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) SEPTEMBER 30, 1997
The Money Store Trust 1997-C and the Originators as listed below under a
Pooling and Servicing Agreement dated as of August 31,
1997 providing for the issuance of The Money Store Asset Backed
Certificates, Series 1997-C.
The Money Store Trust 1997-C
TMS Mortgage Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
The Money Store/Minnesota Inc.
-----------------------------------------------------------
(Exact name of registrant as specified in its charter)
* 333-20817 *
- -------------------------------- ----------- ------
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) ID Number)
2840 MORRIS AVENUE, UNION, NEW JERSEY 07083
- -----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number,
including area code: (908) 686-2000
-------------
N/A
- -------------------------------------------------------------
(Former name or former address, if changed since last report)
* See Schedule A attached hereto.
<PAGE>
Item 5. Other Events
------------
The Originators listed on Schedule A attached hereto, registered
issuances of up to $3,500,000,000 principal amount of TMS Asset Backed
Certificates on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended (the "Act"), by a Registration Statement on
Form S-3 (Registration File No. 333-20817) (as amended, the "Registration
Statement"). Pursuant to the Registration Statement, the Originators caused
the issuance of $1,300,000,000 principal amount of The Money Store Asset
Backed Certificates, Series 1997-C (the "Certificates") by The Money Store
Trust 1997-C (the "Trust"), on September 30, 1997 (the "Closing Date"). This
Current Report on Form 8-K is being filed to file a detailed description of
the Initial Mortgage Loans sold to the Trust, a copy of the Pooling and
Servicing Agreement referred to below and the Underwriting Agreement entered
into among The Money Store Inc., as representative (the "Representative"), the
Originators and Prudential Securities Inc. and Lehman Brothers Inc., as
representatives of the underwriters named therein.
The Certificates were issued pursuant to a pooling and servicing
agreement (the "Pooling and Servicing Agreement"), dated as of August 31, 1997
(the "Cut-Off Date"), among the Representative, the Originators and The Bank of
New York, as trustee (the "Trustee"), and consist of Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class AF- 7, Class AF-8, Class
AV, Class MV-1, Class MV-2, Class BV, Class AH-1, Class AH-2. Class AH-3, Class
AH-4, Class AH-5, Class AH-6, Class MH-1, Class MH-2, Class BH and Class AMF
Certificates (collectively, the "Offered Certificates"), Class X Certificates
and Class R-1 and Class R-2 Certificates (the "Class R Certificates"). As of the
Closing Date, the initial principal amount of each Class of Certificates which
has a principal balance is as set forth below:
CLASS INITIAL CLASS CERTIFICATE BALANCE
Class AF-1 $63,000,000
Class AF-2 $60,400,000
Class AF-3 $80,000,000
Class AF-4 $47,000,000
Class AF-5 $32,900,000
Class AF-6 $39,000,000
Class AF-7 $37,700,000
Class AF-8 $40,000,000
Class AV $498,000,000
Class MV-1 $45,000,000
Class MV-2 $30,000,000
Class BV $27,000,000
Class AH-1 $37,637,000
Class AH-2 $46,765,000
Class AH-3 $36,005,000
Class AH-4 $37,865,000
Class AH-5 $53,809,000
Class AH-6 $11,329,000
Class MH-1 $24,910,000
Class MH-2 $14,975,000
Class BH $11,705,000
Class AMF $25,000,000
Capitalized terms not defined herein have the meanings assigned in
the Pooling and Servicing Agreement.
<PAGE>
Certain Characteristics of Pool I
Set forth below is a description of certain characteristics of Pool I and
the Initial Pool I Mortgage Loans. Certain of the percentage columns may not
sum to 100.00% due to rounding.
- --------------------------------------------------------------------------------
- MONEY STORE 1997 C (HEL)
- Cut Off Date of Tape is 08/31/97
- FIXED RATE COLLATERAL
- $368,508,251.83
- Home Equity Loans Summary Report
- --------------------------------------------------------------------------------
Number of Mortgage Loans: 8,782
Lien Status: 1st and 2nd Lien Loans
Aggregate Unpaid Principal Balance: $368,508,251.83
Aggregate Original Principal Balance: $368,874,973.00
Weighted Average Gross Coupon: 11.487%
Gross Coupon Range: 7.990% - 17.950%
- --------------------------------------------------------------------------------
Average Unpaid Principal Balance: $41,961.77
Average Original Principal Balance: $42,003.53
Maximum Unpaid Principal Balance: $480,000.00
Minimum Unpaid Principal Balance: $3,676.00
Maximum Original Principal Balance: $480,000.00
Minimum Original Principal Balance: $3,676.00
Weighted Avg. Stated Rem. Term (LPD to Mat/Bal Date): 256.838
Stated Rem Term Range: 30.000 - 480.000
Weighted Average Age (First Pay thru Last Pay): 0.436
Age Range: 0.000 - 21.000
Weighted Average Original Term (to Mat/Bal Date): 257.274
Original Term Range: 30.000 - 480.000
Weighted Average Combined LTV: 74.831
Combined LTV Range: 3.940% - 100.000%
Weighted Average FICO Scores: 616.831
(excluding 291 loans)
MAX ZIP CODE CONCENTRATION .165% ZIP CODE 60619 STATE IL
EARLIEST FIRST PAYMENT DATE 12/01/95
MATURITY DATE 10/01/37
- -----------------------------------------------------------------------------
<PAGE>
GROSS COUPON
- ------------------------------------------------------------------
Total
Gross # % Current
Coupon Loan Pool Balance
7.75% * Gross Coupon *= 8.00% 1 .02 $65,000.00
8.00% * Gross Coupon *= 8.25% 2 .10 $352,000.00
8.25% * Gross Coupon *= 8.50% 12 .29 $1,087,048.60
8.50% * Gross Coupon *= 8.75% 19 .40 $1,482,421.12
8.75% * Gross Coupon *= 9.00% 51 1.18 $4,366,490.96
9.00% * Gross Coupon *= 9.25% 31 .67 $2,453,801.05
9.25% * Gross Coupon *= 9.50% 113 2.56 $9,444,798.40
9.50% * Gross Coupon *= 9.75% 111 2.56 $9,418,604.90
9.75% * Gross Coupon *= 10.00% 315 7.23 $26,635,682.64
10.00% * Gross Coupon *= 10.25% 276 5.38 $19,841,924.82
10.25% * Gross Coupon *= 10.50% 432 7.33 $27,030,070.06
10.50% * Gross Coupon *= 10.75% 325 5.24 $19,307,140.42
10.75% * Gross Coupon *= 11.00% 656 9.30 $34,279,404.63
11.00% * Gross Coupon *= 11.25% 467 5.48 $20,191,870.89
11.25% * Gross Coupon *= 11.50% 657 7.07 $26,064,928.56
11.50% * Gross Coupon *= 11.75% 606 6.35 $23,387,488.46
11.75% * Gross Coupon *= 12.00% 894 8.33 $30,679,145.38
12.00% * Gross Coupon *= 12.25% 473 4.05 $14,921,383.68
12.25% * Gross Coupon *= 12.50% 803 6.94 $25,589,237.16
12.50% * Gross Coupon *= 12.75% 471 3.63 $13,392,951.63
12.75% * Gross Coupon *= 13.00% 646 5.22 $19,246,680.73
13.00% * Gross Coupon *= 13.25% 238 1.76 $6,490,605.03
13.25% * Gross Coupon *= 13.50% 341 2.66 $9,788,766.96
13.50% * Gross Coupon *= 13.75% 243 1.75 $6,445,594.37
13.75% * Gross Coupon *= 14.00% 243 1.81 $6,658,984.04
14.00% * Gross Coupon *= 14.25% 74 .56 $2,048,563.01
14.25% * Gross Coupon *= 14.50% 81 .58 $2,139,617.73
14.50% * Gross Coupon *= 14.75% 74 .61 $2,250,259.68
14.75% * Gross Coupon *= 15.00% 57 .46 $1,680,691.42
15.00% * Gross Coupon *= 15.25% 17 .14 $511,609.60
15.25% * Gross Coupon *= 15.50% 12 .08 $278,908.28
15.50% * Gross Coupon *= 15.75% 24 .15 $561,757.36
15.75% * Gross Coupon *= 16.00% 13 .07 $262,084.09
16.00% * Gross Coupon *= 16.25% 1 .02 $74,900.00
16.25% * Gross Coupon *= 16.50% 1 .01 $26,040.00
16.50% * Gross Coupon *= 16.75% 1 .01 $39,996.17
17.75% * Gross Coupon *= 18.00% 1 .00 $11,800.00
- ------------------------------------------------------------------
Total..... 8,782 100.00% $368,508,251.83
==================================================================
* = LESS THAN
<PAGE>
ORIGINAL MATURITY
- ------------------------------------------------------------------
Total
Original # % Current
Maturity Loan Pool Balance
20 * Original Maturity *= 30 1 .00 $6,000.00
30 * Original Maturity *= 40 3 .01 $47,000.00
40 * Original Maturity *= 50 8 .02 $89,677.39
50 * Original Maturity *= 60 320 1.16 $4,263,270.85
70 * Original Maturity *= 80 25 .10 $379,724.53
80 * Original Maturity *= 90 114 .53 $1,958,346.53
90 * Original Maturity *= 100 21 .12 $436,771.89
100 * Original Maturity *= 110 6 .03 $99,155.93
110 * Original Maturity *= 120 1,304 7.48 $27,577,664.86
130 * Original Maturity *= 140 5 .03 $99,800.00
140 * Original Maturity *= 150 27 .25 $931,567.95
150 * Original Maturity *= 160 1 .01 $29,200.00
160 * Original Maturity *= 170 1 .01 $30,700.00
170 * Original Maturity *= 180 3,670 36.03 $132,771,516.67
200 * Original Maturity *= 210 1 .01 $30,000.00
210 * Original Maturity *= 220 2 .04 $142,241.03
230 * Original Maturity *= 240 804 9.46 $34,863,884.84
250 * Original Maturity *= 260 2 .02 $58,200.00
290 * Original Maturity *= 300 483 5.86 $21,608,173.23
330 * Original Maturity *= 340 1 .01 $42,500.00
350 * Original Maturity *= 360 1,941 37.63 $138,671,559.67
470 * Original Maturity *= 480 42 1.19 $4,371,296.46
- ------------------------------------------------------------------
Total..... 8,782 100.00% $368,508,251.83
==================================================================
* = LESS THAN
REMAINING TERM
- -------------------------------------------------------------------
Total
# % Current
Remaining Term Loan Pool Balance
24 * Rem Term *= 36 4 .01 $53,000.00
36 * Rem Term *= 48 8 .02 $89,677.39
48 * Rem Term *= 60 320 1.16 $4,263,270.85
60 * Rem Term *= 72 24 .10 $363,724.53
72 * Rem Term *= 84 115 .54 $1,974,346.53
84 * Rem Term *= 96 21 .12 $436,771.89
96 * Rem Term *= 108 6 .03 $99,155.93
108 * Rem Term *= 120 1,304 7.48 $27,577,664.86
120 * Rem Term *= 132 5 .03 $99,800.00
132 * Rem Term *= 144 27 .25 $931,567.95
144 * Rem Term *= 156 1 .01 $29,200.00
156 * Rem Term *= 168 2 .02 $87,057.21
168 * Rem Term *= 180 3,669 36.01 $132,715,159.46
192 * Rem Term *= 204 1 .01 $30,000.00
204 * Rem Term *= 216 2 .04 $142,241.03
228 * Rem Term *= 240 804 9.46 $34,863,884.84
240 * Rem Term *= 252 1 .01 $39,600.00
252 * Rem Term *= 264 1 .01 $18,600.00
288 * Rem Term *= 300 483 5.86 $21,608,173.23
324 * Rem Term *= 336 1 .01 $42,500.00
336 * Rem Term *= 348 6 .10 $353,775.79
348 * Rem Term *= 360 1,935 37.53 $138,317,783.88
Rem Term * 360 42 1.19 $4,371,296.46
- -------------------------------------------------------------------
Total..... 8,782 100.00% $368,508,251.83
===================================================================
* = LESS THAN
<PAGE>
LOAN AGE IN MONTHS
- ------------------------------------------------------------------
Total
# % Current
Age of Loan Loan Pool Balance
0 = Age 6,701 76.11 $280,482,736.59
0 * Age *= 12 2,076 23.81 $87,739,464.47
12 * Age *= 24 5 .08 $286,050.77
- ------------------------------------------------------------------
Total..... 8,782 100.00% $368,508,251.83
==================================================================
* = LESS THAN
ORIGINATION YEAR
- ------------------------------------------------------------------
Total
Year of # % Current
Origination Loan Pool Balance
1995 1 .01 $29,208.35
1996 29 .49 $1,795,113.15
1997 8,752 99.50 $366,683,930.33
- -------------------------------------------------------------------
Total..... 8,782 100.00% $368,508,251.83
===================================================================
<PAGE>
NEXT PAYMENT DUE DATE
Percentage
of Cut-Off
Aggregate Date
Next Number of Unpaid Aggregate
Due Mortgage Principal Principal
Date Loans Balance Balance
07/01/97 3 $132,184.24 00.04
08/01/97 47 $1,872,707.70 00.51
09/01/97 566 $25,587,081.25 06.94
10/01/97 4219 $180,742,178.68 49.05
11/01/97 2184 $85,599,125.56 23.23
12/01/97 1415 $57,784,105.40 15.68
01/01/98 345 $16,631,269.00 04.51
02/01/98 3 $159,600.00 00.04
- --------------------------------------------------------------------------
Total........ 8782 $368,508,251.83 100.00%
==========================================================================
COMBINED LTV RANGE
- -------------------------------------------------------------------
Total
C LTV # % Current
RANGE Loan Pool Balance
0.000 * LTV *= 5.000 2 .01 $22,300.00
5.000 * LTV *= 10.000 13 .04 $156,715.98
10.000 * LTV *= 15.000 52 .22 $805,966.60
15.000 * LTV *= 20.000 63 .36 $1,344,805.76
20.000 * LTV *= 25.000 87 .56 $2,060,998.14
25.000 * LTV *= 30.000 126 .86 $3,166,781.46
30.000 * LTV *= 35.000 134 .97 $3,562,326.02
35.000 * LTV *= 40.000 145 1.32 $4,879,375.22
40.000 * LTV *= 45.000 189 1.64 $6,033,511.52
45.000 * LTV *= 50.000 230 2.22 $8,181,118.34
50.000 * LTV *= 55.000 266 2.79 $10,266,863.01
55.000 * LTV *= 60.000 331 3.47 $12,776,630.01
60.000 * LTV *= 65.000 488 5.59 $20,587,030.70
65.000 * LTV *= 70.000 720 7.98 $29,410,847.06
70.000 * LTV *= 75.000 825 10.20 $37,602,342.46
75.000 * LTV *= 80.000 1,896 22.92 $84,466,433.40
80.000 * LTV *= 85.000 1,405 17.19 $63,335,453.42
85.000 * LTV *= 90.000 1,460 18.68 $68,829,331.70
90.000 * LTV *= 95.000 211 1.94 $7,156,697.73
95.000 * LTV *= 100.000 139 1.05 $3,862,723.30
- -------------------------------------------------------------------
Total..... 8,782 100.00% $368,508,251.83
===================================================================
* = LESS THAN
<PAGE>
ORIGINAL MORTGAGE AMOUNT
- -------------------------------------------------------------------
Total
Original # % Current
Mortgage Amt. Loan Pool Balance
0 * Balance *= 25,000 3,250 14.98 $55,202,697.66
25,000 * Balance *= 50,000 3,144 30.65 $112,942,252.67
50,000 * Balance *= 75,000 1,396 22.99 $84,705,715.92
75,000 * Balance *= 100,000 474 11.10 $40,916,513.83
100,000 * Balance *= 150,000 369 11.96 $44,091,516.15
150,000 * Balance *= 207,000 95 4.43 $16,307,598.50
207,000 * Balance *= 250,000 29 1.77 $6,528,306.17
250,000 * Balance *= 300,000 14 1.05 $3,883,270.93
300,000 * Balance *= 350,000 7 .62 $2,273,780.00
350,000 * Balance *= 400,000 2 .21 $761,000.00
400,000 * Balance *= 450,000 1 .11 $415,600.00
450,000 * Balance *= 500,000 1 .13 $480,000.00
- -------------------------------------------------------------------
Total..... 8,782100.00% $368,508,251.83
===================================================================
* = LESS THAN
CURRENT MORTGAGE AMOUNT
- -------------------------------------------------------------------
Total
Current # % Current
Mortgage Amt. Loan Pool Balance
0 * Balance *= 25,000 3,254 15.01 $55,300,718.40
25,000 * Balance *= 50,000 3,143 30.66 $112,991,734.56
50,000 * Balance *= 75,000 1,393 22.95 $84,558,213.29
75,000 * Balance *= 100,000 474 11.10 $40,916,513.83
100,000 * Balance *= 150,000 369 11.96 $44,091,516.15
150,000 * Balance *= 200,000 85 3.87 $14,257,992.84
200,000 * Balance *= 250,000 39 2.33 $8,577,911.83
250,000 * Balance *= 300,000 14 1.05 $3,883,270.93
300,000 * Balance *= 350,000 7 .62 $2,273,780.00
350,000 * Balance *= 400,000 2 .21 $761,000.00
400,000 * Balance *= 450,000 1 .11 $415,600.00
450,000 * Balance *= 500,000 1 .13 $480,000.00
- -------------------------------------------------------------------
Total..... 8,782100.00% $368,508,251.83
===================================================================
* = LESS THAN
<PAGE>
GEOGRAPHIC DISTRIBUTION
- ----------------------------------------------------------
Total
# % Current
State Loans Pool Balance
AK 4 .04 $145,100
AR 30 .26 $948,743
AZ 197 2.37 $8,725,630
CA 434 7.20 $26,532,935
CO 222 2.74 $10,107,077
CT 59 .81 $2,998,682
DC 15 .23 $844,379
DE 33 .53 $1,968,243
FL 433 5.47 $20,148,096
GA 303 3.32 $12,226,738
IA 64 .58 $2,129,507
ID 92 .84 $3,089,007
IL 452 5.35 $19,723,439
IN 341 3.29 $12,135,773
KS 175 1.38 $5,085,004
KY 111 1.19 $4,379,623
LA 112 1.08 $3,990,150
MA 127 1.64 $6,051,249
MD 148 1.93 $7,110,133
ME 91 .88 $3,225,434
MI 422 4.01 $14,791,354
MN 128 1.16 $4,284,805
MO 324 3.16 $11,654,700
MS 139 1.32 $4,881,359
MT 18 .21 $786,455
NC 281 3.69 $13,596,677
ND 9 .10 $370,866
NE 78 .79 $2,907,334
NH 45 .46 $1,682,341
NJ 389 5.13 $18,914,657
NM 135 1.54 $5,676,962
NV 106 1.13 $4,166,122
NY 573 8.19 $30,183,637
OH 428 4.77 $17,585,732
OK 141 1.13 $4,151,270
OR 122 1.22 $4,481,252
PA 531 5.29 $19,503,689
RI 25 .29 $1,056,847
SC 321 3.51 $12,926,886
SD 11 .13 $472,291
TN 195 1.85 $6,831,840
TX 61 .66 $2,420,769
UT 104 1.14 $4,194,113
VA 109 1.33 $4,888,618
VT 20 .17 $641,536
WA 410 4.53 $16,688,762
WI 146 1.28 $4,718,466
WV 48 .48 $1,785,807
WY 20 .19 $698,163
- -------------------------------------------
Total.. 8,782 100.00% $368,508,252
===========================================
<PAGE>
PROPERTY-TYPE
- ------------------------------------------------------------------
Total
# % Current
Loan Pool Balance
Manufactured Housing 997 10.91 $40,215,031.79
Townhouses 68 .70 $2,589,136.27
Condominiums 100 .97 $3,590,366.54
Single Family Detached 7,220 81.04 $298,643,078.48
PUD Detached 29 .69 $2,545,372.56
PUD Attached 6 .06 $218,762.04
2-4 Family 360 5.57 $20,542,004.15
Apartment 5+ Units 2 .04 $164,500.00
- -------------------------------------------------------------------
Total..... 8,782 100.00% $368,508,251.83
===================================================================
OCCUPANCY
- ------------------------------------------------------------------
Total
# % Current
Loan Pool Balance
Owner Occ. 8,428 95.94 $353,533,205.59
Investor 296 3.41 $12,583,398.56
Vacation/Second Home 58 .65 $2,391,647.68
- -------------------------------------------------------------------
Total..... 8,782 100.00% $368,508,251.83
===================================================================
DOCUMENTATION LEVEL
- ------------------------------------------------------------------
Total
# % Current
Loan Pool Balance
Full Documentation 8,782 100.00 $368,508,251.83
- -------------------------------------------------------------------
Total..... 8,782 100.00% $368,508,251.83
===================================================================
LOAN-PURPOSE
- ------------------------------------------------------------------
Total
# % Current
Loan Pool Balance
Purchase 269 5.21 $19,186,189.07
Refinance/No ETO 3,683 58.56 $215,813,345.11
Refinance/ETO 1,737 11.78 $43,408,015.50
Tuition 1 .01 $52,000.00
Home Improvement 7 .04 $141,420.00
REO 1 .02 $59,979.52
Debt Consolidation 3,084 24.38 $89,847,302.63
- -------------------------------------------------------------------
Total..... 8,782 100.00% $368,508,251.83
===================================================================
<PAGE>
BALLOON LOANS
- ----------------------------------------------------------------
Total
BALLOON CODE # % Current
Loan Pool Balance
NO 8,487 94.54 $348,385,867.46
YES 295 5.46 $20,122,384.37
- ----------------------------------------------------------------
Total..... 8,782 100.00% $368,508,251.83
================================================================
LIEN STATUS
- ------------------------------------------------------------
Total
# % Current
Lien Status Loan Pool Balance
1 4,865 70.83 $261,018,325.71
2 3,917 29.17 $107,489,926.12
- ------------------------------------------------------------
Total..... 8,782 100.00% $368,508,251.83
============================================================
<PAGE>
CERTAIN CHARACTERISTICS OF POOL II
Set forth below is a description of certain characteristics of Pool II and
the Initial Pool II Mortgage Loans. Certain of the percentage columns may not
sum to 100.00% due to rounding.
- --------------------------------------------------------------------------------
- MONEY STORE 1997 C (HEL)
- Cut Off Date of Tape is 08/31/97
- ADJUSTABLE RATE COLLATERAL
- $480,629,733.81
- --------------------------------------------------------------------------------
Number of Mortgage Loans: 5,663
Lien Status: 1st Lien Loans
Index: Various * Detailed Below
Aggregate Unpaid Principal Balance: $480,629,733.81
Aggregate Original Principal Balance: $481,065,685.00
- --------------------------------------------------------------------------------
Weighted Average Coupon (Gross): 10.138%
Gross Coupon Range: 5.500% - 14.740%
Weighted Average Margin (Gross): 6.059%
Gross Margin Range: 2.750% - 10.725%
Weighted Average Life Cap (Gross): 16.277%
Gross Life Cap Range: 11.500% - 20.875%
Weighted Average Life Floor (Gross): 10.122%
Gross Life Floor Range: 2.875% - 14.740%
- --------------------------------------------------------------------------------
Average Unpaid Principal Balance: $84,871.93
Average Original Principal Balance: $84,948.91
Maximum Unpaid Principal Balance: $640,000.00
Minimum Unpaid Principal Balance: $9,731.39
Maximum Original Principal Balance: $640,000.00
Minimum Original Principal Balance: $9,750.00
Weighted Avg. Stated Rem. Term (PTD to Mat Date): 358.721
Stated Rem Term Range: 170.000 - 360.000
Weighted Average Age (First Pay thru Paid Thru): 0.904
Age Range: 0.000 - 20.000
Weighted Average Original Term: 359.625
Original Term Range: 180.000 - 360.000
Weighted Average Combined LTV: 76.905
Combined LTV Range: 7.000% - 99.240%
Weighted Average Periodic Interest Cap: 1.130%
Periodic Interest Cap Range: 1.000% - 2.000%
Weighted Average Months to Interest Roll: 24.998
Months to Interest Roll Range: 2 - 50
Weighted Average Interest Roll Frequency: 6.331
Interest Frequency Range: 1 - 24
Weighted Average FICO Score: 602.324
(excluding 268 loans)
MAX ZIP CODE CONCENTRATION .241% ZIP CODE 60644 STATE IL
EARLIEST FIRST PAYMENT DATE 1/1/96
LATEST MATURITY DATE 11/1/27
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
LOAN TYPE
- ---------------------------------------------------------------------------------------------------------------------------------
WA WA
WA WA WA WA PER MONTH WA Total
# % Rem WA Orig LIFE GROSS INT TO INT LIFE Current
Loan Type Loan Pool WAC Term Age LTV CAP MARGIN CAP ROLL FLOOR Balance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 YEAR CMT 184 4.89 9.613 355.80 3.57 76.02 15.66 5.978 2.000 8.66 9.58 $23,510,243.79
1 YEAR LIBOR 31 .58 9.724 359.06 .94 71.97 15.83 5.750 2.000 11.33 9.72 $2,799,019.49
2/28 6M LIBOR 1,468 28.85 10.529 358.67 1.09 79.02 16.86 6.222 1.080 23.00 10.52 $138,681,712.87
3/27 6M LIBOR 124 2.52 10.613 358.19 1.68 77.75 16.69 6.048 1.006 34.36 10.61 $12,103,954.33
3/3/1 1M LIBOR 5 .06 9.932 356.56 3.44 65.26 15.97 5.749 2.000 2.89 8.97 $301,507.54
4/26 6M LIBOR 2,132 31.44 10.614 359.79 .21 74.05 16.61 6.255 1.000 48.41 10.61 $151,114,429.82
6 MONTH LIBOR 1,719 31.65 9.359 358.20 .94 77.99 15.48 5.736 1.161 5.64 9.32 $152,118,865.97
- ---------------------------------------------------------------------------------------------------------------------------------
Total..... 5,663 100.00% 10.138 358.72 .90 76.90 16.28 6.059 1.130 25.00 10.12 $480,629,733.81
=================================================================================================================================
</TABLE>
GROSS COUPON
- -------------------------------------------------------------------
Total
Gross # % Current
Coupon Loan Pool Balance
5.25% * Gross Coupon *= 5.50% 1 .05 $262,644.77
6.25% * Gross Coupon *= 6.50% 1 .02 $112,400.00
6.50% * Gross Coupon *= 6.75% 1 .03 $157,364.40
6.75% * Gross Coupon *= 7.00% 2 .04 $214,360.66
7.00% * Gross Coupon *= 7.25% 26 .74 $3,563,714.94
7.25% * Gross Coupon *= 7.50% 63 1.73 $8,310,704.21
7.50% * Gross Coupon *= 7.75% 42 1.00 $4,812,696.94
7.75% * Gross Coupon *= 8.00% 72 1.94 $9,303,322.57
8.00% * Gross Coupon *= 8.25% 57 1.20 $5,767,774.68
8.25% * Gross Coupon *= 8.50% 175 3.36 $16,135,007.94
8.50% * Gross Coupon *= 8.75% 136 2.62 $12,590,068.19
8.75% * Gross Coupon *= 9.00% 249 5.04 $24,234,397.36
9.00% * Gross Coupon *= 9.25% 193 3.77 $18,127,421.59
9.25% * Gross Coupon *= 9.50% 336 6.20 $29,797,014.81
9.50% * Gross Coupon *= 9.75% 314 6.26 $30,069,832.98
9.75% * Gross Coupon *= 10.00% 610 12.12 $58,264,771.32
10.00% * Gross Coupon *= 10.25% 574 10.11 $48,602,255.28
10.25% * Gross Coupon *= 10.50% 648 10.37 $49,827,539.76
10.50% * Gross Coupon *= 10.75% 389 6.57 $31,582,884.75
10.75% * Gross Coupon *= 11.00% 466 7.76 $37,311,513.45
11.00% * Gross Coupon *= 11.25% 381 5.57 $26,752,184.34
11.25% * Gross Coupon *= 11.50% 326 4.66 $22,386,777.02
11.50% * Gross Coupon *= 11.75% 191 2.94 $14,143,237.14
11.75% * Gross Coupon *= 12.00% 127 1.89 $9,060,299.90
12.00% * Gross Coupon *= 12.25% 94 1.31 $6,278,565.06
12.25% * Gross Coupon *= 12.50% 70 1.05 $5,027,497.85
12.50% * Gross Coupon *= 12.75% 39 .58 $2,769,782.82
12.75% * Gross Coupon *= 13.00% 32 .50 $2,394,974.07
13.00% * Gross Coupon *= 13.25% 12 .19 $913,998.05
13.25% * Gross Coupon *= 13.50% 13 .15 $744,227.90
13.50% * Gross Coupon *= 13.75% 11 .11 $533,871.22
13.75% * Gross Coupon *= 14.00% 7 .06 $287,268.04
14.00% * Gross Coupon *= 14.25% 3 .04 $173,988.97
14.50% * Gross Coupon *= 14.75% 2 .02 $115,370.83
- -------------------------------------------------------------------
Total..... 5,663 100.00% $480,629,733.81
===================================================================
* = LESS THAN
<PAGE>
ORIGINAL MATURITY
- ------------------------------------------------------------------
Total
Original # % Current
Maturity Loan Pool Balance
170 * Original Maturity *= 180 16 .19 $927,610.08
290 * Original Maturity *= 300 1 .04 $194,674.67
320 * Original Maturity *= 330 1 .01 $42,240.65
350 * Original Maturity *= 360 5,645 99.76 $479,465,208.41
- ------------------------------------------------------------------
Total..... 5,663 100.00% $480,629,733.81
==================================================================
* = LESS THAN
REMAINING TERM
- -------------------------------------------------------------------
Total
# % Current
Remaining Term Loan Pool Balance
168 * Rem Term *= 180 16 .19 $927,610.08
288 * Rem Term *= 300 1 .04 $194,674.67
312 * Rem Term *= 324 1 .01 $42,240.65
326 * Rem Term *= 348 5 .07 $347,556.65
348 * Rem Term *= 360 5,640 99.69 $479,117,651.76
- -------------------------------------------------------------------
Total..... 5,663 100.00% $480,629,733.81
===================================================================
* = LESS THAN
LOAN AGE IN MONTHS
- -------------------------------------------------------------------
Total
# % Current
Age of Loan Loan Pool Balance
0 = Age 3,430 56.02 $269,239,345.45
0 * Age *= 12 2,231 43.95 $211,230,784.43
12 * Age *= 24 2 .03 $159,603.93
- -------------------------------------------------------------------
Total..... 5,663 100.00% $480,629,733.81
===================================================================
* = LESS THAN
ORIGINATION YEAR
- ------------------------------------------------------------------
Total
Year of # % Current
Origination Loan Pool Balance
1995 1 .02 $92,651.40
1996 38 .84 $4,018,746.27
1997 5,624 99.14 $476,518,336.14
- -------------------------------------------------------------------
Total..... 5,663 100.00% $480,629,733.81
===================================================================
NEXT PAYMENT DUE DATE
Percentage
of Cut-Off
Aggregate Date
Next Number of Unpaid Aggregate
Due Mortgage Principal Principal
Date Loans Balance Balance
07/01/97 4 $373,741.27 00.08
08/01/97 74 $7,371,826.95 01.53
09/01/97 478 $45,605,781.96 09.49
10/01/97 2950 $267,641,309.77 55.69
11/01/97 1224 $91,502,321.62 19.04
12/01/97 607 $44,570,642.24 09.27
01/01/98 325 $23,536,110.00 04.90
02/01/98 1 $28,000.00 00.01
- --------------------------------------------------------------------------
Total........ 5663 $480,629,733.81 100.00%
==========================================================================
COMBINED LTV RANGE
- -------------------------------------------------------------------
Total
C LTV # % Current
RANGE Loan Pool Balance
5.000 * LTV *= 10.000 1 .01 $27,976.42
10.000 * LTV *= 15.000 7 .06 $291,231.72
15.000 * LTV *= 20.000 16 .12 $576,549.19
20.000 * LTV *= 25.000 14 .10 $503,942.64
25.000 * LTV *= 30.000 31 .26 $1,239,454.84
30.000 * LTV *= 35.000 38 .42 $2,035,521.86
35.000 * LTV *= 40.000 60 .60 $2,864,954.24
40.000 * LTV *= 45.000 70 .79 $3,795,924.61
45.000 * LTV *= 50.000 109 1.36 $6,537,858.19
50.000 * LTV *= 55.000 136 1.84 $8,831,281.61
55.000 * LTV *= 60.000 198 2.81 $13,501,365.09
60.000 * LTV *= 65.000 337 5.00 $24,019,249.34
65.000 * LTV *= 70.000 520 8.29 $39,839,876.22
70.000 * LTV *= 75.000 679 11.71 $56,287,375.92
75.000 * LTV *= 80.000 1,638 30.68 $147,453,119.28
80.000 * LTV *= 85.000 1,096 19.82 $95,239,328.85
85.000 * LTV *= 90.000 668 15.32 $73,617,412.70
90.000 * LTV *= 95.000 43 .80 $3,830,544.02
95.000 * LTV *= 100.000 2 .03 $136,767.07
- -------------------------------------------------------------------
Total..... 5,663 100.00% $480,629,733.81
===================================================================
* = LESS THAN
<PAGE>
GROSS MARGIN
- ---------------------------------------------------------------------
Total
Gross # % Current
Margin Loan Pool Balance
2.50% * Gross Margin *= 2.75% 1 .05 $262,644.77
2.75% * Gross Margin *= 3.00% 2 .04 $205,364.40
3.25% * Gross Margin *= 3.50% 1 .04 $187,100.40
3.50% * Gross Margin *= 3.75% 1 .02 $73,827.86
3.75% * Gross Margin *= 4.00% 7 .20 $980,259.21
4.00% * Gross Margin *= 4.25% 7 .11 $530,140.22
4.25% * Gross Margin *= 4.50% 9 .19 $928,827.56
4.50% * Gross Margin *= 4.75% 17 .53 $2,554,883.33
4.75% * Gross Margin *= 5.00% 444 8.60 $41,327,279.03
5.00% * Gross Margin *= 5.25% 547 9.97 $47,924,422.69
5.25% * Gross Margin *= 5.50% 578 9.63 $46,296,323.40
5.50% * Gross Margin *= 5.75% 356 6.72 $32,283,775.73
5.75% * Gross Margin *= 6.00% 589 11.16 $53,650,957.97
6.00% * Gross Margin *= 7.00% 2,670 44.70 $214,827,778.68
7.00% * Gross Margin *= 8.00% 347 6.61 $31,792,433.51
8.00% * Gross Margin *= 9.00% 68 1.14 $5,474,958.70
9.00% * Gross Margin *= 10.00% 17 .25 $1,199,967.38
10.00% * Gross Margin *= 11.00% 2 .03 $128,788.97
- ----------------------------------------------------------------------
Total..... 5,663 100.00% $480,629,733.81
======================================================================
* = LESS THAN
Gross Life Cap
- ----------------------------------------------------------------------
Total
Gross # % Current
Life Cap Loan Pool Balance
11.25% * Gross Life Cap *= 11.50 1 .05 $262,644.77
12.25% * Gross Life Cap *= 12.50 1 .02 $112,400.00
12.50% * Gross Life Cap *= 12.75 1 .03 $157,364.40
12.75% * Gross Life Cap *= 13.00 2 .04 $214,360.66
13.00% * Gross Life Cap *= 13.25 27 .75 $3,616,704.90
13.25% * Gross Life Cap *= 13.50 63 1.73 $8,310,704.21
13.50% * Gross Life Cap *= 13.75 37 .89 $4,270,774.13
13.75% * Gross Life Cap *= 14.00 73 1.98 $9,505,708.28
14.00% * Gross Life Cap *= 14.25 52 1.14 $5,472,348.43
14.25% * Gross Life Cap *= 14.50 165 3.08 $14,807,639.62
14.50% * Gross Life Cap *= 14.75 126 2.26 $10,850,523.08
14.75% * Gross Life Cap *= 15.00 230 4.47 $21,491,228.79
15.00% * Gross Life Cap *= 15.25 163 2.95 $14,180,609.14
15.25% * Gross Life Cap *= 15.50 308 5.54 $26,618,498.38
15.50% * Gross Life Cap *= 15.75 264 5.18 $24,919,135.47
15.75% * Gross Life Cap *= 16.00 561 11.03 $52,995,006.17
16.00% * Gross Life Cap *= 16.25 531 9.18 $44,137,648.88
16.25% * Gross Life Cap *= 16.50 628 10.11 $48,606,591.16
16.50% * Gross Life Cap *= 16.75 406 7.16 $34,407,608.09
16.75% * Gross Life Cap *= 17.00 477 8.04 $38,666,050.14
17.00% * Gross Life Cap *= 17.25 418 6.55 $31,493,333.20
17.25% * Gross Life Cap *= 17.50 359 5.52 $26,536,659.32
17.50% * Gross Life Cap *= 17.75 220 3.54 $17,033,208.38
17.75% * Gross Life Cap *= 18.00 194 3.36 $16,134,024.96
18.00% * Gross Life Cap *= 18.25 114 1.72 $8,286,623.06
18.25% * Gross Life Cap *= 18.50 74 1.06 $5,103,854.33
18.50% * Gross Life Cap *= 18.75 50 .79 $3,794,094.06
18.75% * Gross Life Cap *= 19.00 37 .58 $2,782,919.34
19.00% * Gross Life Cap *= 19.25 21 .40 $1,935,946.89
19.25% * Gross Life Cap *= 19.50 22 .33 $1,573,014.59
19.50% * Gross Life Cap *= 19.75 15 .18 $888,709.89
19.75% * Gross Life Cap *= 20.00 11 .16 $765,757.30
20.00% * Gross Life Cap *= 20.25 4 .05 $245,988.97
20.25% * Gross Life Cap *= 20.50 4 .04 $210,214.47
20.50% * Gross Life Cap *= 20.75 3 .04 $204,236.35
20.75% * Gross Life Cap *= 21.00 1 .01 $37,600.00
- ---------------------------------------------------------------------
Total..... 5,663 100.00% $480,629,733.81
=====================================================================
* = LESS THAN
<PAGE>
Gross Life Floor
- ---------------------------------------------------------------------
Total
Gross # % Current
Life Floor Loan Pool Balance
2.50% * Life Floor *= 3.00% 1 .02 $80,692.03
5.25% * Life Floor *= 5.50% 1 .05 $262,644.77
5.50% * Life Floor *= 5.75% 1 .03 $165,750.00
5.75% * Life Floor *= 6.00% 2 .04 $169,972.11
6.00% * Life Floor *= 6.25% 1 .02 $98,940.03
6.25% * Life Floor *= 6.50% 1 .02 $112,400.00
6.50% * Life Floor *= 6.75% 1 .03 $157,364.40
6.75% * Life Floor *= 7.00% 3 .09 $449,245.07
7.00% * Life Floor *= 7.25% 27 .75 $3,616,704.90
7.25% * Life Floor *= 7.50% 64 1.74 $8,377,656.74
7.50% * Life Floor *= 7.75% 43 1.03 $4,952,946.94
7.75% * Life Floor *= 8.00% 79 2.10 $10,074,747.25
8.00% * Life Floor *= 8.25% 57 1.20 $5,784,182.74
8.25% * Life Floor *= 8.50% 176 3.37 $16,180,235.67
8.50% * Life Floor *= 8.75% 138 2.73 $13,124,780.73
8.75% * Life Floor *= 9.00% 248 4.96 $23,861,753.78
9.00% * Life Floor *= 9.25% 191 3.72 $17,863,100.08
9.25% * Life Floor *= 9.50% 336 6.19 $29,729,031.95
9.50% * Life Floor *= 9.75% 313 6.22 $29,882,511.07
9.75% * Life Floor *= 10.00% 612 12.13 $58,277,632.25
10.00% * Life Floor *= 10.25% 577 10.15 $48,801,998.94
10.25% * Life Floor *= 10.50% 645 10.39 $49,919,182.00
10.50% * Life Floor *= 10.75% 388 6.50 $31,227,384.49
10.75% * Life Floor *= 11.00% 462 7.65 $36,783,463.39
11.00% * Life Floor *= 11.25% 376 5.44 $26,142,423.54
11.25% * Life Floor *= 11.50% 324 4.63 $22,234,827.76
11.50% * Life Floor *= 11.75% 190 2.97 $14,293,053.21
11.75% * Life Floor *= 12.00% 125 1.85 $8,912,959.89
12.00% * Life Floor *= 12.25% 94 1.31 $6,278,565.06
12.25% * Life Floor *= 12.50% 70 1.05 $5,027,497.85
12.50% * Life Floor *= 12.75% 37 .55 $2,622,386.09
12.75% * Life Floor *= 13.00% 32 .50 $2,394,974.07
13.00% * Life Floor *= 13.25% 12 .19 $913,998.05
13.25% * Life Floor *= 13.50% 13 .15 $744,227.90
13.50% * Life Floor *= 13.75% 11 .11 $533,871.22
13.75% * Life Floor *= 14.00% 7 .06 $287,268.04
14.00% * Life Floor *= 14.25% 3 .04 $173,988.97
14.50% * Life Floor *= 14.75% 2 .02 $115,370.83
- ----------------------------------------------------------------------
Total..... 5,663 100.00% $480,629,733.81
=====================================================================
* = LESS THAN
<PAGE>
NEXT INTEREST ROLL DATE
- -----------------------------------------------------------------
Next
Interest Total
Adjustment # % Current
Date Loans Pool Balance
10/01/97 26 .61 $2,926,914.87
10/04/97 2 .03 $142,570.34
10/11/97 1 .00 $23,775.64
10/15/97 2 .03 $150,459.13
10/18/97 1 .01 $66,114.23
10/21/97 2 .06 $272,198.55
10/23/97 1 .02 $110,297.76
10/25/97 1 .01 $28,069.64
10/28/97 3 .04 $171,058.77
10/29/97 3 .04 $199,742.42
10/30/97 2 .05 $234,174.86
11/01/97 58 1.33 $6,403,304.17
11/02/97 2 .02 $94,527.11
11/05/97 2 .05 $253,439.58
11/06/97 1 .01 $34,983.25
11/07/97 1 .02 $87,487.28
11/09/97 1 .02 $79,123.31
11/12/97 2 .04 $213,558.25
11/13/97 3 .05 $231,725.07
11/14/97 2 .02 $106,919.18
11/16/97 3 .08 $387,667.83
11/19/97 2 .07 $322,655.29
11/20/97 2 .02 $105,067.16
11/21/97 6 .08 $381,122.95
11/23/97 2 .03 $130,179.62
11/25/97 1 .01 $34,377.01
11/27/97 5 .08 $365,646.66
11/28/97 5 .08 $380,919.82
11/29/97 3 .03 $159,147.97
11/30/97 1 .01 $55,122.32
12/01/97 93 2.04 $9,824,106.58
12/02/97 4 .06 $294,835.48
12/03/97 7 .12 $567,135.73
12/04/97 5 .13 $609,927.63
12/05/97 2 .02 $91,647.50
12/06/97 4 .08 $398,864.67
12/09/97 3 .04 $196,495.01
12/10/97 4 .09 $433,863.11
12/11/97 7 .13 $615,590.56
12/12/97 3 .07 $349,573.54
12/13/97 3 .10 $460,626.80
12/15/97 3 .04 $182,209.88
12/16/97 2 .02 $78,159.96
12/17/97 1 .00 $14,981.63
12/19/97 2 .03 $137,523.30
12/20/97 4 .04 $204,489.67
12/23/97 3 .05 $238,849.52
12/25/97 3 .09 $438,028.31
12/26/97 1 .03 $149,767.58
12/27/97 1 .01 $53,582.25
12/30/97 8 .10 $495,718.05
01/01/98 335 6.65 $31,938,466.78
01/02/98 1 .04 $174,166.61
01/03/98 1 .02 $81,219.40
01/07/98 5 .06 $302,677.45
01/08/98 1 .01 $32,710.25
01/09/98 1 .05 $246,648.72
01/10/98 2 .03 $121,055.25
01/11/98 1 .02 $74,800.00
01/14/98 1 .02 $111,950.34
01/15/98 2 .02 $103,568.73
01/17/98 1 .01 $41,650.00
<PAGE>
NEXT INTEREST ROLL DATE
- -----------------------------------------------------------
Next
Interest Total
Adjustment # % Current
Date Loans Pool Balance
01/18/98 2 .03 $138,871.07
01/21/98 2 .03 $159,474.28
01/22/98 1 .03 $129,600.00
01/23/98 2 .03 $152,690.77
01/25/98 2 .07 $323,231.57
01/28/98 3 .03 $160,167.29
01/29/98 1 .02 $102,000.00
02/01/98 498 8.91 $42,843,646.69
02/02/98 2 .05 $228,750.00
02/04/98 6 .12 $567,809.77
02/05/98 1 .02 $96,800.00
02/06/98 1 .02 $99,200.00
02/07/98 1 .00 $22,100.00
02/10/98 2 .03 $148,745.34
02/11/98 1 .02 $74,800.00
02/15/98 2 .05 $250,000.00
02/26/98 1 .02 $95,855.17
03/01/98 411 7.57 $36,400,977.27
03/05/98 3 .06 $287,992.95
03/07/98 1 .02 $98,767.74
03/10/98 1 .02 $102,646.14
03/15/98 2 .04 $192,100.00
03/24/98 1 .03 $154,273.56
03/27/98 1 .01 $25,165.20
04/01/98 201 3.73 $17,907,332.94
05/01/98 59 1.56 $7,488,176.28
05/02/98 1 .02 $107,864.42
06/01/98 13 .30 $1,445,707.52
06/02/98 1 .05 $247,926.63
06/06/98 1 .04 $199,287.61
06/13/98 1 .02 $93,902.95
06/17/98 1 .03 $164,818.68
07/01/98 14 .34 $1,625,076.19
07/07/98 1 .02 $76,462.38
07/18/98 1 .02 $75,465.89
07/22/98 1 .02 $110,447.90
07/25/98 1 .01 $28,036.78
07/28/98 1 .01 $65,000.00
07/31/98 1 .04 $185,127.66
08/01/98 16 .33 $1,598,580.21
08/05/98 1 .02 $108,800.00
08/11/98 1 .01 $66,000.00
09/01/98 12 .17 $809,363.83
10/01/98 3 .04 $176,822.00
11/01/98 1 .02 $82,856.81
11/20/98 1 .04 $194,597.26
12/01/98 1 .04 $176,899.75
01/01/99 1 .01 $52,786.26
02/01/99 6 .11 $526,161.11
02/05/99 1 .02 $83,372.96
02/12/99 2 .03 $157,420.29
<PAGE>
NEXT INTEREST ROLL DATE
- ---------------------------------------------------------------
Next
Interest Total
Adjustment # % Current
Date Loans Pool Balance
02/20/99 1 .02 $72,257.45
03/01/99 5 .10 $465,395.12
03/07/99 1 .01 $52,412.60
03/12/99 1 .01 $71,106.98
03/28/99 1 .03 $157,044.81
04/01/99 24 .51 $2,470,342.99
04/04/99 1 .03 $130,268.34
04/15/99 2 .02 $111,803.02
04/18/99 1 .02 $115,087.17
04/22/99 1 .03 $121,364.71
04/28/99 2 .02 $96,597.31
04/30/99 1 .03 $125,908.75
05/01/99 85 1.72 $8,280,460.75
05/05/99 3 .09 $455,214.67
05/06/99 2 .03 $165,686.41
05/09/99 2 .02 $100,469.24
05/15/99 1 .01 $57,538.89
05/16/99 1 .02 $93,634.19
05/17/99 1 .02 $99,873.10
05/19/99 2 .06 $298,678.00
05/21/99 2 .02 $86,065.29
05/22/99 1 .03 $125,908.75
05/23/99 2 .03 $142,491.91
05/27/99 4 .09 $411,894.54
05/30/99 1 .03 $127,890.75
06/01/99 201 4.30 $20,644,135.05
06/02/99 2 .04 $193,850.32
06/03/99 3 .04 $199,119.15
06/04/99 4 .08 $367,427.20
06/05/99 2 .05 $228,088.16
06/09/99 5 .06 $289,541.07
06/10/99 4 .06 $276,303.22
06/11/99 2 .04 $179,840.43
06/12/99 2 .03 $137,292.49
06/13/99 3 .09 $423,648.23
06/15/99 1 .01 $66,965.84
06/16/99 6 .11 $525,454.39
06/18/99 5 .11 $517,537.80
06/19/99 3 .03 $152,448.49
06/23/99 1 .04 $206,843.43
06/24/99 2 .06 $278,269.48
06/25/99 3 .07 $359,329.32
06/30/99 2 .03 $159,533.17
07/01/99 368 7.43 $35,723,208.85
07/02/99 7 .15 $705,085.40
07/03/99 4 .10 $460,491.20
07/04/99 1 .01 $29,500.00
07/07/99 15 .20 $976,358.95
07/08/99 5 .11 $539,153.88
07/09/99 7 .11 $548,373.78
07/10/99 1 .02 $112,500.00
<PAGE>
NEXT INTEREST ROLL DATE
- --------------------------------------------------------
Next
Interest Total
Adjustment # % Current
Date Loans Pool Balance
07/11/99 1 .02 $111,964.20
07/14/99 6 .20 $973,217.72
07/15/99 9 .15 $727,188.53
07/16/99 2 .03 $163,075.37
07/17/99 3 .05 $233,916.61
07/18/99 6 .08 $392,302.46
07/21/99 5 .07 $315,664.15
07/22/99 2 .03 $123,698.93
07/23/99 3 .08 $387,413.91
07/24/99 2 .03 $155,900.00
07/25/99 6 .10 $473,149.84
07/28/99 4 .05 $261,150.00
07/29/99 4 .15 $723,062.31
07/30/99 1 .01 $61,168.27
07/31/99 1 .01 $68,000.00
08/01/99 420 8.28 $39,796,004.87
08/04/99 8 .16 $755,400.00
08/05/99 7 .14 $663,450.00
08/06/99 4 .04 $182,650.00
08/08/99 3 .05 $220,400.00
08/11/99 3 .03 $165,450.00
08/15/99 4 .06 $300,678.00
09/01/99 113 1.95 $9,373,860.00
09/15/99 1 .02 $80,000.00
10/01/99 30 .42 $2,039,690.00
01/01/00 1 .06 $303,128.28
02/01/00 1 .02 $92,520.45
03/01/00 4 .08 $392,075.71
03/05/00 1 .03 $125,434.99
03/15/00 1 .02 $111,900.92
03/20/00 2 .04 $197,508.68
03/25/00 1 .01 $70,266.12
03/30/00 1 .01 $63,629.58
04/01/00 4 .08 $360,565.80
04/25/00 1 .01 $67,874.87
04/29/00 1 .01 $38,189.05
05/01/00 3 .09 $438,439.02
05/15/00 1 .02 $83,587.98
05/19/00 1 .02 $99,892.06
06/01/00 24 .41 $1,968,114.56
06/11/00 1 .02 $111,109.29
06/16/00 1 .01 $41,957.28
06/17/00 1 .02 $84,936.63
06/18/00 2 .03 $139,958.36
06/30/00 1 .03 $130,401.28
07/01/00 35 .73 $3,520,947.09
07/07/00 3 .07 $348,820.39
07/10/00 1 .02 $82,167.68
07/14/00 1 .01 $64,473.81
07/16/00 1 .02 $86,964.29
07/18/00 1 .02 $104,212.01
08/01/00 23 .51 $2,436,213.15
08/06/00 1 .01 $42,700.00
09/01/00 5 .10 $495,965.00
04/01/01 14 .17 $840,693.89
04/15/01 1 .02 $87,842.01
05/01/01 15 .20 $945,654.10
06/01/01 29 .42 $2,001,287.56
07/01/01 309 4.52 $21,734,565.90
07/15/01 2 .03 $150,000.00
08/01/01 723 10.81 $51,949,443.52
09/01/01 740 10.90 $52,405,832.84
09/15/01 4 .05 $259,300.00
09/25/01 1 .06 $299,500.00
10/01/01 294 4.25 $20,440,310.00
- ----------------------------------------------
Total..... 5,663 100.00 $480,629,733.81
===============================================
<PAGE>
PERIODIC INTEREST CAP
- ----------------------------------------------------------------------
Periodic Total
Interest # % Current
Cap Loan Pool Balance
1.000% 4,928 83.28 $400,279,503.50
1.250% 1 .06 $303,128.28
1.500% 333 7.41 $35,604,986.78
2.000% 401 9.25 $44,442,115.25
- ---------------------------------------------------------------------
Total..... 5,663 100.00% $480,629,733.81
=====================================================================
ORIGINAL MORTGAGE AMOUNT
- ------------------------------------------------------------------
Total
Original # % Current
Mortgage Amt. Loan Pool Balance
0 * Balance *= 25,000 108 .49 $2,339,323.88
25,000 * Balance *= 50,000 1,295 10.57 $50,804,387.16
50,000 * Balance *= 75,000 1,694 21.83 $104,908,361.52
75,000 * Balance *= 100,000 1,083 19.52 $93,818,611.88
100,000 * Balance *= 150,000 938 23.59 $113,359,949.81
150,000 * Balance *= 207,000 334 12.04 $57,850,421.90
207,000 * Balance *= 250,000 107 5.07 $24,362,211.92
250,000 * Balance *= 300,000 52 2.94 $14,137,975.73
300,000 * Balance *= 350,000 32 2.16 $10,390,328.13
350,000 * Balance *= 400,000 7 .54 $2,602,341.80
400,000 * Balance *= 450,000 7 .61 $2,935,379.72
450,000 * Balance *= 500,000 4 .40 $1,925,463.31
500,000 * Balance *= 600,000 1 .12 $554,977.05
600,000 * Balance *= 750,000 1 .13 $640,000.00
- ------------------------------------------------------------------
Total..... 5,663100.00 $480,629,733.81
==================================================================
* = LESS THAN
CURRENT MORTGAGE AMOUNT
- ------------------------------------------------------------------
Total
Current # % Current
Mortgage Amt. Loan Pool Balance
0 * Balance *= 25,000 109 .49 $2,359,323.88
25,000 * Balance *= 50,000 1,297 10.60 $50,930,724.61
50,000 * Balance *= 75,000 1,694 21.84 $104,983,294.13
75,000 * Balance *= 100,000 1,082 19.52 $93,795,538.26
100,000 * Balance *= 150,000 937 23.58 $113,311,309.00
150,000 * Balance *= 200,000 313 11.16 $53,627,637.83
200,000 * Balance *= 250,000 129 6.02 $28,933,401.13
250,000 * Balance *= 300,000 50 2.84 $13,640,014.96
300,000 * Balance *= 350,000 32 2.16 $10,390,328.13
350,000 * Balance *= 400,000 7 .54 $2,602,341.80
400,000 * Balance *= 450,000 7 .61 $2,935,379.72
450,000 * Balance *= 500,000 4 .40 $1,925,463.31
500,000 * Balance *= 600,000 1 .12 $554,977.05
600,000 * Balance *= 750,000 1 .13 $640,000.00
- ------------------------------------------------------------------
Total..... 5,663100.00 $480,629,733.81
==================================================================
* = LESS THAN
GEOGRAPHIC DISTRIBUTION
- -----------------------------------------------
Total
# % Current
State Loans Pool Balance
AK 8 .17 $839,050
AR 6 .07 $320,456
AZ 89 1.51 $7,236,171
CA 236 6.66 $32,024,839
CO 163 3.58 $17,224,648
CT 69 1.70 $8,160,850
DC 36 .76 $3,672,876
DE 14 .28 $1,333,297
FL 219 3.61 $17,353,284
GA 202 3.74 $17,962,293
IA 29 .33 $1,607,825
ID 128 1.89 $9,072,808
IL 401 8.10 $38,932,783
IN 230 2.91 $13,965,957
KS 66 .79 $3,796,776
KY 114 1.41 $6,786,561
LA 63 .88 $4,238,393
MA 179 4.10 $19,702,073
MD 140 3.23 $15,532,029
ME 65 .94 $4,495,107
MI 467 7.00 $33,626,860
MN 120 1.90 $9,124,483
MO 182 2.42 $11,607,683
MS 21 .23 $1,113,688
MT 13 .18 $843,108
NC 131 2.01 $9,653,254
ND 3 .03 $145,524
NE 19 .19 $931,693
NH 50 .75 $3,595,667
NJ 127 2.79 $13,392,716
NM 65 1.03 $4,969,678
NV 29 .68 $3,281,915
NY 193 3.80 $18,283,887
OH 351 5.26 $25,284,825
OK 40 .58 $2,784,270
OR 80 1.46 $7,038,877
PA 290 4.16 $20,012,522
RI 26 .48 $2,298,171
SC 56 .88 $4,252,159
SD 3 .05 $247,514
TN 118 1.92 $9,244,107
TX 116 2.25 $10,818,536
UT 109 2.21 $10,639,689
VA 86 2.00 $9,610,532
VT 24 .40 $1,915,659
WA 306 5.99 $28,766,353
WI 153 2.27 $10,931,212
WV 18 .23 $1,083,138
WY 10 .18 $873,937
- -----------------------------------------
Total.. 5,663 100.00 $480,629,734
=========================================
PROPERTY-TYPE
- -----------------------------------------------------------------
Total
# % Current
Loan Pool Balance
Manufactured Housing 293 3.84 $18,454,428.42
Townhouses 44 .77 $3,720,329.52
Condominiums 77 1.25 $5,986,697.75
Single Family Detached 4,885 85.98 $413,248,173.87
PUD Detached 59 1.92 $9,231,959.38
PUD Attached 8 .19 $903,485.55
2-4 Family 293 5.94 $28,552,129.33
Apartment 5+ Units 4 .11 $532,529.99
- ------------------------------------------------------------------
Total..... 5,663 100.00% $480,629,733.81
==================================================================
OCCUPANCY
- -----------------------------------------------------------------
Total
# % Current
Loan Pool Balance
Owner Occ. 5,423 96.60 $464,269,909.71
Investor 212 2.94 $14,144,208.49
Vacation/Second Home 28 .46 $2,215,615.61
- ------------------------------------------------------------------
Total..... 5,663 100.00% $480,629,733.81
==================================================================
DOCUMENTATION LEVEL
- -----------------------------------------------------------------
Total
# % Current
Loan Pool Balance
Full Documentation 5,663 100.00 $480,629,733.81
- ------------------------------------------------------------------
Total..... 5,663 100.00% $480,629,733.81
==================================================================
LOAN-PURPOSE
- -----------------------------------------------------------------
Total
# % Current
Loan Pool Balance
Purchase 706 16.54 $79,485,302.74
Refinance/No ETO 4,210 75.01 $360,544,394.69
Refinance/ETO 362 4.02 $19,343,042.26
Debt Consolidation 385 4.42 $21,256,994.12
- ------------------------------------------------------------------
Total..... 5,663 100.00% $480,629,733.81
==================================================================
<PAGE>
CERTAIN CHARACTERISTICS OF POOL III
Set forth below is a description of certain characteristics of Pool III
and the Initial Pool III Mortgage Loans. Certain of the percentage columns
may not sum to 100.00% due to rounding.
