obtained,
the Company's estimate thereof, in which case the required deposit under this
subsection shall be adjusted upon obtaining of such Current Appraisal), and (ii)
three months' interest on the Mortgage Loan at the applicable Mortgage Rate. If
any Election to Delay Foreclosure extends for a period in excess of three months
(such excess period being referred to herein as the "Excess Period"), the
Purchaser shall remit by wire transfer in advance to the Company for deposit in
the Collateral Fund the amount, as calculated by the Company, equal to interest
on the Mortgage Loan at the applicable Mortgage Rate for the Excess Period. The
terms of this Agreement shall no longer apply to the servicing of any Mortgage
Loan upon the failure of the Purchaser to deposit the above amounts relating to
the Mortgage Loan within two Business Days of the Election to Delay Foreclosure.
(e) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the Company may withdraw
from the Collateral Fund from time to time amounts necessary to reimburse the
Company for all Advances and Liquidation Expenses thereafter made by the Company
as Servicer in accordance with the Pooling and Servicing Agreement. To the
extent that the amount of any such Liquidation Expense is determined by the
Company based on estimated costs, and the actual costs are subsequently
determined to be higher, the Company may withdraw the additional amount from the
Collateral Fund. In the event that the Mortgage Loan is brought current by the
Mortgagor and the foreclosure action is discontinued, the amounts so withdrawn
from the Collateral Fund shall be redeposited therein as and to the extent that
reimbursement therefor from amounts paid by the Mortgagor is not prohibited
pursuant to the Pooling and Servicing Agreement. Except as provided in the
preceding sentence, amounts withdrawn from the Collateral Fund to cover Advances
and Liquidation Expenses shall not be redeposited therein or otherwise
reimbursed to the Purchaser. If and when any such Mortgage Loan is brought
current by the Mortgagor, all amounts remaining in the Collateral Fund in
respect of such Mortgage Loan (after adjustment for all withdrawals and deposits
pursuant to this subsection) shall be released to the Purchaser.
(f) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Delay Foreclosure, the Company shall continue
to service the Mortgage Loan in accordance with its customary procedures (other
than the delay in Commencement of Foreclosure
<PAGE> 172
as provided herein). If and when the Purchaser shall notify the Company that it
believes that it is appropriate to do so, the Company shall proceed with the
Commencement of Foreclosure. In any event, if the Mortgage Loan is not brought
current by the mortgagor by the time the loan becomes 6 months delinquent, the
Purchaser's election shall no longer be effective and at the Purchaser's option,
either (i) the Purchaser shall purchase the Mortgage Loan from the Trust Fund at
a purchase price equal to the fair market value as shown on the Current
Appraisal, to be paid by (x) applying any balance in the Collateral Fund to such
purchase price, and (y) to the extent of any deficiency, by wire transfer of
immediately available funds to the Company or Trustee; or (ii) the Company shall
proceed with the Commencement of Foreclosure.
(g) Upon the occurrence of a liquidation with respect to any
Mortgage Loan as to which the Purchaser made an Election to Delay Foreclosure
and as to which the Company proceeded with the Commencement of Foreclosure in
accordance with subsection (f) above, the Company shall calculate the amount, if
any, by which the value shown on the Current Appraisal obtained under subsection
(c) exceeds the actual sales price obtained for the related Mortgaged Property
(net of Liquidation Expenses and accrued interest related to the extended
foreclosure period), and the Company shall withdraw the amount of such excess
from the Collateral Fund, shall remit the same to the Trust Fund and in its
capacity as Servicer shall apply such amount as additional Liquidation Proceeds
pursuant to the Pooling and Servicing Agreement. After making such withdrawal,
all amounts remaining in the Collateral Fund in respect of such Mortgage Loan
(after adjustment for all withdrawals and deposits pursuant to subsection (e))
shall be released to the Purchaser.
Section 2.03. Purchaser's Election to Commence Foreclosure
Proceedings.
(a) In connection with any Mortgage Loan identified in a
report under Section 2.01(a)(i)(B), the Purchaser may elect, for reasonable
cause as determined by the Purchaser, to instruct the Company to proceed with
the Commencement of Foreclosure as soon as practicable. Such election must be
evidenced by written notice received by the Company by 5:00 p.m., New York City
time, on the third Business Day following the delivery of such report under
Section 2.01(a)(i).
(b) Within two Business Days of making any Election to
Foreclose, the Purchaser shall remit to the Company, for deposit in the
Collateral Fund, an amount, as calculated by the Company, equal to 125% of the
current Principal Balance of the Mortgage Loan and three months' interest on the
Mortgage Loan at the applicable Mortgage Rate. If and when any such Mortgage
Loan is brought current by the Mortgagor, all amounts in the Collateral Fund in
respect of such Mortgage Loan shall be released to the Purchaser. The terms of
this Agreement shall no longer apply to the servicing of any Mortgage Loan upon
the failure of the Purchaser to deposit the above amounts relating to the
Mortgage Loans within two Business Days at the Election to Foreclose.
(c) With respect to any Mortgage Loan as to which the
Purchaser has made an Election to Foreclose, the Company shall continue to
service the Mortgage Loan in
<PAGE> 173
accordance with its customary procedures (other than to proceed with the
Commencement of Foreclosure as provided herein). In connection therewith, the
Company shall have the same rights to make withdrawals for Advances and
Liquidation Expenses from the Collateral Fund as are provided under Section
2.02(e), and the Company shall make reimbursements thereto to the limited extent
provided under such subsection. The Company shall not be required to proceed
with the Commencement of Foreclosure if (i) the same is stayed as a result of
the Mortgagor's bankruptcy or is otherwise barred by applicable law, or to the
extent that all legal conditions precedent thereto have not yet been complied
with or (ii) the Company believes there is a breach of representation or
warranties by the Company, which may result in a repurchase or substitution of
such Mortgage Loan, or (iii) the Company reasonably believes the Mortgaged
Property may be contaminated with or affected by hazardous wastes or hazardous
substances (and the Company supplies the Purchaser with information supporting
such belief). The Company will repurchase or substitute a Mortgage Loan pursuant
to the preceding clause (ii) within the time period specified in the Pooling and
Servicing Agreement. Any foreclosure that has been initiated may be discontinued
(i) without notice to the Purchaser if the Mortgage Loan has been brought
current or if a refinancing or prepayment occurs with respect to the Mortgage
Loan (including by means of a short payoff approved by the Company), or (ii)
with notice to the Purchaser if the Company has reached the terms of a
forbearance agreement unless instructed otherwise by the Purchaser within two
Business Days of notification.