Number Current
Current Balance of Loans Balance %
0.01- 5,000.00 562 2,163,604.53 1.00
5,000.01- 10,000.00 2,850 21,671,107.22 10.03
10,000.01- 15,000.00 2,491 30,999,890.48 14.35
15,000.01- 20,000.00 1,845 32,219,824.87 14.92
20,000.01- 25,000.00 1,841 43,143,473.49 19.97
25,000.01- 30,000.00 798 21,998,665.32 10.18
30,000.01- 35,000.00 647 21,471,543.15 9.94
35,000.01- 40,000.00 421 15,949,341.81 7.38
40,000.01- 45,000.00 209 8,761,190.59 4.06
45,000.01- 50,000.00 332 16,404,346.18 7.59
50,000.01- 55,000.00 14 716,734.57 0.33
55,000.01- 60,000.00 7 410,990.44 0.19
85,000.01- 90,000.00 1 88,144.84 0.04
Total: 12,018 215,998,857.49 100.00
Min: 1,119.71 Max: 88,144.84 Avg: 17,972.95
Number Current
Coupon of Loans Balance %
7.501- 8.000 4 34,385.40 0.02
8.501- 9.000 7 154,346.69 0.07
9.001- 9.500 1 8,402.79 0.00
9.501-10.000 1,335 26,843,305.02 12.43
10.001-10.500 436 8,439,008.94 3.91
10.501-11.000 629 11,499,167.39 5.32
11.001-11.500 243 5,400,499.69 2.50
11.501-12.000 939 16,322,732.09 7.56
12.001-12.500 983 14,368,762.84 6.65
12.501-13.000 2,059 35,101,704.35 16.25
13.001-13.500 722 11,492,496.52 5.32
13.501-14.000 1,984 37,888,543.00 17.54
14.001-14.500 585 10,948,113.30 5.07
14.501-15.000 855 19,259,060.99 8.92
15.001+ 1,236 18,238,328.48 8.44
Total: 12,018 215,998,857.49 100.00
Min: 7.990 Max: 16.990 WA: 12.921
Number Current
Stated Remaining Term of Loans Balance %
1- 60 764 4,885,450.38 2.26
61-120 3,090 29,713,599.96 13.76
121-180 3,168 50,794,389.68 23.52
181-240 2,947 68,222,078.30 31.58
241-300 2,049 62,383,339.17 28.88
Total: 12,018 215,998,857.49 100.00
MIN: 16 Max: 300 WA: 220.24
Wtd Avg FICO: 633
(approximate wtd avg
credit score of those
loans for which a
credit score was
available)
Number Current
Seasoning of Loans Balance %
0 5,801 104,233,050.46 48.26
1- 3 5,650 102,637,345.08 47.52
4- 6 397 6,592,381.70 3.05
7- 9 102 1,698,696.08 0.79
10-12 30 428,228.28 0.20
13+ 38 409,155.89 0.19
Total: 12,018 215,998,857.49 100.00
MIN: 0 Max: 270 WA: 1.10
Number Current
Original Term of Loans Balance %
1- 60 758 4,776,307.40 2.21
61-120 3,093 29,723,625.28 13.76
121-180 3,169 50,806,416.68 23.52
181-240 2,947 68,222,078.30 31.58
241-300 2,051 62,470,429.83 28.92
Total: 12,018 215,998,857.49 100.00
MIN: 18 Max: 300 WA: 221.35
Number Current
Property Type of Loans Balance %
SF Detached 11,712 208,289,206.89 96.43
Multi Family 108 3,111,552.42 1.44
Other 119 2,625,161.01 1.22
2-4 Family 79 1,972,937.17 0.91
Total: 12,018 215,998,857.49 100.00
Number Current
Product Type of Loans Balance %
FHA 2,029 33,990,294.49 15.74
Conventional 9,989 182,008,563.00 84.26
Total: 12,018 215,998,857.49 100.00
Number Current
Lien Position of Loans Balance %
1 1,075 15,148,681.45 7.01
2 9,661 179,636,163.39 83.17
3 1,282 21,214,012.65 9.82
Total: 12,018 215,998,857.49 100.00
Number Current
Occupancy Status of Loans Balance %
Primary Home 11,942 214,045,266.15 99.10
Investment 70 1,807,294.21 0.84
Second Home 6 146,297.13 0.07
Total: 12,018 215,998,857.49 100.00
Number Current
State of Loans Balance %
CA 2,369 60,032,771.53 27.79
IL 963 16,663,855.15 7.71
TX 911 12,359,669.69 5.72
FL 558 11,248,068.35 5.21
NY 451 9,421,414.63 4.36
NV 402 9,035,518.88 4.18
AZ 445 8,863,606.99 4.10
GA 436 8,292,556.89 3.84
NJ 430 6,698,063.52 3.10
PA 491 6,427,144.38 2.98
OH 483 6,232,047.12 2.89
MO 320 4,589,643.04 2.12
WA 278 4,567,339.12 2.11
AR 311 3,773,112.25 1.75
TN 228 3,692,330.97 1.71
IN 203 3,425,685.25 1.59
LA 253 3,247,164.86 1.50
CO 183 2,996,486.05 1.39
NC 168 2,773,080.32 1.28
MI 209 2,737,264.27 1.27
MN 142 2,479,375.52 1.15
MS 173 2,340,352.81 1.08
OK 211 2,308,786.03 1.07
MD 164 2,030,666.35 0.94
OR 104 1,976,828.88 0.92
KS 150 1,958,063.24 0.91
WI 126 1,786,905.72 0.83
UT 72 1,541,089.32 0.71
SC 79 1,537,968.04 0.71
VA 111 1,520,780.82 0.70
CT 69 1,441,151.38 0.67
ID 66 1,360,781.85 0.63
MA 68 1,238,587.31 0.57
NM 66 1,047,358.87 0.48
IA 63 858,976.24 0.40
KY 43 476,568.37 0.22
WV 41 441,864.66 0.20
NE 33 422,789.60 0.20
NH 16 285,940.98 0.13
RI 14 263,258.81 0.12
DC 18 251,573.34 0.12
AK 12 246,277.66 0.11
WY 22 234,173.84 0.11
ME 14 224,625.08 0.10
DE 18 196,360.36 0.09
MT 14 167,897.38 0.08
SD 9 97,958.14 0.05
HI 2 84,971.50 0.04
AL 3 51,055.69 0.02
PR 1 35,873.13 0.02
ND 2 13,173.31 0.01
Total: 12,018 215,998,857.49 100.00
Mon Delq= Number Current
CutOffDt - Due Date of Loans Balance %
0 11,976 215,360,716.33 99.70
1 42 638,141.16 0.30
Total: 12,018 215,998,857.49 100.00
<PAGE>
CERTAIN CHARACTERISTICS OF POOL IV
Set forth below is a description of certain characteristics of Pool IV
and the Initial Pool IV Mortgage Loans. Certain of the percentage columns
may not sum to 100.00% due to rounding.
<PAGE>
- --------------------------------------------------------------------------------
- MONEY STORE 1997 C (MUL)
- Cut Off Date of Tape is 08/31/97
- Multi-Family Collateral Fixed and Arms
- $18,793,612.27
- --------------------------------------------------------------------------------
Number of Mortgage Loans: 98
Lien Status: 1st Lien Loans
Index: Various * Detailed Below
Aggregate Unpaid Principal Balance: $18,793,612.27
Aggregate Original Principal Balance: $18,811,385.00
- --------------------------------------------------------------------------------
Weighted Average Coupon (Gross): 11.529%
Gross Coupon Range: 9.250% - 14.990%
- --------------------------------------------------------------------------------
Average Unpaid Principal Balance: $191,771.55
Average Original Principal Balance: $191,952.91
Maximum Unpaid Principal Balance: $900,000.00
Minimum Unpaid Principal Balance: $29,500.00
Maximum Original Principal Balance: $900,000.00
Minimum Original Principal Balance: $29,500.00
Weighted Avg. Stated Rem. Term (PTD to Mat Date): 343.146
Stated Rem Term Range: 120.000 - 360.000
Weighted Average Age (First Pay thru Paid Thru): 1.406
Age Range: 0.000 - 13.000
Weighted Average Original Term: 344.552
Original Term Range: 120.000 - 360.000
Weighted Average Combined LTV: 63.625
Combined LTV Range: 20.010% - 70.180%
Weighted Average FICO Score: 674.481 *
(Excluding 18 loans)
MAX ZIP CODE CONCENTRATION 4.789% ZIP CODE 30087 STATE GA
EARLIEST FIRST PAYMENT DATE: 08/01/96
LATEST MATURITY DATE: 09/01/27
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
LOAN TYPE
- ---------------------------------------------------------------------------------------------------------------------------------
WA WA
WA WA WA WA PER MONTH WA Total
# % Rem WA Orig LIFE GROSS INT TO INT LIFE Current
Loan Type Loan Pool WAC Term Age LTV CAP MARGIN CAP ROLL FLOOR Balance
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
2/28 6M LIBOR 1 .39 11.500 359.00 1.00 65.00 17.50 5.500 1.000 23.00 11.50 $73,426.53
3/27 6M LIBOR 1 .21 12.700 359.00 1.00 65.00 18.70 7.500 1.000 35.00 12.70 $38,990.46
6 MONTH LIBOR 18 19.68 10.579 357.47 2.53 62.80 16.27 5.254 1.000 4.56 10.27 $3,697,697.64
FIXED RATE 78 79.73 11.761 339.49 1.13 63.82 .00 .000 .000 .00 .00 $14,983,497.64
- ---------------------------------------------------------------------------------------------------------------------------------
Total..... 98 100.00% 11.529 343.15 1.41 63.62 3.31 1.071 .203 1.06 2.09 $18,793,612.27
=================================================================================================================================
</TABLE>
GROSS COUPON
- -------------------------------------------------------------------
Total
Gross # % Current
Coupon Loan Pool Balance
9.00% * Gross Coupon *= 9.25% 1 1.89 $355,112.41
9.25% * Gross Coupon *= 9.50% 2 1.62 $304,062.78
9.75% * Gross Coupon *= 10.00% 2 3.82 $718,322.56
10.00% * Gross Coupon *= 10.25% 2 1.05 $197,600.60
10.25% * Gross Coupon *= 10.50% 6 5.42 $1,018,483.09
10.50% * Gross Coupon *= 10.75% 3 1.75 $328,543.79
10.75% * Gross Coupon *= 11.00% 14 19.40 $3,646,518.61
11.00% * Gross Coupon *= 11.25% 7 7.24 $1,360,316.24
11.25% * Gross Coupon *= 11.50% 14 13.06 $2,455,229.29
11.50% * Gross Coupon *= 11.75% 17 17.40 $3,270,638.10
11.75% * Gross Coupon *= 12.00% 2 2.14 $402,591.48
12.00% * Gross Coupon *= 12.25% 3 2.68 $502,865.36
12.25% * Gross Coupon *= 12.50% 4 2.76 $518,483.48
12.50% * Gross Coupon *= 12.75% 7 5.72 $1,075,802.13
12.75% * Gross Coupon *= 13.00% 7 4.94 $928,203.79
13.00% * Gross Coupon *= 13.25% 2 7.21 $1,355,000.00
13.25% * Gross Coupon *= 13.50% 3 1.44 $270,338.56
13.50% * Gross Coupon *= 13.75% 1 .21 $40,000.00
14.75% * Gross Coupon *= 15.00% 1 .24 $45,500.00
- -------------------------------------------------------------------
Total..... 98 100.00% $18,793,612.27
===================================================================
* = LESS THAN
ORIGINAL MATURITY
- ------------------------------------------------------------------
Total
Original # % Current
Maturity Loan Pool Balance
110 * Original Maturity *= 120 1 .16 $29,500.00
170 * Original Maturity *= 180 15 8.37 $1,573,610.97
350 * Original Maturity *= 360 82 91.47 $17,190,501.30
- -------------------------------------------------------------------
Total..... 98 100.00% $18,793,612.27
===================================================================
* = LESS THAN
REMAINING TERM
- -------------------------------------------------------------------
Total
# % Current
Remaining Term Loan Pool Balance
108 * Rem Term *= 120 1 .16 $29,500.00
168 * Rem Term *= 180 15 8.37 $1,573,610.97
336 * Rem Term *= 348 1 .50 $93,405.45
348 * Rem Term *= 360 81 90.97 $17,097,095.85
- -------------------------------------------------------------------
Total..... 98 100.00% $18,793,612.27
===================================================================
* = LESS THAN
<PAGE>
LOAN AGE IN MONTHS
- -------------------------------------------------------------------
Total
# % Current
Age of Loan Loan Pool Balance
0 = Age 41 39.53 $7,428,539.68
0 * Age *= 12 56 59.98 $11,271,667.14
12 * Age *= 24 1 .50 $93,405.45
- -------------------------------------------------------------------
Total..... 98 100.00% $18,793,612.27
===================================================================
* = LESS THAN
ORIGINATION YEAR
- ------------------------------------------------------------------
Total
Year of # % Current
Origination Loan Pool Balance
1996 4 4.10 $770,892.92
1997 94 95.90 $18,022,719.35
- -------------------------------------------------------------------
Total..... 98 100.00% $18,793,612.27
===================================================================
NEXT PAYMENT DUE DATE
Percentage
of Cut-Off
Aggregate Date
Next Number of Unpaid Aggregate
Due Mortgage Principal Principal
Date Loans Balance Balance
09/01/97 7 $1,269,712.64 06.76
10/01/97 78 $16,026,703.51 85.28
11/01/97 10 $1,146,085.63 06.10
12/01/97 3 $351,110.49 01.87
- --------------------------------------------------------------------------
Total........ 98 $18,793,612.27 100.00%
==========================================================================
COMBINED LTV RANGE
- -------------------------------------------------------------------
Total
C LTV # % Current
RANGE Loan Pool Balance
20.000 * LTV *= 25.000 1 .29 $55,400.00
25.000 * LTV *= 30.000 1 .93 $174,562.78
40.000 * LTV *= 45.000 1 .38 $70,919.58
45.000 * LTV *= 50.000 4 .98 $184,294.26
50.000 * LTV *= 55.000 6 3.80 $714,081.63
55.000 * LTV *= 60.000 15 21.91 $4,117,452.71
60.000 * LTV *= 65.000 36 33.23 $6,244,384.06
65.000 * LTV *= 70.000 33 37.42 $7,032,517.25
70.000 * LTV *= 75.000 1 1.06 $200,000.00
- -------------------------------------------------------------------
Total..... 98 100.00% $18,793,612.27
===================================================================
* = LESS THAN
<PAGE>
ORIGINAL MORTGAGE AMOUNT
- -------------------------------------------------------------------
Total
Original # % Current
Mortgage Amt. Loan Pool Balance
25,000 * Balance *= 50,000 6 1.35 $253,799.90
50,000 * Balance *= 75,000 12 4.05 $761,810.74
75,000 * Balance *= 100,000 13 6.13 $1,151,373.81
100,000 * Balance *= 150,000 19 12.98 $2,439,974.83
150,000 * Balance *= 207,000 18 16.91 $3,177,467.17
207,000 * Balance *= 250,000 7 8.34 $1,568,264.30
250,000 * Balance *= 300,000 4 5.94 $1,116,367.23
300,000 * Balance *= 350,000 6 10.48 $1,969,671.03
350,000 * Balance *= 400,000 5 9.75 $1,831,634.97
400,000 * Balance *= 450,000 3 6.82 $1,282,383.90
450,000 * Balance *= 500,000 2 5.01 $941,236.53
500,000 * Balance *= 600,000 1 2.79 $524,627.86
750,000 * Balance *= 1,000,000 2 9.44 $1,775,000.00
- -------------------------------------------------------------------
Total..... 98100.00% $18,793,612.27
===================================================================
* = LESS THAN
CURRENT MORTGAGE AMOUNT
- -------------------------------------------------------------------
Total
Current # % Current
Mortgage Amt. Loan Pool Balance
25,000 * Balance *= 50,000 6 1.35 $253,799.90
50,000 * Balance *= 75,000 12 4.05 $761,810.74
75,000 * Balance *= 100,000 13 6.13 $1,151,373.81
100,000 * Balance *= 150,000 19 12.98 $2,439,974.83
150,000 * Balance *= 200,000 16 14.76 $2,774,312.09
200,000 * Balance *= 250,000 9 10.49 $1,971,419.38
250,000 * Balance *= 300,000 4 5.94 $1,116,367.23
300,000 * Balance *= 350,000 6 10.48 $1,969,671.03
350,000 * Balance *= 400,000 5 9.75 $1,831,634.97
400,000 * Balance *= 450,000 3 6.82 $1,282,383.90
450,000 * Balance *= 500,000 2 5.01 $941,236.53
500,000 * Balance *= 600,000 1 2.79 $524,627.86
750,000 * Balance *= 1,000,000 2 9.44 $1,775,000.00
- -------------------------------------------------------------------
Total..... 98100.00% $18,793,612.27
===================================================================
* = LESS THAN
GEOGRAPHIC DISTRIBUTION
- ----------------------------------------------------------
Total
# % Current
State Loans Pool Balance
AZ 4 4.10 $771,340
CA 21 20.69 $3,888,364
CT 3 2.19 $412,236
DC 2 4.05 $761,600
FL 1 1.59 $299,324
GA 4 8.97 $1,686,010
IL 4 1.39 $261,292
MA 3 1.78 $334,259
ME 1 .30 $56,000
NJ 4 4.05 $760,275
NY 21 18.78 $3,529,957
OH 4 1.48 $278,890
OK 1 4.66 $875,000
PA 4 3.77 $709,121
TX 19 21.54 $4,048,230
WI 2 .65 $121,714
- --------------------------------------
Total.. 98 100.00 $18,793,612
======================================
<PAGE>
PROPERTY-TYPE
- ------------------------------------------------------------------
Total
# % Current
Loan Pool Balance
Multi-Family/Apt. 71 83.07 $15,612,486.65
Business w/ Dwelling 27 16.93 $3,181,125.62
- -------------------------------------------------------------------
Total..... 98 100.00% $18,793,612.27
===================================================================
OCCUPANCY
- ------------------------------------------------------------------
Total
# % Current
Loan Pool Balance
Owner Occ. 18 13.05 $2,452,721.51
Investor 79 85.72 $16,110,140.76
Vacation/Second Home 1 1.23 $230,750.00
- -------------------------------------------------------------------
Total..... 98 100.00% $18,793,612.27
===================================================================
DOCUMENTATION LEVEL
- ------------------------------------------------------------------
Total
# % Current
Loan Pool Balance
Full Documentation 98 100.00 $18,793,612.27
- -------------------------------------------------------------------
Total..... 98 100.00% $18,793,612.27
===================================================================
LOAN-PURPOSE
- ------------------------------------------------------------------
Total
# % Current
Loan Pool Balance
Purchase 27 29.23 $5,493,636.47
Refinance/No ETO 43 44.77 $8,413,108.28
Refinance/ETO 20 18.09 $3,400,155.22
Tuition 1 1.38 $260,000.00
Debt Consolidation 4 2.36 $444,462.78
Other 3 4.16 $782,249.52
- -------------------------------------------------------------------
Total..... 98 100.00% $18,793,612.27
===================================================================
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
---------------------------------------------------------
(c) Exhibits
--------
Exhibit No.
- -----------
1.1 Underwriting Agreement, dated September 26, 1997, among The Money Store
Inc., the Originators and Prudential Securities Inc. and Lehman Brothers
Inc., as representatives of the underwriters.
1.2 Pricing Agreement, dated September 26, 1997, between The Money Store Inc.
and Prudential Securities Inc. and Lehman Brothers Inc., as
representatives of the underwriters.
1.3 Pooling and Servicing Agreement, dated as of August 31, 1997, among The
Money Store Inc., the Originators and The Bank of New York, as Trustee.
<PAGE>
Schedule A
State of IRS Employer
Registrant Incorporation Number
- ---------- ------------- -------------
TMS Mortgage Inc. New Jersey 22-3217781
The Money Store/D.C. Inc. D.C. 22-2133027
The Money Store/Kentucky Inc. Kentucky 22-2459832
The Money Store Home Equity Corp. Kentucky 22-2522232
The Money Store/Minnesota Inc. Minnesota 22-3003495
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TMS MORTGAGE INC. THE MONEY
STORE/D.C. INC. THE MONEY
STORE/KENTUCKY INC. THE MONEY
STORE HOME EQUITY CORP. THE MONEY
STORE/MINNESOTA INC.
By: /S/ HARRY PUGLISI
---------------------
Name: Harry Puglisi
Title: Treasurer
Dated: October 15, 1997
<PAGE>
EXHIBIT INDEX
Exhibit Description of Exhibit
- ------- ----------------------
1.1 Underwriting Agreement, dated September 26, 1997, among The
Money Store Inc., the Originators and Prudential Securities Inc. and
Lehman Brothers Inc., as representatives of the underwriters.
1.2 Pricing Agreement, dated September 26, 1997, between The Money Store
Inc. and Prudential Securities Inc. and Lehman Brothers Inc., as
representatives of the underwriters.
1.3 Pooling and Servicing Agreement, dated as of August 31, 1997, among
The Money Store Inc., the Originators and The Bank of New York, as
Trustee.
Exhibit 1.1
EXECUTION COPY
$1,300,000,000
THE MONEY STORE INC.
The Money Store Asset Backed Certificates
Series 1997-C
UNDERWRITING AGREEMENT
September 26, 1997
Prudential Securities Incorporated
as representative of the Underwriters
One New York Plaza
New York, New York 10292
Lehman Brothers Inc.
as representative of the Underwriters
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
The Money Store Inc., a New Jersey corporation (the "Company"), and
each of the Originators listed on Annex A hereto (each an "Originator" and
collectively, the "Originators") hereby confirm their agreement with Prudential
Securities Incorporated, and Lehman Brothers Inc. (together, the
"Representatives") on behalf of the several Underwriters listed on Annex B
hereto (the "Underwriters"), with respect to the delivery by the Company, on
behalf of the Originators, of certificates entitled "The Money Store Asset
Backed Certificates, Series 1997-C, Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class AF-6, Class AF-7, Class AF-8 (collectively, the "Pool I
Certificates"), Class AV, Class MV-1, Class MV-2, Class BV (collectively, the
"Pool II Certificates"), Class AH-1, Class AH-2, Class AH-3, Class AH-4, Class
AH-5, Class AH-6, Class MH-1, Class MH-2, Class BH (collectively, the "Pool III
Certificates") and Class AMF (the "Pool IV Certificates," and together with the
Pool I Certificates, the Pool II Certificates and the Pool III Certificates, the
"Offered Certificates") to be issued pursuant to a Pooling and Servicing
Agreement, to be dated as of August 31, 1997 (the "Pooling and Servicing
Agreement"), among the Company, as Representative, Servicer and Claims
Administrator, the Originators and The Bank of New York, as trustee ("Bank of
New York" or, in its capacity as trustee under the Pooling and Servicing
Agreement, the "Trustee"). The initial principal amount of each Class of Offered
Certificates will be as set forth on Annex B hereto. The Offered Certificates
represent beneficial interests in a trust fund (the "Trust Fund") that will
consist at the Closing Time (as defined in Section 2 hereof) primarily of four
sub-trusts, consisting of one pool of fixed rate first and second lien home
equity mortgage loans (the "Pool I Home Equity Loans"), one pool of adjustable
rate first lien home equity mortgage loans (the "Pool II Home Equity Loans"),
one pool of home improvement mortgage loans (the "Pool III Home Improvement
Loans"), certain of which Pool III Home Improvement Loans (the "FHA Loans") are
partially insured by the Federal Housing Administration of the United States
Department of Housing and Urban Development under Title I of the National
Housing Act of 1934 and one pool of multifamily mortgage loans (the "Pool IV
Multifamily Loans"), amounts to be deposited in the Pre-Funding Account and
certain related properties. The Pool I Home Equity Loans, Pool II Home Equity
Loans and Pool III Home Improvement Loans and the Pool IV Multifamily Loans are
referred to herein collectively as the "Loans". Simultaneously with the issuance
and delivery of the Offered Certificates as contemplated herein, the Company, on
behalf of the Originators, will cause to be issued under the Pooling and
Servicing Agreement certificates entitled "The Money Store Asset Backed
Certificates, Series 1997-C, Class R-1 and Class R-2" (the "Class R
Certificates"), and "The Money Store Asset Backed Certificates, Series 1997-C,
Class X" (the "Class X Certificates" and, together with the Offered Certificates
and Class R Certificates, the "Certificates"). The Certificates will evidence
fractional interests in the Trust Fund. The Class R Certificates and Class X
Certificates will be retained by the Company and TMS Special Holdings, Inc. and
are not being delivered to the Underwriters hereunder.
On or prior to the date of issuance of the Certificates, the Company
will obtain from MBIA Insurance Corporation ("MBIA") certificate guaranty
insurance policies (the "MBIA Policies") on behalf of the Trustee for the
benefit of the holders of the Pool I and Pool IV Certificates. An election will
be made to treat certain assets of the Trust Fund as a real estate mortgage
investment conduit ("REMIC") within the meaning of Section 860D of the Internal
Revenue Code of 1986, as amended (the "Code").
Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Pooling and Servicing Agreement.
Prior to the delivery of the Offered Certificates by the Company, on
behalf of the Originators, and the public offering thereof by the Underwriters,
the Company and the Representatives, as representatives of the Underwriters,
shall enter into an agreement substantially in the form of Exhibit A hereto (the
"Pricing Agreement"). The Pricing Agreement shall be between the Company and the
Representatives, as representatives of the Underwriters, and shall specify such
applicable information as is indicated in, and be in substantially the form of,
Exhibit A hereto. The offering of the Offered Certificates will be governed by
this Agreement, as supplemented by the Pricing Agreement. From and after the
date of the execution and delivery of the Pricing Agreement, this Agreement
shall be deemed to incorporate the Pricing Agreement.
The Company and the Originators understand that the Underwriters
propose to make a public offering of the Offered Certificates as soon as the
Underwriters deem advisable after the Pricing Agreement has been executed and
delivered.
Section 1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
ORIGINATORS.
(a) The Company and the Originators represent and warrant to each
of the Underwriters as of the date hereof and, if the Pricing Agreement is
executed on a date other than the date hereof, as of the date of the Pricing
Agreement (such latter date being hereinafter referred to as the "Representation
Date") as follows:
(i) The Company, on behalf of the Originators, has filed
with the Securities and Exchange Commission (the "Commission")
registration statements on Form S-3 (No. 333-20817) including a
prospectus, and such amendments thereto as may have been required to
the date hereof, relating to the Offered Certificates and the offering
thereof from time to time in accordance with Rule 415 under the
Securities Act of 1933, as amended (the "1933 Act"), and such
registration statement, as amended, has become effective. Such
registration statement, as amended, and the prospectus relating to the
sale of the Offered Certificates constituting a part thereof as from
time to time amended or supplemented (including any prospectus
supplement (the "Prospectus Supplement") filed with the Commission
pursuant to Rule 424 of the rules and regulations of the Commission
under the 1933 Act (the "1933 Act Regulations") and any information
incorporated therein by reference) are respectively referred to herein
collectively as the "Registration Statement" and the "Prospectus." The
conditions of Rule 415 under the 1933 Act have been satisfied with
respect to the Company and the Registration Statement.
(ii) At the time the Registration Statement became effective
and at the Representation Date, the Registration Statement complied
and will comply in all material respects with the requirements of the
1933 Act and the 1933 Act Regulations and did not and will not contain
an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading. The Prospectus, at the Representation Date
(unless the term "Prospectus" refers to a prospectus which has been
provided to the Representatives, as representatives of the
Underwriters, by the Company for use in connection with the offering
of the Offered Certificates which differs from the Prospectus on file
at the Commission at the time the Registration Statement became
effective, in which case at the time it is first provided to the
Representatives, as representatives of the Underwriters, for such use)
and at Closing Time referred to in Section 2 hereof, will not include
an 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 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 any
Underwriter through the Representatives expressly for use in the
Registration Statement or Prospectus; and provided further, that
neither the Company nor the Originators make any representations or
warranties as to any information in any Computational Materials (as
defined in Section 11 below) provided by any Underwriter to the
Company pursuant to Section 11, except to the extent of any errors in
the Computational Materials that are caused by errors in the pool
information provided by the Company to the applicable Underwriter. 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.
(iii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company, the Originators
and their subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, which would have a
material adverse effect on the ability of the Company and the
Originators to perform their obligations under the Basic Documents (as
defined below) and, in the case of the Company, the Indemnification
Agreement (as defined below) and (B) there have been no transactions
entered into by the Company or the Originators or any of their
subsidiaries, other than those in the ordinary course of business,
which would have a material adverse effect on the ability of the
Company and the Originators to perform their obligations under this
Agreement, the Pricing Agreement, the Pooling and Servicing Agreement
and the Insurance Agreement dated as of September 1, 1997 among the
Company, the Originators, the Trustee and MBIA (the "Insurance
Agreement") (this Agreement, the Pricing Agreement, the Pooling and
Servicing Agreement, and the Insurance Agreement being herein referred
to, collectively, as the "Basic Documents") and the Indemnification
Agreement to be dated as of September 1, 1997 (the "Indemnification
Agreement") among the Company, MBIA and the Underwriters.
(iv) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State
of New Jersey with all requisite power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and to enter into and perform its obligations under the
Basic Documents and the Indemnification Agreement; and the Company is
duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to so qualify would
not have a material adverse effect on, (A) the Company's ability to
perform its obligations under the Basic Documents and the
Indemnification Agreement, or (B) the business, properties, financial
position, operations or results of operations of the Company.
(v) Each Originator has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation with all requisite power and authority
to own, lease and operate its properties and to conduct its business
as described in the Prospectus and to enter into and perform its
obligations under the Basic Documents; and each Originator is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure to so qualify would not
have a material adverse effect on, (A) the Originator's ability to
perform its obligations under the Basic Documents, or (B) the
business, properties, financial position, operations or results of
operations of the Originator.
(vi) Any person who signed this Agreement on behalf of the
Company or the Originators, was, as of the time of such signing and
delivery, and is now duly elected or appointed, qualified and acting,
and the Agreement, as so executed, is duly and validly authorized,
executed, and constitutes the valid, legal and binding agreement of
the Company and each Originator, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights in general and by general principles
of equity regardless of whether such enforcement is considered in a
proceeding in equity or at law.
(vii) Any person who signs the Indemnification Agreement on
behalf of the Company, will be, as of the time of such signing and
delivery, duly elected or appointed, qualified and acting, and the
Indemnification Agreement, as so executed, will have been duly and
validly authorized, and, when executed, will constitute the valid,
legal and binding agreement of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights in general and by general principles
of equity regardless of whether such enforcement is considered in a
proceeding in equity or at law.
(viii) The Pooling and Servicing Agreement and the Insurance
Agreement have been duly and validly authorized by the Company and the
Originators and, when executed and delivered by the Company and the
Originators and duly and validly authorized, executed and delivered by
the other parties thereto, will constitute, the valid and binding
agreement of the Company and the Originators, enforceable in
accordance with their terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights in general and by
general principles of equity regardless of whether such enforcement is
considered in a proceeding in equity or at law; and the Pooling and
Servicing Agreement and the MBIA Policies conform in all material
respects to the statements relating thereto contained in the
Prospectus.
(ix) The Certificates have been duly and validly authorized
by the Company and, when executed and delivered by the Company and
authenticated by the Trustee as specified in the Pooling and Servicing
Agreement and, in the case of the Offered Certificates, delivered to
the Underwriters pursuant to this Agreement, the Certificates will be
duly and validly issued and outstanding and entitled to the benefits
of the Pooling and Servicing Agreement; and the Certificates conform
in all material respects to all statements relating thereto contained
in the Prospectus.
(x) Neither the issuance or delivery of the Certificates,
nor the consummation of any other of the transactions herein
contemplated or in any other Basic Document and, in the case of the
Company, the Indemnification Agreement, nor the execution and delivery
by the Company and the Originators of the Basic Documents and, in the
case of the Company, the Indemnification Agreement nor the fulfillment
of the terms of the Certificates or each Basic Document and, in the
case of the Company, the Indemnification Agreement will result in the
breach of any term or provision of the charter or by-laws of the
Company and the Originators, and the Company and the Originators are
not in breach or violation of or in default (nor has an event occurred
which with notice or lapse of time or both would constitute a default)
under the terms of (A) any material obligation, agreement, covenant or
condition contained in any material contract, indenture, loan
agreement, note, lease or other material instrument to which the
Company or the Originators are a party or by which it may be bound, or
to which any of the property or assets of the Company or the
Originators are subject, or (B) any law, decree, order, rule or
regulation applicable to the Company and the Originators of any court
or supervisory, regulatory, administrative or governmental agency,
body or authority, or arbitrator having jurisdiction over the Company
or the Originators or their properties, the default in or the breach
or violation of which would have a material adverse effect on the
Company or the Originators or the ability of the Company and the
Originators to perform their obligations under the Basic Documents
and, in the case of the Company, the Indemnification Agreement; and
neither the issuance or delivery of the Certificates, nor the
consummation of any other of the transactions herein contemplated, nor
the fulfillment of the terms of the Certificates or the Basic
Documents and, in the case of the Company, the Indemnification
Agreement will result in such a breach, violation or default which
would have such a material adverse effect.
(xi) Except as described in the Prospectus, there is no
action, suit or proceeding against or investigation of the Company or
any Originator, now pending, or, to the knowledge of the Company and
the Originators, threatened against the Company or any Originator,
before any court, governmental agency or body (A) which is required to
be disclosed in the Prospectus (other than as disclosed therein) or
(B) (1) asserting the invalidity of any Basic Document, the
Indemnification Agreement or the Certificates, (2) seeking to prevent
the issuance of the Certificates or the consummation of any of the
transactions contemplated by the Basic Documents, (3) which would
materially and adversely affect the performance by the Company or any
Originator of its obligations under the Basic Documents, or the
validity or enforceability of any Basic Document or the Certificates
and, in the case of the Company, the Indemnification Agreement or (4)
seeking to adversely affect the federal income tax attributes of the
Offered Certificates described in the Prospectus; all pending legal or
governmental proceedings to which the Company or any Originator is a
party or of which any of its property or assets is the subject which
are not described in the Prospectus, including ordinary routine
litigation incidental to the business, are, considered in the
aggregate, not material to the Company's or any Originator's ability
to perform its obligations under the Basic Documents and, in the case
of the Company, the Indemnification Agreement.
(xii) The Company and each of the Originators possess such
licenses, certificates, authorities or permits issued by the
appropriate state or federal regulatory agencies or governmental
bodies necessary to conduct the businesses now conducted by them
(except where the failure to possess any such license, certificate,
authority or permit would not materially and adversely affect the
holders of the Offered Certificates) and neither the Company nor any
of the Originators has received any 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 any unfavorable decision, ruling or finding, would materially and
adversely affect the ability of the Company to perform its obligations
under the Basic Documents and the Indemnification Agreement.
(xiii) No authorization, approval or consent of any court or
governmental authority or agency is necessary in connection with the
issuance or sale of the Offered Certificates hereunder, except such as
have been obtained or will be obtained prior to the Closing Date and
except as may be required under state securities laws.
(xiv) At the time of execution and delivery of the Pooling
and Servicing Agreement by the Company, the Originators and the
Trustee, the Trustee (or, with respect to the Pool III Home
Improvement Loans, the Co-Trustee) will have acquired good title on
behalf of the Trust Fund to the related Loans, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity, and, upon delivery to the Underwriters of the Offered
Certificates which they purchase, the Underwriters will have good and
marketable title to such Offered Certificates free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity.
(xv) The transfer of the Loans to the Trust Fund at Closing
Time will be treated by the Company and the Originators for financial
accounting and reporting purposes as a sale of assets and not as a
pledge of assets to secure debt.
(xvi) Each assignment of Mortgage required to be prepared
pursuant to the Pooling and Servicing Agreement is based on forms
recently utilized by the applicable Originator with respect to
mortgaged properties located in the appropriate jurisdiction and used
in the regular course of the applicable Originator's business. Upon
execution each such assignment will be in recordable form, and it is
reasonable to believe that it will be sufficient to effect the
assignment of the Mortgage to which it relates as provided in the
Pooling and Servicing Agreement.
(xvii) Any taxes, fees and other governmental charges that
are assessed and due in connection with the execution, delivery and
issuance of the Basic Documents, the Indemnification Agreement and the
Offered Certificates which have become due or will become due on or
prior to Closing Time shall have been paid at or prior to Closing
Time.
(xviii) The Trust Fund is not required to be registered as
an "investment company" under the Investment Company Act of 1940 (the
"1940 Act").
(b) Any certificate signed by any officer of the Company or any
Originator and delivered to the Representatives, as representatives of the
Underwriters, or counsel for the Underwriters shall be deemed a representation
and warranty by the Company and such Originator as to the matters covered
thereby.
Section 2. DELIVERY TO THE UNDERWRITERS; CLOSING.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company,
on behalf of the Originators, agrees to sell to each Underwriter, severally and
not jointly, and each of the Underwriters, severally and not jointly, agrees to
purchase from the Company, the Offered Certificates set forth opposite its name
in Annex B hereto at the price per Class of Offered Certificate set forth below.
In the event that the pass-through rates for each Class of Offered Certificates
have not been agreed upon and the Pricing Agreement has not been executed and
delivered by all parties thereto by the close of business on the fourth business
day following the date of this Agreement, this Agreement shall terminate
forthwith, without liability of any party to any other party, unless otherwise
agreed upon by the Representatives, as representatives of the Underwriters, and
the Company.
(b) Delivery of the Offered Certificates shall be made at the offices
of Stroock & Stroock & Lavan LLP, 180 Maiden Lane, New York, New York 10038, or
at such other place as shall be agreed upon by the Underwriter and the Company,
at 11:00 A.M., New York City time, on September 30, 1997, or such other time not
later than ten business days after such date as shall be agreed upon by the
Representatives, as representatives of the Underwriters, and the Company (such
time and date of payment and delivery being herein called "Closing Time").
Each Class of Offered Certificates will initially be represented by
one certificate registered in the name of Cede & Co., the nominee of The
Depository Trust Company ("DTC") (the "DTC Certificates"). The interests of
beneficial owners of the DTC Certificates will be represented by book entries on
the records of DTC and participating members thereof. Definitive certificates
evidencing the Offered Certificates will be available only under the limited
circumstances specified in the Pooling and Servicing Agreement. The interest in
the DTC Certificates to be purchased by the applicable Underwriter will be
delivered by the Company to the applicable Underwriter (which delivery shall be
made through the facilities of DTC) against payment of the purchase price
therefor by a same day federal funds wire payable to the order of the Company,
equal to 100.025409% of the aggregate initial principal amount of the Offered
Certificates plus accrued interest as set forth in the Prospectus Supplement.
Section 3. COVENANTS OF THE COMPANY AND THE ORIGINATORS. The Company
and the Originators covenant with each of the Underwriters as follows:
(a) The Company will promptly notify the Representatives, as
representatives of the Underwriters, and confirm the notice in writing, (i)
of any amendment to the Registration Statement; (ii) 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; (iii) of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the initiation or threatening of any
proceedings for that purpose; and (iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Offered Certificates for sale in any jurisdiction or the initiation or
threatening of any proceedings for that purpose. The Company will make
every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) The Company will give the Representatives, as representatives
of the Underwriters, notice of its intention to file or prepare any
amendment to the Registration Statement or any amendment or supplement to
the Prospectus (including any revised prospectus which the Company proposes
for use by the Underwriters in connection with the offering of the Offered
Certificates which differs from the prospectus on file at the Commission at
the time the Registration Statement becomes effective, whether or not such
revised prospectus is required to be filed pursuant to Rule 424(b) of the
1933 Act Regulations, will furnish the Representatives, as representatives
of the Underwriters, with copies of any such amendment or supplement a
reasonable amount of time prior to such proposed filing or use, as the case
may be, and, unless required by law to do so, will not file any such
amendment or supplement or use any such prospectus to which The
Representatives, as representatives of the Underwriters, or counsel for the
Underwriters shall reasonably object.
(c) The Company will deliver to the Representatives, as
representatives of the Underwriters, as many signed and as many conformed
copies of the Registration Statement as originally filed and of each
amendment thereto (in each case including exhibits filed therewith) as the
Representatives may reasonably request.
(d) The Company will furnish to the Representatives, as
representatives of the Underwriters, from time to time during the period
when the Prospectus is required to be delivered under the 1933 Act or the
Securities Exchange Act of 1934, as amended (the "1934 Act"), such number
of copies of the Prospectus (as amended or supplemented) as the
Representatives may reasonably request for the purposes contemplated by the
1933 Act or the 1934 Act or the respective applicable rules and regulations
of the Commission thereunder.
(e) If any event shall occur as a result of which it is
necessary, in the reasonable opinion of counsel for the Underwriters, to
amend or supplement the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, the Company will forthwith amend or supplement
the Prospectus (in form and substance satisfactory to counsel for the
Underwriters) so that, as so amended or supplemented, the Prospectus will
not include an 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 existing at the time it is delivered to a
purchaser, not misleading, and the Company will furnish to the
Representatives, as representatives of the Underwriters, a reasonable
number of copies of such amendment or supplement.
(f) The Company and the Originators will endeavor, in cooperation
with the Representatives, as representatives of the Underwriters, to
qualify the Offered Certificates for offering and sale under the applicable
securities laws of such states and other jurisdictions of the United States
as the Representatives, as representatives of the Underwriters, may
designate; provided, however, that neither the Company nor any Originator
shall be obligated to qualify as a foreign corporation in any jurisdiction
in which it is not so qualified. In each jurisdiction in which the Offered
Certificates have been so qualified, the Company and the Originators will
file such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for a period of not
less than one year from the date hereof.
(g) So long as any Certificates shall be outstanding, the Company
and the Originators will deliver to the Representatives, as representatives
of the Underwriters, as promptly as practicable, such information
concerning the Company, the Originators or the Certificates as the
Representatives may reasonably request from time to time.