(d) Upon the occurrence of a liquidation with respect to any
Mortgage Loan as to which the Purchaser made an Election to Foreclose and as to
which the Company proceeded with the Commencement of Foreclosure in accordance
with subsection (c) above, the Company shall calculate the amount, if any, by
which the Principal Balance of the Mortgage Loan at the time of liquidation
(plus all unreimbursed Advances and Liquidation Expenses in connection therewith
other than those paid from the Collateral Fund) exceeds the actual sales price
obtained for the related Mortgaged Property, and the Company shall withdraw the
amount of such excess from the Collateral Fund, shall remit the same to the
Trust Fund and in its capacity as Servicer shall apply such amount as additional
Liquidation Proceeds pursuant to the Pooling and Servicing Agreement. After
making such withdrawal, all amounts remaining in the Collateral Fund (after
adjustment for all withdrawals and deposits pursuant to subsection (c)) in
respect of such Mortgage Loan shall be released to the Purchaser.
Section 2.04. Termination.
(a) With respect to all Mortgage Loans included in the Trust Fund,
the Purchaser's rights to make any Election to Delay Foreclosure or any Election
to Foreclose and the Company's obligations under Section 2.01 shall terminate
(i) at such time as the Certificate Principal Balance of the Class B-5
Certificates has been reduced to zero, (ii) if the greater of (x) 43% (or such
lower or higher percentages that represents the Company's actual historical loss
experience with respect to the Mortgage Loans in the related pool) of the
aggregate principal balance of all Mortgage Loans that are in foreclosure or are
more than 90 days delinquent on a contractual basis and REO properties or if the
aggregate amount that the Company estimates will be
<PAGE> 174
required to be withdrawn from the Collateral Fund with respect to Mortgage Loans
as to which the Purchaser has made an Election to Delay Foreclosure or an
Election to Foreclose exceeds (z) the Outstanding Certificate Principal Balance
of the Class B-5 Certificates, or (iii) upon any transfer by the Purchaser of
any interest (other than the minority interest therein, but only if the
transferee provides written acknowledgment to the Company of the Purchaser's
right hereunder and that such transferee will have no rights hereunder) in the
Class B-5 Certificates (whether or not such transfer is registered under the
Pooling and Servicing Agreement), including any such transfer in connection with
a termination of the Trust Fund. Except as set forth above, this Agreement and
the respective rights, obligations and responsibilities of the Purchaser and the
Company hereunder shall terminate upon the later to occur of (i) the final
liquidation of the last Mortgage Loan as to which the Purchaser made any
Election to Delay Foreclosure or any Election to Foreclose and the withdrawal of
all remaining amounts in the Collateral Fund as provided herein and (ii) ten
(10) Business Day's notice.
(b) Purchaser's rights pursuant to Section 2.02 or 2.03 of this
Agreement shall terminate with respect to a Mortgage loan as to which the
Purchaser has exercised its rights under Section 2.02 or 2.03 hereof, upon
Purchaser's failure to deposit any amounts required pursuant to Section 2.02(d)
or 2.03(b).
(c) Neither the Servicer nor any of its directors, officers,
employees or agents shall be under any liability for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement, or for errors in judgment; provided, however, that this provision
shall not protect the Servicer or any such Person against any liability which
would otherwise be imposed by reason of willful misfeasance, bad faith or gross
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties hereunder. The Servicer and any director, officer,
employee or agent thereof may rely in good faith on any document of any kind
prima facie properly executed and submitted by an Person respecting any matters
arising hereunder.
ARTICLE III.
COLLATERAL FUND; SECURITY INTEREST
Section 3.01. Collateral Fund.
Upon receipt from the Purchaser of the initial amount required to
be deposited in the Collateral Fund pursuant to Article 11, the Company shall
establish and maintain with itself as a segregated account on its books and
records an account (the "Collateral Fund"), entitled "HomeSide Lending, Inc., as
Servicer, for the benefit of registered holders of HomeSide Mortgage Securities,
Inc. Multi-Class Mortgage Pass-Through Certificates, Series 1998-1, Class B-5."
Amounts in the Collateral Fund shall continue to be the property of the
Purchaser, subject to the first priority
<PAGE> 175
security interest granted hereunder for the benefit of the Certificateholders,
until withdrawn from the Collateral Fund pursuant to Section 2.02 or 2.03
hereof.
Upon the termination of this Agreement and the liquidation of all
Mortgage Loans as to which the Purchaser has made any Election to Delay
Foreclosure or any Election to Foreclose pursuant to Section 2.04 hereof, the
Company shall distribute to the Purchaser all amounts remaining in the
Collateral Fund together with any investment earnings thereon.
In no event shall the Purchaser (i) take or cause the Trustee or
the Company to take any action that could cause any REMIC established under the
Trust Agreement to fail to qualify as a REMIC or cause the imposition on any
such REMIC of any "prohibited transaction" or "prohibited contribution" taxes or
(ii) cause the Trustee or the Company to fail to take any action necessary to
maintain the status of any such REMIC as a REMIC.
Section 3.02. Collateral Fund Permitted Investments.
The Company shall, at the written direction of the Purchaser
invest the funds in the Collateral Fund in Collateral Fund Permitted
Investments. Such direction shall not be changed more frequently than quarterly.
In the absence of any direction, the Company shall select such investments in
accordance with the definition of Collateral Fund Permitted Investments in its
discretion.
All income and gain realized from any investment as well as any
interest earned on deposits in the Collateral Fund (net of any losses on such
investments) and any payments of principal made in respect of any Collateral
Fund Permitted Investment shall be deposited in the Collateral Fund upon
receipt. All costs and realized losses associated with the purchase and sale of
Collateral Fund Permitted Investments shall be borne by the Purchaser and the
amount of net realized losses shall be deposited by the Purchaser in the
Collateral Fund. The Company shall periodically (but not more frequently than
monthly) distribute to the Purchaser upon request an amount of cash, to the
extent cash is available therefor in the Collateral Fund, equal to the amount by
which the balance of the Collateral Fund, after giving effect to all other
distributions to be made from the Collateral Fund on such date, exceeds the
Required Collateral Fund Balance. Any amounts so distributed shall be released
from the lien and security interest of this Agreement.
Section 3.03. Grant of Security Interest.
The Purchaser grants to the Company and the Trustee for the
benefit of the Certificateholders a security interest in and lien on all of the
Purchaser's right, title and interest, whether now owned or hereafter acquired,
in and to: (1) the Collateral Fund, (2) all amounts deposited in the Collateral
Fund and Collateral Fund Permitted Investments in which such amounts are
invested (and the distributions and proceeds of such investments) and (3) all
cash and non-cash proceeds of any of the foregoing, including proceeds of the
voluntary or involuntary conversion thereof (all of the foregoing collectively,
the "Collateral").