Section 4. PAYMENT OF EXPENSES. The Company and the Originators will
pay all expenses incident to the performance of their obligations under this
Agreement, including (i) the printing (or other reproducing) and filing of the
Registration Statement as originally filed and of each amendment thereto (other
than amendments relating to the filing of Computational Materials pursuant to
Section 11); (ii) the reproducing of the Basic Documents and the Indemnification
Agreement; (iii) the preparation, printing, issuance and delivery of the
certificates for the DTC Certificates to the Underwriters; (iv) the fees and
disbursements of (A) the Company's counsel, (B) the Underwriters' counsel, (C)
KPMG Peat Marwick, accountants for the Company and issuer of the comfort letter,
(D) the Trustee and the Co-Trustee, if applicable, and their respective counsel
and (E) DTC in connection with the book-entry registration of the DTC
Certificates; (v) the qualification of the Offered Certificates under state
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the fees and disbursements of counsel for the
Underwriters in connection therewith and in connection with the preparation of
the Blue Sky Survey; (vi) the printing (or other reproducing) and delivery to
the Underwriters of copies of the Registration Statement as originally filed and
of each amendment thereto, of each preliminary prospectus and of the Prospectus
and any amendments or supplements thereto; (vii) the fees charged by each of
Moody's Investors Service, Inc. ("Moody's"), Standard & Poor's Rating Services,
a division of The McGraw-Hill Companies Inc. ("Standard & Poor's") and Fitch
Investors Service, L.P. ("Fitch") for rating the Offered Certificates; and
(viii) the reproducing and delivery to the Underwriters of copies of the Blue
Sky Survey.
If this Agreement is terminated by the Representatives, as
representatives of the Underwriters, in accordance with the provisions of
Section 5 or Section 9(a)(i) (unless, in the case of Section 9(a)(i), such
termination arises from a change or development involving a prospective change
in or affecting the business or properties of MBIA), the Company and the
Originators shall reimburse the Underwriters severally for all of their
reasonable out-of-pocket expenses, including the reasonable fees and
disbursements of counsel for the Underwriters.
Section 5. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The
obligations of the Underwriters hereunder are subject, in the Representatives'
sole discretion, to the accuracy of the representations and warranties of the
Company and the Originators herein contained, to the performance by the Company
and the Originators of their respective obligations hereunder, and to the
following further conditions:
(a) The Registration Statement shall have become effective and,
at Closing Time, no stop order suspending the effectiveness of the
Registration Statement shall have been issued under the 1933 Act or
proceedings therefor initiated or threatened by the Commission. As of the
Closing Time, the Prospectus shall have been filed with the Commission in
accordance with Rule 424 of the 1933 Act Regulations.
(b) At Closing Time, the Representatives, as representatives of
the Underwriters, shall have received:
(i) The favorable opinion, dated as of Closing Time, of
Stroock & Stroock & Lavan LLP, counsel for the Underwriters, to the
effect that:
(A) To the best of their knowledge and information, the
Registration Statement is effective under the 1933 Act and no stop
order suspending the effectiveness of the Registration Statement has
been issued under the 1933 Act or proceedings therefor initiated or
threatened by the Commission.
(B) At the time the Registration Statement became
effective and at the Representation Date, the Registration Statement
(other than the financial, numerical, statistical and quantitative
information included or incorporated therein, as to which no opinion
need be rendered) complied as to form in all material respects with
the requirements of the 1933 Act and the Rules and Regulations
thereunder.
(C) The information in the Prospectus under
"Description of the Certificates" and "The Agreements" and the
information in the Prospectus Supplement under "Description of the
Agreement" and "Description of The Certificates," insofar as they
constitute summaries of certain provisions of the Certificates, the
Pooling and Servicing Agreement, the Insurance Agreement and the MBIA
Policies, summarizes fairly such provisions.
(D) The information in the Prospectus under "Summary of
Terms -- Federal Income Tax Consequences," "Summary of Terms -- ERISA
Considerations," "Certain Legal Aspects of the Mortgage Loans,"
"Federal Income Tax Consequences," "ERISA Considerations" and "Risk
Factors-The Status of the Mortgage Loans in the Event of Bankruptcy of
The Representative or an Originator" and in the Prospectus Supplement
under "Summary of Terms-- REMIC Election and Tax Status," "Summary of
Terms--ERISA Considerations," "Federal Income Tax Consequences," and
"ERISA Considerations," to the extent that they constitute matters of
federal, New York or California law, summaries of legal matters,
documents or proceedings or legal conclusions, has been reviewed by
them and is correct in all material respects.
(E) TMS Special Holdings, Inc. has been duly
incorporated and is validly existing and in good standing under the
laws of the State of Delaware. TMS Mortgage Inc. is qualified to
transact business as a foreign corporation in, and is in good standing
under the laws of, the States of California, Florida and New York.
(F) Assuming due authorization, execution and delivery
by the other parties thereto (including but not limited to the
Originators), the Pooling and Servicing Agreement, the Certificates,
the Insurance Agreement, the Indemnification Agreement, the Pricing
Agreement and this Agreement are legal, valid and binding agreements
enforceable in accordance with their respective terms against the
Company, subject (a) to the effect of bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting
creditors' rights generally and court decisions with respect thereto,
(b) to the understanding that no opinion is expressed as to the
application of equitable principles in any proceeding, whether at law
or in equity, and (c) to limitations of public policy under applicable
securities laws as to rights of indemnity and contribution thereunder.
(G) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Company of, or compliance by the
Company with, this Agreement, the Pooling and Servicing Agreement, the
Insurance Agreement, the Pricing Agreement and the Indemnification
Agreement or the offer, issuance, sale or delivery of the
Certificates, or the consummation of any other transactions by the
Company contemplated by this Agreement, the Insurance Agreement, the
Pooling and Servicing Agreement, the Pricing Agreement and the
Indemnification Agreement, except as may be required under the blue
sky laws of any jurisdiction (as to which such counsel need not opine)
and such other approvals as have been obtained.
(H) Neither the consummation of the transactions
contemplated by, nor the fulfillment of the terms of, this Agreement,
the Pooling and Servicing Agreement, the Insurance Agreement, the
Pricing Agreement, the Indemnification Agreement and the Certificates,
conflicts or will conflict with or results or will result in a breach
of or constitutes or will constitute a default under (a) the terms of
any material indenture or other material agreement or instrument of
which counsel has knowledge to which the Company is a party or by
which it is bound or to which it is subject or (b) any statute or
order, rule, regulation, writ, injunction or decree of which counsel
has knowledge of any court, governmental authority or regulatory body
to which the Company is subject or by which it is bound.
(I) The delivery of each Mortgage Note and Mortgage by
an Originator as and in the manner contemplated by the Underwriting
Agreement and the Pooling and Servicing Agreement is sufficient fully
to transfer to the Trustee (or, with respect to the Pool III Home
Improvement Loans, the Co- Trustee) for the benefit of the
Certificateholders all right, title and interest of the applicable
Originator in and to each such Loan including, without limitation, the
right to enforce each such Loan in accordance with its terms to the
extent enforceable by the related Originator at the time of such
delivery. With respect to the transfer of the Loans by the
Originators, such counsel shall express no opinion as to (i) whether
the laws of the State of New York would apply to the transfer of the
related Mortgages or (ii) the effectiveness of the transfer of the
Mortgages under the laws of the jurisdictions in which such
Originators are located (other than Mortgages relating to Mortgaged
Properties situated in California or New York) or in which the
Mortgaged Properties are situated (other than Mortgaged Properties
situated in California or New York) or the right of the Trustee and
the Co-Trustee to enforce such Mortgages.
(J) The Certificates, assuming due execution by the
Company, due authorization by the Trustee and delivery and payment
therefore pursuant to the Underwriting Agreement, will be validly
issued and outstanding and entitled to the benefits of the Pooling and
Servicing Agreement.
(K) Assuming compliance with all provisions of the
Pooling and Servicing Agreement, for federal income tax purposes, each
of REMIC I and REMIC II will qualify as a REMIC, the Offered
Certificates and the Class X Certificates will constitute "regular
interests" in REMIC I and the Class R-1 Certificates and the Class R-2
Certificates will each constitute a single class of "residual
interests" in REMIC I and REMIC II, respectively, within the meaning
of the REMIC Provisions. Assuming compliance with all provisions of
the Pooling and Servicing Agreement, for New York State and City tax
purposes, each of REMIC I and REMIC II will be classified as a REMIC
and not as a corporation, partnership or trust, in conformity with the
federal income tax treatment of such assets. Accordingly, each of
REMIC I and REMIC II will be exempt from all New York State and City
taxation imposed upon its income, franchise or capital stock.
Additionally, each of REMIC I and REMIC II will be exempt from all
State of California taxation imposed upon its income, franchise or
capital stock, other than the application of the annual minimum tax
under Section 23153 of the California Revenue and Taxation Code.
(L) An Offered Certificate owned by a "domestic
building and loan association" within the meaning of Section
7701(a)(19) of the Code will be considered in its entirety to
represent an interest in qualified assets within the meaning of
Section 7701(a)(19)(C)(xi) of the Code so long as at least 95% of the
REMIC I's assets consist of assets described in Section
7701(a)(19)(C)(i) through (x) of the Code. If less than 95% of the
REMIC I's assets consist of such items, an Offered Certificate will be
considered qualified assets in the same proportion as the REMIC I's
assets which are such items. An Offered Certificate owned by a real
estate investment trust will be considered in its entirety an interest
in "real estate assets" within the meaning of Section 856(c)(5)(A) of
the Code and interest thereon will be considered in its entirety
"interest on obligations secured by mortgages on real property" within
the meaning of Section 856(c)(3)(B) of the Code in both cases so long
as at least 95% of the REMIC I's assets are "real estate assets" as
defined in Section 856(c)(3)(B) of the Code. If less than 95% of the
REMIC I's assets are "real estate assets," an Offered Certificate will
be considered "real estate assets" and the interest thereon will be
considered "interest on obligations secured by mortgages on real
property" in the same proportion as the REMIC I's assets which are
"real estate assets." An Offered Certificate will not be considered
"residential loans" for purposes of the residential loan requirement
of Section 593(g)(4)(B) of the Code. An Offered Certificate held by
another REMIC will be a "qualified mortgage" within the meaning of
Section 860G(a)(3) of the Code, assuming it is transferred to the
REMIC on its startup day in exchange for regular or residual interests
in such REMIC.
(M) The Pooling and Servicing Agreement is not required
to be qualified under the Trust Indenture Act of 1939, as amended. The
Trust Fund created by the Pooling and Servicing Agreement is not
required to be registered under the Investment Company Act of 1940, as
amended.
In rendering such opinion, Stroock & Stroock & Lavan LLP may rely on
certificates of responsible officers of the Company, the Trustee, the Co-Trustee
and public officials or, as to matters of law other than New York, Florida,
California or Federal law, on opinions of other counsel (copies of which
opinions shall be delivered to you and upon which you may rely).
(ii) The favorable opinion, dated as of Closing Time, of
counsel for the Company and the Originators, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(A) The Company has been duly organized and is validly
existing and is in good standing under the laws of the State of New
Jersey. Each Originator has been duly organized under the laws of its
jurisdiction of incorporation and is qualified to transact business in
the laws of the states in which the Mortgaged Properties underlying
the Loans originated by each such Originator are located or is
otherwise exempt under applicable law from such qualification. TMS
Special Holdings, Inc. has been duly organized and is validly existing
and in good standing under the laws of the State of Delaware.
(B) The Company and each of the Originators have the
power to engage in the transactions contemplated by this Agreement,
the Pooling and Servicing Agreement, the Insurance Agreement and, in
the case of the Company, the Pricing Agreement, the Indemnification
Agreement, the Auction Agent Agreement and the Certificates, and have
all requisite power, authority and legal right to execute and deliver
this Agreement, the Pooling and Servicing Agreement, the Insurance
Agreement, and, in the case of the Company, the Pricing Agreement, the
Indemnification Agreement, the Auction Agent Agreement and the
Certificates (and any other documents delivered in connection
therewith) and to perform and observe the terms and conditions of such
instruments.
(C) This Agreement, the Pooling and Servicing
Agreement, the Insurance Agreement, the Pricing Agreement, the
Indemnification Agreement, and the Certificates each have been duly
authorized, executed and delivered by the Company; this Agreement, the
Pooling and Servicing Agreement and the Insurance Agreement each have
been duly authorized, executed and delivered by each Originator and,
assuming due authorization, execution and delivery by the other
parties thereto, are legal, valid and binding agreements of the
Company and each Originator, as the case may be, and assuming such
agreements were governed by the laws of the State of New Jersey, would
be enforceable in accordance with their respective terms against the
Company and each Originator, as the case may be, subject (a) to the
effect of bankruptcy, insolvency, reorganization, moratorium and
similar laws relating to or affecting creditors' rights generally and
court decisions with respect thereto, (b) to the understanding that no
opinion is expressed as to the application of equitable principles in
any proceeding, whether at law or in equity, and (c) to limitations of
public policy under applicable securities laws as to rights of
indemnity and contribution thereunder.
(D) Neither the transfer of the Loans to the Trust
Fund, the consummation of the transactions contemplated by, nor the
fulfillment of the terms of, this Agreement, the Pooling and Servicing
Agreement, the Insurance Agreement, or in the case of the Company, the
Pricing Agreement, the Indemnification Agreement and the Certificates,
(A) conflicts or will conflict with or results or will result in a
breach of or constitutes or will constitute a default under the
Certificates of Incorporation or Bylaws of the Company or any
Originator, or the terms of any material indenture or other material
agreement or instrument of which such counsel has knowledge to which
the Company or any Originator are a party or by which it is bound or
to which it is subject, or (B) results in, or will result in the
creation or imposition of any lien or encumbrance upon the Trust Fund
or upon the related Certificates, except as otherwise contemplated by
the Pooling and Servicing Agreement, or (C) any statute or order,
rule, regulations, writ, injunction or decree of any court,
governmental authority or regulatory body to which the Company or any
Originator is subject or to which it is bound.
(E) Except as set forth in the Prospectus Supplement,
there is no action, suit, proceeding or investigation pending or, to
the best of such counsel's knowledge, threatened against the Company
or any Originator which, in such counsel's judgment, either in any one
instance or in the aggregate, may result in any material adverse
change in the business, operation, financial condition, properties or
assets of the Company or an Originator or in any material impairment
of the right or ability of the Company or any Originator to carry on
its business substantially as now conducted or result in any material
liability on the part of the Company or any Originator or which would
draw into question the validity of this Agreement, the Pricing
Agreement, the Certificates, the Insurance Agreement, the
Indemnification Agreement or the Pooling and Servicing Agreement or of
any action taken or to be taken in connection with the transactions
contemplated thereby, or which would be likely to impair materially
the ability of the Company or any Originator to perform under the
terms of this Agreement, the Insurance Agreement or the Pooling and
Servicing Agreement, or in the case of the Company, the Pricing
Agreement, the Indemnification Agreement or the Certificates.
(F) No consent, approval, authorization or order of any
court or governmental agency or body is required for the execution,
delivery and performance by the Company and each Originator of, or
compliance by the Company and each Originator with, this Agreement,
the Pooling and Servicing Agreement, the Insurance Agreement or, in
the case of the Company, the Pricing Agreement, the Indemnification
Agreement or the Certificates, or the consummation of the transactions
contemplated therein, except such as may be required under the blue
sky laws of any jurisdiction and such other approvals as have been
obtained.
(G) The delivery by TMS Mortgage Inc. ("TMS") of each
Mortgage Note and Mortgage secured by real property located in New
Jersey as and in the manner contemplated by the Pooling and Servicing
Agreement is sufficient fully to transfer to the Trustee (or, with
respect to the Pool III Home Improvement Loans, the Co-Trustee) for
the benefit of the Certificateholders all right, title and interest of
TMS in and to each such Loan including, without limitation, the right
to enforce each such Loan in accordance with its terms to the extent
enforceable by TMS at the time of such delivery.
(iii) The favorable opinion, dated as of Closing Time, of
Kutak Rock, counsel for MBIA, in form and substance satisfactory to
counsel for the Underwriters, to the effect that:
(A) MBIA is a stock insurance corporation, duly
incorporated and validly existing under the laws of the State of New
York. MBIA is validly licensed and authorized to issue the MBIA
Policies and perform its obligations under the MBIA Policies in
accordance with the terms thereof, under the laws of the State of New
York.
(B) The execution and delivery by MBIA of the MBIA
Policies, the Insurance Agreement and the Indemnification Agreement
are within the corporate power of MBIA and have been authorized by all
necessary corporate action on the part of MBIA; the MBIA Policies have
been duly executed and is the valid and binding obligation of MBIA
enforceable in accordance with its terms except that the enforcement
of the MBIA Policies may be limited by laws relating to bankruptcy,
insolvency, reorganization, moratorium, receivership and other similar
laws affecting creditors' rights generally and by general principles
of equity.
(C) MBIA is authorized to deliver the Insurance
Agreement and the Indemnification Agreement, and the Insurance
Agreement and the Indemnification Agreement have been duly executed
and are the valid and binding obligations of MBIA enforceable in
accordance with their respective terms except that the enforcement of
the Insurance Agreement and the Indemnification Agreement may be
limited by laws relating to bankruptcy, insolvency, reorganization,
moratorium, receivership and other similar laws affecting creditors'
rights generally and by general principles of equity and by public
policy considerations relating to indemnification for securities law
violations.
(D) No consent, approval, authorization or order of any
state or federal court or govern-mental agency or body is required on
the part of MBIA, the lack of which would adversely affect the
validity or enforceability of the MBIA Policies; to the extent
required by applicable legal requirements that would adversely affect
the validity or enforceability of the MBIA Policies, the form of the
MBIA Policies has been filed with, and approved by, all governmental
authorities having jurisdiction over MBIA in connection with such MBIA
Policies.
(E) To the extent the MBIA Policies constitute
securities within the meaning of Section 2(l) of the Securities Act of
1933, as amended (the "Act"), it is a security that is exempt from the
registration requirements of the Act.
(F) The information set forth under the caption "MBIA
Policies and MBIA" in the Prospectus Supplement, relating to the offer
and sale of the Class A Certificates, to the Prospectus forming a part
of the Registration Statement on Form S-3 (No. 333-20817) filed by the
Company with the Securities and Exchange Commission and declared
effective on September 11, 1997, insofar as such statements constitute
a description of the MBIA Policies, accurately summarizes the MBIA
Policies.
In rendering this opinion, such counsel may rely, as to
matters of fact, on certificates of responsible officers of the Company, the
Trustee, the Co-Trustee MBIA and public officials. Such opinion may assume the
due authorization, execution and delivery of the instruments and documents
referred to therein by the parties thereto other than the MBIA.
(iv) The favorable opinion, dated as of Closing Time, of
Emmitt, Marvin & Marvin, counsel for the Trustee, in form and
substance satisfactory to counsel for the Underwriters.
(v) The favorable opinion, dated as of Closing Time, of
Hunton & Williams, counsel for the Co-Trustee, in form and substance
satisfactory to counsel for the Underwriters.
(vi) The favorable opinion, dated as of the Closing Time, of
Dorsey & Whitney counsel for the Custodian, in form and substance
satisfactory to counsel for the Underwriters.
(vii) In giving its opinion required by subsection (b)(i) of
this Section, Stroock & Stroock & Lavan LLP shall additionally state
that nothing has come to its attention that has caused it to believe
that the Registration Statement, as of the time it became effective,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus, at the
Representation Date (unless the term "Prospectus" refers to a
prospectus which has been provided to the Representatives, as
representatives of the Underwriters, by the Company for use in
connection with the offering of the Offered Certificates which differs
from the Prospectus on file at the Commission at the Representation
Date, in which case at the time it is first provided to the
Representatives, as representatives of the Underwriters, for such use)
or at Closing Time, included an untrue statement of a material fact or
omitted 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 (other than the financial, numerical,
statistical and quantitative information contained therein, the
information under the heading "The MBIA Policies and MBIA" therein,
and the information in the Exhibits thereto, as to which such counsel
need express no view).
(c) At Closing Time, the Representatives, as representatives of
the Underwriters, shall have received from Stroock & Stroock & Lavan LLP,
counsel for the Underwriters, a letter, dated as of Closing Time, authorizing
the Representatives, as representatives of the Underwriters, to rely upon each
opinion delivered by Stroock & Stroock & Lavan LLP to each of Moody's, Standard
& Poor's and Fitch in connection with the issuance of the Certificates as though
each such opinion was addressed to the Representatives, as representatives of
the Underwriters, and attaching a copy of each such opinion.
(d) At Closing Time there shall not have been, since the date
hereof or since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and the Originators and their subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, and the Underwriter shall have received a certificate signed by one or
more duly authorized officers of the Company and the Originators, dated as of
Closing Time, to the effect that (i) there has been no such material adverse
change; (ii) the representations and warranties in Section 1(a) hereof are true
and correct in all material respects with the same force and effect as though
expressly made at and as of Closing Time; (iii) the Company and the Originators
have complied with all agreements and satisfied all conditions on its part to be
performed or satisfied at or prior to Closing Time; and (iv) no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceedings for that purpose have been initiated or threatened by the
Commission.
(e) At or before the time of printing of the Prospectus
Supplement, the Representatives, as representatives of the Underwriters, shall
have received from KPMG Peat Marwick a letter dated as of Closing Time and in
form and substance satisfactory to the Representatives, as representatives of
the Underwriters, to the effect that they have carried out certain specified
procedures, not constituting an audit, with respect to (i) certain amounts,
percentages and financial information relating to the Company's servicing
portfolio which are included in the Prospectus and which are specified by the
Representatives, as representatives of the Underwriters, and have found such
amounts, percentages and financial information to be in agreement with the
relevant accounting, financial and other records of the Company and the
Originators identified in such letter, (ii) the information contained in the
weighted average life tables contained in the Prospectus under the caption
"Maturity, Prepayment and Yield Considerations" and have found such information
to be in agreement with the corresponding information as computed by KPMG Peat
Marwick and (iii) certain information regarding the Loans and the Files which
are specified by the Representatives, as representatives of the Underwriters,
and contained in the Current Report on Form 8-K described in Section 5(l) hereof
and setting forth the results of such specified procedures.
Notwithstanding the foregoing, if the letter delivered by KPMG Peat
Marwick at Closing Time does not cover the information set forth in subclause
(iii), the Company shall cause KPMG Peat Marwick to deliver to the
Representatives, as representatives of the Underwriters, an additional letter
covering such information within 5 business days of the Closing Time.
(f) At Closing Time, the Representatives, as representatives of
the Underwriters, shall have received from each of the Trustee and the
Co-Trustee a certificate signed by one or more duly authorized officers of the
Trustee and the Co-Trustee, respectively, dated as of Closing Time, as to the
due acceptance of the Pooling and Servicing Agreement by the Trustee and the
Co-Trustee and the due authentication of the Certificates by the Trustee and
such other matters as the Representatives, as representatives of the
Underwriters, shall request.
(g) At Closing Time, the Representatives, as representatives of
the Underwriters, shall have received a certificate signed by one or more duly
authorized officers of MBIA, dated as of Closing Time, to the effect that the
information contained under the caption "The MBIA Policies and MBIA" in the
Prospectus and the information incorporated by reference therein is true and
accurate in all material respects and such other matters as the Representatives,
as representatives of the Underwriters, shall request.
(h) At Closing Time, the Representatives, as representatives of
the Underwriters, shall have received a certificate signed by one or more duly
authorized officers of the Company and the Originators, dated as of Closing Time
to the effect that:
(i) the representations and warranties of the Company and
the Originators in the Pooling and Servicing Agreement are true and
correct in all material respects at and on the Closing Date, with the
same effect as if made on the Closing Date;
(ii) the Company and the Originators have complied with all
the agreements and satisfied all the conditions on its part to be
performed or satisfied in connection with the sale and delivery of the
Certificates;
(iii) all statements and information contained in the
Prospectus Supplement under the captions "The Representative and the
Originators" and "The Loans" and in the Prospectus under the captions
"The Representative and the Originators" and "Lending Programs" are
true and accurate in all material respects and nothing has come to
such officer's attention that would lead him to believe that any of
the specified sections contains any untrue statement of a material
fact or omits to state any material fact necessary in order to make
the statements and information therein, in the light of the
circumstances under which they were made, not misleading;
(iv) the information set forth in the Schedule of Loans
required to be furnished pursuant to the Pooling and Servicing
Agreement is true and correct in all material respects and the Loans
actually being delivered to the Trustee and the Co-Trustee at Closing
Time conform in all material respects to the Pool information set
forth in the Prospectus Supplement;
(v) the copies of the Charter and By-laws of the Company and
the Originators attached to such certificate are true and correct and,
are in full force and effect on the date thereof;
(vi) except as may otherwise be disclosed in the Prospectus,
there are no actions, suits or proceedings pending (nor, to the best
knowledge of such officers, are any actions, suits or proceedings
threatened), against or affecting the Company or any Originator which
if adversely determined, individually or in the aggregate, would
adversely affect the Company's or such Originator's obligations under
the Pooling and Servicing Agreement, the Indemnification Agreement,
the Insurance Agreement, the Pricing Agreement or this Agreement;
(vii) each person who, as an officer or representative of
the Company or of any Originator, signed (a) this Agreement, (b) the
Pooling and Servicing Agreement, (c) the Certificates issued
thereunder, (d) the Insurance Agreement, (e) the Indemnification
Agreement or (f) any other document delivered prior hereto or on the
date hereof in connection with the purchase described in this
Agreement and the Pooling and Servicing Agreement, was, at the
respective times of such signing and delivery, and is now duly elected
or appointed, qualified and acting as such officer or representative;
(viii) a certified true copy of the resolutions of the board
of directors of the Company and the Originators with respect to the
sale of the Offered Certificates subject to this Agreement and the
Pooling and Servicing Agreement, which resolutions have not been
amended and remain in full force and effect;
(ix) all payments received with respect to the Loans after
the Cut-Off Date have been deposited in the Principal and Interest
Account, and are, as of the Closing Date, in the Principal and
Interest Account;
(x) the Company has complied, and has ensured that the
Originators have complied, with all the agreements and satisfied, and
has ensured that the Originators have satisfied, all the conditions on
its, and the Originators', part to be performed or satisfied in
connection with the issuance, sale and delivery of the Loans and the
Certificates;
(xi) all statements contained in the Prospectus with respect
to the Company and the Originators are true and accurate in all
material respects and nothing has come to such officer's attention
that would lead such officer to believe that the Prospectus contains
any untrue statement of a material fact or omits to state any material
fact;
(xii) each Mortgage assignment will be prepared based on
forms recently utilized by the Company with respect to mortgaged
properties located in the appropriate jurisdiction and used in the
regular course of the Company's business. Based on the Company's
experience with such matters, the Company reasonably believes that
upon execution each such assignment will be in recordable form and
will be sufficient to effect the assignment of the Mortgage to which
it relates as provided in the Pooling and Servicing Agreement; and
(xiii) the weighted average lives of the Offered
Certificates, in each case using the applicable pricing speed and a
weighted average coupon (or, in the case of the Pool II Home Equity
Loans, the weighted average margin) and weighted average maturity
based upon the Loans actually delivered to the Trustee and the
Co-Trustee, will not vary by more than 1/10th of one year from the
number of years set forth below:
CLASS YEARS CLASS YEARS
----- ----- ----- -----
AF-1 0.50 BV 5.69
AF-2 1.18 AH-1
AF-3 2.04 AH-2
AF-4 3.07 AH-3
AF-5 4.04 AH-4
AF-6 5.40 AH-5
AF-7 9.91 AH-6
AF-8 6.31 MH-1
AV 2.10 MH-2
MV-1 7.50 BH-2
MV-2 8.62 AMF 7.47
(i) At Closing Time, each Class of the Offered Certificates
shall have been rated as follows by Moody's and Standard & Poor's and/or Fitch:
RATING
CLASS S&P MOODY'S FITCH
----- --- ------- -----
AF-1 AAA Aaa --
AF-2 AAA Aaa --
AF-3 AAA Aaa --
AF-4 AAA Aaa --
AF-5 AAA Aaa --
AF-6 AAA Aaa --
AF-7 AAA Aaa --
AF-8 AAA Aaa --
AV AAA Aaa --
MV-1 AA Aa2 --
MV-2 A A2 --
BV BBB Baa --
AH-1 AAA Aaa AAA
AH-2 AAA Aaa AAA
AH-3 AAA Aaa AAA
AH-4 AAA Aaa AAA
AH-5 AAA Aaa AAA
AH-6 AAA Aaa AAA
MH-1 AA Aa2 AA
MH-2 A A2 A
BH BBB Baa2 BBB
AMF AAA Aaa --
(j) At Closing Time, counsel for the Underwriters shall have been
furnished with such documents and opinions as they may reasonably require for
the purpose of enabling them to pass upon the issuance and delivery of the
Offered Certificates as herein contemplated and related proceedings, or in order
to evidence the accuracy of any of the representations or 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 Offered
Certificates as herein contemplated shall be satisfactory in form and substance
to the Representatives, as representatives of the Underwriters, and counsel for
the Underwriters.
(k) On or before the Closing Time the Company and the Originators
shall have delivered to the Trustee (or, with respect to the Pool III Home
Improvement Loans, the Co- Trustee), to hold in trust for the benefit of the
holders of the Certificates, Pool I and Pool II Home Equity Loans, Pool III Home
Improvement Loans and Pool IV Multifamily Loans (as defined in the Prospectus)
with aggregate outstanding principal balances as of the Cut-Off Date of at least
$368,508,251.83, $480,629,733.81, $215,998,857.49 and $18,793,612.27
respectively. The Company and the Originators shall, immediately following the
sale of the Offered Certificates, cause to be deposited with the Trustee, for
deposit in the Pre-Funding Account (as defined in the Prospectus Supplement),
cash in an amount equal to the sum of (A) the excess of (i) the aggregate
initial principal balance of the Class AF-1, Class AF-2, Class AF-3, Class AF-4,
Class AF-5, Class AF-6, Class AF-7 and Class AF-8 (I.E., $400,000,000) over (ii)
the aggregate discounted outstanding principal balances as of the Cut-Off Date
of the Pool I Home Equity Loans actually delivered to the Trustee, (B) the
excess of (i) the aggregate initial principal balance of the Class AV, Class
MV-1, Class MV-2 and Class BV Certificates (I.E., $600,000,000) over (ii) the
aggregate outstanding principal balances as of the Cut-Off Date of the Pool II
Home Equity Loans actually delivered to the Trustee, and (C) the excess of (i)
the aggregate initial principal balance of the Class AH-1, Class AH-2, Class
AH-3, Class AH-4, Class AH-5, Class AH-6 Class MH-1, Class MH-2 and Class BH
Certificates (I.E., 275,000,000) over (ii) the aggregate outstanding principal
balances as of the Cut-Off Date of the Pool III Home Improvement Loans actually
delivered to the Trustee and the Co-Trustee, and (D) the excess of (i) the
aggregate initial principal balance of the Class AMF Certificates (i.e.
$25,000,000) over (ii) the aggregate outstanding principal balances as of the
Cut-Off Date of the Pool IV Multifamily Loans actually delivered to the Trustee.
(l) On or before the Closing Time the Company shall have
delivered to the Representatives a Current Report on Form 8-K containing a
detailed description of the Loans actually being delivered to the Trustee and
the Co-Trustee at Closing Time, in form and substance satisfactory to the
Representatives.
(m) On or before the Closing Time the Company shall have
delivered to the Representative confirmation from the Federal Housing
Administration (the "FHA") that the FHA insurance reserves relating to the FHA
Loans have been or will be transferred to the Co-Trustee.
If any condition specified in this Section shall not have been
fulfilled when and as required to be fulfilled, this Agreement may be terminated
by the Representatives, as representatives to the Underwriters, by notice to the
Company at any time at or prior to Closing time, and such termination shall be
without liability of any party to any other party except as provided in Section
4 hereof.
Section 6. INDEMNIFICATION.
(a) The Company and the Originators jointly and severally agree
to indemnify and hold harmless each of the Underwriters and each person, if any,
who controls each of the Underwriters within the meaning of Section 15 of the
1933 Act as follows:
(i) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), or the omission or
alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact contained in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) or the omission or
alleged omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate amount
paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any untrue statement
or omission described in clause (i) above, or any such alleged untrue
statement or omission, if such settlement is effected with the written
consent of the Company; and
(iii) against any and all expense whatsoever, as incurred
(including, subject to Section 6(c) hereof, the reasonable fees and
disbursements of counsel chosen by such Underwriter), reasonably
incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever based
upon any untrue statement or omission described in clause (i) above,
or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with the information referred to in clauses (x), (y) and
(z) of the immediately following paragraph; provided, further, such indemnity
with respect to the Prospectus or any preliminary prospectus shall not inure to
the benefit of any Underwriter (or person controlling such Underwriter) from
whom the person suffering any such loss, claim, damage or liability purchased
the Offered Certificates which are the subject thereof if such person did not
receive a copy of the Prospectus at or prior to the confirmation of the sale of
such Offered Certificates to such person in any case where such delivery is
required by the 1933 Act and the untrue statement or omission of a material fact
contained in any preliminary prospectus was corrected in the Prospectus.
(b) Each Underwriter agrees to indemnify and hold harmless the
Company and the Originators, their directors, each of the Company's and
Originator's officers who signed the Registration Statement, and each person, if
any, who controls the Company within the meaning of Section 15 of the 1933 Act
against any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (a) of this Section, as incurred, but only
with respect to untrue statements or omissions, or alleged untrue statements or
omissions, contained in (x) the second sentence of the third paragraph on the
third page which is located on the inside cover (discussing the risk of a lack
of secondary trading) of the Prospectus, (y) the second paragraph under the
heading "Underwriting" in the Prospectus Supplement (or any amendment or
supplement thereto) and (z) any Computational Materials prepared by such
Underwriter, except to the extent of any errors in the Computational Materials
that are caused by errors in the pool information provided by the Company to the
applicable Underwriter. The parties hereto agree that no Underwriter shall be
under any liability to the Company, the Originators or any other person
identified in this paragraph (b) for Computational Materials prepared by any
other Underwriter.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party in writing of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve the indemnifying party from any liability that it may have to any
indemnified party except to the extent that it has been prejudiced in any
material respect by such failure or from any liability that it may have
otherwise than under this Section 6. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and, to
the extent that it may elect by written notice delivered to the indemnified
party promptly after receiving the aforesaid notice from such indemnified party,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that, if the defendants in any such action
include both the indemnified party and the indemnifying party and the
indemnified party or parties shall have reasonably concluded that there may be
legal defenses available to it or them and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assert such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of its election so to
assume the defense of such action and approval by the indemnified party of
counsel, the indemnifying party will not be liable to such indemnified party for
any legal or other expenses other than the reasonable costs of investigation
subsequently incurred in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in connection with the
assertion of legal defenses in accordance with the proviso to the next preceding
sentence, (ii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after notice of commencement of the action or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party; and except that, if clause (i)
or (iii) is applicable, such liability shall be only in respect of the counsel
referred to in such clause (i) or (iii). After such notice from the indemnifying
party to such indemnified party, the indemnifying party will not be liable for
the costs and expenses of any settlement of such action effected by such
indemnified party without the consent of the indemnifying party.
Section 7. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 6 hereof is for any reason held to be unenforceable by the indemnified
parties although applicable in accordance with its terms, the Company and the
Originators jointly and severally, on the one hand, and the Underwriters, on the
other hand, shall contribute to the aggregate losses, liabilities, claims,
damages and expenses of the nature contemplated by said indemnity agreement
incurred by the Company and the Originators jointly and severally, on the one
hand, and the Underwriters, on the other hand, as incurred, in such proportions
that each Underwriter is responsible for that portion represented by the
difference between the purchase price paid by such Underwriter allocated to the
principal amount of Offered Certificates set forth next to each Underwriter's
name on Annex B hereto and the price at which such Underwriter sold such Offered
Certificates are sold to the public (or, with respect to Computational Materials
furnished by an Underwriter (except to the extent of any errors in the
Computational Materials that are caused by errors in the pool information
provided by the Company to the applicable Underwriter), the excess of the
principal amount of Offered Certificates set forth next to such Underwriter's
name on Annex B hereto over the difference between the purchase price paid by
such Underwriter for such Offered Certificates and the price at which such
Offered Certificates were sold to the public), and the Company and the
Originators shall be responsible for the balance; provided, however, that 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. Notwithstanding the provisions
of this Section 7, no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Offered Certificates
set forth next to the name of such Underwriter on Annex B hereto were offered to
the public exceeds the amount of any damages such Underwriter has otherwise been
required to pay in respect of such losses, liabilities, claims, damages and
expenses. For purposes of this Section 7, each person, if any, who controls any
Underwriter within the meaning of Section 15 of the 1933 Act shall have the same
rights to contribution as such Underwriter and each respective director of the
Company and the Originators, each officer of the Company and the Originators who
signed the Registration Statement, and each respective person, if any, who
controls the Company and the Originators within the meaning of Section 15 of the
1933 Act shall have the same rights to contribution as the Company and the
Originators.
Section 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY. All representations, warranties and agreements contained in this
Agreement and the Pricing Agreement, or contained in certificates of officers of
the Company and the Originators submitted pursuant hereto, shall remain
operative and in full force and effect, regardless of any investigation made by
or on behalf of any of the Underwriters or any controlling person thereof, or by
or on behalf of the Company and the Originators, and shall survive delivery of
the Offered Certificates to the Underwriter.
Section 9. TERMINATION OF AGREEMENT.
(a) The Representatives, as representatives of the Underwriters,
may terminate this Agreement, by notice to the Company and the Originators, at
any time at or prior to Closing Time (i) if there has been, since the time of
execution of this 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 particularly the
business or properties of the Company and the Originators considered as one
entity or MBIA which, in the reasonable judgment of the Representatives, as
representatives of the Underwriters, materially impairs the investment quality
of any of the Offered Certificates; (ii) if there has occurred any downgrading
in the rating of the debt securities of MBIA by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the 1933 Act) which, in the reasonable judgment of the Representatives, as
representatives of the Underwriters, materially impairs the investment quality
or marketability of any of the Offered Certificates or if any debt security of
MBIA has been put on the "watch list" of any such rating organization with
negative implications; (iii) if there has occurred any suspension or limitation
of trading in securities generally on the New York Stock Exchange, or any
setting of minimum prices for trading on such exchange or by any governmental
authority; (iv) if any banking moratorium has been declared by Federal or New
York authorities; or (v) if there has occurred any outbreak or escalation of
major hostilities in which the United States of America is involved, any
declaration of war by Congress, or any other substantial national or
international calamity or emergency if, in the judgment of the Representatives,
as representatives of the Underwriter, the effects of any such outbreak,
escalation, declaration, calamity, or emergency makes it impractical or
inadvisable to proceed with completion of the sale of and payment for the
Offered Certificates.
(b) If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof.
Section 10. DEFAULT BY ONE OF THE UNDERWRITERS. If any of the
Underwriters shall fail at Closing Time to purchase the Offered Certificates
which it is obligated to purchase hereunder (the "Defaulted Certificates"), the
remaining Underwriters (the "Non-Defaulting Underwriters") shall have the right,
but not the obligation, within one (1) Business Day thereafter, to make
arrangements to purchase all, but not less than all, of the Defaulted
Certificates upon the terms herein set forth; if, however, the Non-Defaulting
Underwriters shall have not completed such arrangements within such one (1)
Business Day period, then this Agreement shall terminate without liability on
the part of the Non-Defaulting Underwriters.
No action taken pursuant to this Section shall relieve any
defaulting Underwriter from liability in respect of its default.
In the event of any such default which does not result in a
termination of this Agreement, either the Non-Defaulting Underwriters or the
Company shall have the right to postpone Closing Time for a period not exceeding
seven days in order to effect any required changes in the Registration Statement
or Prospectus or in any other documents or arrangements.
Section 11. COMPUTATIONAL MATERIALS. (a) It is understood that any
Underwriter may prepare and provide to prospective investors certain
Computational Materials (as defined below) in connection with the Company's
offering of the Offered Certificates, subject to the following conditions:
(i) Each Underwriter shall comply with all applicable laws
and regulations in connection with the use of Computational Materials
including the No- Action Letter of May 20, 1994 issued by the
Commission to Kidder, Peabody Acceptance Corporation I, Kidder,
Peabody & Co. Incorporated and Kidder Structured Asset Corporation, as
made applicable to other issuers and underwriters by the Commission in
response to the request of the Public Securities Association dated May
24, 1994, and the No-Action Letter of February 17, 1995 issued by the
Commission to the Public Securities Association (collectively, the
"Kidder/PSA Letters").
(ii) As used herein, "Computational Materials" and the term
"ABS Term Sheets" shall have the meanings given such terms in the
Kidder/PSA Letters, but shall include only those Computational
Materials that have been prepared or delivered to prospective
investors by or at the direction of an Underwriter.
(iii) Each Underwriter shall provide the Company with
representative forms of all Computational Materials prior to their
first use, to the extent such forms have not previously been approved
by the Company for use by such Underwriter. The Underwriter shall
provide to the Company, for filing on Form 8-K as provided in Section
11(b), copies of all Computational Materials that are to be filed with
the Commission pursuant to the Kidder/PSA Letters. The Underwriter may
provide copies of the foregoing in a consolidated or aggregated form.
All Computational Materials described in this subsection (a)(iii) must
be provided to the Company not later than 10:00 a.m. New York time one
business day before filing thereof is required pursuant to the terms
of this Agreement.
(iv) If an Underwriter does not provide any Computational
Materials to the Company pursuant to subsection (a)(iii) above, such
Underwriter shall be deemed to have represented, as of the Closing
Date, that it 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 Kidder/PSA Letters.
(v) In the event of any delay in the delivery by any
Underwriter to the Company of all Computational Materials required to
be delivered in accordance with subsection (a)(iii) above, the Company
shall have the right to delay the release of the Prospectus to
investors or to any Underwriter, to delay the Closing Date and to take
other appropriate actions in each case as necessary in order to allow
the Company to comply with its agreement set forth in Section 11(b) to
file the Computational Materials by the time specified therein.
(vi) The Company shall file the Computational Materials (if
any) provided to it by each Underwriter under Section 11(a)(iii) with
the Commission pursuant to a Current Report on Form 8-K no later than
10:00 a.m. on the date required pursuant to the Kidder/PSA Letters.
Section 12. NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to Prudential, as representative of the
Underwriters, One New York Plaza, New York, New York 10292, Attention: Syndicate
Department (Fax: 212-778-7401); Lehman, as representative of the Underwriters,
Three World Financial Center, New York, New York 10285, Attention: Asset Backed
Securities (Fax: 212- 528-6049); and notices to the Company or any Originator
shall be directed to it at 2840 Morris Avenue, Union, New Jersey 07083,
Attention: Executive Vice President (Fax: 908-688-3846).
Section 13. PARTIES. This Agreement and the Pricing Agreement shall
each inure to the benefit of and be binding upon the Underwriters, the Company,
the Originators and their respective successors. Nothing expressed or mentioned
in this Agreement or the Pricing Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Underwriters, the Company,
the Originators and their respective successors and the controlling persons and
officers and directors referred to in Section 6 and 7 hereof and their heirs and
legal representatives, any legal or equitable right, remedy or claim under or
with respect to this Agreement or the Pricing Agreement or any provision herein
or therein contained. This Agreement and the Pricing Agreement and all
conditions and provisions hereof and thereof are intended to be for the sole and
exclusive benefit of the Underwriters, the Company, the Originators and their
respective successors, and said controlling persons and officers and directors
and their heirs and legal representatives, and for the benefit of no other
person, firm or corporation. No purchaser of Offered Certificates from the
Underwriters shall be deemed to be a successor by reason merely of such
purchase. The Company and the Originators shall be jointly and severally liable
for all obligations incurred under this Agreement and the Pricing Agreement.
Section 14. GOVERNING LAW AND TIME. This Agreement and the Pricing
Agreement shall be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed in said
State. Unless otherwise set forth herein, specified times of day refer to New
York time.
Section 15. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all such counterparts shall together constitute but one and the same
instrument.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among each of the Underwriters and the Company in accordance with its terms.
Very truly yours,
THE MONEY STORE INC.
By: /S/ MICHAEL H. BENOFF
Name: Michael H. Benoff
Title: Executive Vice President
THE ORIGINATORS LISTED ON
ANNEX A HERETO
By: /S/ MICHAEL H. BENOFF
Name: Michael H. Benoff
Title: Vice President
CONFIRMED AND ACCEPTED, as of
the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: /S/ LEN BLUM
Name: Len Blum
Title: Managing Director
LEHMAN BROTHERS INC.
By: /S/ MARTIN P. HARDING
Name: Martin P. Harding
Title: Managing Director
Acting on behalf of themselves
and as the representatives of
the Underwriters.
<PAGE>
ANNEX A
THE ORIGINATORS
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
<PAGE>
<TABLE>
<CAPTION>
ANNEX B
Morgan
Prudential Stanley &
Securities Lehman Salomon Merrill & Co. Co. Total
Incorporated Brothers Inc. Brothers, Inc. Lynch Incorporated
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class AF-1 $27,500,000 $11,000,000 $9,000,000 $9,000,000 $6,500,000 $63,000,000
Class AF-2 $28,900,000 $10,500,000 $7,500,000 $7,500,000 $6,000,000 $60,400,000
Class AF-3 $38,000,000 $14,000,000 $10,000,000 $10,000,000 $8,000,000 $80,000,000
Class AF-4 $22,000,000 $8,000,000 $6,000,000 $6,000,000 $5,000,000 $47,000,000
Class AF-5 $15,900,000 $6,000,000 $4,000,000 $4,000,000 $3,000,000 $32,900,000
Class AF-6 $18,000,000 $7,000,000 $5,000,000 $5,000,000 $4,000,000 $39,000,000
Class AF-7 $18,030,000 $6,500,000 $4,700,000 $4,700,000 $3,770,000 $3,770,000
Class AF-8 $19,000,000 $7,000,000 $5,000,000 $5,000,000 $4,000,000 $40,000,000
Class AV $276,000,000 $25,000,000 $70,000,000 $70,000,000 $57,000,000 $498,000,000
Class MV-1 $0 $45,000,000 $0 $0 $0 $45,000,000
Class MV-2 $0 $30,000,000 $0 $0 $0 $30,000,000
Class BV $11,670,000 $5,000,000 $3,800,000 $3,800,000 $2,730,000 $27,000,000
Class AH-1 $12,546,000 $25,091,000 $0 $0 $0 $37,637,000
Class AH-2 $15,588,000 $31,177,000 $0 $0 $0 $46,765,000
Class AH-3 $12,000,000 $24,005,000 $0 $0 $0 $36,005,000
Class AH-4 $12,622,000 $25,243,000 $0 $0 $0 $37,865,000
Class AH-5 $17,936,000 $35,873,000 $0 $0 $0 $53,809,000
Class AH-6 $3,776,000 $7,553,000 $0 $0 $0 $11,329,000
Class MH-1 $8,303,000 $16,607,000 $0 $0 $0 $24,910,000
Class MH-2 $4,992,000 $9,983,000 $0 $0 $0 $14,975,000
Class BH $3,902,000 $7,803,000 $0 $0 $0 $11,706,000
Class AMF $25,000,000 $0 $0 $0 $0 $25,000,000
Total $591,665,000 $358,335,000 $125,000,000 $125,000,000 $100,000,000 $1,300,000,000
</TABLE>
Exhibit 1.2
$1,300,000,000
THE MONEY STORE INC.
The Money Store Asset Backed Certificates,
Series 1997-C
PRICING AGREEMENT
September 26, 1997
Prudential Securities Incorporated
as representative of the several Underwriters
One New York Plaza
New York, New York 10292
Lehman Brothers Inc.
as representative of the several Underwriters
Three World Financial Center
New York, New York 10285
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated September 26,
1997 (the "Underwriting Agreement"), relating to $1,300,000,000 aggregate
principal amount of The Money Store Asset Backed Certificates, Series 1997-C,
Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class
AF-7, Class AF-8 (collectively, the "Pool I Certificates"), Class AV, Class
MV-1, Class MV-2, Class BV (collectively, the "Pool II Certificates"), Class
AH-1, Class AH-2, Class AH-3, Class AH-4, Class AH-5, Class AH-6, Class MH-1,
Class MH- 2, Class BH (collectively, the "Pool III Certificates") and Class AMF
(the "Pool IV Certificates," and together with the Pool I Certificates, the Pool
II Certificates and the Pool III Certificates, the "Offered Certificates").
Pursuant to the Underwriting Agreement, The Money Store Inc. (the "Company")
agrees with Prudential Securities Incorporated and Lehman Brothers Inc., as
representatives of the Underwriters, that the Initial Class Certificate Balance
and the Pass-Through Rates, shall be as follows:
INITIAL CLASS PASS-
CERTIFICATE THROUGH
CLASS BALANCE RATE
----- -------- -----
Class AF-1 $63,000,000 6.355%
Class AF-2 $60,400,000 6.310%
Class AF-3 $80,000,000 6.379%
Class AF-4 $47,000,000 6.370%
Class AF-5 $32,900,000 6.535%
Class AF-6 $39,000,000 6.670%
lass AF-7 $37,700,000 6.945%
Class AF-8 $40,000,000 6.575%
Class AV $498,000,000 (1)
Class MV-1 $45,000,000 (1)(2)
Class MV-2 $30,000,000 (1)(2)
Class BV $27,000,000 (1)
Class AH-1 $37,637,000 6.400%
Class AH-2 $46,765,000 6.330%
Class AH-3 $36,005,000 6.340%
Class AH-4 $37,865,000 6.375%
Class AH-5 $53,809,000 6.590%
Class AH-6 $11,329,000 6.750%
Class MH-1 $24,910,000 6.890%
Class MH-2 $14,975,000 7.355%
Class BH $11,705,000 7.405%
Class AMF $25,000,000 6.877%
Total $1,300,000,000
(1) The Pass-Through Rate for the Class AV and Class BV Certificates
will equal LIBOR plus 0.045% and 0.960%, respectively, subject to the
applicable Net Funds Cap but in no event exceeding 14% per annum. In
the case of the Class MV-1 and Class MV-2 Certificates, in no event
shall the Pass-Through Rate exceed 14% per annum.
(2) The Pass-Through Rate for the Class MV-1 and Class MV-2
Certificates will be determined pursuant to the Auction Procedures
described in the Prospectus.
The Offered Certificates will be offered by the Underwriters to the
public from time to time in negotiated transactions or otherwise, at varying
prices to be determined at the time of sale.
<PAGE>
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among each of the Underwriters and the Company in accordance with its terms.
Very truly yours,
THE MONEY STORE INC.