<PAGE> 176
The Purchaser acknowledges the lien on and security interest in
the Collateral for the benefit of the Certificateholders. The Purchaser shall
take all actions requested by the Company or the Trustee as may be reasonably
necessary to perfect the security interest created under this Agreement in the
Collateral and cause it to be prior to all other security interests and liens,
including the execution and delivery to the Company for filing of appropriate
financing statements in accordance with applicable law. The Company shall file
appropriate continuation statements, or appoint an agent on its behalf to file
such statements, in accordance with applicable law.
Section 3.04. Collateral Shortfalls.
In the event that amounts on deposit in the Collateral Fund at any
time are insufficient to cover any withdrawals therefrom that the Company or the
Trustee is then entitled to make hereunder, the Purchaser shall be obligated to
pay such amounts to the Company or the Trustee immediately upon demand. Such
obligation shall constitute a general corporate obligation of the Purchaser.
ARTICLE IV.
MISCELLANEOUS PROVISIONS
Section 4.01. Amendment.
This Agreement may be amended from time to time by the Company and
the Purchaser by written agreement signed by the Company and the Purchaser.
Section 4.02. Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
such counterparts shall constitute but one and the same instrument.
Section 4.03. Governing Law.
This Agreement shall be construed in accordance with the laws of
the State of New York and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
<PAGE> 177
Section 4.04. Notices.
All demands, notices and direction hereunder shall be in writing
or by telecopy and shall be deemed effective upon receipt to:
(a) in the case of the Company,
HomeSide Lending, Inc.
7301 Baymeadows Way
Jacksonville, Florida 32256
Attn: _____________________
Phone: ____________________
or such other address as may hereafter be furnished in writing by the Company,
or
(b) in the case of the Purchaser, with respect to notices
pursuant to Section 2.01,
[Purchaser]
[Address]
Attn: ____________________
Phone: ____________________
Fax: ____________________
with respect to all other notices pursuant to this
Agreement,
______________________________
[Address]
Attn: ____________________
Phone: ____________________
Fax: ____________________
or such other address as may hereafter be furnished in writing by the Purchaser.
Section 4.05. Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever, including
regulatory, held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
<PAGE> 178
Section 4.06. Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure
to the benefit of the respective successors and assigns of the parties hereto,
and all such provisions shall inure to the benefit of the Certificateholders;
provided, however, that the rights under this Agreement cannot be assigned by
the Purchaser without the consent of the Company.
Section 4.07. Article and Section Headings.
The article and section headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning hereof.
Section 4.08. Confidentiality.
The Purchaser agrees that all information supplied by or on behalf
of the Company pursuant to Sections 2.01 or 2.02, including individual account
information, is the property of the Company and the Purchaser agrees to hold
such information confidential and not to disclose such information.
<PAGE> 179
IN WITNESS WHEREOF, the Company and the Purchaser have caused
their names to be signed hereto by their respective officers thereunto duly
authorized, all as of the day and year first above written.
HOMESIDE LENDING, INC.
By:__________________________________________
Name:________________________________________
Title:_______________________________________
________________________
By:__________________________________________
Name:________________________________________
Title:_______________________________________
<PAGE> 180
EXHIBIT K
FORM OF TRANSFEREE'S LETTER
HOMESIDE MORTGAGE SECURITIES, INC. SERIES 1998-1
[DATE]
HomeSide Mortgage Securities, Inc.
7301 Baymeadows Way
Jacksonville, Florida 32256
Ladies and Gentlemen:
We propose to purchase HomeSide Mortgage Securities, Inc.'s
Multi-Class Mortgage Pass-Through Certificates, Series 1998-1, Class A-R,
described in the Prospectus Supplement, dated January __, 1998, and Prospectus,
dated January __, 1998.
1. We certify that (a) we are not a disqualified organization and
(b) we are not purchasing such Class A-R Certificates on behalf of a
disqualified organization; for this purpose the term "disqualified organization"
means the United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code. We
understand that any breach by us of this certification may cause us to be liable
for an excise tax imposed upon transfers to disqualified organizations.
2. We certify that (a) we have historically paid our debts as
they became due, (b) we intend, and believe that we will be able, to continue to
pay our debts as they become due in the future, (c) we understand that, as
beneficial owner of the Class A-R Certificates, we may incur tax liabilities in
excess of any cash flows generated by the Class A-R Certificates, and (d) we
intend to pay any taxes associated with holding the Class A-R Certificates as
they become due.
3. We acknowledge that we will be the beneficial owner of the
Class A-R Certificates and:*/
- ---------------------
*/ Check appropriate box and if necessary fill in the name of the
Transferee's nominee.
<PAGE> 181
_____ The Class A-R Certificates will be registered in our
name.
_____ The Class A-R Certificates will be held in the name
of our nominee,
____________________, which is not a disqualified
organization.
4. Unless HomeSide Mortgage Securities, Inc. ("HSMSI") has
consented to the transfer to us by executing the form of Consent affixed hereto
as Appendix B, we certify that we are a U.S. person; for this purpose the term
"U.S. person" means a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in or under the laws of the
United States or any political subdivision thereof or an estate or trust that is
subject to United States federal income tax regardless of the source of its
income. We agree that any breach by us of this certification shall render the
transfer of any interest in the Class A-R Certificates to us absolutely null and
void and shall cause no rights in the Class A-R Certificates to vest in us.
5. We agree that in the event that at some future time we wish to
transfer any interest in the Class A-R Certificates, we will transfer such
interest in the Class A-R Certificates only (a) to a transferee that (i) is not
a disqualified organization and is not purchasing such interest in the Class A-R
Certificates on behalf of a disqualified organization, (ii) is a U.S. person and
(iii) has delivered to HSMSI a letter in the form of this letter (including the
affidavit appended hereto) and, if requested by HSMSI, an opinion of counsel (in
a form acceptable to HSMSI) that the proposed transfer will not cause the
interest in the Class A-R Certificates to be held by a disqualified organization
or a person who is not a U.S. person or (b) with the written consent of HSMSI.
6. We hereby designate Norwest Bank Minnesota, National
Association as our fiduciary to act as the tax matters person for the Series
1998-1 REMIC.
Very truly yours,
[PURCHASER]
By: __________________________
Name:
Title:
Accepted as of __________ __, 199_
HOMESIDE MORTGAGE SECURITIES, INC.
By: _________________________________
Name:
Title:
<PAGE> 182
APPENDIX A
Affidavit pursuant to (i) Section 860E(e)(4) of
the Internal Revenue Code of 1986, as
amended, and (ii) certain provisions of the
Pooling and Servicing Agreement
Under penalties of perjury, the undersigned declares that the following is true:
(1) He or she is an officer of _________________________ (the
"Transferee"),
(2) the Transferee's Employee Identification number is __________,
(3) the Transferee is not a "disqualified organization" (as defined below),
has no plan or intention of becoming a disqualified organization, and
is not acquiring any of its interest in the HomeSide Mortgage
Securities, Inc., Multiclass Mortgage Pass-Through Certificates, Series
1998-1, Class A-R on behalf of a disqualified organization or any other
entity,
(4) unless HomeSide Mortgage Securities, Inc. ("HSMSI") has consented to
the transfer to the Transferee by executing the form of Consent affixed
as Appendix B to the Transferee's Letter to which this Certificate is
affixed as Appendix A, the Transferee is a "U.S. person" (as defined
below),
(5) that no purpose of the transfer is to avoid or impede the assessment or
collection of tax,
(6) the Transferee has historically paid its debts as they became due,
(7) the Transferee intends, and believes that it will be able, to continue
to pay its debts as they become due in the future,
(8) the Transferee understands that, as beneficial owner of the Class A-R
Certificates, it may incur tax liabilities in excess of any cash flows
generated by the Class A-R Certificates,
(9) the Transferee intends to pay any taxes associated with holding the
Class A-R Certificates as they become due, and
(10) The Transferee consents to any amendment of the Pooling and Servicing
Agreement that shall be deemed necessary by HSMSI (upon advice of
counsel) to constitute a reasonable arrangement to ensure that the
Class A-R Certificates will not be owned directly or indirectly by a
disqualified organization;
<PAGE> 183
For purpose of this affidavit, the term "disqualified organization" means the
United States, any state or political subdivision thereof, any foreign
government, any international organization, any agency or instrumentality of any
of the foregoing (except any entity treated as other than an instrumentality of
the foregoing for purposes of Section 168(h)(2)(D) of the Internal Revenue Code
of 1986, as amended (the "Code")), any organization (other than a cooperative
described in Section 521 of the Code) that is exempt from taxation under the
Code (unless such organization is subject to tax on excess inclusions) and any
organization that is described in Section 1381(a)(2)(C) of the Code and the term
"U.S. person" means a person that is a citizen or resident of the United States,
a corporation, partnership or other entity created or organized in or under the
laws of the United States or any political subdivision thereof, or an estate or
trust that is subject to United States federal income tax regardless of the
source of its income.
__________________________________
By:_______________________________
__________________________________
Address of Investor for receipt of distribution:
Address of Investor for receipt of tax information:
(Corporate Seal)
Attest:
____________________
________________________, Secretary
Personally appeared before me the above-named ______________, known or
proved to me to be the same person who executed the foregoing
instrument and to be the _______ of the Investor, and acknowledged to
me that he executed the same as his free act and deed and the free act
and deed of the Investor.
Subscribed and sworn before me this ____ day of ____________, 19__.
<PAGE> 184
____________________
Notary Public
County of ______
State of _______
My commission expires the ____ day of ______
BY: _________________________
Name: __________________
Title: _________________
<PAGE> 185
Dated: _____________
APPENDIX B
CONSENT
_________________________ (Transferee)
_________________________
_________________________
Ladies and Gentlemen:
HomeSide Mortgage Securities, Inc. ("HSMSI") hereby consents to the
transfer to, and registration in the name of, the Transferee (or, if applicable,
registration in the name of such Transferee's nominee of the Multiclass Mortgage
Pass-Through Certificates, Series 1998-1, Class A-R described in the
Transferee's Letter to which this Consent is appended, notwithstanding HSMSI's
knowledge that the Transferee is not a U.S. person (as defined in such
Transferee's Letter).
HOMESIDE MORTGAGE SECURITIES, INC.
Dated:___________________ By:________________________________
<PAGE> 186
EXHIBIT L
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0067
Attn: Inventory Control
Re:
In connection with the administration of the Mortgage Loans held by
you, as Trustee, pursuant to the above-captioned Pooling and Servicing
Agreement, we request the release, and hereby acknowledge receipt, of the