By: /S/ MICHAEL H. BENOFF
Name: Michael H. Benoff
Title: Executive Vice President
THE ORIGINATORS LISTED ON
ANNEX A HERETO
By: /S/ MICHAEL H. BENOFF
Name: Michael H. Benoff
Title: Vice President
CONFIRMED AND ACCEPTED, as of
the date first above written:
PRUDENTIAL SECURITIES INCORPORATED
By: /S/ LEN BLUM
Name: Len Blum
Title: Managing Director
LEHMAN BROTHERS INC.
By: /S/ MARTIN P. HARDING
Name: Martin P. Harding
Title: Managing Director
Acting on behalf of themselves
and as the representatives of
the Underwriters.
Exhibit 1.3
POOLING AND SERVICING AGREEMENT
Dated as of August 31, 1997
THE BANK OF NEW YORK
(Trustee)
and
THE MONEY STORE INC.
(Representative, Servicer and Claims Administrator)
and
THE ORIGINATORS LISTED HEREIN
The Money Store Asset Backed Certificates, Series 1997-C
Class AF-1, Class AF-2, Class AF-3, Class AF-4,
Class AF-5, Class AF-6, Class AF-7, Class AF-8,
Class AV, Class MV-1, Class MV-2, Class BV, Class AH-1, Class
AH-2, Class AH-3, Class AH-4,
Class AH-5, Class AH-6, Class MH-1, MH-2, Class BH, Class
AMF, Class X, Class R-1 and Class R-2
<PAGE>
TABLE OF CONTENTS
Section Page
ARTICLE I DEFINITIONS..................................................2
ARTICLE II SALE AND CONVEYANCE OF THE TRUST FUND.......................1
Section 2.01 Sale and Conveyance of Trust Fund; Priority
and Subordination of Ownership Interests..........1
Section 2.02 Possession of Mortgage Files......................1
Section 2.03 Books and Records.................................2
Section 2.04 Delivery of Mortgage Loan Documents...............2
Section 2.05 Acceptance by Trustee and Custodian of the
Trust Fund; Certain Substitutions; Certification
by Trustee and Custodian..........................4
Section 2.06 Designations under REMIC Provisions;
Designation of Startup Day........................7
Section 2.07 Authentication of Certificates....................8
Section 2.08 Fees and Expenses of the Trustee and
Co-Trustee........................................9
Section 2.09 Sale and Conveyance of the Subsequent
Mortgage Loans....................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES.............................1
Section 3.01 Representations of Representative,
Servicer, Claims Administrator and Originators.......1
Section 3.02 Individual Mortgage Loans........................8
Section 3.03 Purchase and Substitution........................19
ARTICLE IV THE CERTIFICATES............................................1
Section 4.01 The Certificates..................................1
Section 4.02 Registration of Transfer and Exchange of
Certificates......................................4
Section 4.03 Mutilated, Destroyed, Lost or Stolen
Certificates......................................9
Section 4.04 Persons Deemed Owners............................10
ARTICLE V ADMINISTRATION AND SERVICING OF MORTGAGE LOANS...............1
Section 5.01 Duties of the Servicer............................1
Section 5.02 Liquidation of Mortgage Loans.....................5
Section 5.03 Establishment of Principal and Interest
Accounts; Deposits in Principal and Interest
Accounts..........................................6
Section 5.04 Permitted Withdrawals From the Principal
and Interest Accounts.............................8
Section 5.05 Payment of Taxes, Insurance and Other
Charges..........................................10
Section 5.06 Transfer of Accounts.............................10
Section 5.07 Maintenance of Hazard Insurance..................10
Section 5.08 Maintenance of Mortgage Impairment Insurance
Policy...........................................11
Section 5.09 Fidelity Bond....................................11
Section 5.10 Title, Management and Disposition of REO
Property.........................................12
Section 5.11 Certain Tax Information..........................13
Section 5.12 Collection of Certain Mortgage Loan Payments.....14
Section 5.13 Access to Certain Documentation and
Information Regarding the Mortgage Loans.........14
Section 5.14 Superior Liens...................................14
Section 5.15 Duties of the Claims Administrator...............15
Section 5.16 [Reserved].......................................16
ARTICLE VI PAYMENTS TO THE CERTIFICATEHOLDERS. ........................1
Section 6.01 Establishment of Certificate Accounts;
Deposits in Certificate Accounts; Permitted
Withdrawals from Certificate Accounts.............1
Section 6.02 Establishment of Pre-Funding Account and
Capitalized Interest Account; Deposits in
Pre-Funding Account and Capitalized Interest
Account; Permitted Withdrawals from Pre-Funding
Account and Capitalized Interest Account.........2
Section 6.03 Establishment of Expense Accounts; Deposits
in Expense Accounts;
Permitted Withdrawals from Expense Accounts...4
Section 6.04 Establishment of Insurance Accounts;
Deposits in Insurance Accounts; Permitted
Withdrawals from Insurance Accounts..............6
Section 6.05 Establishment of Spread Account; Deposits
in Spread Account; Permitted Withdrawals
from Spread Account..............................7
Section 6.06 Establishment of FHA Premium Account;
Deposits in FHA Premium Account; Permitted
Withdrawals from FHA Premium Account.............9
Section 6.07 Investment of Accounts..........................10
Section 6.08 Priority and Subordination of, Distributions....11
Section 6.09 Allocation of Realized Losses...................21
Section 6.10 Statements......................................22
Section 6.11 Advances by the Servicer........................27
Section 6.12 Compensating Interest...........................28
Section 6.13 Reports of Foreclosure and Abandonment of
Mortgaged Property..............................28
Section 6.14 Allocation of Total Monthly Excess Cashflow.....29
Section 6.15 Establishment of Servicing Accounts;
Collection of Taxes, Assessments and
Similar Items...................................30
ARTICLE VII GENERAL SERVICING PROCEDURE...............................1
Section 7.01 Assumption Agreements............................1
Section 7.02 Satisfaction of Mortgages and Release of
Mortgage Files...................................2
Section 7.03 Servicing Compensation and Contingency Fee.......3
Section 7.04 Annual Statement as to Compliance................4
Section 7.05 Annual Independent Public Accountants'
Servicing Report.................................4
Section 7.06 Trustee's, Co-Trustee's and Certificate
Insurer's Right to Examine
Servicer Records and Audit Operations............4
Section 7.07 Reports to the Trustee and the Certificate
Insurer; Principal and Interest Account
Statements.......................................5
ARTICLE VIII REPORTS TO BE PROVIDED BY SERVICER.......................1
Section 8.01 Financial Statements.............................1
ARTICLE IX THE SERVICER...............................................1
Section 9.01 Indemnification; Third Party Claims..............1
Section 9.02 Merger or Consolidation of the
Representative, the Servicer and the
Claims Administrator.............................2
Section 9.03 Limitation on Liability of the Servicer and
Others...........................................2
Section 9.04 Servicer and Claims Administrator Not to
Resign...........................................2
Section 9.05 Appointment of Assistant Claims
Administrator....................................3
Section 9.06 Right of Certificate Insurer to Replace
Servicer and Claims Administrator................3
ARTICLE X DEFAULT.....................................................1
Section 10.01 Events of Default...............................1
Section 10.02 Trustee and Co-Trustee to Act; Appointment
of Successor....................................3
Section 10.03 Waiver of Defaults..............................5
Section 10.04 Transfer of Tax Matters Person Residual
Interest........................................5
Section 10.05 Control by Majority Certificateholders..........5
ARTICLE XI TERMINATION................................................1
Section 11.01 Termination.....................................1
Section 11.02. Termination Upon Loss of REMIC Status..........3
Section 11.03 Additional Termination Requirements.............4
Section 11.04 [omitted].......................................5
Section 11.05 Accounting Upon Termination of Servicer
and Claims Administrator........................5
ARTICLE XII THE TRUSTEE...............................................1
Section 12.01 Duties of Trustee...............................1
Section 12.02 Certain Matters Affecting the Trustee...........2
Section 12.03 Trustee Not Liable for Certificates or
Mortgage Loans.................................4
Section 12.04 Trustee May Own Certificates....................4
Section 12.05 Servicer To Pay Trustee's Fees and Expenses.....4
Section 12.06 Eligibility Requirements for Trustee............5
Section 12.07 Resignation and Removal of the Trustee..........5
Section 12.08 Successor Trustee...............................6
Section 12.09 Merger or Consolidation of Trustee..............7
Section 12.10 Appointment of Co-Trustee or Separate
Trustee..............................................7
Section 12.11 Authenticating Agent............................9
Section 12.12 Tax Returns and Reports.........................9
Section 12.13 Appointment of Custodians.......................1
Section 12.14. Protection of Trust Fund.......................1
Section 12.15. Calculation of LIBOR...........................2
ARTICLE XIII MISCELLANEOUS PROVISIONS.................................1
Section 13.01 Acts of Certificateholders......................1
Section 13.02 Amendment.......................................1
Section 13.03 Recordation of Agreement........................2
Section 13.04 Duration of Agreement...........................2
Section 13.05 Governing Law...................................2
Section 13.06 Notices.........................................2
Section 13.07 Severability of Provisions......................3
Section 13.08 No Partnership..................................3
Section 13.09 Counterparts....................................3
Section 13.10 Successors and Assigns..........................3
Section 13.11 Headings........................................3
Section 13.12 The Certificate Insurer.........................3
Section 13.13 Paying Agent....................................4
Section 13.14 Notification to Rating Agencies.................5
Section 13.15 Third Party Rights..............................5
<PAGE>
SCHEDULE I Description of Certain Litigation
SCHEDULE II Auction Procedures
EXHIBIT A Contents of Mortgage File
EXHIBIT B Forms of Certificates
EXHIBIT C Principal and Interest Account
Letter Agreement
EXHIBIT D Resale Certification
EXHIBIT E [Omitted]
EXHIBIT E(1) [Omitted]
EXHIBIT F Form of Trustee/Co-Trustee Initial Certification
EXHIBIT F-1 Form of Trustee/Co-Trustee Interim Certification
EXHIBIT G Form of Trustee/Co-Trustee Final Certification
EXHIBIT H Pool I Mortgage Loan Schedule
EXHIBIT H-1 Pool II Mortgage Loan Schedule
EXHIBIT H-2 Pool III Mortgage Loan Schedule
EXHIBIT H-3 Pool IV Mortgage Loan Schedule
EXHIBIT I List of Originators
EXHIBIT J Request for Release of Documents
EXHIBIT J-1 Request for Release Documents of 90 Day
Delinquent FHA Loans
EXHIBIT K Transfer Affidavit
EXHIBIT L Form of Notice
EXHIBIT M Custodial Agreement
EXHIBIT M-1 Pool III Custodial Agreement
EXHIBIT N Form of Liquidation Report
EXHIBIT O Form of Delinquency Report
EXHIBIT P [Omitted]
EXHIBIT Q [Omitted]
EXHIBIT R Servicer's Monthly Computer Tape Format
EXHIBIT S Subservicing Agreement
EXHIBIT T Prices for Low Interest Mortgage Loans
<PAGE>
Agreement dated as of August 31, 1997, among The Bank of New York, as
trustee (the "Trustee"), the entities listed on Exhibit I hereto (collectively,
the "Originators") and The Money Store Inc., as Representative (the
"Representative"), Servicer (the "Servicer") and Claims Administrator (the
"Claims Administrator"):
PRELIMINARY STATEMENT
In order to facilitate the servicing of certain Mortgage Loans by the
Servicer, the Representative, the Servicer, the Originators and the Claims
Administrator are entering into this Agreement with the Trustee. The Originators
are selling the Mortgage Loans and amounts on deposit in the Pre-Funding Account
to the Trustee for the benefit of the Certificateholders, pursuant to which 25
classes of Certificates are being issued, denominated on the face thereof as The
Money Store Asset Backed Certificates, 1997-C, Class AF-1, Class AF-2, Class
AF-3, Class AF-4, Class AF-5, Class AF-6, Class AF-7, Class AF-8, Class AV,
Class MV-1, Class MV-2, Class BV, Class AH-1, Class AH-2, Class AH-3, Class
AH-4, Class AH-5, Class AH-6, Class MH-1, Class MH-2, Class BH, Class AMF, Class
X, Class R-1 and Class R-2, respectively, representing in the aggregate a 100%
undivided ownership interest in the Mortgage Loans and amounts on deposit in the
Pre- Funding Account. The Initial Pool I, Initial Pool II, Initial Pool III and
Initial Pool IV Mortgage Loans have an aggregate outstanding principal balance
of $368,508,251.83, $480,629,733.81, $215,998,857.49 and $18,793,612.27,
respectively (and an aggregate outstanding Principal Balance of
$1,083,930,455.40, which gives effect to the discounts on the Low Interest
Mortgage Loans of $0), as of August 31, 1997, except for those Initial Mortgage
Loans originated after August 31, 1997 and delivered to the Trustee on the
Closing Date as to which the aggregate outstanding principal balance shall be as
of the date of the related Mortgage Note (the "Cut-Off Date"), after application
of payments received by the Originators on or before such date, and the original
Pre- Funded Amount equals $216,069,544.60. Except for the Low Interest Mortgage
Loans in the related Pool, if any, each Initial Mortgage Loan in such Pool has,
and each Subsequent Mortgage Loan in such Pool will have, a Mortgage Interest
Rate in excess of the Class Adjusted Mortgage Loan Remittance Rate of each Class
of Certificates in the related Pool. The Class R Certificates are subordinated
to the other Classes of Certificates, in each case to the extent described
herein. As provided herein, two separate real estate mortgage investment conduit
("REMIC") elections will be made in connection with the assets constituting each
of REMIC I and REMIC II for federal income tax purposes. On the Startup Day, all
the Classes of REMIC II Regular Certificates will be designated "regular
interests" in REMIC II and the Class R-2 Certificates will be designated the
single class of "residual interests" in such REMIC for purposes of the REMIC
Provisions (as defined herein). On the Startup Day, all the Classes of
Certificates except for the Class R-1 and Class R-2 Certificates will be
designated "regular interests" in REMIC I and the Class R-1 Certificates will be
designated the single class of "residual interests" in such REMIC for purposes
of the REMIC Provisions.
The parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Whenever used herein, the following words and phrases, unless the context
otherwise requires, shall have the following meanings. This Agreement relates to
a Trust Fund evidenced by The Money Store Asset Backed Certificates, Series
1997, Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6,
Class AF-7, Class AF-8, Class AV, Class MV-1, Class MV-2, Class BV, Class AH-1,
Class AH-2, Class AH-3, Class AH-4, Class AH-5, Class AH-6, Class MH- 1, Class
MH-2, Class BH, Class AMF, Class X, Class R-1 and Class R-2. Unless otherwise
provided, all calculations of interest pursuant to this Agreement are based on a
360-day year and twelve 30-day months.
ACCELERATED PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance Date and Pool
II or III, the lesser of (i) the portion, if any, of the Pool Available Amount
for Pool II or Pool III, respectively, remaining after payment of amounts set
forth in Section 6.08(d)(Y)(i) through (ix) or 6.08(d)(Z)(i) through (ix),
inclusive, respectively, and (ii) the Subordinated Deficiency Amount for such
Remittance Date.
ACCOUNT: The Certificate Accounts, Pre-Funding Account, Expense Accounts,
Capitalized Interest Account, Spread Account, Servicing Account or Insurance
Accounts (including any sub-accounts of any of the foregoing) established and
held in trust by the Trustee for the Certificateholders and the FHA Premium
Account established and held in trust by the Trustee for the benefit of the
Certificateholders of the Pool III Certificates to reimburse the Servicer and
the Certificate Insurer for payments with respect to FHA Insurance Premiums or
to make payments with respect to FHA Insurance Premiums. The obligation to
establish and maintain the Accounts is not delegable.
ADDITION NOTICE: With respect to the transfer of Subsequent Mortgage Loans
to the Trust Fund pursuant to Section 2.09 herein, notice, which shall be given
not later than five Business Days prior to the related Subsequent Transfer Date,
of the Representative's designation of Subsequent Mortgage Loans of the related
Pool to be sold to the Trust Fund and the aggregate Principal Balance of such
Subsequent Mortgage Loans.
ADJUSTABLE RATE CERTIFICATES: The Class AV and Class BV Certificates.
ADJUSTED MORTGAGE INTEREST RATE: With respect to each Mortgage Loan, a
percentage per annum, equal to the related Mortgage Interest Rate less the per
annum rate used in calculating (i) the Annual Expense Escrow Amount, (ii) in the
case of a Pool I or a Pool IV Mortgage Loan, the premiums payable to the
Certificate Insurer as set forth in the Insurance Agreement, (iii) in the case
of a Pool III Mortgage Loan the FHA Insurance Premium in connection with FHA
Loans for which the related Mortgagor pays the FHA Insurance Premium as part of
the Mortgage Interest Rate, (iv) the Servicing Fee, (v) the Contingency Fee and
(vi) with respect to a Pool II Mortgage Loan, the Auction Agent Fee.
AGGREGATE INITIAL SPREAD ACCOUNT DEPOSIT: With respect to any Remittance
Date, the sum of the Initial Pool Spread Account Deposits for Pool I and Pool
IV.
AGREEMENT: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
ANNUAL EXPENSE ESCROW AMOUNT: An amount equal to the product of (i) .02%
per annum and (ii) the aggregate Class Principal Balances of the Class A, Class
M and Class B Certificates, which is computed and payable on a monthly basis and
represents the estimated annual Trustee's and Co-Trustee's fees and expenses of
the Trust Fund.
ASSIGNMENT OF MORTGAGE: An assignment of the Mortgage, notice of transfer
or equivalent instrument sufficient under the laws of the jurisdiction wherein
the related Mortgaged Property is located to reflect of record the sale of the
Mortgage to the Trustee (or, with respect to Mortgages relating to Pool III
Mortgage Loans, the Co-Trustee) for the benefit of the Certificateholders.
AUCTION AGENT: The meaning set forth in the Auction Procedures.
AUCTION AGENT AGREEMENT: The meaning set forth in the Auction Procedures.
AUCTION AGENT FEE: The meaning set forth in the Auction Agent Agreement.
The Auction Agent Fee includes the Broker-Dealer Fee payable to the
Broker-Dealer (each as defined in the Auction Procedures).
AUCTION PROCEDURES: The procedures set forth in Schedule II hereof by which
the Auction Rate is determined.
AUCTION RATE: The rate of interest per annum that results from
implementation of the Auction Procedures and is determined as described in
Section 2.1.1(c)(ii) thereof.
AUCTION RATE CERTIFICATES: The Class MV-1 and Class MV-2 Certificates.
AUCTION REPORTING DATE: That day of each month which is the fifth Business
Day prior to the Remittance Date occurring in such month.
AUTHENTICATING AGENT: Initially, The Bank of New York, and thereafter, any
successor appointed pursuant to Section 12.11.
BIF: The Bank Insurance Fund, or any successor thereto.
BUSINESS DAY: Any day other than (i) a Saturday or Sunday, or (ii) a day on
which banking institutions in the States of New York, New Jersey, Minnesota or
Wisconsin are authorized or obligated by law or executive order to be closed.
When used with respect to an Interest Determination Date, "Business Day" shall
also mean a day on which banks are open for dealing in foreign currency and
exchange in London and New York City.
CAPITALIZED INTEREST ACCOUNT: The account established in accordance with
Section 6.02 hereof and maintained by the Trustee.
CAPITALIZED INTEREST REQUIREMENT: With respect to each Pool and the
Remittance Dates in October, November and December 1997, the excess, if any, of
(i) for Pool I, Pool III and Pool IV, 30 days' interest calculated at the
weighted average Class Remittance Rates of the Classes of Certificates of such
Pool, and for Pool II, interest calculated on the actual number of days since
the last Remittance Date (or with respect to the Remittance Date in October
1997, the actual number of days from September 15, 1997 to but not including
such Remittance Date with respect to the Adjustable Rate Certificates and the
actual number of days from the Closing Date to but not including such Remittance
Date with respect to the Auction Rate Certificates) to but not including the
related Remittance Date at the weighted average Class Remittance Rates of the
Pool II Certificates, on the excess of (a) the Pool Principal Balance of such
Pool for such Remittance Date over (b) the aggregate Principal Balances of the
Mortgage Loans of such Pool for such Remittance Date over (ii) any Pool
Pre-Funding Earnings for such Pool to be transferred to the applicable
Certificate Account on such Remittance Date pursuant to Section 6.02(d). With
respect to the Special Remittance Date, 28 days' interest (or, in the case of
Pool II, 14 days' interest) calculated at the weighted average Class Remittance
Rates of the Classes of Certificates of such Pool on the amount to be
transferred on the Special Remittance Date from the Pre-Funding Account to the
Certificate Account relating to the Certificates of such Pool pursuant to
Section 6.02(c).
CERTIFICATE: Any Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class
AF-5, Class AF-6, Class AF-7, Class AF-8, Class AV, Class MV-1, Class MV-2,
Class BV, Class AH-1, Class AH-2, Class AH-3, Class AH-4, Class AH-5, Class
AH-6, Class MH-1, Class MH-2, Class BH, Class AMF, Class X, Class R-1 or Class
R-2 Certificate executed by the Servicer and authenticated by the Trustee or the
Authenticating Agent substantially in the forms annexed hereto in Exhibit B.
CERTIFICATE ACCOUNTS: As described in Section 6.01.
CERTIFICATEHOLDER or HOLDER: Each 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 Representative, the Servicer, the
Claims Administrator, any Subservicer or any Originator, or any affiliate of any
of them, shall be deemed not to be outstanding and the undivided Percentage
Interest evidenced thereby shall not be taken into account in determining
whether the requisite percentage of Certificates necessary to effect any such
consent, waiver, request or demand has been obtained. When used with respect to
any Class or Pool of Certificates, a Certificateholder or Holder of such Class
or Pool of Certificates, as the case may be.
CERTIFICATEHOLDERS' INTEREST CARRYOVER: For any Remittance Date on which
the Class AV, Class MV-1, Class MV-2 or Class BV Remittance Rate is based upon
the applicable Net Funds Cap for Pool II, the excess of (i) the amount of
interest the Class AV, Class MV-1, Class MV-2 or Class BV Certificates would be
entitled to receive on such Remittance Date had interest been calculated at a
rate equal to LIBOR plus the applicable Margin or the applicable Auction Rate,
as the case may be, (but in no event exceeding 14.00% per annum), over (ii) the
amount of interest such Class will receive on such Remittance Date at the
applicable Net Funds Cap for Pool II, together with the unpaid portion of any
such excess from prior Remittance Dates (and interest thereon at the then
applicable Class AV, Class MV-1, Class MV-2 or Class BV Remittance Rate, as the
case may be, without giving effect to the Net Funds Cap, but in no event
exceeding 14.00% per annum). No Certificateholders' Interest Carryover shall be
paid on the Class AV, Class MV-1, Class MV-2 or Class BV Certificates after the
Class Principal Balance of the respective Class is reduced to zero.
CERTIFICATE INSURANCE POLICIES: Collectively, the certificate guaranty
insurance policies relating to the Certificates of Pool I and Pool IV, each
dated the Closing Date, and each issued by the Certificate Insurer for the
benefit of the Holders of the Certificates of the related Pool, pursuant to
which the Certificate Insurer guarantees Insured Payments.
CERTIFICATE INSURER: MBIA Insurance Corporation, a New York stock insurance
corporation, or any successor thereof, as issuer of the Certificate Insurance
Policies.
CERTIFICATE REGISTER: As described in Section 4.02.
CERTIFICATE REGISTRAR: Initially, The Bank of New York, and thereafter, any
successor appointed pursuant to Section 4.02.
CHANGE DATE: The date on which the Mortgage Interest Rate of each Pool II
Mortgage Loan is subject to adjustment, which date is the Due Date set forth in
the related Mortgage Note and each first, third, sixth or twelfth Due Date
thereafter, as set forth in the related Mortgage Note.
CLAIM: An insurance claim submitted to the FHA by the Claims Administrator
with respect to a 90 Day Delinquent FHA Loan pursuant to the FHA Regulations.
CLAIMS ADMINISTRATOR: The Servicer, acting in the capacity of Claims
Administrator appointed as herein provided.
CLASS: Collectively, Certificates having the same priority of payment and
bearing the same designation.
CLASS A CERTIFICATE: A Certificate denominated as a Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class AF-7, Class AF-8, Class
AV, Class AH-1, Class AH-2, Class AH-3, Class AH-4, Class AH-5, Class AH-6 or
Class AMF Certificate.
CLASS A CERTIFICATEHOLDER: A Holder of a Class A Certificate.
CLASS A POOL FORMULA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Remittance Date and each Pool of Certificates, means the applicable Senior
Percentage multiplied by the applicable Pool Principal Distribution Amount,
provided, however, that, with respect to any Remittance Date, the Pool Class A
Formula Principal Distribution Amount shall never exceed the aggregate Class
Principal Balances of the Class A Certificates of the applicable Pool..
CLASS A POOL PRINCIPAL BALANCE: The sum of the Class Principal Balances of
the Pool I Class A Certificates, the Pool II Class A Certificates, the Pool III
Class A Certificates or the Pool IV Class A Certificates, as applicable.
CLASS A POOL PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance
Date and the Pool II or Pool III Class A Certificates, the lesser of (i) the
applicable Class A Pool Formula Principal Distribution Amount or (ii) the
applicable Pool Available Amount remaining after the payment of all Class
Current Interest Requirements payable on such Remittance Date.
CLASS ADJUSTED MORTGAGE LOAN REMITTANCE RATE: With respect to each Mortgage
Loan, a percentage per annum, being the sum of (i) (a) the Class AF-1, Class
AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class AF-7 or then current
Class AF-8 Remittance Rate, as the case may be, with respect to a Pool I
Mortgage Loan, (b) the then current Class AV, Class MV-1, Class MV-2 or Class BV
Remittance Rate with respect to a Pool II Mortgage Loan, (c) the Class AH-1,
Class AH-2, Class AH-3, Class AH-4, Class AH-5, Class AH- 6, Class MH-1, Class
MH-2 or Class BH Remittance Rate, as the case may be, with respect to a Pool III
Mortgage Loan or (d) the Class AMF Remittance Rate with respect to a Pool IV
Mortgage Loan, (ii) .02% per annum, relating to the Annual Expense Escrow
Amount, (iii) with respect to the Pool I and Pool IV Mortgage Loans the
applicable per annum rate relating to premiums payable to the Certificate
Insurer as set forth in the Insurance Agreement, (iv) with respect to the Pool
II Mortgage Loans, for purposes of determining the Class Adjusted Mortgage Loan
Remittance Rate with respect to Class MV-1 and Class MV-2 Certificates, the
Auction Agent Fee as set forth in the Auction Agent Agreement, and (v) with
respect to FHA Loans for which the FHA Insurance Premium is paid by the related
Mortgagor, the applicable Insurance Rate.
CLASS AF-1 CERTIFICATE: A Certificate denominated as a Class AF-1
Certificate.
CLASS AF-1 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-1 Certificateholders, which shall be equal to 6.355%.
CLASS AF-2 CERTIFICATE: A Certificate denominated as a Class AF-2
Certificate.
CLASS AF-2 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-2 Certificateholders, which shall be equal to 6.310%.
CLASS AF-3 CERTIFICATE: A Certificate denominated as a Class AF-3
Certificate.
CLASS AF-3 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-3 Certificateholders, which shall be equal to 6.307%.
CLASS AF-4 CERTIFICATE: A Certificate denominated as a Class AF-4
Certificate.
CLASS A-4F REMITTANCE RATE: The annual rate of interest payable to the
Class A-4F Certificateholders, which shall be equal to 6.370%.
CLASS AF-5 CERTIFICATE: A Certificate denominated as a Class AF-5
Certificate.
CLASS AF-5 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-5 Certificateholders, which shall be equal to 6.535%.
CLASS AF-6 CERTIFICATE: A Certificate denominated as a Class AF-6
Certificate.
CLASS AF-6 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-6 Certificateholders, which shall be equal to 6.670%
CLASS AF-7 CERTIFICATE: A Certificate denominated as a Class AF-7
Certificate.
CLASS AF-7 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-7 Certificateholders, which shall be equal to 6.945%.
CLASS AF-8 CERTIFICATE: A Certificate denominated as a Class AF-8
Certificate.
CLASS AF-8 PRINCIPAL DISTRIBUTION AMOUNT: For any Remittance Date, the
product of (i) the applicable Class AF-8 Principal Percentage for such
Remittance Date and (ii) the Class AF-8 Pro Rata Principal Distribution Amount
for such Remittance Date; provided, however, that in no event will the Class
AF-8 Principal Distribution Amount on any Remittance Date be greater than the
Pool Principal Distribution Amount for Pool I for such Remittance Date or the
Class Principal Balance of the Class AF-8 Certificates.
CLASS AF-8 PRINCIPAL PERCENTAGE: For each Remittance Date, the Class AF-8
Principal Percentage shall be as follows:
Class AF-8
Principal
Remittance Dates Percentage
October 1997 - September 2000 0%
October 2000 - September 2002 45%
October 2002 - September 2003 80%
October 2003 - September 2004 100%
October 2004 and thereafter 300%
CLASS AF-8 PRO RATA PRINCIPAL DISTRIBUTION AMOUNT: For each Remittance
Date, an amount equal to the product of (x) a fraction, the numerator of which
is the Class Principal Balance of the Class AF-8 Certificates immediately prior
to such Remittance Date and the denominator of which is the aggregate Class
Principal Balance of the Pool I Certificates immediately prior to such
Remittance Date and (y) the Pool Principal Distribution Amount for Pool I on
such Remittance Date.
CLASS AF-8 REMITTANCE RATE: The annual rate of interest payable to the
Class AF-8 Certificateholders, which shall be equal to 6.575%.
CLASS AH-1 CERTIFICATE: A Certificate denominated as a Class AH-1
Certificate.
CLASS AH-1 REMITTANCE RATE: The annual rate of interest payable to the
Class AH-1 Certificateholders, which shall be equal to 6.400%.
CLASS AH-2 CERTIFICATE: A Certificate denominated as a Class AH-2
Certificate.
CLASS AH-2 REMITTANCE RATE: The annual rate of interest payable to the
Class AH-2 Certificateholders, which shall be equal to 6.330%.
CLASS AH-3 CERTIFICATE: A Certificate denominated as a Class AH-3
Certificate.
CLASS AH-3 REMITTANCE RATE: The annual rate of interest payable to the
Class AH-3 Certificateholders, which shall be equal to 6.340%.
CLASS AH-4 CERTIFICATE: A Certificate denominated as a Class AH-4
Certificate.
CLASS AH-4 REMITTANCE RATE: The annual rate of interest payable to the
Class AH-4 Certificateholders, which shall be equal to 6.375%.
CLASS AH-5 CERTIFICATE: A Certificate denominated as a Class AH-5
Certificate.
CLASS AH-5 REMITTANCE RATE: The annual rate of interest payable to the
Class AH-5 Certificateholders, which shall be equal to 6.590%.
CLASS AH-6 CERTIFICATE: A Certificate denominated as a Class AH-6
Certificate.
CLASS AH-6 REMITTANCE RATE: The annual rate of interest payable to the
Class AH-6 Certificateholders, which shall be equal to 6.750%.
CLASS AMF CERTIFICATE: A Certificate denominated as a Class AMF
Certificate.
CLASS AMF REMITTANCE RATE: The annual rate of interest payable to the Class
AMF Certificateholders, which shall be equal to 6.877%.
CLASS AV CERTIFICATE: A Certificate denominated as a Class AV Certificate.
CLASS AV REMITTANCE RATE: The annual rate of interest payable to the Class
AV Certificateholders, which shall be equal to 5.83125% for the first Remittance
Date. Thereafter, the Class AV Remittance Rate shall be equal to the lesser of
(i) LIBOR plus 0.175% (or plus 0.35% for each Remittance Date occurring after
the Optional Servicer Termination Date) and (ii) the Net Funds Cap, but in no
event exceeding 14.0% per annum.
CLASS B CERTIFICATE: A Certificate denominated as a Class BH or Class BV
Certificate.
CLASS B CERTIFICATEHOLDER: A Holder of a Class B Certificate.
CLASS B POOL APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance Date
and the Pool II or Pool III Class B Certificates, the lesser of (x) the Class
Principal Balance of the Pool II or Pool III Class B Certificates, as
applicable, (after taking into account the distribution of the applicable Class
B Pool Principal Distribution Amount on such Remittance Date, but prior to the
application for the applicable Class B Pool Applied Realized Loss Amount, if
any, on such Remittance Date) and (y) the applicable Pool Applied Realized Loss
Amount as of such Remittance Date.
CLASS B POOL CROSS-OVER DATE: Means with respect to Pool II and Pool III
Certificates the earlier of (a) the Remittance Date on which the Class Principal
Balance of the Class MV-2 or MH-2 Certificates, respectively, is reduced to zero
and (b) the first Remittance Date on or after the Remittance Date occurring in
October 2000 on which the fraction, expressed as a percentage, the numerator of
which is the sum of the Class Principal Balances of the Pool II or Pool III
Class A and Class M Certificates, respectively, as of the immediately preceding
Remittance Date and the denominator of which is the aggregate Principal Balances
of the Mortgage Loans in the related Pool as of the end of the second preceding
Due Period, is less than or equal to 87.0% in the case of Pool II and 75.8% in
the case of Pool III.
CLASS B POOL FORMULA PRINCIPAL DISTRIBUTION AMOUNT: Means with respect to
Pool II or Pool III Certificates, (i) prior to the Class B Pool Cross-over Date,
$0 and (ii) on each Remittance Date on or after the Class B Cross-over Date, the
applicable Class B Pool Percentage multiplied by the applicable Pool Principal
Distribution Amount; provided, however, that with respect to any Remittance
Date, the Class B Pool Formula Principal Distribution Amount shall never exceed
the Class Principal Balance of the Pool II or Pool III Class B Certificates, as
applicable.
CLASS B POOL PERCENTAGE: Means (i) until such time as the Class Principal
Balances of the Class A and Class M Certificates of the same Pool have been
reduced to zero, 100% minus the applicable Senior Percentage and (ii)
thereafter, 100%.
CLASS B POOL PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance
Date and the Pool II or Pool III Class B Certificates means the lesser of (i)
the applicable Class B Pool Formula Principal Distribution Amount or (ii) the
applicable Pool Available Amount remaining after the payment of all Class
Current Interest Requirements for the applicable Pool, all applicable Class A
Pool Principal Distribution Amounts and the Class MV-1 and Class MV-2 Principal
Distribution Amounts or the Class MH-1 and Class MH-2 Principal Distribution
Amounts, as applicable, payable on such Remittance Date.
CLASS B POOL REALIZED LOSS AMOUNT: Means, as of any Remittance Date and the
Pool II or Pool III Class B Certificates, the lesser of (x) the Unpaid Realized
Loss Amount for Class BV or Class BH Certificates, as applicable, as of such
Remittance Date and (y) the portion of the applicable Pool Available Amount for
the Pool II or Pool III Certificates, as applicable, for such Remittance Date
remaining after application of amounts set forth in Section 6.08(d)(Y)(i)-(xv)
or Section 6.08(d)(Z)(i)-(xv), inclusive.
CLASS BH CERTIFICATE: A Certificate denominated as a Class BH Certificate.
CLASS BH REMITTANCE RATE: The annual rate of interest payable to the Class
BH Certificateholders, which shall be equal to 7.405%.
CLASS BV CERTIFICATE: A Certificate denominated as a Class BV Certificate.
CLASS BV REMITTANCE RATE: The annual rate of interest payable to the Class
BV Certificateholders, which shall be equal to 6.61625% for the first Remittance
Date. Thereafter, the Class BV Remittance Rate shall be equal to the lesser of
(i) LIBOR plus 0.960% (or plus 1.44% for each Remittance Date occurring after
the Optional Servicer Termination Date) and (ii) the Net Funds Cap, but in no
event exceeding 14.0% per annum.
CLASS CURRENT INTEREST REQUIREMENT: For each Class of Class A, Class M and
Class B Certificates and with respect to each Remittance Date, the amount equal
to 30 days interest (or, in the case of the Adjustable Rate Certificates and the
Auction Rate Certificates, the actual number of days since the last Remittance
Date for such Classes to but not including the related Remittance Date) at the
related Class Remittance Rate on the Class Principal Balance for such Class
outstanding immediately prior to such Remittance Date; provided, however, that
with respect to the October 1997 Remittance Date, interest on the Adjustable
Rate Certificates shall accrue at the applicable Class Remittance Rate from and
including September 15, 1997 to but not including the October 1997 Remittance
Date and interest on the Auction Rate Certificates shall accrue at the
applicable Class Remittance Rate from and including the Closing Date to but not
including the October 1997 Remittance Rate. If a principal prepayment is made to
a Class of Class A, Class M or Class B Certificates on the Special Remittance
Date, the Current Interest Requirement for each such Class for the January 1998
Remittance Date will be based on 30 days' interest (or, in the case of the
Adjustable Rate Certificates and the Auction Rate Certificates, the actual
number of days since the December 1997 Remittance Date) on the Class Principal
Balance for such Class on the Special Remittance Date, after giving effect to
such principal prepayment. The Current Interest Requirement for the Pool II
Certificates shall not include any Certificateholders' Interest Carryover.
CLASS M CERTIFICATE: A Certificate denominated as a Class MH-1, Class MH-
2, Class MV-1 or Class MV-2 Certificate.
CLASS M CERTIFICATEHOLDER: A Holder of a Class M Certificate.
CLASS MH-1 APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance Date,
the lesser of (x) the Class Principal Balance of the Class MH-1 Certificates
(after taking into account the distribution of the Class MH-1 Principal
Distribution Amount on such Remittance Date, but prior to the application of the
Class MH-1 Applied Realized Loss Amount, if any, on such Remittance Date) and
(y) the excess of (i) the Pool Applied Realized Loss Amount for Pool III for
such Remittance Date over (ii) the sum of the Class MH-2 Applied Realized Loss
Amount and the Class B Pool Applied Realized Amount for Pool III, in each case
for such Remittance Date.
CLASS MH-1 CERTIFICATE: A Certificate denominated as a Class MH-1
Certificate.
CLASS MH-1 FORMULA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Remittance Date on or after the Class A Pool Principal Balance of the Pool III
Class A Certificates has been reduced to zero, means the applicable Senior
Percentage multiplied by the Pool Principal Distribution Amount for Pool III
(less any portion of the Pool Principal Distribution Amount required to be
distributed to the Holders of the Pool III Class A Certificates on such
Remittance Date); provided, however, that, with respect to any Remittance Date,
the Class MH-1 Formula Principal Distribution Amount shall never exceed the
Class Principal Balance of the Class MH-1 Certificates.
CLASS MH-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance
Date means the lesser of (i) the Class MH-1 Formula Principal Distribution
Amount or (ii) the Pool Available Amount for Pool III remaining after the
payment of all Class Current Interest Requirements for Pool III Certificates and
the Class A Pool Principal Distribution Amount for Pool III Class A Certificates
payable on such Remittance Date.
CLASS MH-1 REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Unpaid Realized Loss Amount for Class MH-1 Certificates as of
such Remittance Date and (y) the portion of the Pool Available Amount for the
Pool III Certificates for such Remittance Date remaining after application of
amounts set forth in Section 6.08(d)(Z)(i) through (xi), inclusive.
CLASS MH-1 REMITTANCE RATE: The annual rate of interest payable to the
Class MH-1 Certificateholders, which shall be equal to 6.890%
CLASS MH-2 APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance Date,
the lesser of (x) the Class Principal Balance of the Class MH-2 Certificates
(after taking into account the distribution of the Class MH-2 Principal
Distribution Amount on such Remittance Date, but prior to the application of the
Class MH-2 Applied Realized Loss Amount, if any, on such Remittance Date) and
(y) the excess of (i) the Pool Applied Realized Loss Amount for the Pool III
Certificates for such Remittance Date over (ii) the Class B Applied Realized
Loss Amount for Pool III for such Remittance Date.
CLASS MH-2 CERTIFICATE: A Certificate denominated as a Class MH-2
Certificate.
CLASS MH-2 FORMULA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Remittance Date on or after the Class A Pool Principal Balance of the Pool III
Class A and Class MH-1 Certificates have been reduced to zero, means the
applicable Senior Percentage multiplied by the Pool Principal Distribution
Amount for Pool III (less any portion of the Pool Principal Distribution Amount
for Pool III required to be distributed to the Holders of the Pool III Class A
or Class MH-1 Certificates on such Remittance Date); provided, however, that,
with respect to any Remittance Date, the Class MH-2 Formula Principal
Distribution Amount shall never exceed the Class Principal Balance of the Class
MH-2 Certificates.
CLASS MH-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance
Date, the lesser of (i) the Class MH-2 Formula Principal Distribution Amount or
(ii) the Pool Available Amount for Pool III remaining after giving effect to all
payments of Class Current Interest Requirements for Pool III Certificates, the
Class A Pool Principal Distribution Amount for Pool III Class A Certificates and
the Class MH-1 Principal Distribution Amount payable on such Remittance Date.
CLASS MH-2 REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Unpaid Realized Loss Amount for Class MH-2 Certificates as of
such Remittance Date and (y) the portion of the Pool Available Amount for Pool
III Certificates for such Remittance Date remaining after application of amounts
set forth in Section 6.08(d)(Z)(i) through (xiii), inclusive.
CLASS MH-2 REMITTANCE RATE: The annual rate of interest payable to the
Class MH-2 Certificateholders, which shall be equal to 7.355%.
CLASS MV-1 APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance Date,
the lesser of (x) the Class Principal Balance of the Class MV-1 Certificates
(after taking into account the distribution of the Class MV-1 Principal
Distribution Amount on such Remittance Date, but prior to the application of the
Class MV-1 Applied Realized Loss Amount, if any, on such Remittance Date) and
(y) the excess of (i) the Pool Applied Realized Loss Amount for Pool II for such
Remittance Date over (ii) the sum of the Class MV-2 Applied Realized Loss Amount
and the Class B Pool Applied Realized Amount for Pool II, in each case for such
Remittance Date.
CLASS MV-1 CERTIFICATE: A Certificate denominated as a Class MV-1
Certificate.
CLASS MV-1 FORMULA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Remittance Date on or after the Class A Pool Principal Balance of the Pool II
Class A Certificates has been reduced to zero, means the applicable Senior
Percentage multiplied by the Pool Principal Distribution Amount for Pool II
(less any portion of the Pool Principal Distribution Amount required to be
distributed to the Holders of the Pool II Class A Certificates on such
Remittance Date); provided, however, that, with respect to any Remittance Date,
the Class MV-1 Formula Principal Distribution Amount shall never exceed the
Class Principal Balance of the Class MV-1 Certificates.
CLASS MV-1 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance
Date means the lesser of (i) the Class MV-1 Formula Principal Distribution
Amount or (ii) the Pool Available Amount for Pool II remaining after the payment
of all Class Current Interest Requirements for Pool II Certificates and the
Class A Pool Principal Distribution Amount for Pool II Class A Certificates
payable on such Remittance Date.
CLASS MV-1 REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Unpaid Realized Loss Amount for Class MV-1 Certificates as of
such Remittance Date and (y) the portion of the Pool Available Amount for the
Pool II Certificates for such Remittance Date remaining after application of
amounts set forth in Section 6.08(d)(Y)(i) through (xi), inclusive.
CLASS MV-1 REMITTANCE RATE: The annual rate of interest payable to the
Class MV-1 Certificateholders, which shall be equal to 5.70% for the first
Remittance Date. Thereafter, the Class MV-1 Remittance Rate shall be equal to
the annual rate of interest determined according to the Auction Procedures set
forth in Schedule II, subject to the Net Funds Cap (but in no event exceeding
14.0% per annum).
CLASS MV-2 APPLIED REALIZED LOSS AMOUNT: Means, as of any Remittance Date,
the lesser of (x) the Class Principal Balance of the Class MV-2 Certificates
(after taking into account the distribution of the Class MV-2 Principal
Distribution Amount on such Remittance Date, but prior to the application of the
Class MV-2 Applied Realized Loss Amount, if any, on such Remittance Date) and
(y) the excess of (i) the Pool Applied Realized Loss Amount for the Pool II
Certificates for such Remittance Date over (ii) the Class B Applied Realized
Loss Amount for Pool II for such Remittance Date.
CLASS MV-2 CERTIFICATE: A Certificate denominated as a Class MV-2
Certificate.
CLASS MV-2 FORMULA PRINCIPAL DISTRIBUTION AMOUNT: With respect to any
Remittance Date on or after the Class A Pool Principal Balance of the Pool II
Class A and Class MV-1 Certificates have been reduced to zero, means the
applicable Senior Percentage multiplied by the Pool Principal Distribution
Amount for Pool II (less any portion of the Pool Principal Distribution Amount
for Pool II required to be distributed to the Holders of the Pool II Class A or
Class MV-1 Certificates on such Remittance Date); provided, however, that, with
respect to any Remittance Date, the Class MV-2 Formula Principal Distribution
Amount shall never exceed the Class Principal Balance of the Class MV-2
Certificates.
CLASS MV-2 PRINCIPAL DISTRIBUTION AMOUNT: With respect to any Remittance
Date, the lesser of (i) the Class MV-2 Formula Principal Distribution Amount or
(ii) the Pool Available Amount for Pool II remaining after giving effect to all
payments of Class Current Interest Requirements for Pool II Certificates, the
Class A Pool Principal Distribution Amount for Pool II Class A Certificates and
the Class MV-1 Principal Distribution Amount payable on such Remittance Date.
CLASS MV-2 REALIZED LOSS AMOUNT: Means, as of any Remittance Date, the
lesser of (x) the Unpaid Realized Loss Amount for Class MV-2 Certificates as of
such Remittance Date and (y) the portion of the Pool Available Amount for Pool
II Certificates for such Remittance Date remaining after application of amounts
set forth in Section 6.08(d)(Y)(i) through (xiii), inclusive.
CLASS MV-2 REMITTANCE RATE: The annual rate of interest payable to the
Class MV-2 Certificateholders, which shall be equal to 5.80% for the first
Remittance Date. Thereafter, the Class MV-2 Remittance Rate shall be equal to
the annual rate of interest determined according to the Auction Procedures set
forth in Schedule II, subject to the Net Funds Cap (but in no event exceeding
14.0% per annum).
CLASS POOL FACTOR: With respect to a Class of Class A, Class M or Class B
Certificates, as of any date of determination, the then Class Principal Balance
for such Class divided by the Original Principal Balance for such Class.
CLASS PRINCIPAL BALANCE: With respect to each Class of Class A, Class M or
Class B Certificates, as of any date of determination, the Original Principal
Balance of such Class less (i) the sum of all amounts (including with respect to
Pool I and Pool IV Certificates, the principal portion of any related Insured
Payment and with respect to Pool III Certificates, any FHA Payments made in
respect of principal) previously distributed to the Certificateholders of such
Class in respect of principal pursuant to Section 6.08(d) and (ii) the amount,
if any, of Applied Realized Loss Amounts previously allocated to such Class
pursuant to Section 6.09 or any actual loss of principal suffered with respect
to a Pool I or Pool IV Certificate as a result of the failure of the Certificate
Insurer to perform. For purposes of determining the Class Principal Balance of
each Class of Class A, Class M or Class B Certificates with respect to any
Remittance Date, no effect shall be given to any principal to be distributed, or
Applied Realized Amounts or loss due to the Certificate Insurer's failure to
perform to be allocated, to each such Class on such Remittance Date.
CLASS REMITTANCE RATE: With respect to each Class of Class A, Class M or
Class B Certificates, the annual rate of interest payable to the
Certificateholders of such Class as provided herein.
CLASS R-1 CERTIFICATE: A Certificate denominated as a Class R-1
Certificate.
CLASS R-2 CERTIFICATE: A Certificate denominated as a Class R-2
Certificate.
CLASS R CERTIFICATE: Collectively or singularly, the Class R-1 and/or Class
R- 2 Certificates, as applicable.
CLASS R CERTIFICATEHOLDER: A Holder of a Class R Certificate.
CLASS X CERTIFICATE: A Certificate denominated as a Class X Certificate.
CLASS X REMITTANCE AMOUNT: As of any Remittance Date, an amount equal to
the sum of (i) the Pool I Strip Amount, (ii) the Pool II Strip Amount, (iii) the
Pool Remaining Amount Available for each Pool, and (iv) the Remainder Excess
Spread Amount, net of reimbursements to the Servicer or the Representative of
Reimbursable Amounts pursuant to Section 5.04(f).
CLOSING DATE: September 30, 1997.
CODE: The Internal Revenue Code of 1986, as amended, or any successor
legislation thereto.
COMPENSATING INTEREST: As defined in Section 6.12.
CONTINGENCY FEE: As to each Mortgage Loan, the annual fee which is, in
addition to the Servicing Fee, payable to the Servicer pursuant to Section 7.03
of this Agreement. Such fee shall be calculated and payable monthly only from
the amounts received in respect of interest on such Mortgage Loan, shall accrue
at the rate of .25% per annum and shall be computed on the basis of the same
principal amount and for the period respecting which any related interest
payment on a Mortgage Loan is computed. The Contingency Fee is payable solely
from the interest portion of related (i) Monthly Payments, (ii) Liquidation
Proceeds or (iii) Released Mortgaged Property Proceeds collected by the
Servicer, or as otherwise provided in Section 5.04.
CONTRACT OF INSURANCE: A Contract of Insurance under Title I.
CONVENTIONAL HOME IMPROVEMENT LOANS: Pool III Mortgage Loans that are not
FHA Loans.
CO-TRUSTEE: First Union Trust Company, National Association, a national
banking association headquartered in Wilmington, Delaware.
CROSS-OVER DATE: The date on which the Pool Maximum Subordinated Amounts
for Pool I and Pool IV and the Pool Available Maximum Subordinated Amounts for
Pool II and Pool III have all been reduced to zero.
CUMULATIVE REALIZED LOSSES: As of any date of determination, the aggregate
amount of Realized Losses with respect to the applicable Pool of Mortgage Loans
since the Startup Day.
CURTAILMENT: With respect to a Mortgage Loan, any payment of principal
received during a Due Period as part of a payment that is in excess of five
times the amount of the Monthly Payment due for such Due Period and which is not
intended to satisfy the Mortgage Loan in full, nor is intended to cure a
delinquency.
CUSTODIAL AGREEMENT: Any agreement to be entered into pursuant to Section
12.13 for the retention of each Trustee's Mortgage File, substantially in the
form attached as Exhibit M hereto.
CUSTODIAN: Any custodian appointed pursuant to Section 12.13 herein,
provided that such custodian shall be independent of the Servicer, the
Representative and the Claims Administrator, except in the event the Trustee or
the Co-Trustee shall be the Servicer or the Claims Administrator. The initial
Custodian for the Pool III Loans shall be First Trust National Association, a
national banking association headquartered in Minneapolis, Minnesota.