Mortgage File for the Mortgage Loan described below, for the reason indicated.
Mortgage Loan Number:
Mortgagor Name, Address & Zip Code:
Reason for Requesting Documents (check one):
______ 1. Mortgage Paid in Full
______ 2. Foreclosure
______ 3. Substitution
______ 4. Other Liquidation
______ 5. Nonliquidation Reason: _________________________
By: ______________________________
(authorized signer)
Issuer: __________________________
Address: _________________________
_________________________
Date: ___________________________
Trustee
Norwest Bank Minnesota, National Association
Please acknowledge the execution of the above request by your signature and date
below:
_______________________________ ___________________
Signature Date
Documents returned to Trustee:
_______________________________ ___________________
Trustee Date
<PAGE> 187
ANNEX I
<PAGE> 188
APPENDIX A
<TABLE>
<CAPTION>
CLASS A6 CLASS A5
TARGETED COMPONENT 2 CLASS A10 PERCENTAGE
DISTRIBUTION PRINCIPAL PLANNED PRINCIPAL PLANNED PRINCIPAL REDUCTION
DATE BALANCE BALANCE BALANCE FACTOR
---- ------- ------- ------- ------
<S> <C> <C> <C> <C>
Initial Balance $ 23,954,379.00 $ 14,624,421.00 $ 1,049,002.00 --
February 1998 23,837,034.09 14,624,421.00 1,049,002.00 0.24232247%
March 1998 23,698,417.49 14,624,421.00 1,049,002.00 0.28955597%
April 1998 23,538,605.30 14,624,421.00 1,049,002.00 0.33703475%
May 1998 23,357,691.67 14,624,421.00 1,049,002.00 0.38476147%
June 1998 23,155,800.56 14,624,421.00 1,049,002.00 0.43273882%
July 1998 22,933,085.72 14,624,421.00 1,049,002.00 0.48096955%
August 1998 22,689,730.64 14,624,421.00 1,049,002.00 0.52945646%
September 1998 22,425,948.34 14,624,421.00 1,049,002.00 0.57820237%
October 1998 22,141,981.23 14,624,421.00 1,049,002.00 0.62721017%
November 1998 21,838,100.76 14,624,421.00 1,049,002.00 0.67648281%
December 1998 21,650,906.52 14,479,675.51 1,038,619.48 0.72602325%
January 1999 21,451,851.54 14,327,045.96 1,027,671.45 0.77583455%
February 1999 21,241,242.20 14,166,598.83 1,016,162.66 0.82589007%
March 1999 21,019,399.62 13,998,399.72 1,004,097.82 0.87622317%
April 1999 20,786,676.05 13,822,523.29 991,482.30 0.92680595%
May 1999 20,543,437.08 13,639,043.05 978,321.36 0.97767311%
June 1999 20,290,069.67 13,448,036.44 964,620.56 1.02882787%
July 1999 20,026,981.43 13,249,584.76 950,385.72 1.08027351%
August 1999 19,754,599.76 13,043,773.13 935,622.96 1.13201336%
September 1999 19,473,395.72 12,830,705.83 920,339.76 1.18395280%
October 1999 19,183,839.58 12,610,479.83 904,543.06 1.23616406%
November 1999 18,886,469.81 12,383,228.22 888,242.42 1.28843967%
December 1999 18,581,817.03 12,149,074.31 871,446.69 1.34086434%
January 2000 18,270,588.21 11,908,248.52 854,172.38 1.39275156%
February 2000 17,954,100.85 11,661,370.42 836,463.95 1.44149838%
March 2000 17,633,510.81 11,408,974.76 818,359.74 1.48759655%
April 2000 17,310,820.15 11,152,153.08 799,938.05 1.52714014%
May 2000 16,988,175.23 10,892,129.66 781,286.71 1.55897609%
June 2000 16,668,656.35 10,630,775.13 762,539.89 1.57824366%
July 2000 16,356,161.64 10,370,560.71 743,874.85 1.58014216%
August 2000 16,050,850.19 10,111,654.75 725,303.66 1.58079759%
September 2000 15,752,599.64 9,854,050.59 706,825.85 1.58145848%
October 2000 15,461,289.51 9,597,741.61 688,440.94 1.58212486%
November 2000 15,176,801.22 9,342,721.21 670,148.46 1.58279681%
December 2000 14,899,018.00 9,088,982.83 651,947.94 1.58347437%
</TABLE>
1
<PAGE> 189
<TABLE>
<CAPTION>
CLASS A6 CLASS A5
TARGETED COMPONENT 2 CLASS A10 PERCENTAGE
DISTRIBUTION PRINCIPAL PLANNED PRINCIPAL PLANNED PRINCIPAL REDUCTION
DATE BALANCE BALANCE BALANCE FACTOR
---- ------- ------- ------- ------
<S> <C> <C> <C> <C>
January 2001 14,627,824.92 8,836,519.96 633,838.91 1.58415760%
February 2001 14,363,108.82 8,585,326.11 615,820.91 1.58484655%
March 2001 14,104,758.31 8,335,394.82 597,893.47 1.58554129%
April 2001 13,852,663.73 8,086,719.66 580,056.13 1.58624188%
May 2001 13,606,717.14 7,839,294.27 562,308.44 1.58694836%
June 2001 13,366,812.25 7,593,112.27 544,649.94 1.58766081%
July 2001 13,132,844.46 7,348,167.36 527,080.17 1.58837928%
August 2001 12,904,710.78 7,104,453.25 509,598.68 1.58910384%
September 2001 12,682,309.82 6,861,963.69 492,205.03 1.58983454%
October 2001 12,465,541.79 6,620,692.45 474,898.78 1.59057146%
November 2001 12,254,308.45 6,380,633.35 457,679.46 1.59131464%
December 2001 12,048,513.08 6,141,780.24 440,546.65 1.59206417%
January 2002 11,848,060.49 5,904,126.99 423,499.91 1.59282010%
February 2002 11,652,856.97 5,667,667.52 406,538.80 1.59358250%
March 2002 11,462,810.26 5,432,395.77 389,662.88 1.59435143%
April 2002 11,277,829.57 5,198,305.71 372,871.73 1.59512698%
May 2002 11,097,825.49 4,965,391.36 356,164.90 1.59590919%
June 2002 10,922,710.06 4,733,646.75 339,541.98 1.59669816%
July 2002 10,752,396.65 4,503,065.95 323,002.54 1.59749394%
August 2002 10,586,800.00 4,273,643.06 306,546.16 1.59829660%
September 2002 10,425,836.21 4,045,372.23 290,172.41 1.59910623%
October 2002 10,269,422.67 3,818,247.60 273,880.89 1.59992289%
November 2002 10,117,478.05 3,592,263.38 257,671.16 1.60074666%
December 2002 9,969,922.34 3,367,413.79 241,542.81 1.60157762%
January 2003 9,826,676.75 3,143,693.09 225,495.45 1.60241584%
February 2003 9,705,823.94 2,936,510.72 210,634.36 1.60326139%
March 2003 9,588,976.69 2,730,441.14 195,853.10 1.60411437%
April 2003 9,476,060.36 2,525,478.75 181,151.26 1.60497484%
May 2003 9,367,001.52 2,321,618.02 166,528.44 1.60584290%
June 2003 9,261,727.87 2,118,853.43 151,984.24 1.60671861%
July 2003 9,160,168.28 1,917,179.48 137,518.27 1.60760207%
August 2003 9,062,252.72 1,716,590.73 123,130.15 1.60849336%
September 2003 8,967,912.28 1,517,081.73 108,819.47 1.60939257%
October 2003 8,877,079.13 1,318,647.10 94,585.86 1.61029977%
November 2003 8,789,686.53 1,121,281.45 80,428.93 1.61121507%
December 2003 8,705,668.76 924,979.46 66,348.29 1.61213855%
January 2004 8,624,961.19 729,735.80 52,343.56 1.61307029%
February 2004 8,553,048.23 538,819.44 38,649.23 1.61401040%
</TABLE>
2
<PAGE> 190
<TABLE>
<CAPTION>
CLASS A6 CLASS A5
TARGETED COMPONENT 2 CLASS A10 PERCENTAGE
DISTRIBUTION PRINCIPAL PLANNED PRINCIPAL PLANNED PRINCIPAL REDUCTION
DATE BALANCE BALANCE BALANCE FACTOR
---- ------- ------- ------- ------
<S> <C> <C> <C> <C>
March 2004 8,483,507.96 349,693.84 25,083.35 1.61495896%
April 2004 8,411,054.23 167,902.93 12,043.59 1.61591608%
May 2004 8,329,451.43 0.00 0.00 1.61688183%
June 2004 8,093,607.82 0.00 0.00 1.61785633%
July 2004 7,861,566.25 0.00 0.00 1.61883967%
August 2004 7,633,264.90 0.00 0.00 1.61983195%
September 2004 7,408,642.92 0.00 0.00 1.62083328%
October 2004 7,187,640.34 0.00 0.00 1.62184375%
November 2004 6,970,198.15 0.00 0.00 1.62286347%
December 2004 6,756,258.20 0.00 0.00 1.62389254%
January 2005 6,545,763.24 0.00 0.00 1.62493108%
February 2005 6,354,472.80 0.00 0.00 1.62597919%
March 2005 6,166,236.35 0.00 0.00 1.62703698%
April 2005 5,981,002.42 0.00 0.00 1.62810457%
May 2005 5,798,720.37 0.00 0.00 1.62918207%
June 2005 5,619,340.31 0.00 0.00 1.63026959%
July 2005 5,442,813.14 0.00 0.00 1.63136726%
August 2005 5,269,090.53 0.00 0.00 1.63247518%
September 2005 5,098,124.89 0.00 0.00 1.63359349%
October 2005 4,929,869.36 0.00 0.00 1.63472231%
November 2005 4,764,277.83 0.00 0.00 1.63586176%
December 2005 4,601,304.88 0.00 0.00 1.63701196%
January 2006 4,440,905.81 0.00 0.00 1.63817305%
February 2006 4,296,992.23 0.00 0.00 1.63934516%
March 2006 4,128,730.78 0.00 0.00 1.64052842%
April 2006 3,962,968.06 0.00 0.00 1.64172296%
May 2006 3,799,735.05 0.00 0.00 1.64292892%
June 2006 3,638,988.35 0.00 0.00 1.64414644%
July 2006 3,480,685.23 0.00 0.00 1.64537566%
August 2006 3,324,783.66 0.00 0.00 1.64661673%
September 2006 3,171,242.25 0.00 0.00 1.64786978%
October 2006 3,020,020.26 0.00 0.00 1.64913498%
November 2006 2,871,077.62 0.00 0.00 1.65041246%
December 2006 2,724,374.85 0.00 0.00 1.65170239%
January 2007 2,579,873.13 0.00 0.00 1.65300491%
February 2007 2,451,860.67 0.00 0.00 1.65432018%
March 2007 2,325,541.68 0.00 0.00 1.65564837%
April 2007 2,200,888.34 0.00 0.00 1.65698963%
</TABLE>
3
<PAGE> 191
<TABLE>
<CAPTION>
CLASS A6 CLASS A5
TARGETED COMPONENT 2 CLASS A10 PERCENTAGE
DISTRIBUTION PRINCIPAL PLANNED PRINCIPAL PLANNED PRINCIPAL REDUCTION
DATE BALANCE BALANCE BALANCE FACTOR
---- ------- ------- ------- ------
<S> <C> <C> <C> <C>
May 2007 2,077,873.25 0.00 0.00 1.65834414%
June 2007 1,956,469.42 0.00 0.00 1.65971206%
July 2007 1,836,650.24 0.00 0.00 1.66109357%
August 2007 1,718,389.52 0.00 0.00 1.66248882%
September 2007 1,601,661.45 0.00 0.00 1.66389801%
October 2007 1,486,440.59 0.00 0.00 1.66532132%
November 2007 1,372,701.89 0.00 0.00 1.66675892%
December 2007 1,260,420.65 0.00 0.00 1.66821100%
January 2008 1,149,572.57 0.00 0.00 1.66967775%
February 2008 1,040,133.66 0.00 0.00 1.67115937%
March 2008 932,080.32 0.00 0.00 1.67265604%
April 2008 825,389.30 0.00 0.00 1.67416797%
May 2008 720,037.66 0.00 0.00 1.67569536%
June 2008 616,002.83 0.00 0.00 1.67723842%
July 2008 513,262.55 0.00 0.00 1.67879735%
August 2008 411,794.92 0.00 0.00 1.68037237%
September 2008 311,578.31 0.00 0.00 1.68196369%
October 2008 212,591.45 0.00 0.00 1.68357154%
November 2008 114,813.38 0.00 0.00 1.68519614%
December 2008 18,223.42 0.00 0.00 1.68683772%
January 2009 0.00 0.00 0.00 1.68849651%
February 2009 0.00 0.00 0.00 1.69017274%
March 2009 0.00 0.00 0.00 1.69148582%
April 2009 0.00 0.00 0.00 1.69296660%
May 2009 0.00 0.00 0.00 1.69469003%
June 2009 0.00 0.00 0.00 1.69643181%
July 2009 0.00 0.00 0.00 1.69819219%
August 2009 0.00 0.00 0.00 1.69997144%
September 2009 0.00 0.00 0.00 1.70176982%
October 2009 0.00 0.00 0.00 1.70358761%
November 2009 0.00 0.00 0.00 1.70542507%
December 2009 0.00 0.00 0.00 1.70728250%
January 2010 0.00 0.00 0.00 1.70916018%
February 2010 0.00 0.00 0.00 1.71105841%
March 2010 0.00 0.00 0.00 1.71297748%
April 2010 0.00 0.00 0.00 1.71491769%