CUT-OFF DATE: August 31, 1997; provided, however, that for purposes of
determining characteristics of the Initial Mortgage Loans as of the Cut-Off
Date, the Cut-Off Date for those Initial Mortgage Loans originated after August
31, 1997 shall be deemed to be the date of the applicable Mortgage Note.
DEALER LOANS: Pool III Mortgage Loans in which a dealer-contractor
participates in the financing.
DEFICIENCY AMOUNT: means with respect to any Remittance Date and the Pool I
or Pool IV Certificates, (i) the excess, if any, of (a) the Pool Current
Interest Requirement for such Pool over (b) the sum of the Pool Available
Remittance Amount for such Pool (minus amounts withdrawn to pay required
premiums to the Certificate Insurer), and the Monthly Excess Spread and the
Subordination Reduction Amount applicable to such Pool, plus (ii) the
Subordination Deficit, if any, for such Pool with respect to such Remittance
Date.
DEFICIENT VALUATION: With respect to any Mortgage Loan, a valuation by a
court of competent jurisdiction of the Mortgaged Property in an amount less than
the then outstanding indebtedness under the Mortgage Loan, which valuation
results from a proceeding initiated under the United States Bankruptcy Code, as
amended from time to time (11 U.S.C.).
DELETED MORTGAGE LOAN: A Mortgage Loan replaced by a Qualified Substitute
Mortgage Loan.
DEPOSITORY: The Depository Trust Company and any successor Depository
hereafter named.
DESIGNATED DEPOSITORY INSTITUTION: With respect to each Principal and
Interest Account, an entity which is an institution whose deposits are insured
by either the BIF or SAIF administered by the FDIC, the unsecured and
uncollateralized long-term debt obligations of which shall be rated "A" or
better by S&P and A2 or better by Moody's, or one of the two highest short-term
ratings by S&P and the highest short term rating by Moody's, and which is either
(i) a federal savings association duly organized, validly existing and in good
standing under the federal banking laws, (ii) an institution duly organized,
validly existing and in good standing under the applicable banking laws of any
state, (iii) a national banking association duly organized, validly existing and
in good standing under the federal banking laws, or (iv) a principal subsidiary
of a bank holding company, in each case acting or designated by the Servicer as
the depository institution for a Principal and Interest Account.
DETERMINATION DATE: That day of each month which is the later of (i) the
third Business Day prior to the 15th day of such month and (ii) the seventh
Business Day of such month.
DIRECT PARTICIPANT: Any broker-dealer, bank or other financial institution
for which the Depository holds Class A, Class M or Class B Certificates from
time to time as a securities depository.
DUE DATE: The day of the month on which the Monthly Payment is due from the
Mortgagor on a Mortgage Loan.
DUE PERIOD: With respect to each Remittance Date, the calendar month
preceding the month in which such Remittance Date occurs.
EVENT OF DEFAULT: As described in Section 10.01.
EVENT OF EXCESSIVE POOL LOSS: means, with respect to Pool I or Pool IV, (a)
until the 36th Remittance Date, any event that causes Cumulative Realized Losses
with respect to the related Pool to equal or exceed 1.25% of the Pool Principal
Balance of the related Pool as of the Closing Date, (b) from the 36th until the
42nd Remittance Dates, any event that causes Cumulative Realized Losses with
respect to the related Pool to equal or exceed 1.75% of the Pool Principal
Balance of the related Pool as of the Closing Date, (c) from the 42nd until the
48th Remittance Dates, any event that causes Cumulative Realized Losses with
respect to the related Pool to equal or exceed 2.25% of the Pool Principal
Balance of the related Pool as of the Closing Date and (d) thereafter, any event
that causes Cumulative Realized Losses with respect to the related Pool to equal
or exceed 2.75% of the Pool Principal Balance of the related Pool as of the
Closing Date.
EVENT OF NONPAYMENT: An event of nonpayment with respect to Pool I or Pool
IV shall occur with respect to any Remittance Date if the amounts remitted by
the Servicer to the Trustee pursuant to Sections 5.04(a), 6.07(e), 6.11 and 6.12
for deposit in the Certificate Accounts with respect to Pool I and Pool IV
(minus the amount to be withdrawn from the applicable Certificate Account for
deposit in (i) the applicable Insurance Account pursuant to Section 6.01(b)(i)),
plus any amount transferred from the Spread Account to the applicable
Certificate Account pursuant to Section 6.05(b)(ii) will not, taken together, be
sufficient to pay all of the Pool Remittance Amounts for each such Pool
(exclusive of any Pool Carry-Forward Amounts representing amounts previously
paid to the Certificateholders of the applicable Pool as Insured Payments and
exclusive of any amount described in clause (X)(iv) of the definition of Pool
Principal Distribution Amounts with respect to such applicable Pool which have
not been paid by the Originators) in respect of such Remittance Date.
EXCESS CLAIM AMOUNT: As defined in Section 6.05(c).
EXCESS PAYMENTS: With respect to a Due Period, any amounts received on a
Mortgage Loan in excess of the Monthly Payment due on the Due Date relating to
such Due Period which does not constitute either a Curtailment or a Principal
Prepayment or payment with respect to an overdue amount. Excess Payments are
payments of principal for purposes of this Agreement.
EXCESS PROCEEDS: As of any Remittance Date, with respect to any Liquidated
Mortgage Loan, the excess, if any, of (a) the total Net Liquidation Proceeds,
over (b) the Principal Balance of such Mortgage Loan as of the date such
Mortgage Loan became a Liquidated Mortgage Loan plus 30 days interest thereon at
the weighted average Class Adjusted Mortgage Loan Remittance Rates for each
Class of Pool I Certificates with respect to a Pool I Mortgage Loan, the Class
Adjusted Mortgage Loan Remittance Rate for each Class of Pool II Certificates
with respect to a Pool II Mortgage Loan, the weighted average Class Adjusted
Mortgage Loan Remittance Rates for each Class of Pool III Certificates with
respect to a Pool III Mortgage Loan or the Class Adjusted Mortgage Loan
Remittance Rate for the Pool IV Certificates with respect to a Pool IV Mortgage
Loan; provided, however, that such excess shall be reduced by the amount by
which interest accrued on the advance, if any, made by the Servicer pursuant to
Section 5.14 at the related Mortgage Interest Rate exceeds interest accrued on
such advance at the applicable Class Remittance Rates.
EXCESS SPREAD: With respect to any Remittance Date and Pool of Mortgage
Loans, an amount equal to the excess of (A) the product of (i) the aggregate
Principal Balances of the applicable Pool of Mortgage Loans as of the first day
of the immediately preceding Due Period and (ii) one-twelfth of the weighted
average Mortgage Interest Rate for the applicable Pool of Mortgage Loans, as the
case may be, as of the first day of the related Due Period over (B) the sum of
(i) the Pool Current Interest Requirement for the applicable Pool of
Certificates for such Remittance Date, (ii) amounts to be deposited into the
applicable Expense Account and Insurance Account on such Remittance Date
pursuant to Sections 6.03(a)(i) and 6.04(a)(i), respectively, (iii) the
Servicing Fee and Contingency Fee for the applicable Pool of Mortgage Loans with
respect to such Remittance Date, (iv) with respect to the Pool II Mortgage
Loans, the Auction Agent Fee for such Remittance Date and (v) with respect to
those FHA Loans in Pool III for which the FHA Insurance Premium is paid by the
related Mortgagor as part of the interest payment, the applicable FHA Insurance
Premium. With respect to the Remittance Dates in October, November and December
1997, the Excess Spread for each Pool of Mortgage Loans also will include the
sum of (i) all funds to be transferred to the applicable Certificate Account
from the Capitalized Interest Account for such Remittance Date pursuant to
Section 6.02(g) and (ii) the Pool Pre-Funding Earnings for such Pool for the
applicable Remittance Date.
EXCESS SUBORDINATED AMOUNT: With respect to any Pool of Mortgage Loans and
any Remittance Date, the excess, if any, of (x) the Pool Subordinated Amount
that would apply to such respective Pool on such Remittance Date after taking
into account the payment of the Pool Remittance Amount for such respective Pool
on such Remittance Date (except for any distributions of related Subordination
Reduction Amounts on such Remittance Date) over (y) the related Specified
Subordinated Amount for such Remittance Date.
EXPENSE ACCOUNTS: The expense accounts established and maintained by the
Trustee in accordance with Section 6.03 hereof.
FDIC: The Federal Deposit Insurance Corporation and any successor thereto.
FHA: The Federal Housing Administration, and its successors in interest.
FHA CUSTODIAL AGREEMENT: The Agreement dated as of August 31, 1997 by and
between the Co-Trustee and the Custodian for the retention of each Trustee's
Mortgage Loan File in connection with the Pool III Loans, substantially in the
form attached as Exhibit M-1 hereto.
FHA INSURANCE PREMIUM: The premium charged by the FHA pursuant to 24 C.F.R.
ss.201.31, or any successor regulation, as payment for Title I insurance
coverage for an FHA Loan, which premium shall be the responsibility of the
Servicer, who will be reimbursed from the FHA Premium Account in accordance with
Section 6.06(b)(i) hereof.
FHA LOAN: A Mortgage Loan that is partially insured by the FHA under Title
I.
FHA PAYMENT: The amount received from the FHA for a Claim filed with
respect to a 90 Day Delinquent FHA Loan.
FHA PREMIUM ACCOUNT: The account established and maintained by the Trustee
in accordance with Section 6.06 hereof.
FHA PREMIUM AMOUNT: With respect to any FHA Loan for any Remittance Date,
(i) if the FHA Insurance Premium is paid by the related Mortgagor as part of the
Mortgage Interest Rate on an FHA Loan, an amount equal to 1/12 of the product of
the Insurance Rate times the Principal Balance as of the first day of the
immediately preceding Due Period and (ii) if the related Mortgagor pays the FHA
Insurance Premium as a separate amount in addition to Monthly Payments, any such
amount received by the Servicer during the related Due Period.
FHA REGULATIONS: The regulations of the FHA with respect to Title I home
improvement loans set forth in 24 C.F.R. ss.201, as the same may be amended
during the term of this Agreement.
FHA RESERVE ACCOUNT: The account of the Co-Trustee maintained by the FHA
with respect to the FHA Loans and certain other mortgage loans registered in the
name of the Co-Trustee and insured by the FHA under Title I in accordance with
the FHA Regulations.
FHLMC: The Federal Home Loan Mortgage Corporation and any successor
thereto.
FIDELITY BOND: As described in Section 5.09.
FITCH: Fitch Investors Service, L.P., or any successor thereto.
FNMA: The Federal National Mortgage Association and any successor thereto.
FUNDING PERIOD: The period commencing on the Closing Date and ending on the
earliest to occur of (i) the date on which the amount on deposit in the
Pre-Funding Account is less than $200,000, (ii) the date on which an Event of
Default occurs and (iii) the close of business on December 26, 1997.
GLOBAL CERTIFICATES: [Reserved]
GROSS MARGIN: With respect to each Pool II Mortgage Loan, the number of
basis points set forth in the related Mortgage Note which is added to the LIBOR
Index or the Treasury Index, as the case may be, to determine the Mortgage
Interest Rate on the related Change Date, subject to the applicable Periodic
Rate Cap and the applicable Lifetime Cap and Lifetime Floor.
HIGH-RISE CONDOMINIUM: A multiple dwelling unit of five stories or more in
which individual fee title is held to the interior space only and all other
elements of the structure and land are held in undivided common ownership.
HUD: The United States Department of Housing and Urban Development, and its
successor in interest.
INDEX: Either the LIBOR Index or the Treasury Index, as the case may be.
INDIRECT PARTICIPANT: Any financial institution for whom any Direct
Participant holds an interest in any Pool I, Pool II, Pool III or Pool IV
Certificate.
INITIAL MORTGAGE LOANS: The Initial Pool I, Initial Pool II, Initial Pool
III and Initial Pool IV Mortgage Loans.
INITIAL POOL SPREAD ACCOUNT DEPOSIT: As of any Remittance Date, (A) with
respect to Pool I, the amount deposited into the Spread Account and allocated to
Pool I pursuant to Section 6.05(a)(i) and (ii); and (B) with respect to Pool IV,
the amount deposited into the Spread Account and allocated to Pool IV pursuant
to Section 6.05(a)(i) and (ii).
INITIAL POOL I MORTGAGE LOANS: The Pool I Mortgage Loans listed on Exhibit
H delivered to the Trustee on the Closing Date.
INITIAL POOL II MORTGAGE LOANS: The Pool II Mortgage Loans listed on
Exhibit H-1 delivered to the Trustee on the Closing Date.
INITIAL POOL III MORTGAGE LOANS: The Pool III Mortgage Loans listed on
Exhibit H-2 delivered to the Co-Trustee on the Closing Date.
INITIAL POOL IV MORTGAGE LOANS: The Pool IV Mortgage Loans listed on
Exhibit H-3 delivered to the Trustee on the Closing Date.
INSURANCE ACCOUNTS: The insurance accounts established and maintained by
the Trustee in accordance with Section 6.04 hereof.
INSURANCE AGREEMENT: The agreement dated as of September 1, 1997 by and
among the Certificate Insurer, The Money Store Inc., the Originators listed in
Schedule I thereto and the Trustee, as amended from time to time by the parties
thereto.
INSURANCE PAYING AGENT: The Bank of New York or any successor as appointed
herein.
INSURANCE PROCEEDS: Proceeds (other than FHA Payments) paid (i) to the
Trustee or the Servicer by any insurer (other than the Certificate Insurer)
pursuant to any insurance policy covering a Mortgage Loan, Mortgaged Property,
or REO Property, including but not limited to title, hazard, life, health and/or
accident insurance policies, and/or (ii) by the Servicer pursuant to Section
5.08, in either case, net of any expenses which are incurred by the Servicer in
connection with the collection of such proceeds and not otherwise reimbursed to
the Servicer.
INSURANCE RATE: As to any FHA Loan with respect to which the FHA Insurance
Premium is paid by the related Mortgagor as part of the Mortgage Interest Rate,
the rate of 1.0% per annum, which is used to calculate the amount to be applied
to the payment of the related FHA Insurance Premium.
INSURED PAYMENT: means (i) as of any Remittance Date, any Deficiency Amount
and (ii) any Preference Amount.
INSURER REIMBURSABLE AMOUNTS: As described in Section 6.14(a)(ii).
INTEREST DETERMINATION DATE: With respect to the Adjustable Rate
Certificates, the second LIBOR Determination Date prior to any Remittance Date
while the Adjustable Rate Certificates are outstanding.
INTEREST PERIOD: (A) With respect to the Adjustable Rate Certificates (i)
initially, the period commencing September 15, 1997 and ending on the day
immediately preceding the Remittance Date in October 1997 and (ii) thereafter,
the period commencing on a Remittance Date and ending on the day immediately
preceding the next Remittance Date and (B) with respect to the Auction Rate
Certificates, the meaning set forth in the Auction Procedures attached hereto as
Schedule II.
INTEREST SHORTFALL CARRYFORWARD AMOUNT: Means, as of any Remittance Date
and with respect to any Class of Class A, Class M or Class B Certificates of
Pool II and Pool III, the sum of (i) the amount, if any, by which (X) the sum of
(a) the Class Current Interest Requirement for such Class for such Remittance
Date plus (b) the Interest Shortfall Carryforward Amount for such Class as of
the immediately preceding Remittance Date exceeds (Y) the amount paid to the
Certificateholders of such Class on such Remittance Date pursuant to clauses
(ii), (iii), (iv), (ix), (xi), (xiii) and (xv) of Section 6.08(d)(Y) or Section
6.08(d)(Z), as applicable, of this Agreement and (ii) one month's interest on
the amount determined pursuant to clause (i)(b) at the applicable Class
Remittance Rate.
LIBOR: The London Interbank Offered Rate for one-month U.S. dollar
deposits, determined on each Interest Determination Date as provided in Section
12.15 hereof.
LIBOR DETERMINATION DATE: A date which is both a Business Day and a London
Banking Day prior to the commencement of each related Interest Period.
LIBOR INDEX: The applicable London interbank offered rate for one-month,
six- month or one year U.S. dollar deposits, as specified in the related
Mortgage Note.
LIFETIME CAP: The provision in the Mortgage Note for each Pool II Mortgage
Loan which limits the maximum Mortgage Interest Rate over the life of such Pool
II Mortgage Loan to the rate set forth in the applicable Mortgage Note.
LIFETIME FLOOR: The provision in the Mortgage Note for each Pool II
Mortgage Loan which limits the minimum Mortgage Interest Rate over the life of
such Pool II Mortgage Loan to the rate set forth in the applicable Mortgage
Note.
LIQUIDATED MORTGAGE LOAN: Any defaulted Mortgage Loan or REO Property as to
which the Servicer has determined that all amounts which it reasonably and in
good faith expects to recover have been recovered from or on account of such
Mortgage Loan.
LIQUIDATION PROCEEDS: Cash, including Insurance Proceeds, proceeds of any
REO Disposition, amounts required to be deposited in the applicable Principal
and Interest Account pursuant to Section 5.10 hereof, and any other amounts
other than FHA Payments and Related Payments received in connection with the
liquidation of defaulted Mortgage Loans, whether through trustee's sale,
foreclosure sale or otherwise.
LISTING AGENT: [RESERVED]
LOAN-TO-VALUE RATIO OR LTV: With respect to any Mortgage Loan, (i) the sum
of (a) the original principal balance of such Mortgage Loan plus (b) the
remaining balance of any Prior Lien, if any, at the time of origination of such
Mortgage Loan, less (c) that portion of the principal balance equal to the
amount of the premium for credit life insurance collected by the Originators,
divided by (ii) the value of the related Mortgaged Property, based upon the
appraisal (or, in the case of certain Mortgage Loans with original principal
balances of less than $15,000, such other method of valuation acceptable to the
related Originator) made at the time of origination of the Mortgage Loan.
LONDON BANKING DAY: Any Business Day on which dealings in deposits in
United States dollars are transacted in the London interbank market.
LOW INTEREST MORTGAGE LOAN: A Low Interest Pool I Mortgage Loan, a Low
Interest Pool III Mortgage Loan or a Low Interest Pool IV Mortgage Loan.
LOW INTEREST POOL I MORTGAGE LOAN: [RESERVED]
LOW INTEREST POOL III MORTGAGE LOAN: [RESERVED]
LOW INTEREST POOL IV MORTGAGE LOAN: [RESERVED]
LOW-RISE CONDOMINIUM: A multiple dwelling unit of four stories or less in
which individual fee title is held to the interior space only and all other
elements of the structure and land are held in undivided common ownership.
MAJORITY CERTIFICATEHOLDERS: The Holder or Holders of Class A, Class M and
Class B Certificates evidencing in excess of 50% of the aggregate Class
Principal Balances of the Class A, Class M and Class B Certificates; provided,
however, that with respect to any action or event affecting fewer than all
Classes of Class A, Class M and Class B Certificates, "Majority
Certificateholders" shall mean the Holder or Holders of Certificates evidencing
in excess of 50% of the aggregate Class Principal Balances of such Classes of
Class A, Class M and Class B Certificates.
MARGIN: With respect to the Class AV and BV Certificates, the rate per
annum of 0.175% and 0.960%, respectively, that is added to LIBOR to determine
the Class AV and Class BV Remittance Rates, respectively, for each Remittance
Date; provided, however, that the Margin with respect to the Class AV and Class
BV Certificates for each Remittance Date occurring after the Optional Servicer
Termination Date shall be 0.35% and 1.44%, respectively.
MIXED USE BUILDING: A building containing both residential dwelling units
and commercial use units, e.g., retail stores or office space.
MONTHLY ADVANCE: An advance made by the Servicer pursuant to Section 6.11
hereof.
MONTHLY EXCESS SPREAD: As of any Remittance Date and for any Pool of
Mortgage Loans, an amount equal to the sum of (A) the product of (i) the amount
calculated pursuant to the first sentence of the definition of Excess Spread
with respect to such Remittance Date for such Pool of Mortgage Loans and (ii)
the then applicable Monthly Excess Spread Percentage and (B) with respect to the
Remittance Dates in October, November and December 1997, the amount calculated
pursuant to the second sentence of the definition of Excess Spread with respect
to such Remittance Date.
MONTHLY EXCESS SPREAD PERCENTAGE: As to any Remittance Date, 100%.
MONTHLY PAYMENT: The scheduled monthly payment of principal and/or interest
required to be made by a Mortgagor on the related Mortgage Loan, as set forth in
the related Mortgage Note.
MONTHLY PREMIUM: With respect to Pool I and Pool IV, the monthly premium
payable to the Certificate Insurer equal to the product of (i) the applicable
percentage set forth in the Insurance Agreement and (ii) the applicable then
outstanding Pool Principal Balance, rounded to the nearest thousand dollars.
MOODY'S: Moody's Investors Service, Inc., or any successor thereto.
MORTGAGE: The mortgage, deed of trust or other instrument creating a lien
on the Mortgaged Property.
MORTGAGE FILE: As described in Exhibit A.
MORTGAGE IMPAIRMENT INSURANCE POLICY: As described in Section 5.08.
MORTGAGE INTEREST RATE: The fixed or adjustable rate of interest borne by a
Mortgage Note, as shown on the applicable Mortgage Loan Schedule.
MORTGAGE LOAN: An individual mortgage loan which is transferred to the
Trustee (or, with respect to the Pool III Mortgage Loans, the Co-Trustee)
pursuant to this Agreement, including any Subsequent Mortgage Loan, together
with the rights and obligations of a holder thereof and payments thereon and
proceeds therefrom, the Mortgage Loans originally subject to this Agreement
being identified on the Pool I, Pool II, Pool III and Pool IV Mortgage Loan
Schedules delivered to the Trustee (or with respect to Pool III, the Co-Trustee)
as Exhibits H, H-1, H-2 and H-3, respectively. Any mortgage loan which, although
intended by the parties hereto to have been, and which purportedly was, sold to
the Trust Fund by the applicable Originator (as indicated by Exhibits H, H-1,
H-2 and H-3), in fact was not sold or otherwise transferred and assigned to the
Trust Fund for any reason whatsoever, including, without limitation, the
incorrectness of the statement set forth in Section 3.02(i) hereof with respect
to such mortgage loan, shall nevertheless be considered a "Mortgage Loan" for
all purposes of this Agreement.
MORTGAGE LOAN SCHEDULE: The separate schedules of Pool I, Pool II, Pool III
and Pool IV Mortgage Loans delivered to the Trustee (or with respect to Pool
III, the Co- Trustee) as Exhibits H, H-1, H-2 and H-3, respectively, such
schedules identifying each Mortgage Loan by address of the Mortgaged Property
and the name of the Mortgagor and setting forth as to each Mortgage Loan the
following information: (i) the Principal Balance as of the close of business on
the Cut-Off Date, (ii) the account number, (iii) the original principal amount,
(iv) except with respect to the Pool III Loans, the LTV as of the date of the
origination of the related Mortgage Loan, (v) the Due Date, (vi) the Mortgage
Interest Rate, (vii) the first Due Date, (viii) the Monthly Payment, (ix) the
maturity date of the Mortgage Note, (x) the remaining number of months to
maturity as of the Cut-Off Date and additionally, (xi) with respect to Exhibit
H-1, the Periodic Rate Cap, Lifetime Cap and Lifetime Floor. Also, the Mortgage
Loan Schedule for the Pool III Mortgage Loans will indicate, based upon loan
number, whether the related Pool III Mortgage Loan is an FHA Loan or a
Conventional Home Improvement Loan.
MORTGAGE NOTE: The note or other evidence of indebtedness evidencing the
indebtedness of a Mortgagor under a Mortgage Loan.
MORTGAGED PROPERTY: The underlying property securing a Mortgage Loan,
consisting of a fee simple estate in a single contiguous parcel of land improved
by a Residential Dwelling.
MORTGAGED PROPERTY STATES: Any one of the 50 states and the District of
Columbia and Puerto Rico, where the Mortgaged Properties are located.
MORTGAGOR: The obligor on a Mortgage Note.
MULTIFAMILY LOANS: Mortgage Loans secured by Multifamily Properties.
MULTIFAMILY PROPERTY: A residential or mixed-use property, such as rental
apartment buildings or projects containing five or more units.
NET FUNDS CAP: As to any Remittance Date, a percentage equal to the
difference between (A) the weighted average Mortgage Interest Rate on the Pool
II Mortgage Loans, and (B) the sum of (i) the percentages used in determining
the Servicing Fee, the Contingency Fee and the fee due the Trustee and (ii) with
respect to the Auction Rate Certificates, the percentage used in determining the
Auction Agent Fee.
NET FUNDS CAP SHORTFALL: With respect to each Class of Pool II Certificates
and any Remittance Date, the excess, if any, of (i) the amount of interest
accrued on such Class of Certificates for such Remittance Date calculated at the
Class Remittance Rate for such Class, without giving effect to the applicable
Net Funds Cap (but in no event exceeding 14.0% per annum), over (ii) the amount
of interest accrued on such Class of Certificates for such Remittance Date
calculated at the Class Remittance Rate for such Class, after giving effect to,
and limited by, the applicable Net Funds Cap for such Remittance Date (but in no
event exceeding 14.0% per annum).
NET LIQUIDATION PROCEEDS: Liquidation Proceeds net of (i) any
reimbursements to the Servicer made therefrom pursuant to Section 5.04(b) and
(ii) amounts required to be released to the related Mortgagor pursuant to
applicable law.
NET MONTHLY EXCESS CASHFLOW: As defined in Section 6.14(b) hereof.
1933 ACT: The Securities Act of 1993, as amended.
90 DAY DELINQUENT FHA LOAN: A 90 Day Delinquent Pool III Loan that is an
FHA Loan.
90 DAY DELINQUENT POOL III LOAN: With respect to any Remittance Date, a
Pool III Mortgage Loan with respect to which four consecutive Monthly Payments
have not been received by the Servicer as of the last day of the related Due
Period unless, on or prior to the last day of the Due Period in which the fourth
Monthly Payment is due, the Servicer has received from the related Mortgagor an
amount at least equal to one unpaid Monthly Payment.
NON-ACKNOWLEDGED FHA LOANS: As defined in Section 3.02(lll) hereof.
OFFICER'S CERTIFICATE: A certificate delivered to the Trustee or
Co-Trustee, as the case may be, signed by the Chairman of the Board, the
President, a Vice President or Assistant Vice President, the Treasurer, the
Secretary, or one of the Assistant Secretaries of the Representative, an
Originator, the Servicer or the Claims Administrator, as required by this
Agreement.
OPINION OF COUNSEL: A written opinion of counsel, who may, without
limitation, be counsel for the Representative, the Servicer or the Claims
Administrator, reasonably acceptable to the Trustee and the Certificate Insurer
and experienced in matters relating thereto; except that any opinion of counsel
relating to (a) the qualification of the Trust Fund as a REMIC or (b) compliance
with the REMIC Provisions, must be an opinion of counsel who (i) is in fact
independent of the Representative, the Servicer or the Claims Administrator,
(ii) does not have any direct financial interest or any material indirect
financial interest in the Representative, the Servicer or the Claims
Administrator or in an affiliate thereof and (iii) is not connected with the
Representative, the Servicer or the Claims Administrator as an officer,
employee, director or person performing similar functions.
OPTIONAL SERVICER TERMINATION DATE: As defined in Section 11.01 hereof.
ORIGINAL CLASS AF-1 PRINCIPAL BALANCE: $ 63,000,000.
ORIGINAL CLASS AF-2 PRINCIPAL BALANCE: $ 60,400,000.
ORIGINAL CLASS AF-3 PRINCIPAL BALANCE: $ 80,000,000.
ORIGINAL CLASS AF-4 PRINCIPAL BALANCE: $ 47,000,000.
ORIGINAL CLASS AF-5 PRINCIPAL BALANCE: $ 32,900,000.
ORIGINAL CLASS AF-6 PRINCIPAL BALANCE: $ 39,000,000.
ORIGINAL CLASS AF-7 PRINCIPAL BALANCE: $ 37,700,000.
ORIGINAL CLASS AF-8 PRINCIPAL BALANCE: $ 40,000.000.
ORIGINAL CLASS AV PRINCIPAL BALANCE: $498,000,000.
ORIGINAL CLASS MV-1 PRINCIPAL BALANCE: $ 45,000,000.
ORIGINAL CLASS MV-2 PRINCIPAL BALANCE: $ 30,000,000.
ORIGINAL CLASS BV PRINCIPAL BALANCE: $ 27,000,000.
ORIGINAL CLASS AH-1 PRINCIPAL BALANCE: $ 37,637,000.
ORIGINAL CLASS AH-2 PRINCIPAL BALANCE: $ 46,765,000.
ORIGINAL CLASS AH-3 PRINCIPAL BALANCE: $ 36,005,000.
ORIGINAL CLASS AH-4 PRINCIPAL BALANCE: $ 37,865,000.
ORIGINAL CLASS AH-5 PRINCIPAL BALANCE: $ 53,809,000.
ORIGINAL CLASS AH-6 PRINCIPAL BALANCE: $ 11,329,000.
ORIGINAL CLASS MH-1 PRINCIPAL BALANCE: $ 24,910,000.
ORIGINAL CLASS MH-2 PRINCIPAL BALANCE: $ 14,975,000.
ORIGINAL CLASS BH PRINCIPAL BALANCE: $ 11,705,000.
ORIGINAL CLASS AMF PRINCIPAL BALANCE: $ 25,000,000.
ORIGINAL PRE-FUNDED AMOUNT: $216,069,544.60, representing the amount
deposited in the Pre-Funding Account on the Closing Date, $31,491,748.17 of
which relates to Pool I, $119,370,266.19 of which relates to Pool II,
$59,001,142.51 of which relates to Pool III and $6,206,387.73 of which relates
to Pool IV.
ORIGINAL PRINCIPAL BALANCE: With respect to each Class of Class A, Class M
and Class B Certificates, the amount set forth for such Class under the
definitions of Original Class AF-1 through Original Class AMF Principal
Balances.
ORIGINATOR: Any of the entities listed on Exhibit I hereto, each of which
is a direct or indirect wholly-owned subsidiary of the Representative, and each
of which is a Subservicer as of the date hereof.
OVERFUNDED INTEREST AMOUNT: With respect to each Subsequent Transfer Date
occurring in October 1997, the sum, if any, of (w), with respect to Pool I, the
difference between (i) three-months' interest on the aggregate Principal
Balances of the Subsequent Pool I Mortgage Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the weighted average Class AF-1,
Class AF-2, Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class AF-7 and Class
AF-8 Remittance Rates and (ii) three-months' interest on the aggregate Principal
Balances of the Subsequent Pool I Mortgage Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the rate at which Pre-Funding
Account moneys are invested as of such Subsequent Transfer Date; (x) with
respect to Pool II, the difference between (i) three months' interest on the
aggregate Principal Balances of the Subsequent Pool II Mortgage Loans acquired
by the Trust Fund on such Subsequent Transfer Date, calculated at the weighted
average Class AV, Class MV-1, Class MV-2 and Class BV Remittance Rates and (ii)
three-months' interest on the aggregate Principal Balances of the Subsequent
Pool II Mortgage Loans acquired by the Trust Fund on such Subsequent Transfer
Date, calculated at the rate at which Pre-Funding Account moneys are invested as
of such Subsequent Transfer Date; (y), with respect to Pool III, the difference
between (i) three-months' interest on the aggregate Principal Balances of the
Subsequent Pool III Mortgage Loans acquired by the Trust Fund on such Subsequent
Transfer Date, calculated at the weighted average Class AH-1, Class AH-2, Class
AH-3, Class AH-4, Class AH-5, Class AH-6, Class MH-1, Class MH-2 and Class BH
Remittance Rates and (ii) three-months' interest on the aggregate Principal
Balances of the Subsequent Pool III Mortgage Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the rate at which Pre-Funding
Account moneys are invested as of such Subsequent Transfer Date; and (z), with
respect to Pool IV, the difference between (i) three-months' interest on the
aggregate Principal Balances of the Subsequent Pool IV Mortgage Loans acquired
by the Trust Fund on such Subsequent Transfer Date, calculated at the Class AMF
Remittance Rate and (ii) three-months' interest on the aggregate Principal
Balances of the Subsequent Pool IV Mortgage Loans acquired by the Trust Fund on
such Subsequent Transfer Date, calculated at the rate at which Pre-Funding
Account moneys are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in November 1997,
the sum, if any, of (w), with respect to Pool I, the difference between (i)
two-months' interest on the aggregate Principal Balances of the Subsequent Pool
I Mortgage Loans acquired by the Trust Fund on such Subsequent Transfer Date,
calculated at the weighted average Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-5, Class AF-6, Class AF-7 and Class AF-8 Remittance Rates and
(ii) two-months' interest on the aggregate Principal Balances of the Subsequent
Pool I Mortgage Loans acquired by the Trust Fund on such Subsequent Transfer
Date, calculated at the rate at which Pre-Funding Account moneys are invested as
of such Subsequent Transfer Date; (x) with respect to Pool II, the difference
between (i) two-months' interest on the aggregate Principal Balances of the
Subsequent Pool II Mortgage Loans acquired by the Trust Fund on such Subsequent
Transfer Date, calculated at the weighted average Class AV, Class MV-1, Class
MV, and Class BV Remittance Rate and (ii) two-months' interest on the aggregate
Principal Balances of the Subsequent Pool II Mortgage Loans acquired by the
Trust Fund on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date; (y)
with respect to Pool III, the difference between (i) two-months' interest on the
aggregate Principal Balances of the Subsequent Pool III Loans acquired by the
Trust Fund on such Subsequent Transfer Date, calculated at the weighted average
Class AH-1, Class AH-2, Class AH-3, Class AH-4, Class AH-5, Class AH-6, Class
MH-1, Class MH-2 and Class BH Remittance Rates and (ii) two-months' interest on
the aggregate Principal Balances of the Subsequent Pool III Loans acquired by
the Trust Fund on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date; and
(z) with respect to Pool IV, the difference between (i) two-months' interest on
the aggregate Principal Balances of the Subsequent Pool III Loans acquired by
the Trust Fund on such Subsequent Transfer Date, calculated at the Class AMF
Remittance Rate and (ii) two-months' interest on the aggregate Principal
Balances of the Subsequent Pool IV Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the rate at which Pre-Funding Account
moneys are invested as of such Subsequent Transfer Date.
With respect to each Subsequent Transfer Date occurring in December 1997,
the sum, if any, of (w), with respect to Pool I, the difference between (i)
one-month's interest on the aggregate Principal Balances of the Subsequent Pool
I Loans acquired by the Trust Fund on such Subsequent Transfer Date, calculated
at the weighted average Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class
AF-5, Class AF-6, Class AF-7 and Class AF-8 Remittance Rates and (ii) one-
month's interest on the aggregate Principal Balances of the Subsequent Pool I
Loans acquired by the Trust Fund on such Subsequent Transfer Date, calculated at
the rate at which Pre-Funding Account moneys are invested as of such Subsequent
Transfer Date; (x) with respect to Pool II, the difference between (i)
one-month's interest on the aggregate Principal Balances of the Subsequent Pool
II Loans acquired by the Trust Fund on such Subsequent Transfer Date, calculated
at the weighted average Class AV, Class MV-1, Class MV-2, and Class BV
Remittance Rate and (ii) one-month's interest on the aggregate Principal
Balances of the Subsequent Pool II Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the rate at which Pre-Funding Account
moneys are invested as of such Subsequent Transfer Date; (y), with respect to
Pool III, the difference between (i) one-month's interest on the aggregate
Principal Balances of the Subsequent Pool III Loans acquired by the Trust Fund
on such Subsequent Transfer Date, calculated at the weighted average Class AH-1,
Class AH-2, Class AH-3, Class AH-4, Class AH-5, Class AH-6, Class MH-1, Class
MH-2, and Class BH Remittance Rates and (ii) one-month's interest on the
aggregate Principal Balances of the Subsequent Pool III Loans acquired by the
Trust Fund on such Subsequent Transfer Date, calculated at the rate at which
Pre-Funding Account moneys are invested as of such Subsequent Transfer Date; and
(z), with respect to Pool IV, the difference between (i) one-month's interest on
the aggregate Principal Balances of the Subsequent Pool IV Loans acquired by the
Trust Fund on such Subsequent Transfer Date, calculated at the Class AMF
Remittance Rate and (ii) one-month's interest on the aggregate Principal
Balances of the Subsequent Pool IV Loans acquired by the Trust Fund on such
Subsequent Transfer Date, calculated at the rate at which Pre- Funding Account
moneys are invested as of such Subsequent Transfer Date.
OWNER-OCCUPIED MORTGAGED PROPERTY: A Residential Dwelling as to which the
related Mortgagor represented at the time of the origination of the Mortgage
Loan an intent to occupy as such Mortgagor's primary, secondary or vacation
residence.
PAYING AGENT: Initially, the Trustee or any other Person that meets the
eligibility standards for the Paying Agent specified in Section 13.13 hereof and
is authorized by the Trustee to make payments on the Certificates on behalf of
the Trustee.
PERCENTAGE INTEREST: With respect to a Certificate other than a Class X or
Class R Certificate, the portion of the respective Class evidenced by such
Certificate, expressed as a percentage, the numerator of which is the
denomination represented by such Certificate and the denominator of which is the
Original Principal Balance of such Class. With respect to the Class X
Certificates, the portion of the Class evidenced thereby, expressed as a
percentage, which shall equal 100%. With respect to the Class R Certificates,
the portion of the Class evidenced thereby, expressed as a percentage, as stated
on the face of such Certificate, which shall be either 99.99% or, but only with
respect to the Class R Certificates held by the Tax Matters Person, 0.01%. The
Pool I, Pool II, Pool III and Pool IV Certificates (other than the Auction Rate
Certificates) are issuable only in the minimum Percentage Interest corresponding
to a minimum denomination of $1,000 and integral multiples of $1,000 in excess
thereof, except that one Pool I, Pool II, Pool III and Pool IV Certificate of
each Class may be issued in a different denomination. The Auction Rate
Certificates are issuable only in the minimum Percentage Interest corresponding
to a minimum denomination of $25,000 and integral multiples of $25,000 in excess
thereof.
PERIODIC RATE CAP: The provision in the Mortgage Note for each Pool II Loan
which limits increases or decreases in the Mortgage Interest Rate on each Change
Date to the rate set forth in the applicable Mortgage Note.
PERMITTED INSTRUMENTS: As used herein, Permitted Instruments shall include
the following:
(i) direct general obligations of, or obligations
fully and unconditionally guaranteed as to the timely payment
of principal and interest by, the United States or any agency
or instrumentality thereof, provided such obligations are
backed by the full faith and credit of the United States, FHA
debentures, FHLMC senior debt obligations, Federal Home Loan
Bank consolidated senior debt obligations, and FNMA senior
debt obligations, but excluding any of such securities whose
terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption;
(ii) federal funds, certificates of deposit, time
deposits and banker's acceptances (having original maturities
of not more than 365 days) of any bank or trust company
incorporated under the laws of the United States or any state
thereof, provided that the short-term debt obligations of such
bank or trust company at the date of acquisition thereof have
been rated "A-1" or better by S&P and Prime-1 or better by
Moody's;
(iii) deposits of any bank or savings and loan
association which has combined capital, surplus and undivided
profits of at least $3,000,000 which deposits are held only up
to the limits insured by the BIF or SAIF administered by the
FDIC, provided that the unsecured long-term debt obligations
of such bank or savings and loan association have been rated
"BBB" or better by S&P and Baa3 or better by Moody's;
(iv) commercial paper (having original maturities of
not more than 365 days) rated "A-1" or better by S&P and
Prime-1 or better by Moody's;
(v) debt obligations rated "AAA" by S&P and Aaa by
Moody's (other than any such obligations that do not have a
fixed par value and/or whose terms do not promise a fixed
dollar amount at maturity or call date);
(vi) investments in money market funds rated "AAAm"
or better by S&P or "Aaa" or better by Moody's the assets of
which are invested solely in instruments described in clauses
(i)-(v) above;
(vii) guaranteed investment contracts or surety bonds
issued by or reasonably acceptable to the Certificate Insurer
providing for the investment of funds in an account or
insuring a minimum rate of return on investments of such
funds, which contract or surety bond shall:
(a) be an obligation of an insurance company or
other corporation whose debt obligations or
insurance financial strength or claims
paying ability are rated "AAA" by S&P and
"Aaa" by Moody's; and
(b) provide that the Trustee may exercise all of
the rights of the Representative under such
contract or surety bond without the
necessity of the taking of any action by the
Representative;
(viii) A repurchase agreement that satisfies the
following criteria and is acceptable to the Certificate
Insurer:
(a) Must be between the Trustee and a dealer bank
or securities firm described in 1. or 2.
below:
1. Primary dealers on the Federal Reserve
reporting dealer list which are rated
"A" or better by S&P and Moody's, or
2. Banks rated "A" or above by S&P and
Moody's
(b) The written repurchase agreement must
include the following:
1. Securities which are acceptable for the
transfer are:
A. Direct U.S. governments, or
B. Federal Agencies backed by the
full faith and credit of the U.S.
government (and FNMA & FHLMC)
2. the term of the repurchase agreement may
be up to 60 days
3. the collateral must be delivered to the
Trustee or third party custodian acting
as agent for the Trustee by appropriate
book entries and confirmation
statements, with a copy to the
Certificate Insurer, must have been
delivered before or simultaneous with
payment (perfection by possession of
certificated securities)
4. Valuation of collateral
A. The securities must be valued
weekly, marked-to-market at current
market price plus accrued interest.
B. The value of the collateral must
be equal to at least 104% of the
amount of cash transferred by the
Trustee or custodian for the Trustee
to the dealer bank or security firm
under the repurchase agreement plus
accrued interest. If the value of
securities held as collateral slips
below 104% of the value of the cash
transferred by the Trustee plus
accrued interest, then additional
cash and/or acceptable securities
must be transferred. If, however,
the securities used as collateral
are FNMA or FHLMC, then the value of
collateral must equal at least 105%.
(ix) any other investment acceptable to the
Certificate Insurer and the Rating Agencies, written
confirmation of which shall be furnished by the Certificate
Insurer to the Trustee.
PERMITTED TRANSFEREE: Any Person other than (i) the United States, any
State or political subdivision thereof, or any agency or instrumentality of any
of the foregoing, (ii) a foreign government, International Organization or any
agency or instrumentality of either of the foregoing, (iii) an organization
(except certain farmers' cooperatives described in Code Section 521) which is
exempt from tax imposed by Chapter 1 of the Code (including the tax imposed by
Section 511 of the Code on unrelated business taxable income) on any excess
inclusions (as defined in Code section 860E(c)(1)) with respect to any Class R
Certificate, (iv) rural electric and telephone cooperatives described in Code
Section 1381(a)(2)(C), (v) a Person other than a "United States Person" as
defined in Code Section 7701(a)(30), unless the Servicer consents in writing to
the Transfer to such Person and (vi) any other Person so designated by the
Servicer based upon an Opinion of Counsel that the transfer of a Percentage
Interest in a Class R Certificate to such Person may cause the Trust Fund to
fail to qualify as a REMIC at any time that the Certificates are outstanding.
The terms "United States," "State" and "International Organization" shall have
the meanings set forth in Code Section 7701 or successor provisions. A
corporation will not be treated as an instrumentality of the United States or of
any State or political subdivision thereof for these purposes if all of its
activities are subject to tax and, with the exception of FHLMC, a majority of
its board of directors is not selected by such governmental unit.
PERSON: Any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency or
political subdivision thereof.
POOL: With respect to the Certificates, the Pool I, Pool II, Pool III or
Pool IV Certificates, as the case may be, and with respect to the Mortgage
Loans, the Pool I, Pool II, Pool III or Pool IV Mortgage Loans, as the case may
be.
POOL AMORTIZED SUBORDINATED AMOUNT REQUIREMENT: With respect to Pool I and
Pool IV and as of any date of determination, the product of (x) 3.50% and
50.00%, respectively, and (y) the aggregate Principal Balances of all Mortgage
Loans in the related Pool as of the close of business on the last day of the Due
Period immediately preceding such date; provided, however, that for any period
during which an Event of Excessive Loss relating to Pool I or Pool IV exists,
the Pool Amortized Subordinated Amount Requirement for such Pool shall equal the
product of 3.50% or 50.00%, respectively, and the Pool Principal Balance of the
respective Pool as of the date such Event of Excessive Pool Loss for such Pool
first existed.
POOL APPLIED REALIZED LOSS AMOUNT: For any Remittance Date and Pool II or
Pool III, an amount equal to the excess, if any, of (i) the aggregate Class
Principal Balances of the Pool II or Pool III Class A, Class M and Class B
Certificates, as applicable, (after taking into account the distribution of
principal (including the applicable Accelerated Principal Distribution Amount)
with respect to the Pool II or Pool III Certificates, as applicable, on such
Remittance Date) over (ii) the aggregate Principal Balance of the Pool II or
Pool III Mortgage Loans, as applicable, as of the end of the prior Due Period
(after taking into account all Realized Losses relating to Pool II or Pool III
Mortgage Loans, as applicable, experienced during such Due Period).
POOL AVAILABLE AMOUNT: With respect to any Pool and each Remittance Date,
an amount equal to the sum of (i) the Pool Available Remittance Amount for such
Pool (minus the amounts withdrawn from the applicable Certificate Account (a)
for Pool I and Pool IV, pursuant to Section 6.01(b)(i) to deposit amounts
related to required premiums in the applicable Insurance Account, (b) for Pool
II pursuant to Section 6.01 (b)(iii) to pay the Auction Agent Fee to the Auction
Agent and (c) for Pool III, pursuant to Section 6.01(b)(ii) to make deposits in
the FHA Premium Account), (ii) any amount of Total Monthly Excess Cashflow to be
applied to the Certificates of such Pool on such Remittance Date, and (iii)
amounts transferred from the Spread Account, if any, pursuant to Section
6.05(b)(ii) and Insured Payments, if any, made by the Certificate Insurer with
respect to Pool I and IV.
POOL AVAILABLE MAXIMUM SUBORDINATED AMOUNT: With respect to Pool II and
Pool III and any Remittance Date, the Pool Maximum Subordinated Amount for Pool
II or Pool II, as applicable, less all distributions made on Certificates of the
applicable Pool with respect to Shortfall Amounts on prior Remittance Dates and
when determining if the Pool Available Maximum Subordinated Amount with respect
to Pool II or Pool III has been reduced to zero, all distributions on
Certificates of the applicable Pool with respect to Shortfall Amounts on such
Remittance Date, in the order of priority set forth in Section 6.08, until zero
has been reached.
POOL AVAILABLE REMITTANCE AMOUNT: With respect to any Pool and any
Remittance Date, (i) the sum of all amounts relating to the Mortgage Loans of
such Pool described in clauses (i) through (viii), inclusive, of Section 5.03(b)
received by the Servicer or any Subservicer (including any amounts paid by the
Servicer and the Representative and excluding any Excess Spread and
Subordination Reduction Amounts relating to the Mortgage Loans of such Pool, any
amounts withdrawn by the Servicer with respect to the Mortgage Loans in such
Pool pursuant to Section 5.04(b), (c), (e) and (f)(i) as of the related
Determination Date and any amounts deposited into the Servicing Account with
respect to the Mortgage Loans in such Pool pursuant to Section 5.04(g) as of the
related Determination Date) during the related Due Period or, with respect to
Section 5.03(b)(vi), on the related Determination Date, and deposited into the
applicable Certificate Account as of the Determination Date, plus (ii) the
amount of any Monthly Advances and Compensating Interest payments relating to
the Mortgage Loans of such Pool, remitted by the Servicer for such Remittance
Date, plus (iii) amounts to be transferred to the applicable Certificate Account
from the Pre-Funding Account and the Capitalized Interest Account with respect
to the Remittance Dates in October, November and December 1997, less (iv) those
amounts withdrawable from the applicable Certificate Account pursuant to Section
6.01(b)(vi). The "Pool Available Remittance Amount" does not include (i) funds
in the applicable Principal and Interest Account and available to be withdrawn
pursuant to Section 5.04(d)(ii), (ii) funds in the applicable Certificate
Account and available to be withdrawn pursuant to Section 6.01(b)(vi), (iii)
funds in the applicable Certificate Account that cannot be distributed by the
Trustee on such Remittance Date as a result of a proceeding initiated under the
United States Bankruptcy Code, as amended from time to time (11 U.S.C.) and (iv)
Insured Payments.
POOL AVAILABLE REMITTANCE AMOUNT SHORTFALL: With respect to Pool I or Pool
IV and any Remittance Date, the excess, if any, of (i) the Pool Remittance
Amount for such Pool (net of amounts included in clauses (X) (vi) and (viii) and
(Y) of the definition of Pool Principal Distribution Amount) over (ii) the Pool
Available Remittance Amount for such Pool (net of the amount to be withdrawn
from the applicable Certificate Account pursuant to Section 6.01(b)(i) and
one-twelfth of the Annual Expense Escrow Amount with respect to such Pool).
POOL AVAILABLE REMITTANCE AMOUNT SURPLUS: With respect to Pool I or Pool IV
and any Remittance Date, the excess, if any, of (i) the Pool Available
Remittance Amount for such Pool (net of the amount to be withdrawn from the
applicable Certificate Account pursuant to Section 6.01(b)(i) and one-twelfth of
the Annual Expense Escrow Amount with respect to such Pool) over (ii) the Pool
Remittance Amount for such Pool (net of amounts included in clauses (X)(vi) and
(viii) and (Y) of the definition of Pool Principal Distribution Amount).
POOL CARRY-FORWARD AMOUNT: With respect to Pool I or Pool IV and any
Remittance Date, the sum of (i) the amounts, if any, by which (x) the Pool
Remittance Amount for such Pool as of the immediately preceding Remittance Date
exceeded (y) the amount of the actual distribution to the Holders of the
Certificates of such Pool (including to the Certificate Insurer, as provided in
Section 6.08), pursuant to Section 6.08 on the immediately preceding Remittance
Date, exclusive of any Insured Payment to the Holders of the Certificates of
such Pool made pursuant to Section 6.08 hereof on such immediately preceding
Remittance Date, and (ii) interest on the amounts, if any, described in clause
(i) above, at one-twelfth of the weighted average Remittance Rates of the
Certificates of such Pool from such immediately preceding Remittance Date;
provided, however, that only the Certificate Insurer shall be entitled to
interest on the principal portion of the Pool Carry-Forward Amount.
POOL CURRENT INTEREST REQUIREMENT: For each Pool, the sum of the Class
Current Interest Requirements of the Certificates of such Pool.
POOL MAXIMUM COLLATERAL AMOUNT: For each Pool, the sum of (i) the aggregate
Principal Balances as of the Cut-Off Date of all Initial Mortgage Loans in such
Pool and (ii) the aggregate Principal Balances as of the related Subsequent
Cut-Off Dates of all Subsequent Mortgage Loans transferred to the Trust Fund and
assigned to such Pool.
POOL MAXIMUM SUBORDINATED AMOUNT: The initial Pool Maximum Subordinated
Amount for Pool I and Pool IV shall be $48,000,000 and $3,000,000, respectively,
which amounts equal 12% of the original Pool Principal Balances of each such
Pool. On any Remittance Date, the applicable Maximum Subordinated Amount for
Pool I or Pool IV shall equal the initial applicable Pool Maximum Subordinated
Amount less Cumulative Realized Losses allocated to such respective Pool through
the last day of the month preceding such Remittance Date. The applicable Pool
Maximum Subordinated Amount for Pool I or Pool IV on any date other than a
Remittance Date shall be equal to the applicable Pool Maximum Subordinated
Amount as of the immediately preceding Remittance Date (or, prior to the first
Remittance Date, the initial Pool Maximum Subordinated Amount), provided,
however, that a Pool Maximum Subordinated Amount for Pool I or Pool IV shall
never be less than zero. The Pool Maximum Subordinated Amount for Pool II and
Pool III shall be $7,970,000 and $4,469,531, respectively.
POOL ORIGINAL COLLATERAL AMOUNT: For each Pool the sum of (i) the aggregate
Principal Balances of the related Mortgage Loans as of the Cut-Off Date and (ii)
the related Original Pre-Funded Amount.
POOL PRE-FUNDING EARNINGS: With respect to each Pool and the Remittance
Dates in October, November and December 1997, the actual investment earnings
earned during the period from the Closing Date through the Business Day
immediately preceding the Determination Date in October, November and December
1997 (inclusive) on that portion of the Pre-Funding Account allocated to such
Pool during such period as calculated by the Representative pursuant to Section
2.09(e) hereof.
POOL PRINCIPAL BALANCE: With respect to any Pool, the sum of the Class
Principal Balances of the Certificates of such Pool. Notwithstanding the
foregoing, for purposes of determining the following definitions amounts on
deposit in the Certificate Account for Pool II allocated to the Holders of the
Auction Rate Certificates for a Remittance Date but not being distributed on
such Remittance Date pursuant to Section 6.08(f) shall be deemed to have been so
distributed on such Remittance Date and to have reduced the Pool Principal
Balance of Pool II accordingly: (i) Excess Subordinated Amount, (ii) Pool
Subordinated Amount, (iii) Subordinated Deficiency Amount, (iv) Subordination
Increase Amount and (v) Subordination Reduction Amount.
POOL PRINCIPAL DISTRIBUTION AMOUNT: For each Pool, on any Remittance Date,
the excess of:
(X) the sum, without duplication, of the following:
(i) each payment of principal received by the
Servicer or any Subservicer (exclusive of Curtailments,
Principal Prepayments and amounts described in clause (iii)
hereof) during the related Due Period with respect to the
Mortgage Loans of the related Pool,
(ii) all Curtailments and all Principal Prepayments
received by the Servicer or any Subservicer during the related
Due Period with respect to the Mortgage Loans of the related
Pool,
(iii) the principal portion of all Insurance
Proceeds, Released Mortgaged Property Proceeds and Net
Liquidation Proceeds received by the Servicer or any
Subservicer during the related Due Period with respect to the
Mortgage Loans of the related Pool (and, with respect to the
Pool III Loans, the principal portion of all FHA Payments
received by the Claims Administrator with respect to a 90 Day
Delinquent FHA Loan during the related Due Period),
(iv) that portion of the purchase price (as indicated
in Section 2.05(b)) for any repurchased Mortgage Loan from the
related Pool which represents principal and any Substitution
Adjustments deposited in the applicable Principal and Interest
Account with respect to such Mortgage Loans of the related
Pool and transferred to the applicable Certificate Account as
of the related Determination Date,
(v) any proceeds representing principal on the
Mortgage Loans of the related Pool received by the Trustee in
connection with the liquidation of the Mortgage Loans of the
related Pool or the termination of the Trust,
(vi) with respect to Pool I or Pool IV, the amount of
any Subordination Deficit with respect to such Pool for such
Remittance Date,
(vii) any moneys released from the Pre-Funding
Account on the October, November and December 1997 Remittance
Date as a prepayment of the Certificates of the related Pool
for such Remittance Date,
(viii) with respect to Pool I or Pool IV the amount
of any Subordination Increase Amount with respect to the
related Pool for such Remittance Date, OVER
(Y) the amount of any Subordination Reduction Amount with respect to the
related Pool for such Remittance Date.
POOL PROJECTED NET MONTHLY EXCESS CASHFLOW: As of any date of calculation,
with respect to Pool I and Pool IV, five times Net Monthly Excess Cashflow
relating to such Pool, as calculated pursuant to Section 6.14(b) hereof on the
Remittance Date immediately preceding such date of calculation.
POOL REMAINING AMOUNT AVAILABLE: With respect to any Pool and as of any
Remittance Date the greater of (x) zero dollars and (y)(i) the Pool Available
Amount for the related Pool minus (ii) in the case of Pool I or Pool IV the sum
of payments made with respect to the applicable Pool pursuant to Sections
6.08(d)(X)(i) through (iv), in the case of Pool II, the sum of payments made
with respect thereto pursuant to Section 6.08(d)(Y)(i) through (xvii) and
amounts on deposit in the Certificate Account for Pool II allocated to the
Holders of the Auction Rate Certificates but not being distributed on such
Remittance Date pursuant to Section 6.08(f) and in the case of Pool III the sum
of payments made with respect thereto pursuant to Section 6.08(Z)(i) through
(xvii).
POOL REMITTANCE AMOUNT: As to Pool I or Pool IV and any Remittance Date,
the amount required to be distributed on such Remittance Date to the Holders of
the Certificates of such Pool, such amount being equal to the sum of (i) the
Pool Current Interest Requirement for the related Pool, (ii) the Pool Principal
Distribution Amount for the related Pool, (iii) the Pool Carry-Forward Amount
for the related Pool and (iv) any amount received by the Trustee from the
Servicer or the Originator and paid to the Holders of the Certificates of the
related Pool that constitutes a Monthly Advance and that is recoverable and
sought to be recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code, as amended from time to time (11
U.S.C.), in accordance with a final, nonappealable order of a court having
competent jurisdiction.
In the event that any amounts referenced in subclause (iv) above constitute
Insured Payments or any portion thereof, payment of such amounts shall be
disbursed to the trustee in bankruptcy named in the final order of the court
exercising jurisdiction and not directly to any Certificateholder of the
Certificates of such Pool unless such Certificateholder has returned principal
or interest paid on the Certificates of such Pool to such trustee in bankruptcy,
in which case payment shall be disbursed to such Certificateholder.
POOL SENIOR SPECIFIED ENHANCEMENT PERCENTAGE: With respect to any
Remittance Date, 38.0% with respect to Pool II and 53.2% with respect to Pool
III.
POOL SPREAD AMOUNT STEPDOWN DATE: Means with respect to Pool II or Pool III
the later to occur of (i) the Remittance Date occurring in October 2000 and (ii)
the first Remittance Date on which the aggregate Principal Balances of the
Mortgage Loans in the related Pool as of the last day of the related Due Period
is less than 50% of the Pool Original Collateral Amount for the respective Pool.
POOL SUBORDINATED AMOUNT: For each Pool, as of any Remittance Date, the
excess, if any, of (x) the sum of (i) the aggregate Principal Balances of the
Mortgage Loans of the related Pool as of the close of business on the last day
of the Due Period relating to such Remittance Date, (ii) any amount on deposit
in the Pre-Funding Account at such time and allocated to the related Pool and
(iii) the Spread Account Portion for the related Pool, over (y) the Pool
Principal Balance of the related Pool as of such Remittance Date (after taking
into account the payment of the Pool Remittance Amount of the related Pool on
such Remittance Date, net of amounts included in clauses (X)(vi) and (viii) and
(Y) of the definition of Pool Principal Distribution Amount).
POOL I CERTIFICATE: A Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class
AF-5, Class AF-6, Class AF-7 or Class AF-8 Certificate.
POOL I CLASS A CERTIFICATES: Class AF-1, Class AF-2, Class AF-3, Class
AF-4, Class AF-4, Class AF-5, Class AF-6, Class AF-7 and Class AF-8
Certificates.
POOL I INITIAL SPECIFIED SUBORDINATED AMOUNT: $7,000,000.00.
POOL I MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H delivered to the
Trustee, as such Exhibit may be amended from time to time.
POOL I SPECIFIED SUBORDINATED AMOUNT: means (as such amount may be changed
in accordance with the provisions of Section 2.09(f) hereof) the greater of (i)
the Pool I Initial Specified Subordinated Amount or (ii) the difference between
(x) one-half of the aggregate Principal Balances of all Pool I Mortgage Loans
that are 90 or more days delinquent (including REO Properties) minus (y) the
Pool Projected Net Monthly Excess Cashflow for Pool I as of such date, until the
later of the date upon which principal in the amount of one-half of the Pool
Maximum Collateral Amount for Pool I has been received in respect of the Pool I
Mortgage Loans and the 30th Remittance Date following the Closing Date, and with
respect to each Remittance Date thereafter, the greatest of:
(a) the lesser of (i) the Pool I Initial Specified Subordinated Amount,
(ii) the Pool Amortized Subordinated Amount Requirement for Pool I or (iii) two
times the Pool I Initial Specified Subordinated Amount stated as a percentage of
the Pool Maximum Collateral Amount for Pool I times the then current outstanding
Pool Principal Balance for Pool I plus the then current outstanding Principal
Balance of the Pool I Mortgage Loans with an original term to stated maturity of
five years and a "balloon" payment due at such stated maturity;
(b) the difference between (i) one-half of the aggregate Principal Balances
of all Pool I Mortgage Loans that are 90 or more days delinquent (including REO
Properties) minus (ii) the Pool Projected Net Monthly Excess Cashflow for Pool I
as of such date;
(c) an amount equal to 0.5% of the Pool Maximum Collateral Amount for Pool
I plus 15.0% of the then current outstanding Principal Balance of the Pool I
Mortgage Loans with an original term to stated maturity of 15 years and a
"balloon" payment due at such stated maturity; or
(d) $500,000 times a fraction, the numerator of which is the Pool Principal
Balance of Pool I for such Remittance Date and the denominator of which is the
sum of the aggregate Pool Principal Balances of each Pool for such Remittance
Date.
POOL I STRIP AMOUNT: With respect to Pool I and each Remittance Date
through the Remittance Date in July 1998, the lesser of (a) the Total Monthly
Excess Cashflow for Pool I less any Pool I Subordination Deficit and (b) an
amount equal to 30 days' interest at a rate of 2.5% per annum on a notional
amount equal to the Class Principal Balance of the Class AF-8 Certificates prior
to the distributions being made on the specified Remittance Date.
POOL II CERTIFICATE: A Class AV, Class MV-1, Class MV-2 and Class BV
Certificate.
POOL II CLASS A CERTIFICATES: The Class AV Certificates.
POOL II CLASS B CERTIFICATES: The Class BV Certificates.
POOL II CLASS M CERTIFICATES: The Class MV-1 and Class MV-2 Certificates.
POOL II CUMULATIVE LOSS TRIGGER: Will be in effect with respect to the Pool
II Certificates after the Remittance Date on which (i) the quotient of (A) the
Pool Applied Realized Loss Amount for Pool II since the Cut-off Date over (B)
the sum of the initial Principal Balance of the Pool II Mortgage Loans as of the
Cut-off Date and the Original Pre-Funded Amount for Pool II exceeds (ii) the
following percentages as of such Distribution Date:
Distribution Date Percentage
November 2000-October 2001 3.50%
November 2001-October 2002 4.00%
November 2002-October 2003 4.50%
November 2003 and thereafter 5.00%
POOL II INITIAL SPECIFIED SUBORDINATED AMOUNT: $12,000,000.00.
POOL II MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H-1 delivered to
the Trustee, as such Exhibit may be amended from time to time, which Mortgage
Loan has a Mortgage Interest Rate which adjusts on each Change Date by reference
to the LIBOR Index or the Treasury Index, as the case may be, subject to the
applicable Periodic Rate Cap and the applicable Lifetime Floor and Lifetime Cap.
POOL II SPECIFIED SUBORDINATED AMOUNT: means (a) prior to the Pool Spread
Amount Stepdown Date for Pool II, 2.0% of the Pool Original Collateral Amount
for Pool II and (b) on and after the Pool Spread Amount Stepdown Date for Pool
II, the greater of (A) 4.0% of the then aggregate Principal Balance of the Pool
II Mortgage Loans as of the last day of the related Due Period and (B) 0.5% of
the Pool Original Collateral Amount for Pool II; provided that upon the
occurrence and during the continuance of (x) a Trigger Event or a Pool II
Cumulative Loss Trigger, no stepdown may occur and (y) an S&P Trigger Event, the
Pool II Specified Subordinated Amount will equal 3.75% of the Pool Original
Collateral Amount for Pool II on or prior to October 2000 and 7.50% of the then
current aggregate Principal Balance of the Pool II Mortgage Loans as of the last
day of the related Due Period thereafter, and in any event the Pool II Specified
Subordinated Amount shall never exceed the then Class Principal Balance of the
Pool II Certificates.
POOL II STRIP AMOUNT: With respect to Pool II and each Remittance Date
through the Remittance Date in April 1998, an amount equal to 30 days' interest
at a rate of 4.0% per annum on a notional amount equal to the Class Principal
Balance of the Class MV-1 Certificates prior to the distributions being made on
the specified Remittance Date.
POOL III CERTIFICATE: A Class AH-1, Class AH-2, Class AH-3, Class AH-4,
Class AH-5, Class AH-6, Class MH-1, Class MH-2 or Class BH Certificate.
POOL III CLASS A CERTIFICATES: The Class AH-1, Class AH-2, Class AH-3,
Class AH-4, Class AH-5 and Class AH-6 Certificates.
POOL III CLASS B CERTIFICATES: The Class BH Certificates.
POOL III CLASS M CERTIFICATES: The Class MH-1 and Class MH-2 Certificates.
POOL III DELINQUENCY PERIOD: [RESERVED]
POOL III INITIAL SPECIFIED SUBORDINATED AMOUNT: $21,587,500.00.
POOL III MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H-2 delivered to
the Co-Trustee, as such Exhibit may be amended from time to time.
POOL III SPECIFIED SUBORDINATED AMOUNT: means (a) prior to the Pool Spread
Amount Stepdown Date for Pool III, 7.85% of the Original Collateral Amount for
Pool III and (b) on and after the Pool Spread Amount Stepdown Date for Pool III,
the greater of (i) 15.70% of the then aggregate Principal Balance of the Pool
III Mortgage Loans as of the last day of the related Due Period and (ii) 0.5% of
the Pool Original Collateral Amount for Pool III; provided that upon the
occurrence and during the continuance of a Trigger Event, the Pool III Specified
Subordinated Amount will equal 9.2% of the Pool Original Collateral Amount for
Pool III and in any event, the Pool III Specified Subordinated Amount shall
never exceed the then Class Principal Balance of the Pool III Certificates.
POOL IV CERTIFICATE: A Class AMF Certificate.
POOL IV CLASS A CERTIFICATES: The Class AMF Certificates.
POOL IV INITIAL SPECIFIED SUBORDINATED AMOUNT: $6,250,000.00.
POOL IV MORTGAGE LOAN: A Mortgage Loan listed on Exhibit H-3 delivered to
the Trustee, as such Exhibit may be amended from time to time.
POOL IV SPECIFIED SUBORDINATED AMOUNT: means (as such amount may be reduced
in accordance with the provisions of Section 2.09(f) hereof) the Pool IV Initial
Specified Subordinated Amount until the later of the date upon which principal
in the amount of one-half of the Pool Maximum Collateral Amount for Pool IV has
been received in respect of the Pool IV Mortgage Loans and the 30th Remittance
Date following the Closing Date, and with respect to each Remittance Date
thereafter, the greatest of:
(a) the lesser of (i) the Pool IV Initial Specified Subordinated Amount,
(ii) the Pool Amortized Subordinated Amount Requirement for Pool IV or (iii) two
times the Pool IV Initial Specified Subordinated Amount stated as a percentage
of the Pool Maximum Collateral Amount for Pool IV times the then current
outstanding Pool Principal Balance for Pool IV plus the then current outstanding
Principal Balance of the Pool IV Mortgage Loans with an original term to stated
maturity of five years and a "balloon" payment due at such stated maturity;
(b) two times the difference between (i) one-half of the aggregate
Principal Balances of all Pool IV Mortgage Loans that are 90 or more days
delinquent (including REO Properties) minus (ii) the Pool Projected Net Monthly
Excess Cashflow for Pool IV as of such date;
(c) an amount equal to 0.5% of the Pool Maximum Collateral Amount for Pool
IV plus 15% of the then current outstanding Principal Balance of the Pool IV
Mortgage Loans with an original term to stated maturity of 15 years and a
"balloon" payment due at such stated maturity;
(d) $500,000 times a fraction, the numerator of which is the Pool Principal
Balance for Pool IV for such Remittance Date and the denominator of which is the
sum of the aggregate Pool Principal Balances of each Pool for such Remittance
Date; or
(e) the sum of the Principal Balances of the three largest Pool IV Mortgage
Loans.
PREFERENCE AMOUNT: means any amount previously distributed to a holder of
the Certificates (other than the Trust Fund) that is recoverable and sought to
be recovered as a voidable preference by a trustee in bankruptcy pursuant to the
United States Bankruptcy Code (11 U.S.C.), as amended from time to time, in
accordance with a final nonappealable order of a court having competent
jurisdiction.
PRE-FUNDED AMOUNT: With respect to any date of determination, the amount on
deposit in the Pre-Funding Account.
PRE-FUNDING ACCOUNT: The Pre-Funding Account established in accordance with
Section 6.02 hereof and maintained by the Trustee.
PREMIUM DEPOSIT AMOUNT: As of any Remittance Date, an amount equal to the
Monthly Premium for such Remittance Date.
PRIME RATE: The lowest prime lending rate as published in The Wall Street
Journal on any date of determination, or if such rate is not published in The
Wall Street Journal on any date of determination, the lowest prime lending rate
as published in the most recently available edition of The Wall Street Journal
preceding such date of determination.
PRINCIPAL AND INTEREST ACCOUNT: The principal and interest account
established by the Servicer pursuant to Section 5.03 hereof.
PRINCIPAL BALANCE: With respect to any Mortgage Loan or related REO
Property, at any date of determination, (i) the principal balance of the
Mortgage Loan (or, with respect to a Low Interest Pool I Mortgage Loan, the
product of such principal balance and the percentage set forth on Exhibit T
attached hereto) outstanding as of the Cut-Off Date or as of the applicable
Subsequent Cut-Off Date relative to Subsequent Mortgage Loans or as of the
applicable substitution date relative to Qualified Substitute Mortgage Loans,
after application of principal payments received on or before such date, minus
(ii) the sum of (a) the principal portion of the Monthly Payments received
during each Due Period ending prior to the most recent Remittance Date, which
were distributed pursuant to Section 6.08 on any previous Remittance Date, and
(b) all Principal Prepayments, Curtailments, Excess Payments, Insurance
Proceeds, Released Mortgaged Property Proceeds, Net Liquidation Proceeds and net
income from an REO Property (but not including the proceeds of any Insured
Payment) to the extent applied by the Servicer as recoveries of principal in
accordance with the provisions hereof, which were distributed pursuant to
Section 6.08 on any previous Remittance Date.
PRINCIPAL PREPAYMENT: Any payment or other recovery of principal on a
Mortgage Loan equal to the outstanding principal balance thereof, received in
advance of the final scheduled Due Date which is intended to satisfy a Mortgage
Loan in full.
PRIOR LIEN: With respect to any Mortgage Loan which is not a first priority
lien, each mortgage loan relating to the corresponding Mortgaged Property having
a higher priority lien.
PROHIBITED TRANSACTION: "Prohibited Transaction" shall have the meaning set
forth from time to time in the definition thereof at Section 860F(a)(2) of the
Code (or any successor statute thereto).
PROJECTED EXCESS SPREAD: As of any date of determination, the amount
calculated as such with respect to Pool I and Pool IV in accordance with the
Insurance Agreement.
PUD AND DE MINIMIS PUD: A planned unit development in which individual fee
title is held to the interior and exterior of the units and underlying land and
common areas, recreational facilities and streets are held in undivided common
ownership.
QUALIFIED MORTGAGE: "Qualified mortgage" shall have the meaning set forth
from time to time in the definition thereof at Section 860G(a)(3) of the Code
(or any successor statute thereto).
QUALIFIED SUBSTITUTE MORTGAGE LOAN: A mortgage loan or mortgage loans
substituted for a Deleted Mortgage Loan pursuant to Section 2.05 or 3.03 hereof,
which (i) has or have a mortgage interest rate or rates (or, in the case of a
Pool II Mortgage Loan, a Gross Margin and Index) of not less than (and not more
than two percentage points more than) the Mortgage Interest Rate (or Gross
Margin and Index) for the Deleted Mortgage Loan, (ii) relates or relate to the
same type of Residential Dwelling or Multifamily Property, as the case may be,
as the Deleted Mortgage Loan, (iii) matures or mature no later than (and not
more than one year earlier than) the Deleted Mortgage Loan, (iv) has or have a
Loan-to-Value Ratio or Loan-to-Value Ratios at the time of such substitution no
higher than the Loan-to-Value Ratio of the Deleted Mortgage Loan at such time,
(v) has or have a principal balance or principal balances (after application of
all payments received on or prior to the date of substitution) equal to or less
than the Principal Balance (prior to the occurrence of Realized Losses) of the
Deleted Mortgage Loan as of such date, (vi) with respect to each Deleted
Mortgage Loan that is a first mortgage loan, is a first mortgage loan, (vii)
satisfies or satisfy the criteria set forth from time to time in the definition
of a "qualified replacement mortgage" at Section 860G(a)(4) of the Code (or any
successor statute thereto), (viii) with respect to Pool III, is an FHA Loan if
the Deleted Mortgage Loan was an FHA Loan or a Conventional Home Improvement
Loan if the Deleted Mortgage Loan was a Conventional Home Improvement Loan and
(ix) complies or comply as of the date of substitution with each representation
and warranty set forth in Sections 3.01(b) and 3.02.
RATING AGENCIES: Moody's, S&P and Fitch.
REALIZED LOSS: With respect to each Liquidated Mortgage Loan (including a
90 Day Delinquent FHA Loan as to which no Claim is eligible to be filed with the
FHA), an amount (not less than zero or greater than the related outstanding
principal balance as of the date of the final liquidation) equal to the
outstanding principal balance of the Mortgage Loan as of the date of such
liquidation, minus the Net Liquidation Proceeds relating to such Liquidated
Mortgage Loan (such Net Liquidation Proceeds to be applied first to the
principal balance of the Liquidated Mortgage Loan and then to interest thereon).
With respect to each 90 Day Delinquent FHA Loan for which a Claim is eligible to
be filed with the FHA, the Realized Loss, if any, shall be determined as of the
Determination Date following the date the related FHA Payment is received by the
Co-Trustee, and shall be an amount (not less than zero or greater than the
related outstanding principal balance as of the date the Claim relating to such
FHA Loan is filed with the FHA) equal to the outstanding principal balance of
the FHA Loan as of the date of such filing, minus amounts paid from the
Certificate Account relating to such 90 Day Delinquent FHA Loan (such amounts to
be applied first to the principal balance of such FHA Loan and then to interest
thereon). With respect to each Mortgage Loan which has become the subject of a
Deficient Valuation, the Realized Loss shall be calculated as the difference
between the principal balance of the Mortgage Loan immediately prior to such
Deficient Valuation and the principal balance of the Mortgage Loan as reduced by
the Deficient Valuation. With respect to any Mortgage Loan made to a Mortgagor
who has filed a petition in bankruptcy under the United States Bankruptcy Code,
as amended from time to time (11 U.S.C.), a Realized Loss shall be deemed to
have occurred whenever a withdrawal is made from the Principal and Interest
Account in respect of such Mortgage Loan pursuant to Section 5.04(c), and shall
be equal to the amount of such withdrawal.
RECORD DATE: With respect to any Remittance Date, the close of business on
the last day of the month immediately preceding the month of the related
Remittance Date. With respect to the Special Remittance Date, November 30, 1997.
REFERENCE BANKS: Leading banks selected by the Trustee (or, with respect to
the Auction Rate Certificates, the Auction Agent) and engaged in transactions in
Eurodollar deposits in the international Eurocurrency market (i) with an
established place of business in London, (ii) which have been designated by the
Trustee (or, with respect to the Auction Rate Certificates, the Auction Agent)
to the Representative, the Servicer and the Claims Administrator and (iii) which
are not affiliates of the Representative.
REGISTRATION STATEMENT: The registration statement (File No. 333-20817)
filed by the Representative with the Securities and Exchange Commission in
connection with the issuance and sale of the Pool I, Pool II, Pool III and Pool
IV Certificates, including the Prospectus dated September 11, 1997 and the
Prospectus Supplement dated September 26, 1997.
REIMBURSABLE AMOUNTS: As of any date of determination, an amount payable to
the Servicer and/or Representative with respect to (i) the payment of any tax
reimbursable pursuant to Section 5.01(h), (ii) the Monthly Advances and
Servicing Advances reimbursable pursuant to Section 5.04(b), (iii) any advances
reimbursable pursuant to Section 9.01 and not previously reimbursed pursuant to
Section 6.03(c)(i), and (iv) any other amounts reimbursable to the Servicer or
the Representative prior to a distribution to the Class R Certificateholders
pursuant to this Agreement.
RELATED PAYMENTS: As described in Section 5.15(c).
RELEASED MORTGAGED PROPERTY PROCEEDS: As to any Mortgage Loan, proceeds
received by the Servicer in connection with (a) a taking of an entire Mortgaged
Property by exercise of the power of eminent domain or condemnation or (b) any
release of part of the Mortgaged Property from the lien of the related Mortgage,
whether by partial condemnation, sale or otherwise, which are not released to
the Mortgagor in accordance with applicable law, the Servicer's customary second
mortgage servicing procedures and this Agreement.
REMAINDER EXCESS SPREAD AMOUNT: As of any Remittance Date, the amount equal
to the excess of the related Excess Spread over the related Monthly Excess
Spread, which amount shall be zero.
REMIC: A "real estate mortgage investment conduit" within the meaning of
Section 860D of the Code.
REMIC CHANGE OF LAW: Any proposed, temporary or final regulation, revenue
ruling, revenue procedure or other official announcement or interpretation
relating to the REMIC and the REMIC Provisions issued after the Closing Date.
REMIC PROVISIONS: Provisions of the federal income tax law relating to real
estate mortgage investment conduits, which appear at Section 860A through 860G
of Subchapter M of Chapter 1 of the Code, and related provisions, and
regulations promulgated thereunder, as the foregoing may be in effect from time
to time.
REMIC I: The assets constituting the Trust Fund consisting of the REMIC II
Regular Certificates.
REMIC II: The assets constituting the Trust Fund other than the Pre-Funding
Account and the Capitalized Interest Account. Expenses and fees of the Trust
Fund shall be paid by REMIC II.
REMIC II CERTIFICATES: The REMIC II Regular Certificates and the Class R-2
Certificates.
REMIC II REGULAR CERTIFICATES: As designated in Section 4.1.
REMITTANCE DATE: The 15th day of any month or if such 15th day is not a
Business Day, the first Business Day immediately following, commencing in
October 1997; provided, however, that in no event shall the Remittance Date
occur less than three Business Days following the Determination Date.
REO DISPOSITION: The final sale by the Servicer of a Mortgaged Property
acquired by the Servicer in foreclosure or by deed in lieu of foreclosure. The
proceeds of any REO Disposition constitute part of the definition of Liquidation
Proceeds.
REO PROPERTY: As described in Section 5.10.
REPRESENTATION LETTER: The Letter of Representations executed by the
Representative, the Trustee and the Depository with respect to the Class A,
Class M and Class B Certificates.
REPRESENTATIVE: The Money Store Inc., a New Jersey corporation, and its
successors and assigns as Representative hereunder.
RESERVE AMOUNT: As of any date of determination, the maximum amount of FHA
insurance available with respect to all FHA Loans. The Reserve Amount initially
will equal at least 10% of the aggregate Principal Balance of the FHA Loans as
of the Cut-Off Date and will decline as set forth in 24 C.F.R. ss. 201.32(b).
RESIDENTIAL DWELLING: Any one or more of the following, (i) Single Family
Detached House, (ii) Row House, (iii) Two-Family House, (iv) Low-Rise
Condominium, (v) PUD and De minimis PUD, (vi) Three- or Four-Family House, (vii)
High-Rise Condominium, (viii) Mixed Use Building or (ix) manufactured home (as
defined in FNMA/FHLMC Seller-Servicers' Guide) to the extent that it constitutes
real property in the state in which it is located.
RESPONSIBLE OFFICER: When used with respect to the Trustee or the Co-
Trustee, any officer assigned to the Corporate Trust Department, and when used
with respect to the Co-Trustee, any officer assigned to the Corporate Trust
Department, in each case including any Vice President, Assistant Vice President,
any Assistant Secretary, any trust officer or any other officer of the Trustee
or Co-Trustee 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 to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject. When used with respect
to the Representative, an Originator or any other person, any Vice President,
Assistant Vice President, the Treasurer, or any Secretary or Assistant
Secretary.
ROW HOUSE: A single family dwelling unit attached to another dwelling unit
by common walls.
SAIF: The Savings Association Insurance Fund, or any successor thereto.
SCHEDULE OF MORTGAGE LOANS: The schedule of Mortgage Loans attached to the
related Subsequent Transfer Agreement.
SERIES: 1997-C.
SENIOR PERCENTAGE: means for any Remittance Date (a) for the Pool I and
Pool IV Class A Certificates, 100% and (b) for the Pool II and Pool III Class A
Certificates (i) prior to the Class B Pool Cross-over Date for Pool II or Pool
III, respectively, and for any Remittance Date on or after the Class B Pool
Cross-over Date for Pool II or Pool II, respectively, on which the Trigger Event
with respect to the applicable Pool is in effect, 100%, or (ii) on or after the
Class B Pool Cross-over Date for Pool II or Pool III, respectively, on which the
Trigger Event with respect to the applicable Pool is not in effect, a fraction,
expressed as a percentage, the numerator of which is the sum of the Class
Principal Balances of the Pool II or Pool III Class A and Class M Certificates,
as applicable, as of the immediately preceding Remittance Date and the
denominator of which is the sum of the Class Principal Balances of the Pool II
or Pool III Class A, Class M and Class B Certificates, as applicable, as of the
immediately preceding Remittance Date.
SERVICER: The Money Store Inc., a New Jersey corporation, and its
successors and assigns as Servicer hereunder.
SERVICER'S CERTIFICATE: The certificate as defined in Section 6.10.
SERVICING ACCOUNT: The Servicing Account established and maintained by the
Servicer in accordance with Section 6.15 hereof. The Servicing Account, and
amounts deposited therein, shall not constitute part of the Trust Fund and
Certificateholders shall have no rights thereto.
SERVICING ADVANCES: All reasonable and customary "out of pocket" costs and
expenses incurred in the performance by the Servicer of its servicing
obligations, 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 REO Property, (iv) compliance with the obligations under
clause (vi) of Section 5.01(a) and Sections 5.02, 5.05 and 5.07, which Servicing
Advances are reimbursable to the Servicer to the extent provided in Section
5.04(b), and (e) in connection with the liquidation of a Mortgage Loan,
expenditures relating to the purchase or maintenance of any Prior Lien pursuant
to Section 5.14, for all of which costs and expenses the Servicer is entitled to
reimbursement with interest thereon up to a maximum rate per annum equal to the
related Mortgage Interest Rate, except that any amount of such interest accrued
at a rate in excess of the weighted average Remittance Rate of the Pool I
Certificates for a Pool I Mortgage Loan, the weighted average Remittance Rate of
the Pool II Certificates for a Pool II Mortgage Loan, the weighted average
Remittance Rate of the Pool III Certificates for a Pool III Mortgage Loan or the
Class AMF Remittance Rate for a Pool IV Mortgage Loan, with respect to the
Remittance Date on which the Net Liquidation Proceeds will be distributed shall
be reimbursable only from Excess Proceeds.
SERVICING DELINQUENCY TRIGGER: Will be deemed to have occurred on any date
of determination (i) on or prior to September 30, 2001, if the Total Expected
Losses (as defined below) of the Pool I, Pool II, Pool III and Pool IV Mortgage
Loans, exceed 9.00%, 13.25%, 19.50% and 9.00%, respectively, of the aggregate
Principal Balances of the Pool I, Pool II, Pool III and Pool IV Mortgage Loans
as of the end of the first Due Period immediately following the Funding Period
and (ii) after September 30, 2001, but on or prior to September 30, 2006, if the
Total Expected Losses of the Pool I, Pool II, Pool III and Pool IV Mortgage
Loans exceed 13.50%, 19.875%, 29.25% and 13.50% of the aggregate Principal
Balances of the Pool I, Pool II, Pool III and Pool IV Mortgage Loans,
respectively, as of the end of the first Due Period immediately following the
Funding Period.
For purposes of the foregoing definition, the "Total Expected Losses" of
the Pool I, Pool II, Pool III and Pool IV Mortgage Loans on any date of
determination shall equal the sum of (i) the cumulative Realized Losses on the
Pool I, Pool II, Pool III and Pool IV Mortgage Loans from the Closing Date
through and including such date of determination and (ii) the Delinquency
Calculation (as defined below).
For purposes of the foregoing definition, the "Delinquency Calculation" on
any date of determination shall equal the sum of:
(i) the Principal Balance of all Pool I, Pool II,
Pool III and Pool IV Mortgage Loans 30-59 days delinquent
multiplied by 10.75%, 10.75%, 25.00% and 10.75%, respectively;
(ii) the Principal Balance of all Pool I, Pool II,
Pool III and Pool IV Mortgage Loans 60-89 days delinquent
multiplied by 21.50%, 21.50%, 50.00% and 21.50%, respectively;
and
(iii) the Principal Balance of all Pool I, Pool II,
Pool III and Pool IV Mortgage Loans 90 days or more delinquent
multiplied by 43.00%, 43.00%, 100.00% and 43.00%,
respectively.
SERVICING FEE: As to each Mortgage Loan, the annual fee payable to the
Servicer. Such fee shall be calculated and payable monthly only from the amounts
received in respect of interest on such Mortgage Loan, shall accrue at the rate
of .25% per annum and shall be computed on the basis of the same principal
amount and for the period respecting which any related interest payment on a
Mortgage Loan is computed. The Servicing Fee is payable solely from the interest
portion of related (i) Monthly Payments, (ii) Liquidation Proceeds or (iii)
Released Mortgaged Property Proceeds collected by the Servicer, or as otherwise
provided in Section 5.04. The Servicing Fee includes any servicing fees owed or
payable to any Subservicer.
SERVICING OFFICER: Any officer of the Servicer or Claims Administrator
involved in, or responsible for, the administration and servicing of the
Mortgage Loans whose name and signature appears on a list of servicing officers
furnished to the Trustee or Co-Trustee by the Servicer or Claims Administrator,
as such list may from time to time be amended.
SHORTFALL AMOUNTS: Means, as of any Remittance Date, (a) with respect to
Pool II, the sum of (i) the Interest Shortfall Carryforward Amounts with respect
to the Class MV-1, Class MV-2 and Class BV Certificates and (ii) the Class MV-1,
Class MV-2 and Class BV Realized Loss Amounts and (b) with respect to Pool III,
the sum of (i) the Interest Shortfall Carryforward Amounts with respect to the
Class MH-1, Class MH-2 and Class BH Certificates and (ii) the Class MH-1, Class
MH-2 and Class BH Realized Loss Amounts.
SINGLE FAMILY DETACHED HOUSE: A single family dwelling unit not attached in
any way to any other unit.
SINGLE FAMILY LOANS: Mortgage Loans secured by Mortgaged Property
consisting of one-to-four family units.
SIXTY-DAY DELINQUENCY RATIO: Means, as of any Remittance Date, a fraction,
expressed as a percentage, the numerator of which is the aggregate of the
outstanding Principal Balances of all Mortgage Loans in a Pool that were
delinquent 60 days or more as of the end of the prior Due Period (including
Mortgage Loans in respect of which the related real estate has been foreclosed
upon but is still in inventory), and the denominator of which is the sum of the
Principal Balances of all the Mortgage Loans in such Pool as of the end of the
immediately preceding Due Period.
S&P: Standard & Poor's Rating Services, a division of The McGraw-Hill
Companies, or any successor thereto.
S&P TRIGGER EVENT: An S&P Trigger Event will be in effect on a Remittance
Date for Pool II if the Sixty-Day Delinquency Ratio as of such Remittance Date
exceeds 50% of the Senior Specified Enhancement Percentage for such Pool.
SPECIAL HOLDINGS: TMS Special Holdings Inc., a Delaware corporation.
SPECIAL REMITTANCE DATE: December 29, 1997.
SPECIFIED SUBORDINATED AMOUNT: As applicable, the Pool I Specified
Subordinated Amount, the Pool II Specified Subordinated Amount, the Pool III
Specified Subordinated Amount or the Pool IV Specified Subordinated Amount.
SPREAD ACCOUNT: The Spread Account that may be established and maintained
with the Trustee in accordance with Section 6.05 hereof.
SPREAD ACCOUNT PORTION: With respect to Pool I or Pool IV and any
Remittance Date, an amount equal to the product of (i) the amount on deposit in
the Spread Account immediately prior to such Remittance Date (other than amounts
deposited therein pursuant to Section 6.14(b)(iv)) and (ii) a fraction, the
numerator of which is the Initial Pool Spread Account Deposit for such Pool and
the denominator of which is the Aggregate Initial Spread Account Deposit.
SPREAD AMOUNT: Means for any Remittance Date and any Pool the excess, if
any, of (i) the aggregate Principal Balances of the Mortgage Loans in such Pool
as of the last day of the immediately preceding Due Period and any amounts on
deposit in the Pre-Funding Account with respect to such Pool over (ii) the
aggregate Class Principal Balances of the related Pool of Certificates (after
taking into account all distributions of principal on such Remittance Date).
STARTUP DAY: The day designated as such pursuant to Section 2.06 hereof.
SUBORDINATED AMOUNT: For each Pool, the Pool Subordinated Amount for such
Pool.
SUBORDINATED DEFICIENCY AMOUNT: With respect to any Pool and Remittance
Date, the excess, if any, of (i) the Specified Subordinated Amount applicable to
such Pool and Remittance Date over (ii) with respect to (a) Pool I or Pool IV,
the Subordinated Amount applicable to such Pool and Remittance Date prior to
taking into account the payment of any amounts calculated pursuant to clauses
(X)(vi) and (viii) and (Y) of the definition of Pool Principal Distribution
Amount with respect to such Remittance Date and (b) Pool II or Pool III, the
then current Spread Amount for the applicable Pool, after giving effect to all
payments previously made on such Remittance Date.
SUBORDINATION DEFICIT: With respect to Pool I or Pool IV and any Remittance
Date, the amount, if any, by which (x) the Pool Principal Balance with respect
to such Pool after taking into account the payment of the Pool Remittance Amount
for such Pool on such Remittance Date in the manner described herein (other than
amounts payable with respect to clause (X)(vi) of the definition of Pool
Principal Distribution Amount) exceeds (y) the sum of (i) the aggregate
Principal Balances of the Mortgage Loans of the related Pool as of the close of
business on the last day of the Due Period relating to such Remittance Date,
(ii) any Pre-Funding Account moneys allocable to the Mortgage Loans of such Pool
as of the close of business on the last day of the related Due Period and (iii)
the amount, if any, in the Spread Account and allocated to such Pool.
SUBORDINATION INCREASE AMOUNT: With respect to any Pool and any Remittance
Date, the lesser of (i) the Subordinated Deficiency Amount as of such Payment
Date (after taking into account the payment of the Pool Remittance Amount for
such Pool on such Remittance Date (except for any Subordination Increase
Amount)) and (ii) the aggregate amount of Net Monthly Excess Cashflow available
to be allocated to such Pool pursuant to Section 6.14(b)(ii) on such Remittance
Date.
SUBORDINATION REDUCTION AMOUNT: With respect to any Pool and any Remittance
Date, an amount equal to the lesser of (x) the Excess Subordinated Amount for
such Pool and Remittance Date and (y) the sum of the amounts calculated pursuant
to clauses (X)(i) through (v), inclusive, and (vii) of the definition of Pool
Principal Distribution Amount with respect to such Pool and Remittance Date.
SUBSEQUENT CUT-OFF DATE: The beginning of business on each date specified
in a Subsequent Transfer Agreement with respect to those Subsequent Mortgage
Loans which are transferred and assigned to the Trust Fund pursuant to the
related Subsequent Transfer Agreement.
SUBSEQUENT MORTGAGE LOANS: The Mortgage Loans sold to the Trust Fund
pursuant to Section 2.09, which shall be listed on the Schedule of Mortgage
Loans attached to the related Subsequent Transfer Agreement.
SUBSEQUENT POOL I MORTGAGE LOANS: Subsequent Mortgage Loans assigned to
Pool I.
SUBSEQUENT POOL II MORTGAGE LOANS: Subsequent Mortgage Loans assigned to
Pool II.
SUBSEQUENT POOL III MORTGAGE LOANS: Subsequent Mortgage Loans assigned to
Pool III.
SUBSEQUENT POOL IV MORTGAGE LOANS: Subsequent Mortgage Loans assigned to
Pool IV.
SUBSEQUENT TRANSFER AGREEMENT: Each Subsequent Transfer Agreement dated as
of a Subsequent Transfer Date executed by the Trustee (and, with respect to Pool
III Mortgage Loans, the Co-Trustee) and the Representative, by which Subsequent
Mortgage Loans are sold and assigned to the Trust Fund.
SUBSEQUENT TRANSFER DATE: The date specified as such in each Subsequent
Transfer Agreement.
SUBSERVICER: Any Person with whom the Servicer has entered into a
Subservicing Agreement and who satisfies any requirements set forth in Section
5.01(b) hereof in respect of the qualification of a Subservicer.
SUBSERVICING AGREEMENT: Any agreement between the Servicer and any
Subservicer relating to subservicing and/or administration of certain Mortgage
Loans as provided in Section 5.01(b), a copy of which shall be delivered, along
with any modifications thereto, to the Trustee and, in the case of Pool I or
Pool IV Mortgage Loans, to the Certificate Insurer.
SUBSTITUTION ADJUSTMENT: As to any date on which a substitution occurs
pursuant to Sections 2.05 or 3.03, the sum of (i) the amount (if any) by which
the aggregate principal balances (after application of principal payments
received on or before the date of substitution) of any Qualified Substitute
Mortgage Loans as of the date of substitution are less than the aggregate of the
Principal Balance, prior to the occurrence of Realized Losses, of the related
Deleted Mortgage Loans, and (ii) in the case of Pool I and Pool IV Mortgage
Loans, the interest portion of any unreimbursed Insured Payments made by the
Certificate Insurer related to such Mortgage Loan.
TAX MATTERS PERSON: The Person or Persons designated from time to time to
act as the "tax matters person" (within the meaning of the REMIC Provisions) of
the Trust Fund.
TAX MATTERS PERSON RESIDUAL INTEREST: The interest in each Class of Class R
Certificates acquired by the Tax Matters Person pursuant to Section 2.06(d)
hereof.
TAX RETURN: The federal income tax return on Internal Revenue Service Form
1066, "U.S. Real Estate Mortgage Investment Conduit Income Tax Return,"
including Schedule Q thereto, Quarterly Notice to Residual Interest Holders of
REMIC Taxable
Income or Net Loss Allocation, or any successor forms, to be filed on behalf of
the Trust Fund due to its classification as a REMIC under the REMIC Provisions,
together with any and all other information reports or returns that may be
required to be furnished to the Certificateholders or filed with the Internal
Revenue Service or any other governmental taxing authority under any applicable
provision of federal, state or local tax laws.
TELERATE PAGE 3750: The display page currently so designated on the Dow
Jones Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
TERMINATION PRICE: The price defined in Section 11.01 hereof.
THREE- OR FOUR-FAMILY HOUSE: Three or four dwelling units under one roof.
TITLE I: Section 2 of Title I of the National Housing Act and the rules and
regulations promulgated thereunder.
TOTAL MONTHLY EXCESS CASHFLOW: As defined in Section 6.14(a) hereof.
TREASURY INDEX: The applicable One-Year Constant Maturity Treasury Index as
published by the Federal Reserve Board in the applicable Federal Reserve Board
Statistical Release No. H.15.
TRIGGER EVENT: Will be in effect on a Remittance Date for Pool II if the
Sixty- Day Delinquency Ratio as of such Remittance Date exceeds 40% of the Pool
Senior Specified Enhancement Percentage for Pool II. A "Trigger Event" will be
in effect on a Remittance Date for Pool III if either (i) the Sixty-Day
Delinquency Ratio with respect to Pool III Mortgage Loans as of such Remittance
Date exceeds 50% of the Pool Senior Specified Enhancement Percentage for Pool
III; or (ii) both (A) either (x) the Weighted Average Five-Month Sixty-Day
Delinquency Ratio with respect to Pool III Mortgage Loans as of such Remittance
Date exceeds 9% or (y) the Cumulative Realized Losses for Pool III Mortgage
Loans as of such Remittance Date exceed $32,175,000; and (B) either (x) the
Weighted Average Five-Month Sixty-Day Delinquency Ratio with respect to Pool III
Mortgage Loans as of such Remittance Date exceeds 15% or (y) the Cumulative
Realized Losses for Pool III Mortgage Loans as of such Remittance Date exceed
$10,725,000; or (iii) the fraction, expressed as a percentage, the numerator of
which is the sum of the Pool III Class A and Class M Class Principal Balances as
of the immediately preceding Remittance Date and the denominator of which is the
aggregate outstanding Principal Balance of the Pool III Mortgage Loans as of the
end of the second preceding Due Period is greater than 75.8%.
TRUST FUND: The segregated pool of assets subject hereto, constituting the
trust created hereby and to be administered hereunder, consisting of: (i) such
Mortgage Loans as from time to time are subject to this Agreement, together with
the Mortgage Files relating thereto and all proceeds thereof, (ii) such assets
(including any Permitted Instruments) as from time to time are identified as REO
Property relating to Mortgage Loans or are deposited in or constitute the
Certificate Accounts, Principal and Interest Account, Expense Account,
Pre-Funding Account, Capitalized Interest Account, Spread Account, FHA Premium
Account and Insurance Accounts, (iii) the Trustee's and the Co-Trustee's rights
under all insurance policies with respect to the Mortgage Loans required to be
maintained pursuant to this Agreement and any related Insurance Proceeds, (iv)
the Certificate Insurance Policies, (v) Liquidation Proceeds and (vi) Released
Mortgaged Property Proceeds, including all earnings thereon and proceeds
thereof. The Mortgage Loans included from time to time in the Trust Fund shall
be divided into four separate sub-trusts, one for the Pool I Mortgage Loans, one
for the Pool II Mortgage Loans, one for the Pool III Mortgage Loans and one for
the Pool IV Mortgage Loans.
TRUSTEE: The Bank of New York, or its successor in interest, or any
successor trustee appointed as herein provided.
TRUSTEE'S MORTGAGE FILE: The documents delivered to the Trustee or the
Custodian pursuant to Section 2.04.
TWO FAMILY HOUSE: Two dwelling units under one roof.
UNPAID REALIZED LOSS AMOUNT: Means with respect to Pool II or Pool III for
any Class of the respective Class M or Class B Certificates as of any Remittance
Date, the excess of (x) the aggregate cumulative amount of related Pool Applied
Realized Loss Amounts with respect to such Class for all prior Remittance Dates
over (y) the aggregate, cumulative amount of related Realized Loss Amounts with
respect to such Class for all prior Remittance Dates.
WEIGHTED AVERAGE FIVE-MONTH SIXTY-DAY DELINQUENCY RATIO: Means, as of any
Remittance Date, the average of the Sixty-Day Delinquency Ratios for such
Remittance Date and for each of the four Remittance Dates immediately preceding
such Remittance Date, weighted by the sum of the Principal Balances of the
applicable Pool of Mortgage Loans as of the ends of the related Due Periods.
<PAGE>
ARTICLE II
SALE AND CONVEYANCE OF THE TRUST FUND
Section 2.01 Sale and Conveyance of Trust Fund; Priority and Subordination
of Ownership Interests
(a) The Originators do hereby sell, transfer, assign, set over and convey
to the Trustee (or, with respect to the Pool III Mortgage Loans and the Reserve
Amount, the Co-Trustee) without recourse and for the benefit of the
Certificateholders of the related Pool, subject to the terms of this Agreement,
all of the right, title and interest of the Originators in and to the Initial
Pool I, Initial Pool II, Initial Pool III and Initial Pool IV Mortgage Loans,
all rights under the Reserve Amount relating to the Pool III Mortgage Loans and
all other assets included or to be included in the Trust Fund. The Mortgage
Loans that from time to time constitute part of the Trust Fund shall be divided
into four separate sub-trusts, one for the Pool I Mortgage Loans, one for the
Pool II Mortgage Loans, one for the Pool III Mortgage Loans and one for the Pool
IV Mortgage Loans.
(b) The rights of the Certificateholders to receive payments with respect
to the Mortgage Loans in respect of the Certificates, and all ownership
interests of the Certificateholders in such payments, shall be as set forth in
this Agreement. In this regard, all rights of the Class R Certificateholders to
receive payments in respect of the Class R Certificates and all ownership
interests of the Class R Certificateholders in and to such payments, are subject
and subordinate to the preferential rights of the Pool I, Pool II, Pool III and
Pool IV Certificateholders and Class X Certificateholders, to receive payments
in respect of the Pool I, Pool II, Pool III and Pool IV Certificates and Class X
Certificates, repectively, and the ownership interests of the Pool I, Pool II,
Pool III and Pool IV Certificateholders and Class X Certificateholders in such
payments, to the extent set forth herein. In accordance with the foregoing, the
ownership interest of the Class R Certificateholders in amounts deposited in the
Principal and Interest Account and any Account from time to time shall not vest
unless and until such amounts are distributed in respect of the Class R
Certificates in accordance with the terms of this Agreement.
Section 2.02 Possession of Mortgage Files.
(a) Upon the issuance of the Certificates, the ownership of each Mortgage
Note, the Mortgage and the contents of the related Mortgage File relating to the
Initial Mortgage Loans is, and upon each Subsequent Transfer Date the ownership
of each Mortgage Note, the Mortgage and the contents of the related Mortgage
File relating to the applicable Subsequent Mortgage Loans will be, vested in the
Trustee (or, with respect to the Pool III Mortgage Loans, the Co-Trustee) for
the benefit of the Certificateholders of the related Pool.
(b) Pursuant to Section 2.04, the Originators have delivered or caused to
be delivered each Trustee's Mortgage File relating to the Initial Mortgage Loans
to the Trustee (or, with respect to the Pool III Mortgage Loans, the Custodian)
and on each Subsequent Transfer Date the Originators will deliver or cause to be
delivered each Trustee's Mortgage File relating to the related Subsequent
Mortgage Loans to the Trustee (or, with respect to the Pool III Mortgage Loans,
the Custodian).
Section 2.03 Books and Records.
The sale of each Mortgage Loan shall be reflected on the Originator's
balance sheets and other financial statements as a sale of assets by each
Originator. Nothing in this Agreement, however, shall be deemed to create a
transfer of an FHA Loan in violation of Title I or the FHA Regulations. The
Originators shall be responsible for maintaining, and shall maintain, a complete
set of books and records for each Mortgage Loan which shall be clearly marked to
reflect the ownership of each Mortgage Loan by the Trustee for the benefit of
the Certificateholders.
Section 2.04 Delivery of Mortgage Loan Documents.
Each Originator, (i) contemporaneously with the delivery of this Agreement,
has delivered or caused to be delivered to the Trustee (or, with respect to the
Pool III Mortgage Loans, the Custodian) the Certificate Insurance Policies for
the Pool I and Pool IV Mortgage Loans and each of the following documents for
each Initial Mortgage Loan and (ii) on each Subsequent Transfer Date, will
deliver or cause to be delivered to the Trustee (or, with respect to the Pool
III Mortgage Loans, the Custodian) each of the following documents for each
Subsequent Mortgage Loan originated by such Originator:
(a) The original Mortgage Note, endorsed "Pay to the order of holder" or
"Pay to the order of __________________" and signed, by facsimile or manual
signature, in the name of the Person delivering the note by a Responsible
Officer, with all prior and intervening endorsements showing a complete chain of
endorsement from the originator to such Person;
(b) Either: (i) the original Mortgage, with evidence of recording thereon,
(ii) a copy of the Mortgage certified as a true copy by a Responsible Officer
where the original has been transmitted for recording until such time as the
original is returned by the public recording office or (iii) a copy of the
Mortgage certified by the public recording office in those instances where the
original recorded Mortgage has been lost;
(c) Either: (i) the original Assignment of Mortgage from the Person
delivering such Assignment to "The Bank of New York, as Trustee under the
Pooling and Servicing Agreement dated as of August 31, 1997, 1997-C" (or, with
respect to the Pool III Mortgage Loans, to "First Union Trust Company, National
Association, as Co-Trustee under the Pooling and Servicing Agreement dated as of
August 31, 1997, 1997-C") with evidence of recording thereon (provided, however,
that where permitted under the laws of the jurisdiction wherein the Mortgaged
Property is located, the Assignment of Mortgage may be effected by one or more
blanket assignments for Mortgage Loans secured by Mortgaged Properties located
in the same county), or (ii) a copy of such Assignment of Mortgage certified as
a true copy by a Responsible Officer where the original has been transmitted for
recording (provided, however, that where the original Assignment of Mortgage is
not being delivered to the Trustee (or, with respect to the Pool III Mortgage
Loans, the Custodian), each such Responsible Officer may complete one or more
blanket certificates attaching copies of one or more Assignments of Mortgage
relating to the Mortgages originated by the related Originator);
(d) (X) Except with respect to the FHA Loans (i) the original policy of
title insurance or, if such policy has not yet been delivered by the insurer,
the commitment or binder to issue same, or if the original principal balance of
the Mortgage Loan was less than or equal to $15,000 or the Mortgage Loan was not
originated by the Originators, other evidence of the status of title, which
shall consist of an attorney's opinion of title or certificate of title, a
preliminary title report, a property search, a title search, a lot book report,
a property information report or a report entitled "prelim" or "PIRT" (property
information report), and (ii) proof of hazard insurance in the form of a hazard
insurance policy or hazard insurance policy endorsement that names the related
Originator, its successors and assigns, as a mortgagee/loss payee, and, if such
endorsement does not show the amount insured by the related hazard insurance
policy, some evidence of such amount and (Y) with respect to the FHA Loans, the
written Mortgage Loan application, title report, credit reconciliation
worksheet, credit investigation receipts and approval sheet;
(e) Either: (i) originals of all intervening assignments, if any, showing a
complete chain of title from the originator to the Person delivering such
assignment, including warehousing assignments, with evidence of recording
thereon if such assignments were recorded, (ii) copies of any assignments
certified as true copies by a Responsible Officer where the originals have been
submitted for recording until such time as the originals are returned by the
public recording officer, or (iii) copies of any assignments certified by the
public recording office in any instances where the original recorded assignments
have been lost;
(f) Originals of all assumption and modification agreements, if any; and
(g) Except with respect to the FHA Loans and certain Mortgage Loans with
original principal balances of less than $15,000, the appraisal made in
connection with the origination of the related Mortgage Loan with photographs of
the subject property and of comparable properties (if available), constituting
evidence sufficient to indicate that the Mortgaged Property relates to a
Residential Dwelling (or, with respect to Multifamily Loans, a Multifamily
Property) and identifying the type thereof.
The Originator shall, within five Business Days after the receipt thereof,
and in any event, within one year of the Closing Date (or with respect to the
Subsequent Mortgage Loans, within one year of the related Subsequent Transfer
Date), deliver or cause to be delivered to the Trustee (or, with respect to the
Pool III Mortgage Loans, the Custodian): (a) the original recorded Mortgage in
those instances where a copy thereof certified by a Responsible Officer was
delivered to the Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian); (b) the original recorded Assignment of Mortgage to the Trustee (or,
with respect to the Pool III Mortgage Loans, the Co-Trustee), which, together
with any intervening assignments of Mortgage, evidences a complete chain of
title from the originator to the Trustee (or, with respect to the Pool III
Mortgage Loans, the Co-Trustee) in those instances where copies thereof
certified by a Responsible Officer were delivered to the Trustee (or, with
respect to the Pool III Mortgage Loans, the Custodian); (c) any intervening
assignments of Mortgage in those instances where copies thereof certified by a
Responsible Officer were delivered to the Trustee (or, with respect to the Pool
III Mortgage Loans, the Custodian); and (d) except with respect to the Pool III
Mortgage Loans, the title insurance policy, or, where no such policy is required
to be provided, the other evidence of title and hazard insurance required in
clause (d) above. Notwithstanding anything to the contrary contained in this
Section 2.04, in those instances where the public recording office retains the
original Mortgage, Assignment of Mortgage or the intervening assignments of the
Mortgage after it has been recorded, the Originator shall be deemed to have
satisfied its obligations hereunder upon delivery to the Trustee (or, with
respect to the Pool III Mortgage Loans, the Custodian) of a copy of such
Mortgage, Assignment of Mortgage or assignments of Mortgage certified by the
public recording office to be a true copy of the recorded original thereof. From
time to time the Originator may forward or cause to be forwarded to the Trustee
(or, with respect to the Pool III Mortgage Loans, the Custodian) additional
original documents evidencing an assumption or modification of a Mortgage Loan.
All Mortgage Loan documents held by the Trustee (or, with respect to the Pool
III Mortgage Loans, the Custodian) as to each Mortgage Loan are referred to
herein as the "Trustee's Mortgage File."
All recording required pursuant to this Section 2.04 shall be accomplished
by and at the expense of the Servicer.
Section 2.05 Acceptance by Trustee and Custodian of the Trust Fund; Certain
Substitutions; Certification by Trustee and Custodian.
(a) The Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian, as agent for the Co-Trustee) agrees to execute and deliver on the
Closing Date with respect to the Initial Mortgage Loans, and on each Subsequent
Transfer Date with respect to the related Subsequent Mortgage Loans, an
acknowledgment of receipt of, for each Mortgage Loan, an Assignment of Mortgage
or certified copy thereof, and a Mortgage Note, in the form attached as Exhibit
F hereto, and declares that it will hold such documents and any amendments,
replacements or supplements thereto, as well as any other assets included in the
definition of the Trust Fund and delivered to the Trustee, as Trustee in trust
upon (or, with respect to the Pool III Mortgage Loans, to the Custodian, as
agent for the Co-Trustee) and subject to the conditions set forth herein for the
benefit of the Certificateholders. The Trustee (or, with respect to the Pool III
Mortgage Loans, the Custodian) agrees, for the benefit of the
Certificateholders, to review each Trustee's Mortgage File relating to the
Initial Mortgage Loans delivered to it within 60 days after the Closing Date and
each Trustee's Mortgage File relating to the Subsequent Mortgage Loans delivered
to it within 60 days after the related Subsequent Transfer Date (or, with
respect to any Qualified Substitute Mortgage Loan, within 45 days after the
assignment thereof) and, on each such date, to deliver to the Representative,
the Servicer and, with respect to the Pool I and Pool IV Mortgage Loans, the
Certificate Insurer a certification in the form attached hereto as Exhibit F-1
to the effect that, as to each Mortgage Loan listed in the Mortgage Loan
Schedule (other than any Mortgage Loan paid in full or any Mortgage Loan
specifically identified in such certification as not covered by such
certification), with such exceptions, if any, as identified therein (i) all
documents required to be delivered to it pursuant to this Agreement are in its
possession (other than items listed in Section 2.04(d)(ii)), (ii) such documents
(other than items listed in Section 2.04(d)(ii)) have been reviewed by it and
have not been mutilated, damaged, torn or otherwise physically altered and
relate to such Mortgage Loan, (iii) based on its examination and only as to the
foregoing documents, the information set forth on the Mortgage Loan Schedule
accurately reflects the information set forth in the Trustee's Mortgage File,
and (iv) each Mortgage Note has been endorsed as provided in Section 2.04 of
this Agreement. Further, for each Mortgage Loan (other than the Pool III
Mortgage Loans) with an original principal balance in excess of $15,000 for
which the documents in the possession of the Trustee indicate that the related
Originator conducted a drive-by appraisal pursuant to FHLMC Form 704 or
alternative FNMA Form in connection with originating such Mortgage Loan, the
Trustee shall verify whether the Trustee's Mortgage File shows that such
Mortgage Loan, (A) had an original principal balance not in excess of $35,000,
and (B) has a Loan-to Value Ratio less than 50% (based solely on the LTV
included on the Mortgage Loan Schedule) and/or an appraisal on FNMA/FHLMC Form
1004 was performed by the related Originator within one year prior to the
origination of such Mortgage Loan. The Trustee and the Custodian shall be under
no duty or obligation to inspect, review or examine any such documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face. Within 375 days after the Closing
Date, the Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian) shall deliver to the Servicer, the Representative, the Certificate
Insurer (with respect to the Pool I and Pool IV Mortgage Loans) and any
Certificateholder who requests a copy from the Trustee (or, with respect to the
Pool III Mortgage Loans, the Custodian) a final certification in the form
attached hereto as Exhibit G evidencing, if such be the case, the completeness
of the Trustee's Mortgage Files (other than items listed in Section
2.04(d)(ii)).
(b) If the Certificate Insurer (with respect to the Pool I and Pool IV
Mortgage Loans) or the Trustee (or, with respect to the Pool III Mortgage Loans,
the Custodian) during the process of reviewing the Trustee's Mortgage Files
finds any document constituting a part of a Trustee's Mortgage File which is not
properly executed, has not been received, is unrelated to a Mortgage Loan
identified in the Mortgage Loan Schedule, or does not conform in a material
respect to the requirements of Section 2.04 or the description thereof as set
forth in the Mortgage Loan Schedule, the Certificate Insurer (with respect to
the Pool I and Pool IV Mortgage Loans) or the Trustee (or, with respect to the
Pool III Mortgage Loans, the Custodian) shall promptly so notify the Servicer,
the Representative and the Trustee (or, with respect to the Pool III Mortgage
Loans, the Custodian) or the Certificate Insurer (with respect to the Pool I and
Pool IV Mortgage Loans), respectively. In performing any such review, the
Trustee and the Custodian may conclusively rely on the related Originator as to
the purported genuineness of any such document and any signature thereon. It is
understood that the scope of the Trustee's (or, with respect to the Pool III
Mortgage Loans, the Custodian's) review of the Mortgage Files is limited solely
to confirming that the documents listed in Section 2.04 (other than the items
listed in Section 2.04(d)(ii)) appear on their face to have been executed and
received and to relate to the Mortgage Loans identified in the Mortgage Loan
Schedule, and to verify that each Mortgaged Property appears from the
information contained in the Trustee's Mortgage File to be a Residential
Dwelling (or, with respect to the Multifamily Loans, a Multifamily Property).
The Representative agrees to use reasonable efforts to remedy a material defect
in a document constituting part of a Mortgage File of which it is so notified by
the Certificate Insurer, the Trustee or the Custodian. If, however, within 60
days after the Trustee's or the Custodian's notice to it respecting such defect
the Representative has not remedied the defect and the defect materially and
adversely affects the interest of the Certificateholders in the related Mortgage
Loan or the interests of the Certificate Insurer, the Representative will (i)
substitute in lieu of such Mortgage Loan a Qualified Substitute Mortgage Loan in
the manner and subject to the conditions set forth in Section 3.03 or (ii)
purchase such Mortgage Loan at a purchase price equal to the Principal Balance
of the Mortgage Loan as of the date of purchase, before the occurrence of
Realized Losses, if any, plus 30 days' interest (or, in the case of a Pool II
Mortgage Loan, the actual number of days during the related interest period for
the Pool II Certificates) on such Principal Balance, computed at the weighted
average Class Adjusted Mortgage Loan Remittance Rates for the Pool I
Certificates with respect to a Pool I Mortgage Loan, the weighted average Class
Adjusted Mortgage Loan Remittance Rates for the Pool II Certificates, with
respect to a Pool II Mortgage Loan, the weighted average Class Adjusted Mortgage
Loan Remittance Rates for the Pool III Certificates, with respect to a Pool III
Mortgage Loan or the Class Adjusted Mortgage Loan Remittance Rate for the Pool
IV Certificates with respect to a Pool IV Mortgage Loan, as the case may be, as
of the next succeeding Determination Date, plus any accrued unpaid Servicing
Fees, Contingency Fees, Monthly Advances and Servicing Advances reimbursable to
the Servicer, plus the interest portion of any unreimbursed Insured Payments
made by the Certificate Insurer related to a Pool I or Pool IV Mortgage Loan,
which purchase price shall be deposited in the applicable Principal and Interest
Account on the next succeeding Determination Date except for the amount
described above relating to unreimbursed Insured Payments on a Pool I or Pool IV
Mortgage Loan, which shall be paid directly by the Representative to the
Certificate Insurer.
(c) Upon receipt by the Trustee (or, with respect to the Pool III Mortgage
Loans, the Custodian) of a certification of a Servicing Officer of the Servicer
of such substitution or purchase and the deposit of the amounts described above
in the applicable Principal and Interest Account (which certification shall be
in the form of Exhibit J hereto), the Trustee (or, with respect to the Pool III
Mortgage Loans, the Custodian) shall release to the Servicer for release to the
Representative the related Trustee's Mortgage File and the Trustee (or, with
respect to the Pool III Mortgage Loans, the Co-Trustee) shall execute, without
recourse, and deliver such instruments of transfer necessary to transfer such
Mortgage Loan to the Representative including, without limitation, for each FHA
Loan, an FHA Transfer of Note Report to be filed with the FHA. All costs of any
such transfer shall be borne by the Servicer.
If requested by either the Representative, the Servicer or the Certificate
Insurer, on the Remittance Date in June of each year, commencing 1998, the
Trustee (and, with respect to the Pool III Mortgage Loans, the Custodian) shall
deliver to the Representative, the Servicer and the Certificate Insurer a
certification detailing all transactions with respect to the Mortgage Loans for
which the Trustee or the Custodian holds a Trustee's Mortgage File pursuant to
this Agreement during the prior calendar year; provided, however, that any
certification requested by the Certificate Insurer shall detail only those
transactions relating to Pool I and Pool IV Mortgage Loans. Such certification
shall list all Trustee's Mortgage Files which were released by or returned to
the Trustee or the Custodian during the prior calendar year, the date of such
release or return, the reason for such release or return, and the person to whom
the Trustee's Mortgage File was released or the person who returned the
Trustee's Mortgage File.
Section 2.06 Designations under REMIC Provisions; Designation of Startup
Day.
(a) As of the Startup Day, all Classes of Certificates except for the Class
R-1 and Class R-2 Certificates are hereby designated as the "regular interests"
in REMIC I and the Class R-1 Certificates are designated the single class of
"residual interests" in REMIC I for the purposes of the REMIC Provisions. As of
the Startup Day, the REMIC II Regular Certificates are hereby designated as the
"regular interests" in REMIC II and the Class R-2 Certificates are designated
the single class of "residual interests" in REMIC II for the purposes of the
REMIC Provisions.
(b) The Closing Date is hereby designated as the "Startup Day" of each
REMIC within the meaning of Section 860G(a)(9) of the Code. The latest possible
maturity date of the REMIC II Regular Certificates is January 15, 2039.
(c) The latest possible maturity dates of the Pool I, Pool II, Pool III and
Pool IV Certificates and the Class X Certificates are as follows:
Latest Latest Possible
Class Possible Class Maturity
Maturity
AF-1 October 15, 2003 AH-1 March 15, 2003
AF-2 May 15, 2008 AH-2 March 15, 2007
AF-3 August 15, 2012 AH-3 January 15, 2010
AF-4 August 15, 2017 AH-4 March 15, 2012
AF-5 June 15, 2021 AH-5 February 15, 2015
AF-6 February 15, 2025 AH-6 August 15, 2015
AF-7 January 15, 2039 MH-1 September 15, 2018
AF-8 January 15, 2039 MH-2 February 15, 2024
AV May 15, 2026 BH February 15, 2024
MV-1 February 15, 2027 AMF January 15, 2029
MV-2 January 15, 2029 X January 15, 2039
BV January 15, 2029
(d) The Servicer, at the direction of the Originators, shall acquire and
retain a 0.01% Percentage Interest in each Class of Class R Certificates so long
as it shall act as Tax Matters Person of the Trust Fund, except that, when the
Trustee is acting as successor Servicer, the Representative will hold the Tax
Matters Person Residual Interest until an entity is appointed to succeed the
Trustee as Servicer.
(e) Any inconsistencies or ambiguities in this Agreement or in the
administration of the Trust Fund shall be resolved in a manner that preserves
the validity of the election that each of REMIC I and REMIC II be treated as a
REMIC.
Section 2.07 Authentication of Certificates.
The Trustee acknowledges the assignment to it of the Mortgage Loans (other
than the Pool III Mortgage Loans) and the delivery to it of the Trustee's
Mortgage Files relating to the Initial Mortgage Loans (other than the Pool III
Mortgage Loans), the Co-Trustee acknowledges the assignment to it of the Pool
III Mortgage Loans and the delivery to the Custodian of the Trustee's Mortgage
Files relating to the Initial Pool III Mortgage Loans and, concurrently with
such delivery, the Trustee has authenticated or caused to be authenticated and
delivered to or upon the order of the Representative on behalf of the
Originators, in exchange for the Initial Mortgage Loans, the Certificate
Insurance Policies (in the case of Pool I and Pool IV) the Trustee's Mortgage
Files and the other assets included in the definition of the Trust Fund,
Certificates duly authenticated by the Trustee in authorized denominations
evidencing the entire ownership of the Trust Fund.
Section 2.08 Fees and Expenses of the Trustee and Co-Trustee.
The fees and expenses of the Trustee and Co-Trustee including (i) the
annual fees of the Trustee and Co-Trustee, payable annually in advance, and
subject to rebate to the Servicer as additional servicing compensation hereunder
for any fraction of a year in which this Agreement terminates, (ii) any other
fees and expenses to which the Trustee or Co-Trustee is entitled, and (iii)
reimbursements to the Servicer for any advances made by the Servicer to the
applicable Expense Accounts pursuant to Section 6.03 hereof, shall be paid from
the Expense Accounts in the manner set forth in Section 6.03 hereof; provided,
however, that the Representative shall be liable for any expenses of the Trust
Fund incurred prior to the Closing Date. The Servicer, the Trustee and the
Co-Trustee hereby covenant with the Certificateholders that every material
contract or other material agreement entered into by the Trustee, the Co-Trustee
or the Servicer, acting as attorney-in- fact for the Trustee or the Co-Trustee,
on behalf of the Trust Fund shall expressly state therein that no
Certificateholder shall be personally liable in its capacity as such in
connection with such contract or agreement.
Section 2.09 Sale and Conveyance of the Subsequent Mortgage Loans.
(a) Subject to the conditions set forth in paragraph (b) below, in
consideration of the Trustee's delivery on the related Subsequent Transfer Dates
to or upon the order of the Representative of all or a portion of the balance of
funds in the Pre-Funding Account, the Originators shall on any Subsequent
Transfer Date sell, transfer, assign, set over and otherwise convey without
recourse, to the Trustee (or, with respect to the Subsequent Pool III Mortgage
Loans, the Co-Trustee) all right, title and interest of the applicable
Originators in and to each Subsequent Mortgage Loan listed on the Mortgage Loan
Schedule delivered by the Representative on such Subsequent Transfer Date, all
their right, title and interest in and to principal collected and interest
accruing on each such Subsequent Mortgage Loan on and after the related
Subsequent Cut- Off Date and all their right, title and interest in and to all
Insurance Policies; provided, however, that the Originators reserve and retain
all their right, title and interest in and to principal (including Principal
Prepayments) collected and interest accruing on each such Subsequent Mortgage
Loan prior to the related Subsequent Cut-Off Date. The transfer by the
Originators of the Subsequent Mortgage Loans set forth on the Mortgage Loan
Schedule to the Trustee (or, with respect to the Subsequent Pool III Mortgage
Loans, the Co-Trustee) shall be absolute and shall be intended by all parties
hereto to be treated as a sale by the Originators.
The amount released from the Pre-Funding Account shall be one-hundred
percent (100%) of the aggregate principal balances as of the related Subsequent
Cut-Off Dates of the Subsequent Mortgage Loans so transferred; provided,
however, that the amount released from the Pre-Funding Account for a Low
Interest Mortgage Loan shall be the percentage set forth on Exhibit T attached
hereto of the aggregate principal balance thereof as of the related Subsequent
Cut-Off Date.
(b) The Originators shall transfer to the Trustee (or, with respect to the
Subsequent Pool III Mortgage Loans, the Co-Trustee) the Subsequent Mortgage
Loans and the other property and rights related thereto described in paragraph
(a) above only upon the satisfaction of each of the following conditions on or
prior to the related Subsequent Transfer Date:
(i) Except with respect to the transfer of Subsequent
Mortgages Loans on a Subsequent Transfer Date occurring in
October 1997, the Representative shall have provided the
Trustee (or, with respect to the Subsequent Pool III Mortgage
Loans, the Trustee, the Co-Trustee and the Custodian) and with
respect to a Subsequent Pool I or Pool IV Mortgage Loan, the
Certificate Insurer, with a timely Addition Notice and shall
have provided any information reasonably requested by any of
the foregoing with respect to the Subsequent Mortgage Loans;
(ii) the Originators shall have delivered to the
Trustee (or, with respect to the Subsequent Pool III Mortgage
Loans, the Co-Trustee and the Custodian) a duly
executed written assignment (including an acceptance by the
Trustee (or, with respect to the Subsequent Pool III Mortgage
Loans, the Co-Trustee and the Custodian)) that shall indicate
whether such Subsequent Mortgage Loan is a Subsequent Pool I
Mortgage Loan, a Subsequent Pool II Mortgage Loan, a
Subsequent Pool III or a Subsequent Pool IV Mortgage Loan and
which shall include Mortgage Loan Schedules, listing the
Subsequent Mortgage Loans and any other exhibits listed
thereon;
(iii) the Originators shall have deposited in the
Principal and Interest Account all collections in respect of
the Subsequent Mortgage Loans received on or after the related
Subsequent Cut-Off Date;
(iv) as of each Subsequent Transfer Date, none of the
related Originator, the Servicer or the Representative shall
be insolvent nor will any of them have been made insolvent by
such transfer nor is any of them aware of any pending
insolvency;
(v) such addition will not result in a material
adverse tax consequence to the Trust Fund or the Holders of
the Certificates;
(vi) the Pre-Funding Period shall not have
terminated;
(vii) the Representative shall have delivered to the
Trustee and, if Subsequent Pool III Mortgage Loans are being
transferred on such Subsequent Transfer Date, the Co-Trustee,
an Officer's Certificate confirming the satisfaction of each
condition precedent specified in this paragraph (b) and in the
related Subsequent Transfer Agreement;
(viii) the Representative shall have delivered to the
Rating Agencies, the Trustee and if Subsequent Pool I or Pool
IV Mortgage Loans are being transferred on such Subsequent
Transfer Date, the Certificate Insurer and, if Subsequent Pool
III Mortgage Loans are being transferred on such Subsequent
Transfer Date, the Co- Trustee, Opinions of Counsel with
respect to the transfer of the Subsequent Mortgage Loans
substantially in the form of the Opinions of Counsel
delivered to the Certificate Insurer, the Trustee and the
Co-Trustee on the Startup Day (bankruptcy, corporate and tax
opinions); and
(ix) if Subsequent Pool I or Pool IV Mortgage Loans
are transferred on such Subsequent Transfer Date, the
Representative shall have deposited into the Spread Account
the amount, if any, required by the Certificate Insurer with
respect to such Mortgage Loans.
(c) The obligation of the Trust Fund to purchase a Subsequent Pool I
Mortgage Loan, a Subsequent Pool II Mortgage Loan, a Subsequent Pool III
Mortgage Loan or a Subsequent Pool IV Mortgage Loan, as the case may be, on any
Subsequent Transfer Date is subject to the requirement, as evidenced by a
certificate from a Responsible Officer of the Representative, that (i) such
Subsequent Pool I Mortgage Loan, Subsequent Pool II Mortgage Loan, Subsequent
Pool III Mortgage Loan or Subsequent Pool IV Mortgage Loan, as the case may be,
conforms in all material respects to the representations and warranties
concerning the individual Initial Pool I Mortgage Loans, Initial Pool II
Mortgage Loans, Initial Pool III Mortgage Loans or Initial Pool IV Mortgage
Loans, as the case may be (including, if such Subsequent Pool III Mortgage Loan
is an FHA Loan, the representations and warranties concerning the FHA Loans),
set forth in Sections 3.01 and 3.02 (except that any reference therein to the
Cut-Off Date shall be deemed a reference to the applicable Subsequent Cut-Off
Date) and that the inclusion of all Subsequent Pool I Mortgage Loans, Subsequent
Pool II Mortgage Loans, Subsequent Pool III Mortgage Loans or Subsequent Pool IV
Mortgage Loans, as the case may be, being transferred to the Trust Fund on such
Subsequent Transfer Date will not change, in any material respect, the
characteristics of the Initial Pool I Mortgage Loans, Initial Pool II Mortgage
Loans, Initial Pool III Mortgage Loans or Initial Pool IV Mortgage Loans, as the
case may be, in the aggregate, set forth in Sections 3.01 and 3.02 or in the
Prospectus Supplement dated September 26, 1997 forming a part of the
Registration Statement under the headings "Summary of Terms -- The Pools -- Pool
I and Pool II," "-- Pool III," "-- Pool IV" and "The Loan Pools -- Home Equity
Loans," "-- Home Improvement Loans" and "-- Multifamily Loans", (ii) the
Subsequent Pool II Mortgage Loans, in the aggregate, conform to the following
standards: (x) the weighted average margin of the Initial plus the Subsequent
Pool II Mortgage Loans shall be no less than 6.0%, (y) the weighted average
credit score of the Subsequent Pool II Mortgage Loans shall be no less than 5
points below the weighted average credit score of the Initial Pool II Mortgage
Loans and (z) the weighted average LTV of the Initial plus the Subsequent Pool
II Mortgage Loans shall be no more than 78% and (iii) the Subsequent Pool III
Mortgage Loans, in the aggregate, conform to the following standards: (x) the
weighted average Mortgage Interest rate of the Initial plus the Subsequent Pool
III Mortgage Loans shall be no less than 12.75%, (y) the weighted average credit
score of the Subsequent Pool III Mortgage Loans shall be no less than 5 points
below the weighted average credit score of the Initial Pool III Mortgage Loans
and (z) no more than 18% of the Initial plus the Subsequent Pool III Mortgage
Loans are FHA Loans.
(d) In connection with the transfer and assignment of the Subsequent
Mortgage Loans, the Representative agrees to satisfy the conditions set forth in
Sections 2.01, 2.02, 2.03, 2.04 and 2.05.
(e) In connection with each Subsequent Transfer Date, on the Remittance
Dates in October, November and December 1997 and the Special Remittance Date,
the Representative shall determine, and the Trustee shall cooperate with the
Representative in determining (i) the amount and correct dispositions of the
Capitalized Interest Requirement for each Pool, the Overfunded Interest Amounts
for each Pool, the Pool Pre-Funding Earnings for each Pool, the amounts of
Pre-Funding Account moneys allocated to each Pool and (ii) any other necessary
matters in connection with the administration of the Pre-Funding Account and of
the Capitalized Interest Account. If any amounts are incorrectly released to the
Holders of the Class R Certificates from the Pre-Funding Account or from the
Capitalized Interest Account, such Holders or the Representative shall
immediately repay such amounts to the Trustee.
(f) In connection with the transfer of any Subsequent Mortgage Loans to the
Trust Fund, the Representative, the Servicer and the Trustee may, with the prior
written consent of the Certificate Insurer, amend the definition of "Specified
Subordinated Amount" (or any component of the definition thereof) with respect
to Pool I or Pool IV for the purpose of changing the related Specified
Subordinated Amount (or any component of the definition thereof). Based upon the
results of any additional due diligence procedures performed by the Certificate
Insurer after the Closing Date to determine compliance with the Registration
Statement, the Certificate Insurer may require the Representative, the Servicer
and the Trustee to amend the definition of "Specified Subordinated Amount" (or
any component of the definition thereof) with respect to Pool I or Pool IV for
the purpose of changing the related Specified Subordinated Amount (or any
component of the definition thereof). Provided, however, that any amendment of
the definition of "Specified Subordinated Amount" with respect to Pool I or Pool
IV, other than an amendment increasing the related Initial Specified
Subordinated Amount (or any component of the definition thereof), as the case
may be, and accompanied by a cash deposit into the Spread Account pursuant to
Section 6.05, must comply with the provisions of Section 13.02 hereof.
(g) No later than December 26, 1997, the Representative shall obtain a
letter from an independent accountant stating whether or not the characteristics
of the Pool II and Pool III Subsequent Mortgage Loans conform to the
characteristics described in the Prospectus Supplement dated September 26, 1997
included as part of the Registration Statement.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations of Representative, Servicer, Claims
Administrator and Originators.
(a) The Representative, the Servicer and the Claims Administrator (for the
purposes of this Section 3.01(a), "The Money Store Inc.") hereby represent and
warrant to the Trustee, the Co-Trustee and the Certificateholders as of the
Closing Date:
(i) The Money Store Inc. is a corporation duly
organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation and has all
licenses necessary to carry on its business as now being
conducted and is licensed, qualified and in good standing in
each Mortgaged Property State if the laws of such state
require licensing or qualification in order to conduct
business of the type conducted by The Money Store Inc. and
perform its obligations hereunder; The Money Store Inc. has
corporate power and authority to execute and deliver this
Agreement and each Subservicing Agreement and to perform in
accordance herewith and therewith; the execution, delivery and
performance of this Agreement and each Subservicing Agreement
(including all instruments of transfer to be delivered
pursuant to this Agreement and each Subservicing Agreement) by
The Money Store Inc. and the consummation of the transactions
contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action; this Agreement
and each Subservicing Agreement evidences the valid, binding
and enforceable obligation of The Money Store Inc.; The Money
Store Inc. is a Permitted Transferee; and all requisite
corporate action has been taken by The Money Store Inc. to
make this Agreement and each Subservicing Agreement valid,
binding and enforceable upon The Money Store Inc. in
accordance with the respective terms of each, subject to the
effect of bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors'
rights generally or the application of equitable principles in
any proceeding, whether at law or in equity, none of which
will affect the ownership of the Mortgage Loans by the
Trustee, as trustee;
(ii) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits,
authorizations, rights and licenses required to be taken,
given or obtained, as the case may be, by or from any federal,
state or other governmental authority or agency (other than
any such actions, approvals, etc., under any state securities
laws, real estate syndication or "Blue Sky" statutes, as to
which The Money Store Inc. makes no such representation or
warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution
and delivery by The Money Store Inc. of the documents to which
it is a party, have been duly taken, given or obtained, as the
case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time
within which any appeal therefrom may be taken or review
thereof may be obtained has expired or no review thereof may
be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by
this Agreement and each Subservicing Agreement and the other
documents on the part of The Money Store Inc. and the
performance by The Money Store Inc. of its obligations under
this Agreement and each Subservicing Agreement and such of the
other documents to which it is a party;
(iii) The consummation of the transactions
contemplated by this Agreement and each Subservicing Agreement
will not result in the breach of any terms or provisions of
the certificate of incorporation or by-laws of The Money Store
Inc. or result in the breach of any term or provision of, or
conflict with or constitute a default under or result in the
acceleration of any obligation under, any material agreement,
indenture or loan or credit agreement or other material
instrument to which The Money Store Inc. or its property is
subject, or result in the violation of any law, rule,
regulation, order, judgment or decree to which The Money
Store Inc. or its property is subject;
(iv) Neither this Agreement or any Subservicing
Agreement nor any statement, report or other document
furnished or to be furnished pursuant to this Agreement and
each Subservicing Agreement or in connection with the
transactions contemplated hereby and thereby contains any
untrue statement of material fact or omits to state a material
fact necessary to make the statements contained herein or
therein not misleading;
(v) The Money Store Inc. does not believe, nor does
it have any reason or cause to believe, that it cannot perform
each and every covenant contained in this
Agreement;
(vi) Except as set forth on Schedule I, there is no
action, suit, proceeding or investigation pending or, to the
best of The Money Store Inc.'s knowledge, threatened against
The Money Store Inc. which, either in any one instance or in
the aggregate, may result in any material adverse change in
the business, operations, financial condition, properties or
assets of The Money Store Inc. or in any material impairment
of the right or ability of The Money Store Inc. to carry on
its business substantially as now conducted, or in any
material liability on the part of The Money Store Inc. or
which would draw into question the validity of this Agreement
and each Subservicing Agreement or the Mortgage Loans or of
any action taken or to be taken in connection with the
obligations of The Money Store Inc. contemplated herein, or
which would be likely to impair materially the ability of The
Money Store Inc. to perform under the terms of this Agreement
and each Subservicing Agreement;
(vii) The Trust Fund will not constitute an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended;
(viii) The Money Store Inc. 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 Money Store Inc. or
its properties or might have consequences that would
materially and adversely affect its performance hereunder or
under any Subservicing Agreement;
(ix) The statements contained in the Registration
Statement which describe The Money Store Inc. or matters or
activities for which The Money Store Inc. is responsible in
accordance with the Registration Statement, this Agreement and
all documents referred to therein or delivered in connection
therewith, or which are attributable to The Money Store Inc.
therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement
of a material fact with respect to The Money Store Inc. and
does not omit to state a material fact necessary to make the
statements contained therein with respect to The Money Store
Inc. not misleading. The Money Store Inc. is not aware that
the Registration Statement contains any untrue statement of a
material fact or omits to state any material fact necessary to
make the statements contained therein not misleading. There is
no fact peculiar to The Money Store Inc. or the Mortgage Loans
and known to The Money Store Inc. that materially adversely
affects or in the future may (so far as The Money Store Inc.
can now reasonably foresee) materially adversely affect The
Money Store Inc. or the Mortgage Loans or the ownership
interests therein represented by the Certificates that has not
been set forth in the Registration Statement;
(x) Each Originator received fair consideration and
reasonably equivalent value in exchange for the sale of the
interest in the Initial Mortgage Loans, and will receive fair
consideration and reasonably equivalent value in exchange for
the sale of the interest in the Subsequent Mortgage Loans,
evidenced by the Certificates;
(xi) No Originator sold any interest in any Initial
Mortgage Loan, and no Originator will sell any interest in any
Subsequent Mortgage Loan, evidenced by the Certificates, as
provided in the Agreements, with any intent to hinder, delay
or defraud any of its respective creditors;
(xii) The Originators are solvent and the Originators
will not be rendered insolvent as a result of the sale of the
Mortgage Loans to the Trust Fund or the sale of the
Certificates; and
(xiii) No Certificateholder is subject to state
licensing requirements solely by virtue of holding the
Certificates.
(b) Each Originator hereby represents and warrants to the
Certificateholders, the Trustee and the Co-Trustee as of the Closing Date:
(i) Such Originator is a corporation duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation and, except as set forth
below, has all licenses necessary to carry on its business as
now being conducted and is licensed, qualified and in good
standing in each Mortgaged Property State if the laws of such
state require licensing or qualification in order to conduct
business of the type conducted by such Originator and perform
its obligations hereunder; such Originator has corporate power
and authority to execute and deliver this Agreement and the
Subservicing Agreement to which it is a party and to perform
in accordance herewith and therewith; the execution, delivery
and performance of this Agreement and the Subservicing
Agreement to which it is a party (including all instruments of
transfer to be delivered pursuant to this Agreement and the
Subservicing Agreement to which it is a party) by such
Originator and the consummation of the transactions
contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action; this Agreement
and the Subservicing Agreement to which it is a party
evidences the valid, binding and enforceable obligation of
such Originator; such Originator is a Permitted Transferee;
and all requisite corporate action has been taken by such
Originator to make this Agreement and the Subservicing
Agreement to which it is a party valid, binding and
enforceable upon such Originator in accordance with the
respective terms of each such agreement, subject to the effect
of bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally or the application of equitable principles in any
proceeding, whether at law or in equity, none of which will
affect the ownership of the Mortgage Loans by the Trustee, as
trustee, or the Co-Trustee, as the case may be.
(ii) No approval of the transactions contemplated by
this Agreement and the Subservicing Agreement to which it is a
party from any state or federal regulatory authority having
jurisdiction over such Originator is required or, if required,
such approval has been or will, prior to the Closing Date, be
obtained;
(iii) The consummation of the transactions
contemplated by this Agreement and the Subservicing Agreement
to which it is a party will not result in the breach of any
terms or provisions of the certificate of incorporation or
by-laws of such Originator or result in the breach of any term
or provision of, or conflict with or constitute a default
under or result in the acceleration of any obligation under,
any material agreement, indenture or loan or credit agreement
or other material instrument to which such Originator or its
property is subject, or result in the violation of any law,
rule, regulation, order, judgment or decree to which such
Originator or its property is subject;
(iv) Such Originator 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 such
Originator or its properties or might have consequences that
would materially and adversely affect its performance
hereunder or under the Subservicing Agreement to which it is a
party;
(v) Except as set forth on Schedule I, there is no
action, suit, proceeding or investigation pending or, to the
best of such Originator's knowledge, threatened against such
Originator which, either in any one instance or in the
aggregate, may result in any material adverse change in the
business, operations, condition (financial or other),
properties or assets of such Originator or in any material
impairment of the right or properties or assets of such
Originator to carry on its business substantially as now
conducted, or in any material liability on the part of such
Originator or which would draw into question the validity of
this Agreement or the Subservicing Agreement to which it is a
party or the Mortgage Loans or of any action taken or to be
taken in connection with the obligations of such Originator
contemplated herein, or which would be likely to impair
materially the ability of such Originator to perform under the
terms of this Agreement or the Subservicing Agreement to which
it is a party;
(vi) Neither this Agreement or the Subservicing
Agreement to which it is a party nor any statement, report or
other document furnished or to be furnished pursuant to this
Agreement or the Subservicing Agreement to which it is a party
or in connection with the transactions contemplated hereby or
thereby contains any untrue statement of a material fact or
omits to state any material fact necessary to make the
statements contained herein or therein not misleading;
(vii) The statements contained in the Registration
Statement which describe such Originator or matters or
activities for which such Originator is responsible in
accordance with the Registration Statement, this Agreement and
all documents referred to therein or delivered in connection
therewith, or which are attributable to such Originator
therein are true and correct in all material respects, and the
Registration Statement does not contain any untrue statement
of a material fact with respect to such Originator or the
Mortgage Loans and does not omit to state a material fact
necessary to make the statements contained therein with
respect to such Originator or the Mortgage Loans not
misleading. Such Originator is not aware that the Registration
Statement contains any untrue statement of a material fact or
omits to state any material fact necessary to make the
statements contained therein not misleading. There is no fact
peculiar to such Originator or the Mortgage Loans and known to
such Originator that materially and adversely affects or in
the future may (so far as such Originator can now reasonably
foresee) materially and adversely affect such Originator or
the Mortgage Loans or the ownership interests therein
represented by the Certificates that has not been set forth in
the Registration Statement;
(viii) Upon the receipt of each Trustee's Mortgage
File by the Trustee (or, with respect to the Pool III Mortgage
Loans, the Custodian on behalf of the Co- Trustee) under this
Agreement, the Trustee (or, with respect to the Pool III
Mortgage Loans, the Co-Trustee) will have good and marketable
title on behalf of the related Trust Fund to each Mortgage
Loan and such other items comprising the corpus of the related
Trust Fund free and clear of any lien (other than liens which
will be simultaneously released);
(ix) All actions, approvals, consents, waivers,
exemptions, variances, franchises, orders, permits,
authorizations, rights and licenses required to be taken,
given or obtained, as the case may be, by or from any federal,
state or other governmental authority or agency (other than
any such actions, approvals, etc. under any state securities
laws, real estate syndication or "Blue Sky" statutes, as to
which such Originator makes no such representation or
warranty), that are necessary or advisable in connection with
the purchase and sale of the Certificates and the execution
and delivery by such Originator of the documents to which it
is a party, have been duly taken, given or obtained, as the
case may be, are in full force and effect on the date hereof,
are not subject to any pending proceedings or appeals
(administrative, judicial or otherwise) and either the time
within which any appeal therefrom may be taken or review
thereof may be obtained has expired or no review thereof may
be obtained or appeal therefrom taken, and are adequate to
authorize the consummation of the transactions contemplated by
this Agreement and the Subservicing Agreement to which it is a
party and the other documents on the part of such Originator
and the performance by such Originator of its obligations
under this Agreement and the Subservicing Agreement to which
it is a party and such of the other documents to which it is a
party;
(x) The transfer, assignment and conveyance of the
Mortgage Notes and the Mortgages by the Originators pursuant
to this Agreement are not or, with respect to the Subsequent
Mortgage Loans, will not be, subject to the bulk transfer laws
or any similar statutory provisions in effect in any
applicable jurisdiction;
(xi) The origination and collection practices used by
each Originator and the primary servicer with respect to each
Mortgage Note and Mortgage relating to the Initial Mortgage
Loans have been, and the origination and collection practices
to be used by each Originator and the primary servicer with
respect to each Mortgage Note and Mortgage relating to the
Subsequent Mortgage Loans will be, in all material respects
legal, proper, prudent and customary in the mortgage
origination and servicing business;
(xii) Each Initial Mortgage Loan was selected, and
each Subsequent Mortgage Loan will be selected, from among the
existing Mortgage Loans in the respective Originator's
portfolio at the date hereof or, in the case of the Subsequent
Mortgage Loans, at the related Subsequent Cut-off Date, in a
manner not designed to adversely affect the
Certificateholders;
(xiii) Such Originator does not believe, nor does it
have any reason or cause to believe, that it cannot perform
each and every covenant contained in this
Agreement and the Subservicing Agreement to which it is
a party;
(xiv) Such Originator received fair consideration and
reasonably equivalent value or, in the case of the Subsequent
Mortgage Loans, will receive fair consideration and reasonably
equivalent value, in exchange for the sale of the interest in
the Mortgage Loans evidenced by the Certificates;
(xv) Such Originator did not sell or, in the case of
the Subsequent Mortgage Loans, will not sell, any interest in
any Mortgage Loan evidenced by the Certificates with any
intent to hinder, delay or defraud any of its respective
creditors;
(xvi) Such Originator is solvent, and such Originator
will not be rendered insolvent as a result of the sale of the
Mortgage Loans to the Trust Fund or the sale of the
Certificates;
(xvii) No Certificateholder is subject to state
licensing requirements solely by virtue of holding the
Certificates;
(xviii) The Subservicing Agreement to which the
Originator is a party conforms to the requirements for a
Subservicing Agreement contained in this Agreement;
(xix) Each FHA Loan was selected from among the
existing FHA-insured Title I loans in such Originator's
portfolio at the date hereof in a manner not designed to
adversely affect the Certificateholders; and
(xx) Each Originator of an FHA Loan is authorized and
approved by the FHA for participation in the FHA Title I loan
program and holds a valid Contract of Insurance from the FHA
for such purpose.
Section 3.02 Individual Mortgage Loans.
Each Originator hereby represents and warrants to the Trustee, the
Co-Trustee and the Certificateholders, with respect to each Initial Mortgage
Loan, as of the Closing Date and, with respect to each Subsequent Mortgage Loan,
as of the related Subsequent Transfer Date:
(a) The information with respect to each Mortgage Loan set forth in the
Mortgage Loan Schedule is true and correct;
(b) All of the original or certified documentation set forth in Section
2.04 (including all material documents related thereto) has been or will be
delivered to the Trustee or to the Custodian on the Closing Date or, with
respect to the Subsequent Mortgage Loans, on the related Subsequent Transfer
Date, or as otherwise provided in Section 2.04;
(c) Each Initial Mortgage Loan being transferred to the Trust Fund is, and
each Subsequent Mortgage Loan to be transferred will be, a Qualified Mortgage;
(d) Each Mortgaged Property (other than the Multifamily Properties) is
improved by a Residential Dwelling, which, to the best of the Originator's
knowledge, does not include cooperatives or mobile homes attached to a
foundation or otherwise and does not constitute other than real property under
state law; provided, however, that up to $0 aggregate principal balance of
Mortgage Loans in each of Pool I and Pool II may be secured by Mortgaged
Properties that are cooperatives or mobile homes.
(e) Each Initial Mortgage Loan has been, and each Subsequent Mortgage Loan
will be, originated and underwritten, or purchased and re-underwritten, by an
Originator in accordance with the Representative's underwriting criteria set
forth in the Registration Statement and is being, or with respect to the
Subsequent Mortgage Loans, will be, serviced by the Servicer or one or more
Subservicers and, with respect to each Initial Mortgage Loan originated by an
Originator, there is, and with respect to each Subsequent Mortgage Loan, there
will be, only one originally executed Mortgage Note not stamped as a duplicate
copy with respect to each such Mortgage Loan;
(f) The Mortgage Note with respect to each Initial Mortgage Loan bears, and
with respect to each Subsequent Mortgage Loan will bear, a fixed Mortgage
Interest Rate with respect to the Initial Pool I Mortgage Loans and Initial Pool
III Mortgage Loans, an adjustable Mortgage Interest Rate with respect to the
Initial Pool II Mortgage Loans and either a fixed or an adjustable Mortgage
Interest Rate with respect to the Initial Pool IV Mortgage Loans, which rate
shall at least equal the sum of (i) the Class Adjusted Mortgage Loan Remittance
Rate for Class AF- 7 in the case of the Initial Pool I Mortgage Loans, the
initial Class Adjusted Mortgage Loan Remittance Rate for Class BV in the case of
the Initial Pool II Mortgage Loans, the Class Adjusted Mortgage Loan Remittance
Rate for Class BH in the case of the Initial Pool III Mortgage Loans, and the
Class Adjusted Mortgage Loan Remittance Rate for Class AMF in the case of the
Initial Pool IV Mortgage Loans, (ii) the rate used in calculating the Servicing
Fee and (iii) the rate used in calculating the Contingency Fee; provided,
however, that (A) up to $0 aggregate principal amount of the Initial Pool I
Mortgage Loans may be Low Interest Pool I Mortgage Loans, (B) up to $0 aggregate
principal amount of the Initial Pool III Mortgage Loans may be Low Interest Pool
III Mortgage Loans, (C) up to $0 aggregate principal amount of the Initial Pool
IV Mortgage Loans may be Low Interest Pool IV Mortgage Loans and (D) in
connection with FHA Loans, if the related Mortgagor pays the FHA Insurance
Premium as a separate amount in addition to the Monthly Payment, such extra
amount shall be sufficient to pay the related FHA Insurance Premium;
(g) (i) Except with respect to 10.0% of the Initial Pool I Mortgage Loans
and approximately 10.0% of the Subsequent Pool I Mortgage Loans, each Mortgage
Note relating to the Pool I Mortgage Loans will provide for a schedule of
substantially level and equal Monthly Payments which are, if timely paid,
sufficient to fully amortize the principal balance of such Mortgage Note on or
before its maturity date, (ii) except with respect to 0% of the Initial Pool II
Mortgage Loans and approximately 0% of the Subsequent Pool II Mortgage Loans,
each Mortgage Note relating to the Pool II Mortgage Loans will provide for a
schedule of Monthly Payments which are, if timely paid as adjusted, sufficient
to fully amortize the principal balance of such Mortgage Note on or before its
maturity date, (iii) each Mortgage Note relating to the Pool III Mortgage Loans
will provide for a schedule of substantially level and equal Monthly Payments
which are, if timely paid, sufficient to fully amortize the principal balance of
such Mortgage Note on or before its maturity date and (iv) each Mortgage Note
relating to the Pool IV Mortgage Loans will provide for a schedule of
substantially level and equal Monthly Payments which are, if timely paid as
adjusted, sufficient to fully amortize the principal balance of such Mortgage
Note on or before its maturity date.
(h) Each Mortgage is, with respect to the Initial Mortgage Loans, and will
be with respect to the Subsequent Mortgage Loans, a valid and subsisting first
or second lien of record on the Mortgaged Property (except that the Mortgages
relating to no more than approximately 20.0% of the Mortgage Loans in Pool III
measured by Principal Balances as of the Cut-Off Date may be more junior liens)
subject, in the case of any second or more junior Mortgage Loan, only to any
applicable Prior Liens on such Mortgaged Property and subject in all cases to
the exceptions to title set forth in the title insurance policy or the other
evidence of title enumerated in Section 2.04(d), with respect to the related
Mortgage Loan, which exceptions are generally acceptable to banking institutions
in connection with their regular mortgage lending activities, and such other
exceptions to which similar properties are commonly subject and which do not
individually, or in the aggregate, materially and adversely affect the benefits
of the security intended to be provided by such Mortgage;
(i) Immediately prior to the transfer and assignment herein contemplated,
the Originator held good and indefeasible title to, and was the sole owner of,
each Mortgage Loan conveyed by the Originator subject to no liens, charges,
mortgages, encumbrances or rights of others except as set forth in Section
3.02(h) or other liens which will be released simultaneously with such transfer
and assignment; and immediately upon the transfer and assignment herein
contemplated, the Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee) will hold good and indefeasible title, to, and be the sole owner of,
each Mortgage Loan subject to no liens, charges, mortgages, encumbrances or
rights of others except as set forth in Section 3.02(h) or other liens which
will be released simultaneously with such transfer and assignment;
(j) As of the Cut-Off Date, no Initial Mortgage Loan is 60 days or more
delinquent in payment and, except as provided in the next sentence, no Initial
Mortgage Loan has been delinquent 60 days or more as measured at the end of any
month during the 12 months immediately preceding the Cut-Off Date. Approximately
1.0% of the Mortgage Loans in Pool I or Pool II were 60 days or more delinquent
as measured at the end of any month during the 12 months immediately preceding
the Cut-Off Date. As of the related Subsequent Cut-Off Date, no Subsequent
Mortgage Loan shall be 60 or more days delinquent;
(k) To the best of the Originator's knowledge, there is no delinquent tax
or assessment lien on any Mortgaged Property, and each Mortgaged Property is
free of material damage and is in good repair;
(l) The Mortgage Loan is not subject to any right of rescission, set-off,
counterclaim or defense, including the defense of usury, nor will the operation
of any of the terms of the Mortgage Note or the Mortgage, or the exercise of any
right thereunder, render either the Mortgage Note or the 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;
(m) Except with respect to the Pool III Loans as to which no representation
is made, there is no mechanics' lien or claim for work, labor or material
affecting any Mortgaged Property which is or may be a lien prior to, or equal
with, the lien of such Mortgage except those which are insured against by the
title insurance policy referred to in Section 3.02(o) below;
(n) Each Mortgage Loan at the time it was made complied in all material
respects with applicable state and federal laws and regulations, including,
without limitation, usury, equal credit opportunity, disclosure and recording
laws;
(o) With respect to each Mortgage Loan with an original principal balance
greater than $15,000 other than any Initial Mortgage Loan which was not
originated by an Originator and other than the Pool III Mortgage Loans, a
lender's title insurance policy, issued in standard American Land Title
Association, California Land Title Association, New York Board of Title
Underwriters form, or other form acceptable in a particular jurisdiction, by a
title insurance company authorized to transact business in the state in which
the related Mortgaged Property is situated, together with a condominium
endorsement, if applicable, in an amount at least equal to the original
principal balance of such Mortgage Loan insuring the mortgagee's interest under
the related Mortgage Loan as the holder of a valid first or second mortgage lien
of record on the real property described in the Mortgage, subject only to
exceptions of the character referred to in Section 3.02(h) above, or, with
respect to any Mortgage Loan with an original principal balance less than or
equal to $15,000 or any Mortgage Loan which was not originated by an Originator
(other than the FHA Loans), some other evidence of the status of title, or other
evidence of title as enumerated in Section 2.04(d), was effective on the date of
the origination of such Mortgage Loan, and, as of the Closing Date, such policy
will be valid and thereafter such policy shall continue in full force and
effect;
(p) The improvements upon each Mortgaged Property are covered by a valid
and existing hazard insurance policy with a generally acceptable carrier that
provides for fire and extended coverage representing coverage described in
Sections 5.07 and 5.08;
(q) If the Mortgaged Property is in an area identified in the Federal
Register by the Federal Emergency Management Agency as having special flood
hazards, a flood insurance policy is in effect with respect to such Mortgaged
Property with a generally acceptable carrier in an amount representing coverage
described in Sections 5.07 and 5.08;
(r) Each Mortgage and Mortgage Note is the legal, valid and binding
obligation of the maker thereof and is enforceable in accordance with its terms,
except only as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity (whether
considered in a proceeding or action in equity or at law), none of which will
prevent the ultimate realization of the security provided by the Mortgage, and
all parties to each Mortgage Loan had full legal capacity to execute all
Mortgage Loan documents and convey the estate therein purported to be conveyed;
(s) The Servicer, at the direction of the related Originator, has caused
and will cause to be performed any and all acts required to be performed to
preserve the rights and remedies of the Trustee and the Co-Trustee in any
insurance policies applicable to the Mortgage Loans including, without
limitation, any necessary notifications of insurers, assignments of policies or
interests therein, and establishments of co-insured, joint loss payee and
mortgagee rights in favor of the Trustee and the Co-Trustee, and the Originator
of any FHA Loan has the authority and power to transfer to the Co-Trustee the
FHA Reserve Amount relating to the Mortgage Loans;
(t) No more than approximately 0.5%, 0.5%, 0.5% and 4.0% of the Principal
Balances of the Initial Pool I, Pool II, Pool III or Pool IV Mortgage Loans,
respectively, are secured by Mortgaged Properties located within any single zip
code area;
(u) Each original Mortgage was recorded, and all subsequent assignments of
the original Mortgage have been recorded in the appropriate jurisdictions
wherein such recordation is necessary to perfect the lien thereof as against
creditors of the Originator (or, subject to Section 2.04 hereof, are in the
process of being recorded);
(v) Each Mortgage Loan conforms, and all such Mortgage Loans in the
aggregate conform, to the description thereof set forth in the Registration
Statement;
(w) [Reserved]
(x) Approximately 16.0% and 84.0% of the Initial Pool III Mortgage Loans
(measured by outstanding Principal Balance as of the Cut-Off Date) were FHA
Loans and Conventional Home Improvement Loans, respectively;
(y) All of the Initial Pool I, Initial Pool II and Initial Pool III
Mortgage Loans are Single-Family Loans (provided, however, that no more than
approximately 1.0% and 1.0% of the Initial Pool I and Initial Pool III Mortgage
Loans, measured by Principal Balances of the Cut-Off Date, may be Multifamily
Loans); and, when measured by outstanding Principal Balance as of the
Cut-Off-Date, no more than approximately 6.0%, 6.0% and 2.0% of the Initial Pool
I, Initial Pool II and Initial Pool III Mortgage Loans, respectively, are
secured by vacation homes, secondary residences, or investment properties, less
than approximately 4.0%, 4.0% and 2.0% of the Initial Pool I, Initial Pool II
and Initial Pool III Mortgage Loans, respectively, are secured by individual
units in Low-Rise Condominiums, no more than approximately 10.0%, 12.0% and 2.0%
of the Initial Pool I, Initial Pool II and Initial Pool III Mortgage Loans,
respectively, are secured by Two-, Three- or Four-Family Houses, and no more
than 1.0%, 1.0% and 2.0% of the Initial Pool I, Initial Pool II and Initial Pool
III Mortgage Loans are secured by individual units of other types including
High-Rise Condominiums. None of the Initial Pool I and Initial Pool II Mortgage
Loans and no more than approximately 2.0% of the Pool III Initial Mortgage Loans
are secured by a mobile home or co-op;
(z) Each Pool IV Mortgage Loan is a Multifamily Loan with respect to which
no less than approximately 90% of the related Mortgaged Property, measured by
square footage, number of units and projected rent, being allocated to
residential units;
(aa) The terms of the Mortgage Note and the Mortgage have not been
impaired, altered or modified in any respect, except by a written instrument
which has been recorded, if necessary, to protect the interest of the
Certificateholders and which has been delivered to the Trustee or, with respect
to the Pool III Mortgage Loans, the Custodian. The substance of any such
alteration or modification is reflected on the Mortgage Loan Schedule and has
been approved by the primary mortgage guaranty insurer, if any;
(bb) No instrument of release or waiver has been executed in connection
with the Mortgage Loan, and no Mortgagor has been released, in whole or in part,
except in connection with an assumption agreement which has been approved by the
primary mortgage guaranty insurer, if any, and which has been delivered to the
Trustee or, with respect to the Pool III Mortgage Loans, the Custodian;
(cc) There are no defaults in complying with the terms of the Mortgage, and
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 an escrow of funds has been established in an
amount sufficient to pay for every such item which remains unpaid and which has
been assessed but is not yet due and payable. The Servicer has not advanced
funds, or induced, solicited or knowingly received any advance of funds by a
party other than the Mortgagor, directly or indirectly, for the payment of any
amount required by the Mortgage, except for interest accruing from the date of
the Mortgage Note or date of disbursement of the Mortgage Loan proceeds,
whichever is greater, to the day which precedes by one month the Due Date of the
first installment of principal and interest;
(dd) There is no proceeding pending or threatened for the total or partial
condemnation of the Mortgaged Property, nor is such a proceeding currently
occurring, and such property is undamaged by waste, fire, earthquake or earth
movement, windstorm, flood, tornado or other casualty, so as to affect adversely
the value of the Mortgaged Property as security for the Mortgage Loan or the use
for which the premises were intended;
(ee) Other than with respect to the Pool III Mortgage Loans, as to which no
representation is made, all of the improvements which were included for the
purpose of determining the appraised value of the Mortgaged Property lie wholly
within the boundaries and building restriction lines of such property, and no
improvements on adjoining properties encroach upon the Mortgaged Property unless
any such improvements are (except with respect to those Mortgage Loans with
original principal balances which were less than $15,000 or not originated by a
Originator) stated in the title insurance policy and affirmatively insured;
(ff) To the best of the Originator's knowledge there do not exist any
circumstances or conditions with respect to the Mortgage, the Mortgaged
Property, the Mortgagor or the Mortgagor's credit standing that can be
reasonably expected to cause private institutional investors to regard the
Mortgage Loan as an unacceptable investment, cause the Mortgage Loan to become
delinquent or adversely affect the value or marketability of the Mortgage Loan;
(gg) Other than with respect to the Pool III Mortgage Loans, as to which no
representation is made, no improvement located on or being part of the Mortgaged
Property is in violation of any applicable zoning law or regulation. All
inspections, licenses and certificates required to be made or issued with
respect to all occupied portions of the Mortgaged Property and, with respect to
the use and occupancy of the same, including but not limited to certificates of
occupancy and fire underwriting certificates, have been made or obtained from
the appropriate authorities and the Mortgaged Property is lawfully occupied
under applicable law;
(hh) The proceeds of the Mortgage Loan have been fully disbursed, and there
is no obligation on the part of the mortgagee to make future advances
thereunder. Any and all requirements as to completion of any on-site or off-site
improvements and as to disbursements of any escrow funds therefor have been
complied with. All costs, fees and expenses incurred in making or closing or
recording the Mortgage Loans were paid;
(ii) The related Mortgage Note is not and has not been secured by any
collateral, pledged account or other security except the lien of the
corresponding Mortgage;
(jj) No Initial Mortgage Loan was, and no Subsequent Mortgage Loan will be,
originated under a buydown plan;
(kk) Except for the related FHA Premium Account in connection with any FHA
Loan, there is no obligation on the part of the Originator or any other party to
make payments in addition to those made by the Mortgagor;
(ll) No statement, report or other document signed by the Originator
constituting a part of the Mortgage File contains any untrue statement of fact
or omits to state a fact necessary to make the statements contained therein not
misleading;
(mm) The origination and collection practices used by the Originator with
respect to the Mortgage Note and Mortgage have been in all respects legal,
proper, prudent and customary in the mortgage lending and servicing business
and, in the case of FHA Loans, legal, proper, prudent and customary in the Title
I mortgage lending and servicing business;
(nn) With respect to each Mortgage constituting a deed of trust, a trustee,
duly qualified under applicable law to serve as such, has been properly
designated and currently so serves and is named in such Mortgage, and no fees or
expenses are or will become payable by the Certificateholders to the trustee
under the deed of trust, except in connection with a trustee's sale after
default by the Mortgagor;
(oo) No Initial Mortgage Loan has, and no Subsequent Mortgage Loan will
have, a shared appreciation feature, or other contingent interest feature;
(pp) With respect to each Mortgage Loan that is not a first mortgage loan,
the related Prior Lien requires equal monthly payments, or if it bears an
adjustable interest rate, the monthly payments for the related Prior Lien may be
adjusted no more frequently than monthly; at the time of the origination of the
Mortgage Loan, the related Prior Lien was not 30 or more days delinquent;
(qq) With respect to each Mortgage Loan that is not a first mortgage loan,
either (i) no consent for the Mortgage Loan is required by the holder of the
related Prior Lien or (ii) such consent has been obtained and is contained in
the Mortgage File;
(rr) Other than with respect to the Pool III Mortgage Loans, as to which no
representation is made, with respect to each Mortgage Loan that is not a first
mortgage loan, to the best of the Originator's knowledge, the related Prior Lien
does not provide for negative amortization;
(ss) With respect to each Mortgage Loan that is not a first mortgage loan,
the maturity date of the Mortgage Loan is prior to the maturity date of the
related Prior Lien if such Prior Lien provides for a balloon payment;
(tt) 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
Residential Dwelling erected thereon (or, with respect to any Multifamily Loans,
a Multifamily Property erected thereon);
(uu) All parties which have had any interest in the Mortgage Loan, whether
as mortgagee, assignee, pledgee or otherwise, are (or, during the period in
which they held and disposed of such interest, were) (1) in compliance with any
and all applicable licensing requirements of the laws of the state wherein the
Mortgaged Property is located, and (2)(A) organized under the laws of such
state, or (B) qualified to do business in such state, or (C) federal savings and
loan associations or national banks having principal offices in such state, or
(D) not doing business in such state;
(vv) The Mortgage contains an enforceable provision for the acceleration of
the payment of the unpaid principal balance of the Mortgage Loan in the event
the related Mortgaged Property is sold without the prior consent of the
mortgagee thereunder;
(ww) Any future advances made prior to the Cut-Off Date have been
consolidated with the outstanding principal amount secured by the Mortgage, and
the secured principal amount, as consolidated, bears a single interest rate and
single repayment term reflected on the Mortgage Loan Schedule. The consolidated
principal amount does not exceed the original principal amount of the Mortgage
Loan. The Mortgage Note does not permit or obligate the Servicer to make future
advances to the Mortgagor at the option of the Mortgagor;
(xx) The related Mortgage contains customary and enforceable provisions
which render the rights and remedies of the holder thereof adequate for the
realization against the Mortgaged Property of the benefits of the security,
including, (i) in the case of a Mortgage designated as a deed of trust, by
trustee's sale, and (ii) otherwise by judicial foreclosure. There is no
homestead or other exemption available to the Mortgagor which would materially
interfere with the right to sell the Mortgaged Property at a trustee's sale or
the right to foreclose the Mortgage;
(yy) There is no default, breach, violation or event of acceleration
existing 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 of acceleration;
and neither the Servicer nor the Originator has waived any default, breach,
violation or event of acceleration;
(zz) All parties to the Mortgage Note and the Mortgage had legal capacity
to execute the Mortgage Note and the Mortgage and each Mortgage Note and
Mortgage have been duly and properly executed by such parties;
(aaa) The Initial Mortgage Loan was not, and the Subsequent Mortgage Loan
will not be, selected for inclusion under this Agreement from its portfolio of
comparable loans, including, in the case of FHA Loans, comparable Title I loans,
on any basis which would have a material adverse effect on a Certificateholder;
(bbb) All amounts received after the Cut-Off Date with respect to the
Initial Mortgage Loans have been deposited and all amounts received after the
Subsequent Cut-off Date with respect to the Subsequent Mortgage Loans will be
deposited into the applicable Principal and Interest Account and are, as of the
Closing Date with respect to the Initial Mortgage Loans, in the applicable
Principal and Interest Account;
(ccc) With respect to each Mortgage Loan (other than the Pool III Mortgage
Loans) originated by an Originator with an original principal balance in excess
of $15,000 for which the Originator conducted a drive-by appraisal pursuant to
FHLMC Form 704 or alternative FNMA Form in connection with the origination
thereof, such deposited Mortgage Loan (i) had an original principal balance not
in excess of $35,000, and (ii) has a Loan-to-Value Ratio less than 50% and/or an
appraisal on FNMA/FHLMC Form 1004 was performed by the related Originator within
one year prior to the origination of such Mortgage Loan; and
(ddd) At the applicable dates of origination of the Mortgage Loans, (i)
none of the Pool I, Pool II or Pool IV Mortgage Loans, had a Loan-to-Value Ratio
which exceeded 100.0%, 100.0% and 70.0%, respectively, and (ii) for each Pool
III Mortgage Loan, after giving effect to all improvements to be made on the
related Mortgaged Property with the proceeds of such Pool III Mortgage Loan, and
based upon representations of the related Mortgagor, the value of the related
Mortgaged Property will at least be equal to the amount of such Pool III
Mortgage Loan and the outstanding amount of all other loans secured by Prior
Liens on such Mortgaged Property;
(eee) No more than approximately 20.0% and 28.0% of the Initial Pool I and
Initial Pool II Mortgage Loans, respectively (measured by outstanding principal
balance as of the Cut-Off Date), had a Debt-to-Income Ratio exceeding 44.0%.
"Debt-to-Income Ratio" is that ratio, stated as a percentage, which results from
dividing a Mortgagor's monthly debt by his gross monthly income. "Monthly debt"
includes (i) the monthly payment under the Prior Liens (which generally includes
an escrow for real estate taxes), (ii) the related Mortgage Loan Monthly Payment
(which, with respect to the Initial Pool II Mortgage Loans, is calculated with
interest based on a rate equal to the Lifetime Cap), (iii) other installment
debt service payments, including, in respect of revolving credit debt, the
required monthly payment thereon, or, if no such payment is specified, 5.0% of
the balance as of the date of calculation. "Monthly debt" does not include any
of the debt (other than revolving credit debt) described above that matures
within less than 10 months from the date of the calculation. No more than
approximately 0.50% of the Initial Pool I Mortgage Loans were originated without
verifying the Mortgagor's income;
(fff) At the applicable dates of origination, each Mortgage Loan had an
original term to maturity of no greater than 30 years;
(ggg) Each Subsequent Mortgage Loan will comply with the representations
and warranties respecting Subsequent Mortgage Loans set forth in Section 3.01(d)
of the Insurance Agreement, which representations and warranties are
incorporated herein;
(hhh) Each Initial Pool I and Initial Pool III bears, and each Subsequent
Pool I and Subsequent Pool III Mortgage Loan will bear, a fixed rate of
interest, each Initial Pool II Mortgage Loan bears, and each Subsequent Pool II
Mortgage Loan will bear, an adjustable rate of interest and each Initial Pool IV
Mortgage Loan bears, and each Subsequent Pool IV Mortgage Loan will bear, either
a fixed or adjustable rate of interest;
(iii) As of the Cut-off Date, for each Pool II Mortgage Loan, the Lifetime
Cap is not lower than approximately 16.0% per annum, the Lifetime Floor is not
lower than approximately 0% per annum, the Gross Margin is not less than
approximately 6.00%, the related Mortgage Note does not provide for negative
amortization, limits in the amount of monthly payments or a conversion feature,
the Mortgage Interest Rate is subject to adjustment on each Change Date to equal
the sum of the LIBOR Index, or Treasury Index, as the case may be, plus the
applicable Gross Margin, subject to rounding, the Periodic Rate Cap, the
applicable Lifetime Floor and the applicable Lifetime Cap on each Change Date,
the Mortgagor's new monthly payment will be adjusted to an amount equal to the
payment which, when paid in substantially equal installments during the then
remaining term of the Pool II Mortgage Loan, would amortize fully the unpaid
principal balance of such Pool II Mortgage Loan at the then applicable Mortgage
Interest Rate without extension of the original maturity date which maturity
date is not more than 360 months after the original Due Date therefor;
(jjj) With respect to each Initial Pool II Mortgage Loan, all of the terms
of the Mortgage and Mortgage Note pertaining to interest rate adjustments,
payment adjustments and adjustments of the outstanding principal balance are
enforceable, such adjustments will not affect the priority of the Mortgage lien,
and all of the interest rate calculations have been properly calculated,
recorded, reported and applied in accordance with the Mortgage and Mortgage
Note;
(kkk) Each Initial FHA Loan is, and each Subsequent FHA Loan will be, an
FHA Title I property improvement loan (as defined in the FHA Regulations)
underwritten in accordance with applicable FHA requirements and submitted to the
FHA for insurance;
(lll) Each Initial FHA Loan has been, and each Subsequent FHA Loan will be,
submitted to the FHA for insurance pursuant to the FHA Title I loan program and,
except for no more than 25% of the Initial FHA Loans (measured by outstanding
principal balance as of the Closing Date) (the "Non-Acknowledged FHA Loans"),
each Initial FHA Loan has been acknowledged by the FHA for the FHA Title I loan
program; each Non-Acknowledged FHA Loan will be acknowledged by the FHA within
180 days of the Closing Date and each Subsequent FHA Loan will be acknowledged
by the FHA within 180 days after the Funding Period;
(mmm) The Reserve Amount with respect to each Initial FHA Loan will be
transferred to the Co-Trustee's FHA Reserve Account within 180 days after the
Closing Date, the Reserve Amount with respect to each Subsequent FHA Loan will
be transferred to the Co-Trustee's FHA Reserve Account within 180 days after the
Funding Period, and the Originators will give the Certificate Insurer, the
Trustee, the Co-Trustee and the Rating Agencies prompt notice of their receipt
of confirmation of such transfers;
(nnn) Assuming sufficient coverage remains available in the Reserve Amount,
each Claim filed by the Claims Administrator with respect to a 90 Day Delinquent
FHA Loan will be honored by the FHA in accordance with the FHA Regulations;
(ooo) Substantially all the proceeds of each Pool III Mortgage Loan
(including each Subsequent Pool III Mortgage Loan) have been or will be used to
acquire or to improve or protect an interest in real property that, at the
origination date of such Pool III Mortgage Loan, was the only security for such
Pool III Mortgage Loan;
(ppp) [Reserved];
(qqq) A portion of the Pool III Mortgage Loans are governed by the FTC
holder regulation provided in 16 C.F.R. Part 433;
(rrr) All obligations of the seller or subcontractor under each Pool III
Mortgage Loan have been completed in accordance with the terms of such Pool III
Mortgage Loans as of the Closing Date, and no additional goods or services will
be, or are required to be, provided by the seller or subcontractor under the
terms of such Pool III Mortgage Loans after the Closing Date. All improvements
and other goods and services provided under each Pool III Mortgage Loan shall
have been inspected by the Originator within the time period and in accordance
to the applicable Title I regulations and prior to the Closing Date, and
evidence of such inspection shall be included in the Mortgage File;
(sss) With respect to each Pool III Mortgage Loan that is a home
improvement loan or retail installment sales contract for goods or services, no
Mortgagor has or will have a claim, counterclaim, right of rescission, set-off
or defense under any express or implied warranty or otherwise with respect to
goods or services provided under such Pool III Mortgage Loan; and
(ttt) The Mortgage and the Mortgage Note contain the entire agreement of
the parties and all obligations of the seller or subcontractor under the related
Pool III Mortgage Loan, and no other agreement defines, modifies or expands the
obligations of the seller or subcontractor under the Pool III Mortgage Loan.
Section 3.03 Purchase and Substitution.
It is understood and agreed that the representations and warranties set
forth in Sections 3.01 and 3.02 shall survive delivery of the Certificates to
the Certificateholders. Upon discovery by the Representative, the Servicer, any
Subservicer, any Custodian, the Trustee, the Co- Trustee or, in the case of any
Pool I or Pool IV Mortgage Loan, the Certificate Insurer of a breach of any of
such representations and warranties (or, in the case of any Subsequent Mortgage
Loan, any additional representation or warranty set forth in Section 2.01(d) of
the Insurance Agreement) which materially and adversely affects the value of the
Mortgage Loans or the interest of the Certificateholders, or which materially
and adversely affects the interests of the Certificate Insurer, in the case of
any Pool I or Pool IV Mortgage Loan, or the Certificateholders in the related
Mortgage Loan in the case of a representation and warranty relating to a
particular Mortgage Loan (notwithstanding that such representation and warranty
was made to the Representative's or Originators' best knowledge), the party
discovering such breach shall give prompt written notice to the others. Within
60 days of the earlier of its discovery or its receipt of notice of any breach
of a representation or warranty, the Representative shall (a) promptly cure such
breach in all material respects, (b) purchase such Mortgage Loan by depositing
in the applicable Principal and Interest Account, on the next succeeding
Determination Date, an amount in the manner specified in Section 2.05(b), or (c)
remove such Mortgage Loan from the Trust Fund (in which case it shall become a
Deleted Mortgage Loan) and substitute one or more Qualified Substitute Mortgage
Loans, provided such substitution is effected not later than the date which is
two years after the Startup Day or at such later date, if the Trustee, and, in
the case of any Pool I or Pool IV Mortgage Loan, the Certificate Insurer receive
an Opinion of Counsel that such substitution would not constitute a Prohibited
Transaction or cause the Trust Fund to fail to qualify as a REMIC at any time
any Certificates are outstanding.
As to any Deleted Mortgage Loan for which the Representative substitutes a
Qualified Substitute Mortgage Loan or Loans, the Servicer shall effect such
substitution by delivering to the Trustee (or, with respect to the Pool III
Mortgage Loans, the Co-Trustee) a certification in the form attached hereto as
Exhibit J, executed by a Servicing Officer and the documents constituting the
Trustee's Mortgage File for such Qualified Substitute Mortgage Loan or Loans.
The Servicer shall deposit in the applicable Principal and Interest Account
all payments received in connection with such Qualified Substitute Mortgage Loan
or Loans after the date of such substitution. Monthly Payments received with
respect to Qualified Substitute Mortgage Loans on or before the date of
substitution will be retained by the Representative on behalf of the related
Originator. The Trust Fund will own all payments received on the Deleted
Mortgage Loan on or before the date of substitution, and the Representative on
behalf of the Originators shall thereafter be entitled to retain all amounts
subsequently received in respect of such Deleted Mortgage Loan. The Servicer
shall give written notice to the Trustee, the Representative and, in the case of
any Pool I or Pool IV Mortgage Loan, the Certificate Insurer that such
substitution has taken place and shall amend the applicable Mortgage Loan
Schedule to reflect the removal of such Deleted Mortgage Loan from the terms of
this Agreement and the substitution of the Qualified Substitute Mortgage Loan.
Upon such substitution, such Qualified Substitute Mortgage Loan or Loans shall
be subject to the terms of this Agreement in all respects, including Sections
2.04 and 2.05, and the Representative and the Originator shall be deemed to have
made with respect to such Qualified Substitute Mortgage Loan or Loans, as of the
date of substitution, the covenants, representations and warranties set forth in
Sections 3.01 and 3.02. On the date of such substitution, the Representative
will remit to the Servicer, and the Servicer will deposit into the applicable
Principal and Interest Account an amount equal to the Substitution Adjustment.
In addition to the cure, purchase and substitution obligation in Section
2.05 and this Section 3.03, the Representative shall indemnify and hold harmless
the Trust Fund, the Trustee, the Co-Trustee, the Custodian, the
Certificateholders and, in the case of any Pool I or Pool IV Mortgage Loan, the
Certificate Insurer against any loss, damages, penalties, fines, forfeitures,
reasonable legal fees and related costs, judgments and other costs and expenses
resulting from any claim, demand, defense or assertion based on or grounded
upon, or resulting from, a breach of the Representative's or any Originator's
representations and warranties contained in this Agreement. It is understood and
agreed that the obligations of the Representative or any Originator set forth in
Sections 2.05 and 3.03 to cure, purchase or substitute for a defective Mortgage
Loan and to indemnify the Certificateholders, the Trustee, the Co-Trustee, the
Custodian, and, in the case of any Pool I or Pool IV Mortgage Loan, the
Certificate Insurer as provided in Sections 2.05 and 3.03 constitute the sole
remedies of the Trustee, the Co-Trustee, the Custodian, the Certificate Insurer
and the Certificateholders respecting a breach of the foregoing representations
and warranties.
Any cause of action against any Originator, the Servicer or the
Representative relating to or arising out of the breach of any representations
and warranties made in Sections 2.05, 3.01 or 3.02 shall accrue as to any
Mortgage Loan upon (i) discovery of such breach by any party and notice thereof
to the Representative or notice thereof by the Representative to the Trustee
(and, with respect to the Pool III Mortgage Loans, the Co-Trustee), (ii) failure
by the Representative to cure such breach or purchase or substitute such
Mortgage Loan as specified above, and (iii) demand upon the Representative by
the Trustee (and, with respect to the Pool III Mortgage Loans, the Co- Trustee)
for all amounts payable in respect of such Mortgage Loan.
For as long as the Trust Fund shall exist, the Servicer, the Trustee and
the Co-Trustee shall act in accordance herewith to assure continuing treatment
of each of REMIC I and REMIC II as a REMIC. In particular, the Trustee and the
Co-Trustee shall not (a) sell or permit the sale of all or any portion of the
Mortgage Loans or of any Permitted Instrument unless such sale is as a result of
a repurchase of the Mortgage Loans pursuant to this Agreement or the Trustee
(or, with respect to a Pool III Mortgage Loan, the Trustee and the Co-Trustee)
has received an Opinion of Counsel to the effect that such sale (i) is in
accordance with a qualified liquidation as defined in Section 860F(a)(4) of the
Code and as described in Section 11.01 hereof, or (ii) would not be treated as a
prohibited transaction within the meaning of Section 860F(a)(2) of the Code; and
(b) except for the cash deposits into the Spread Account pursuant to Section
6.05, accept any contribution to the Trust Fund after the Startup Day without an
Opinion of Counsel 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.
<PAGE>
ARTICLE IV
THE CERTIFICATES
Section 4.01 The Certificates.
(a) The Certificates shall be substantially in the forms annexed hereto as
Exhibit B and shall, upon original issue, be executed and delivered by the
Servicer to the Trustee for authentication and redelivery to or upon the order
of the Representative, on behalf of the Originators, upon receipt by the Trustee
of the documents specified in Section 2.04. All Certificates shall be executed
by manual or facsimile signature on behalf of the Servicer by its President, one
of its Executive Vice Presidents or Vice Presidents, or by its Treasurer, in the
denominations specified in the definition of Percentage Interest, and shall be
authenticated by manual signature on behalf of the Trustee by one of its
authorized signatories. Certificates bearing the signatures of individuals who
were at the time of the execution or authentication of the Certificates the
proper officers of the Servicer or an authorized signatory of the Trustee, as
the case may be, shall bind the Servicer or the Trustee, as the case may be,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the delivery of such Certificates or did not hold such offices
at the date of such Certificates. All Certificates issued hereunder shall be
dated the date of their authentication.
(b) The Trustee shall elect that each of REMIC I and REMIC II shall be
treated as a REMIC under Section 860D of the Code. Any inconsistencies or
ambiguities in this Agreement or in the administration of this Agreement shall
be resolved in a manner that preserves the validity of such REMIC elections.
(c) REMIC II will be evidenced by (x) the REMIC II Regular Certificates,
which will be uncertificated and non-transferable and are hereby designated as
the "regular interests" in REMIC II and (y) the Class R-2 Certificates, which
are hereby designated as the single "residual interest" in REMIC II. Except as
provided below, principal and interest shall be paid on the REMIC II Regular
Certificates in the same order and priority as payments are to be made on the
Classes of Certificates described in footnote 2 to the table in Section 4.01(d).
(d) REMIC II will be evidenced by (x) the Class II-AF-1, Class II-AF-2,
Class II- AF-3, Class II-AF-4, Class II-AF-5, Class II-AF-6, Class II-AF-7,
Class II-AF-8, Class II-AV, Class II-MV-1, Class II-MV-2, Class II-BV, Class
II-AH-1, Class II-AH-2, Class II-AH-3, Class II- AH-4, Class II-AH-5, Class
II-AH-6, Class II-MH-1, Class II-MH-2, Class II-BH, Class II-AMF, Class QQQ and
Class MMM Certificates (the "REMIC II Regular Certificates"), which will be
uncertificated and non-transferable and are hereby designated as the "regular
interests" in the REMIC II and (y) the Class R-2 Certificates, which are hereby
designated as the single "residual interest" in the REMIC II (the REMIC II
Regular Certificates, together with the Class R-2 Certificates, the "REMIC II
Certificates"). The REMIC II Regular Certificates shall be recorded on the
records of the REMIC II as being issued to and held by the Trustee on behalf of
REMIC I.
The sum of (i) interest payments on the Mortgage Loans in Pool I and Pool
IV in excess of the respective amounts deposited in the Insurance Accounts
pursuant to Section 6.01(b)(i) and in the Expense Account pursuant to Section
6.08(d)(X)(i), the Current Interest Requirements for the applicable Pool and the
Pool I Strip Amount in the case of Pool I plus (ii) any cashflow applied
pursuant to Section 6.08(d)(Y)(x) and Section 6.08(d)(Z)(x) (collectively, the
"Turbo Amount") will not be paid to the REMIC II Regular Interests, but a
portion of the interest payable with respect to the Class II-MMM Certificate
which equals 1% of the Turbo Amount will be payable as a reduction of the
principal balances of the REMIC II Certificates (other than the Class QQQ and
Class MMM Certificates) in the same manner in which the Turbo Amount is
distributed as principal among the REMIC I Certificates (and will be accrued and
added to principal on the Class II-MMM Certificate). Principal payments on the
Mortgage Loans shall be allocated 98% to the Class II-QQQ Certificate, 1% to the
Class II-MMM Certificate, and 1% in total to the other REMIC II Certificates
until paid in full. The aggregate amount of principal allocated to such other
REMIC II Certificates shall be apportioned among such Classes in the same manner
in which principal is payable with respect to the REMIC I Certificates bearing
the same designation (other than the II-). Realized Losses shall be applied such
that after all distributions have been made on such Payment Date the principal
balance of the Class II-QQQ Certificates is 98% of the aggregate Loan Balances
of the Mortgage Loans, the principal balances of the Class II-AF-1, Class
II-AF-2, Class II-AF-3, Class II- AF-4, Class II-AF-5, Class II-AF-6, Class
II-AF-7, Class II-AF-8, Class II-AV, Class II-MV-1, Class II-MV-2, Class II-BV,
Class II-AH-1, Class II-AH-2, Class II-AH-3, Class II-AH-4, Class II- AH-5,
Class II-AH-6, Class II-MH-1, Class II-MH-2, Class II-BH and Class II-AMF are
each 1% of the principal balances of the REMIC I Certificates bearing the same
designation (other than the II-), and the principal balance of the Class II-MMM
Certificate is equal to the aggregate Loan Balances of the Mortgage Loans less
an amount equal to the sum of the principal balances of the other Classes of
REMIC II Certificates.
The REMIC II Certificates will have the following designations and
Pass-Through Rates, and distributions of principal and interest thereon shall be
allocated to the Certificates in the following manner:
Pass- Allocation Allocation
REMIC II Initial Through of of
Certificates Balance Rate Principal Interest
II-QQQ $1,274,000,000 (1) (6) (3),(4)
II-MMM $13,000,000 (1) (6) (3),(4)
II-AF-1 $630,000 (1) (2) (3),(4)
II-AF-2 $604,000 (1) (2) (3),(4)
II-AF-3 $800,000 (1) (2) (3),(4)
II-AF-4 $470,000 (1) (2) (3),(4)
II-AF-5 $329,000 (1) (2) (3),(4)
II-AF-6 $390,000 (1) (2) (3),(4)
II-AF-7 $377,000 (1) (2) (3),(4)
II-AF-8 $400,000 (1) (2) (3),(4)
II-AV $4,980,000 (1) (2) (3),(4)
II-MV-1 $450,000 (1) (2) (3),(4)
II-MV-2 $300,000 (1) (2) (3),(4)
II-BV $270,000 (1) (2) (3),(4)
II-AH-1 $376,370 (1) (2) (3),(4)
II-AH-2 $467,650 (1) (2) (3),(4)
II-AH-3 $360,050 (1) (2) (3),(4)
II-AH-4 $378,650 (1) (2) (3),(4)
II-AH-5 $538,090 (1) (2) (3),(4)
II-AH-6 $113,290 (1) (2) (3),(4)
II-MH-1 $249,100 (1) (2) (3),(4)
II-MH-2 $149,750 (1) (2) (3),(4)
II-BH $117,050 (1) (2) (3),(4)
II-AMF $250,000 (1) (2) (3),(4)
R-2 $0 0% N/A N/A (5)
- -----------------
(1) The Pass-Through Rate on these REMIC II Regular Interests shall at any
time of determination equal the weighted average of all of the
Mortgage Loans.
(2) Principal will be allocated to and apportioned to the REMIC I Regular
Interest bearing the same designation (without the II-) as this REMIC
II Regular Interest.
(3) Except as provided in footnote (4), interest will be allocated among
the REMIC I Regular Interests (other than the Class X Certificates) in
the same proportion as interest is payable with respect to such
interests.
(4) Any interest with respect to this REMIC II Certificate in
excess of the product of (i) two times the weighted average
coupon of the REMIC II Regular Interests (excluding the QQQ
Class), where each of such Classes, other than the Class
II-MMM Certificate, is first subject to a cap and floor equal
to the Pass-Through Rate of the REMIC I Class that its
principal is allocated to, and the Class II-MMM Certificate
is subject to a cap equal to 0%, and (ii) the principal
balance of this REMIC II Certificate, shall be allocated to
the Class X Certificates as a separate component.
(5) On each Distribution Date, available funds, if any, remaining in the
REMIC II after payments of interest and principal, as designated above,
will be distributed to the Class R-2 Certificate.
(6) Principal will be allocated to all outstanding Classes of REMIC I
Regular Interests which are paid principal (other than the Turbo
Amount) in proportion to such principal distributions.
<PAGE>
(e) The Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class AF-5, Class
AF- 6, Class AF-7, Class AF-8, Class AV, Class MV-1, Class MV-2, Class BV, Class
AH-1, Class AH- 2, Class AH-3, Class AH-4, Class AH-5, Class AH-6, Class MH-1,
Class MH-2, Class BH, Class AMF and Class X are hereby designated as "regular
interests" with respect to the REMIC I and the Class R-1 Certificate is hereby
designated as the single "residual interest" with respect to the REMIC I.
Section 4.02 Registration of Transfer and Exchange of Certificates.
(a) The Trustee shall cause to be kept at its office, or at the office of
its designated agent, a Certificate Register in which, subject to such
reasonable regulations as it may prescribe, it shall provide for the
registration of Certificates and of transfers and exchanges of Certificates as
herein provided. The Certificate Register shall contain the name, remittance
instructions, Class and Percentage Interest of each Certificateholder. The Bank
of New York is initially appointed Certificate Registrar for the purpose of
registering Certificates and transfer and exchanges of Certificates as herein
provided (the "Certificate Registrar").
(b) It is intended that the Pool I, Pool II, Pool III and Pool IV
Certificates be registered so as to participate in a global book-entry system
with the Depository, as set forth herein. Each Class of Pool I, Pool II, Pool
III and Pool IV Certificates shall initially be issued in the form of a single
(and if the Class exceeds $200,000,000, additional Certificates in multiples of
$200,000,000 provided that one such Certificate may be in a denomination no
greater than $200,000,000) fully registered Certificate of such Class. The Pool
I, Pool II, Pool III and Pool IV Certificates shall have an aggregate
denomination equal to the following:
CLASS DENOMINATION
Class AF-1 $ 63,000,000
Class AF-2 $ 60,400,000
Class AF-3 $ 80,000,000
Class AF-4 $ 47,000,000
Class AF-5 $ 32,900,000
Class AF-6 $ 39,000,000
Class AF-7 $ 37,700,000
Class AF-8 $ 40,000,000
Class AV $ 498,000,000
Class MV-1 $ 45,000,000
Class MV-2 $ 30,000,000
Class BV $ 27,000,000
Class AH-1 $ 37,637,000
Class AH-2 $ 46,765,000
Class AH-3 $ 36,005,000
Class AH-4 $ 37,865,000
Class AH-5 $ 53,809,000
Class AH-6 $ 11,329,000
Class MH-1 $ 24,910,000
Class MH-2 $ 14,975,000
Class BH $ 11,705,000
Class AMF $ 25,000,000
Upon initial issuance, the ownership of such Classes of Certificates shall be
registered in the Register in the name of Cede & Co., or any successor thereto,
as nominee for the Depository.
The Representative and the Trustee are hereby authorized to execute and
deliver the Representation Letter with the Depository.
(c) With respect to Pool I, Pool II, Pool III or Pool IV Certificates
registered in the Register in the name of Cede & Co., as nominee of the
Depository, the Representative and the Trustee shall have no responsibility or
obligation to Direct or Indirect Participants or beneficial owners for which the
Depository holds Pool I, Pool II, Pool III or Pool IV Certificates from time to
time as a Depository. Without limiting the immediately preceding sentence, the
Representative and the Trustee shall have no responsibility or obligation with
respect to (a) the accuracy of the records of the Depository, Cede & Co., or any
Direct or Indirect Participant with respect to the ownership interest in the
Pool I, Pool II, Pool III or Pool IV Certificates, (b) the delivery to any
Direct or Indirect Participant or any other Person, other than a registered
Holder of a Pool I, Pool II, Pool III or Pool IV Certificate or (c) the payment
to any Direct or Indirect Participant or any other Person, other than a
registered Holder of a Pool I, Pool II, Pool III or Pool IV Certificate as shown
in the Register, of any amount with respect to any distribution of principal or
interest on the Pool I, Pool II, Pool III or Pool IV Certificates. No Person
other than a registered Holder of a Pool I, Pool II, Pool III or Pool IV
Certificate as shown in the Register shall receive a certificate evidencing such
Pool I, Pool II, Pool III or Pool IV Certificate.
(d) Upon delivery by the Depository to the Trustee of written notice to the
effect that the Depository has determined to substitute a new nominee in place
of Cede & Co., and subject to the provisions hereof with respect to the payment
of distributions by the mailing of checks or drafts to the registered Holders of
Pool I, Pool II, Pool III or Pool IV Certificates appearing as registered Owners
in the Certificate Register on a Record Date, the name "Cede & Co." in this
Agreement shall refer to such new nominee of the Depository.
(e) In the event that (i) the Depository or the Representative advises the
Trustee in writing that the Depository is no longer willing or able to discharge
properly its responsibilities as nominee and depository with respect to the Pool
I, Pool II, Pool III or Pool IV Certificates and the Representative is unable to
locate a qualified successor or (ii) the Representative at its sole option
elects to terminate the book-entry system through the Depository, the Pool I,
Pool II, Pool III or Pool IV Certificates shall no longer be restricted to being
registered in the Register in the name of Cede & Co. (or a successor nominee) as
nominee of the Depository. At that time, the Representative may determine that
the Pool I, Pool II, Pool III or Pool IV Certificates shall be registered in the
name of and deposited with a successor depository operating a global book-entry
system, as may be acceptable to the Representative, or such depository's agent
or designee but, if the Representative does not select such alternative global
book-entry system, then the Pool I, Pool II, Pool III or Pool IV Certificates
may be registered in whatever name or names registered Holders of Pool I, Pool
II, Pool III or Pool IV Certificates transferring Pool I, Pool II, Pool III or
Pool IV Certificates shall designate, in accordance with the provisions hereof.
(f) Notwithstanding any other provision of this Agreement to the contrary,
so long as any Pool I, Pool II, Pool III or Pool IV Certificates are registered
in the name of Cede & Co., as nominee of the Depository, all distributions of
principal and interest on such Pool I, Pool II, Pool III or Pool IV Certificates
and all notices with respect to such Pool I, Pool II, Pool III or Pool IV
Certificates shall be made and given, respectively, in the manner provided in
the Representation Letter.
(g) The Class R and Class X Certificates shall be issued without principal
balances in minimum Percentage Interests as provided in the definition of
Percentage Interest. The Class R Certificates and Class X Certificates have not
been registered or qualified under the 1933 Act, or any state securities law. No
transfer, sale, pledge or other disposition of any Class R or Class X
Certificate shall be made unless such disposition is made pursuant to an
effective registration statement under the 1933 Act and effective registration
or qualification under applicable state securities laws, or is made in a
transaction which does not require such registration or qualification. In the
event that a transfer is to be made in reliance upon an exemption from the 1933
Act, the Trustee or the Certificate Registrar may require, in order to assure
compliance with the 1933 Act, that the Class R or Class X Certificateholder
desiring to effect such disposition and such Class R or Class X
Certificateholder's prospective transferee each certify to the Trustee or the
Certificate Registrar in writing the facts surrounding such disposition. Unless
the Trustee requests otherwise, such certification shall be substantially in the
form of Exhibit D hereto. In the event that such certification of facts does not
on its face establish the availability of an exemption under Rule 144A of the
1933 Act or under Section 4(2) or a comparable provision of the 1933 Act, the
Trustee shall require an Opinion of Counsel satisfactory to it that such
transfer may be made pursuant to an exemption from the 1933 Act, which Opinion
of Counsel shall not be an expense of the Trustee or of the Trust Fund. The
Representative is not obligated under this Agreement to register the Class R
Certificates under the 1933 Act or any other securities law or to take any
action not otherwise required under this Agreement to permit the transfer of
Class R or Class X Certificates without such registration or qualification.
(h) Each Person who has or who acquires any Percentage Interest in a Class
R Certificate shall be deemed by the acceptance or acquisition of such
Percentage Interest to have agreed to be bound by the following provisions and
to have irrevocably appointed the Representative or its designee as its
attorney-in-fact to negotiate the terms of any mandatory sale under clause (v)
below and to execute all instruments of transfer and to do all other things
necessary in connection with any such sale, and the rights of each Person
acquiring any Percentage Interest in a Class R Certificate are expressly subject
to the following provisions:
(i) Each Person holding or acquiring any Percentage
Interest in a Class R Certificate shall be a Permitted
Transferee and shall promptly notify the Representative of any
change or impending change in its status as a Permitted
Transferee.
(ii) No Percentage Interest in a Class R Certificate
may be transferred (including the sale to the initial holder)
and the Trustee shall not register the transfer of a Class R
Certificate unless the Trustee and the Representative shall
have been furnished with (A) an affidavit (a "Transfer
Affidavit") of the proposed transferee in the form attached as
Exhibit K (and if required by the Transfer Affidavit, the
opinion of counsel, as therein referenced) and (B) a
certificate (a "Transfer Certificate") of the transferor to
the effect that such transferor has no actual knowledge that
the proposed transferee is not a
Permitted Transferee.
(iii) Each Person holding or acquiring any Percentage
Interest in a Class R Certificate shall agree (A) to require a
Transfer Affidavit from any other Person to whom such Person
attempts to transfer its Percentage Interest in a Class R
Certificate, (B) to require a Transfer Affidavit from any
Person for whom such Person is acting as nominee, trustee or
agent in connection with any transfer of a Class R
Certificate, (C) to deliver a Transfer Certificate to the
Trustee and the Representative in connection with any such
attempted transfer and (D) not to transfer its Percentage
Interest in a Class R Certificate or to cause the transfer of
a Percentage Interest in a Class R Certificate to any other
Person if it has actual knowledge that such Person is not a
Permitted Transferee.
(iv) Any attempted or purported transfer of any
Percentage Interest in a Class R Certificate in violation of
the provisions of this Section 4.02 shall be absolutely null
and void and shall vest no rights in the purported transferee.
If any purported transferee shall become a Holder of a Class R
Certificate in violation of the provisions of this Section
4.02, then the last preceding Permitted Transferee shall be
restored to all rights as Holder thereof retroactive to the
date of registration of transfer of such Class R Certificate.
The Trustee shall notify the Representative upon knowledge of
a Responsible Officer that the registration of transfer of a
Class R Certificate was not in fact permitted by this Section
4.02. The Trustee shall be under no liability to any Person
for any registration of transfer of a Class R Certificate that
is in fact not permitted by this Section 4.02 or for making
any payments due on such Certificate to the Holder thereof or
taking any other action with respect to such Holder under the
provisions of this Agreement so long as the transfer was
registered after receipt of the related Transfer Affidavit
and Transfer Certificate. The Trustee shall be entitled but
not obligated to recover from any Holder of a Class R
Certificate that was in fact not a Permitted Transferee at
the time it became a Holder or, at such subsequent time as it
became other than a Permitted Transferee, all payments made
on such Class R Certificate at and after either such time.
Any such payments so recovered by the Trustee shall be paid
and delivered by the Trustee to the last preceding Holder of
such Certificate.
(v) If any purported transferee shall become a Holder
of a Class R Certificate in violation of the restrictions in
this Section 4.02, then the Representative or its designee
shall, without notice to the Holder or any prior Holder of
such Class R Certificate, as the case may be, sell such Class
R Certificate to a purchaser selected by the Representative or
its designee on such reasonable terms as the Representative or
its designee may choose. Such purchaser may be the
Representative itself or any affiliate of the Representative.
The proceeds of such sale, net of commissions, expenses and
taxes due, if any, will be remitted by the Representative to
the last preceding purported transferee of such Class R
Certificate, except that in the event that the Representative
determines that the Holder or any prior Holder of such Class R
Certificate may be liable for any amount due under this
Section 4.02 or any other provision of this Agreement, the
Representative may withhold a corresponding amount from such
remittance as security for such claim. The terms and
conditions of any sale under this clause (v) shall be
determined in the sole discretion of the Representative or its
designee, and it shall not be liable to any Person having a
Percentage Interest in a Class R Certificate, as applicable,
as a result of its exercise of such discretion.
No Class R or Class X Certificate or Certificates or any interest therein
shall be acquired by or on behalf of a "benefit plan investor" described in or
subject to the plan asset regulations set forth at 29 C.F.R. ss. 2510.3-101,
unless an Opinion of Counsel is provided to the Representative and the Trustee
which establishes to their satisfaction that the transfer and/or the holding of
such Class R or Class X Certificates, as applicable, will not result in the
assets of the Trust Fund being deemed to be "plan assets" within the meaning of
Department of Labor Regulations ss. 2510.3-101; subject the Trustee, the
Representative or the underwriters of the Pool I, Pool II, Pool III and Pool IV
Certificates, or any of their affiliates, to the prohibited transaction rules
under ERISA or excise taxes under Section 4975 of the Code; or cause the
fiduciary investment standards of ERISA to apply to the assets of the Trust
Fund.
Subject to the preceding paragraphs, upon surrender for registration of
transfer of any Certificate at such office, the Representative shall execute in
the name of the designated transferee or transferees, a new Certificate of the
same Class and Percentage Interest and dated the date of authentication by the
Trustee. The Certificate Registrar shall notify the Representative and the
Trustee of any such transfer.
At the option of the Certificateholders, Certificates may be exchanged for
other Certificates of the same Class in authorized denominations of a like
aggregate Percentage Interest, upon surrender of the Certificates to be
exchanged at such office. Whenever any Certificates are so surrendered for
exchange, the Servicer shall execute, and the Trustee shall authenticate, the
Certificates which the