May 2010 0.00 0.00 0.00 1.71687936%
June 2010 0.00 0.00 0.00 1.71886281%
</TABLE>
4
<PAGE> 192
<TABLE>
<CAPTION>
CLASS A6 CLASS A5
TARGETED COMPONENT 2 CLASS A10 PERCENTAGE
DISTRIBUTION PRINCIPAL PLANNED PRINCIPAL PLANNED PRINCIPAL REDUCTION
DATE BALANCE BALANCE BALANCE FACTOR
---- ------- ------- ------- ------
<S> <C> <C> <C> <C>
July 2010 0.00 0.00 0.00 1.72086835%
August 2010 0.00 0.00 0.00 1.72289632%
September 2010 0.00 0.00 0.00 1.72494704%
October 2010 0.00 0.00 0.00 1.72702086%
November 2010 0.00 0.00 0.00 1.72911814%
December 2010 0.00 0.00 0.00 1.73123922%
January 2011 0.00 0.00 0.00 1.73338446%
February 2011 0.00 0.00 0.00 1.73555424%
March 2011 0.00 0.00 0.00 1.73774894%
April 2011 0.00 0.00 0.00 1.73996893%
May 2011 0.00 0.00 0.00 1.74221461%
June 2011 0.00 0.00 0.00 1.74448639%
July 2011 0.00 0.00 0.00 1.74678466%
August 2011 0.00 0.00 0.00 1.74910986%
September 2011 0.00 0.00 0.00 1.75146239%
October 2011 0.00 0.00 0.00 1.75384271%
November 2011 0.00 0.00 0.00 1.75625124%
December 2011 0.00 0.00 0.00 1.75868846%
January 2012 0.00 0.00 0.00 1.76115481%
February 2012 0.00 0.00 0.00 1.76365078%
March 2012 0.00 0.00 0.00 1.76617684%
April 2012 0.00 0.00 0.00 1.76873349%
May 2012 0.00 0.00 0.00 1.77132124%
June 2012 0.00 0.00 0.00 1.77394059%
July 2012 0.00 0.00 0.00 1.77659208%
August 2012 0.00 0.00 0.00 1.77927625%
September 2012 0.00 0.00 0.00 1.78199386%
October 2012 0.00 0.00 0.00 1.78396049%
November 2012 0.00 0.00 0.00 1.78673642%
December 2012 0.00 0.00 0.00 1.78954713%
January 2013 0.00 0.00 0.00 1.79239323%
February 2013 0.00 0.00 0.00 1.79527532%
March 2013 0.00 0.00 0.00 1.79819404%
April 2013 0.00 0.00 0.00 1.80115002%
May 2013 0.00 0.00 0.00 1.80414391%
June 2013 0.00 0.00 0.00 1.80717640%
July 2013 0.00 0.00 0.00 1.81024816%
August 2013 0.00 0.00 0.00 1.81335989%
</TABLE>
5
<PAGE> 193
<TABLE>
<CAPTION>
CLASS A6 CLASS A5
TARGETED COMPONENT 2 CLASS A10 PERCENTAGE
DISTRIBUTION PRINCIPAL PLANNED PRINCIPAL PLANNED PRINCIPAL REDUCTION
DATE BALANCE BALANCE BALANCE FACTOR
---- ------- ------- ------- ------
<S> <C> <C> <C> <C>
September 2013 0.00 0.00 0.00 1.81651232%
October 2013 0.00 0.00 0.00 1.81970618%
November 2013 0.00 0.00 0.00 1.82294223%
December 2013 0.00 0.00 0.00 1.82622123%
January 2014 0.00 0.00 0.00 1.82954398%
February 2014 0.00 0.00 0.00 1.83291129%
March 2014 0.00 0.00 0.00 1.83632398%
April 2014 0.00 0.00 0.00 1.83978292%
May 2014 0.00 0.00 0.00 1.84328896%
June 2014 0.00 0.00 0.00 1.84684301%
July 2014 0.00 0.00 0.00 1.85044598%
August 2014 0.00 0.00 0.00 1.85409882%
September 2014 0.00 0.00 0.00 1.85780247%
October 2014 0.00 0.00 0.00 1.86155795%
November 2014 0.00 0.00 0.00 1.86536625%
December 2014 0.00 0.00 0.00 1.86922842%
January 2015 0.00 0.00 0.00 1.87314553%
February 2015 0.00 0.00 0.00 1.87711867%
March 2015 0.00 0.00 0.00 1.88114898%
April 2015 0.00 0.00 0.00 1.88523760%
May 2015 0.00 0.00 0.00 1.88938572%
June 2015 0.00 0.00 0.00 1.89359457%
July 2015 0.00 0.00 0.00 1.89786539%
August 2015 0.00 0.00 0.00 1.90219947%
September 2015 0.00 0.00 0.00 1.90659814%
October 2015 0.00 0.00 0.00 1.91106276%
November 2015 0.00 0.00 0.00 1.91559472%
December 2015 0.00 0.00 0.00 1.92013442%
January 2016 0.00 0.00 0.00 1.92361027%
February 2016 0.00 0.00 0.00 1.92833350%
March 2016 0.00 0.00 0.00 1.93312965%
April 2016 0.00 0.00 0.00 1.93800032%
May 2016 0.00 0.00 0.00 1.94294715%
June 2016 0.00 0.00 0.00 1.94797185%
July 2016 0.00 0.00 0.00 1.95307614%
August 2016 0.00 0.00 0.00 1.95826184%
September 2016 0.00 0.00 0.00 1.96353078%
October 2016 0.00 0.00 0.00 1.96888489%
</TABLE>
6
<PAGE> 194
<TABLE>
<CAPTION>
CLASS A6 CLASS A5
TARGETED COMPONENT 2 CLASS A10 PERCENTAGE
DISTRIBUTION PRINCIPAL PLANNED PRINCIPAL PLANNED PRINCIPAL REDUCTION
DATE BALANCE BALANCE BALANCE FACTOR
---- ------- ------- ------- ------
<S> <C> <C> <C> <C>
November 2016 0.00 0.00 0.00 1.97432612%
December 2016 0.00 0.00 0.00 1.97985650%
January 2017 0.00 0.00 0.00 1.98547812%
February 2017 0.00 0.00 0.00 1.99119315%
March 2017 0.00 0.00 0.00 1.99700379%
April 2017 0.00 0.00 0.00 2.00291235%
May 2017 0.00 0.00 0.00 2.00892120%
June 2017 0.00 0.00 0.00 2.01503278%
July 2017 0.00 0.00 0.00 2.02124961%
August 2017 0.00 0.00 0.00 2.02757445%
September 2017 0.00 0.00 0.00 2.03265035%
October 2017 0.00 0.00 0.00 2.03646744%
November 2017 0.00 0.00 0.00 2.04305680%
December 2017 0.00 0.00 0.00 2.04764164%
January 2018 0.00 0.00 0.00 2.05358016%
February 2018 0.00 0.00 0.00 2.06047820%
March 2018 0.00 0.00 0.00 2.06750149%
April 2018 0.00 0.00 0.00 2.07465333%
May 2018 0.00 0.00 0.00 2.08193711%
June 2018 0.00 0.00 0.00 2.08935638%
July 2018 0.00 0.00 0.00 2.09691478%
August 2018 0.00 0.00 0.00 2.10461610%
September 2018 0.00 0.00 0.00 2.11246427%
October 2018 0.00 0.00 0.00 2.12046336%
November 2018 0.00 0.00 0.00 2.12861759%
December 2018 0.00 0.00 0.00 2.13693134%
January 2019 0.00 0.00 0.00 2.14540916%
February 2019 0.00 0.00 0.00 2.15405578%
March 2019 0.00 0.00 0.00 2.16287608%
April 2019 0.00 0.00 0.00 2.17187518%
May 2019 0.00 0.00 0.00 2.18105837%
June 2019 0.00 0.00 0.00 2.19043116%
July 2019 0.00 0.00 0.00 2.19999927%
August 2019 0.00 0.00 0.00 2.20976866%
September 2019 0.00 0.00 0.00 2.21974556%
October 2019 0.00 0.00 0.00 2.22949009%
November 2019 0.00 0.00 0.00 2.23926027%
December 2019 0.00 0.00 0.00 2.24987558%
</TABLE>
7
<PAGE> 195
<TABLE>
<CAPTION>
CLASS A6 CLASS A5
TARGETED COMPONENT 2 CLASS A10 PERCENTAGE
DISTRIBUTION PRINCIPAL PLANNED PRINCIPAL PLANNED PRINCIPAL REDUCTION
DATE BALANCE BALANCE BALANCE FACTOR
---- ------- ------- ------- ------
<S> <C> <C> <C> <C>
January 2020 0.00 0.00 0.00 2.26072515%
February 2020 0.00 0.00 0.00 2.27181659%
March 2020 0.00 0.00 0.00 2.28315785%
April 2020 0.00 0.00 0.00 2.29475720%
May 2020 0.00 0.00 0.00 2.30662330%
June 2020 0.00 0.00 0.00 2.31876522%
July 2020 0.00 0.00 0.00 2.33119241%
August 2020 0.00 0.00 0.00 2.34391478%
September 2020 0.00 0.00 0.00 2.35694268%
October 2020 0.00 0.00 0.00 2.37028699%
November 2020 0.00 0.00 0.00 2.38395907%
December 2020 0.00 0.00 0.00 2.39797085%
January 2021 0.00 0.00 0.00 2.41233485%
February 2021 0.00 0.00 0.00 2.42706420%
March 2021 0.00 0.00 0.00 2.44217270%
April 2021 0.00 0.00 0.00 2.45767486%
May 2021 0.00 0.00 0.00 2.47358590%
June 2021 0.00 0.00 0.00 2.48992189%
July 2021 0.00 0.00 0.00 2.50669973%
August 2021 0.00 0.00 0.00 2.52393720%
September 2021 0.00 0.00 0.00 2.54165309%
October 2021 0.00 0.00 0.00 2.55986721%
November 2021 0.00 0.00 0.00 2.57860047%
December 2021 0.00 0.00 0.00 2.59787497%
January 2022 0.00 0.00 0.00 2.61771410%
February 2022 0.00 0.00 0.00 2.63814260%
March 2022 0.00 0.00 0.00 2.65918666%
April 2022 0.00 0.00 0.00 2.68087409%
May 2022 0.00 0.00 0.00 2.70323437%
June 2022 0.00 0.00 0.00 2.72629879%
July 2022 0.00 0.00 0.00 2.75010066%
August 2022 0.00 0.00 0.00 2.77467188%
September 2022 0.00 0.00 0.00 2.79862081%
October 2022 0.00 0.00 0.00 2.82480849%
November 2022 0.00 0.00 0.00 2.85062107%
December 2022 0.00 0.00 0.00 2.87726179%
January 2023 0.00 0.00 0.00 2.90169649%
February 2023 0.00 0.00 0.00 2.93147818%
</TABLE>
8
<PAGE> 196
<TABLE>
<CAPTION>
CLASS A6 CLASS A5
TARGETED COMPONENT 2 CLASS A10 PERCENTAGE
DISTRIBUTION PRINCIPAL PLANNED PRINCIPAL PLANNED PRINCIPAL REDUCTION
DATE BALANCE BALANCE BALANCE FACTOR
---- ------- ------- ------- ------
<S> <C> <C> <C> <C>
March 2023 0.00 0.00 0.00 2.96234003%
April 2023 0.00 0.00 0.00 2.99434123%
May 2023 0.00 0.00 0.00 3.02754532%
June 2023 0.00 0.00 0.00 3.06170017%
July 2023 0.00 0.00 0.00 3.09619753%
August 2023 0.00 0.00 0.00 3.13337605%
September 2023 0.00 0.00 0.00 3.17206080%
October 2023 0.00 0.00 0.00 3.21234435%
November 2023 0.00 0.00 0.00 3.25432701%
December 2023 0.00 0.00 0.00 3.29811765%
January 2024 0.00 0.00 0.00 3.34383463%
February 2024 0.00 0.00 0.00 3.39160691%
March 2024 0.00 0.00 0.00 3.44157518%
April 2024 0.00 0.00 0.00 3.49389331%
May 2024 0.00 0.00 0.00 3.54872985%
June 2024 0.00 0.00 0.00 3.60626989%
July 2024 0.00 0.00 0.00 3.66671710%
August 2024 0.00 0.00 0.00 3.73029615%
September 2024 0.00 0.00 0.00 3.79725545%
October 2024 0.00 0.00 0.00 3.86787041%
November 2024 0.00 0.00 0.00 3.94244718%
December 2024 0.00 0.00 0.00 4.02069172%
January 2025 0.00 0.00 0.00 4.10289314%
February 2025 0.00 0.00 0.00 4.19144542%
March 2025 0.00 0.00 0.00 4.28558074%
April 2025 0.00 0.00 0.00 4.38584212%
May 2025 0.00 0.00 0.00 4.49284532%
June 2025 0.00 0.00 0.00 4.60729152%
July 2025 0.00 0.00 0.00 4.72998260%
August 2025 0.00 0.00 0.00 4.86183993%
September 2025 0.00 0.00 0.00 5.00050262%
October 2025 0.00 0.00 0.00 5.14783209%
November 2025 0.00 0.00 0.00 5.31346683%
December 2025 0.00 0.00 0.00 5.49261967%
January 2026 0.00 0.00 0.00 5.68736896%
February 2026 0.00 0.00 0.00 5.89985893%
March 2026 0.00 0.00 0.00 6.13638617%
April 2026 0.00 0.00 0.00 6.39793017%
</TABLE>
9
<PAGE> 197
<TABLE>
<CAPTION>
CLASS A6 CLASS A5
TARGETED COMPONENT 2 CLASS A10 PERCENTAGE
DISTRIBUTION PRINCIPAL PLANNED PRINCIPAL PLANNED PRINCIPAL REDUCTION
DATE BALANCE BALANCE BALANCE FACTOR
---- ------- ------- ------- ------
<S> <C> <C> <C> <C>
May 2026 0.00 0.00 0.00 6.68690227%
June 2026 0.00 0.00 0.00 7.00885129%
July 2026 0.00 0.00 0.00 7.37026257%
August 2026 0.00 0.00 0.00 7.77652167%
September 2026 0.00 0.00 0.00 8.23734483%
October 2026 0.00 0.00 0.00 8.74328177%
November 2026 0.00 0.00 0.00 9.34256560%
December 2026 0.00 0.00 0.00 10.05171311%
January 2027 0.00 0.00 0.00 10.91442603%
February 2027 0.00 0.00 0.00 11.95637685%
March 2027 0.00 0.00 0.00 13.18413194%
April 2027 0.00 0.00 0.00 14.74654011%
May 2027 0.00 0.00 0.00 16.78419206%
June 2027 0.00 0.00 0.00 19.51573779%
July 2027 0.00 0.00 0.00 23.14481351%
August 2027 0.00 0.00 0.00 27.44183846%
September 2027 0.00 0.00 0.00 34.51645455%
October 2027 0.00 0.00 0.00 44.15126014%
November 2027 0.00 0.00 0.00 60.90265469%
December 2027 0.00 0.00 0.00 93.48541141%
January 2028 0.00 0.00 0.00 100.00000000%
</TABLE>
10
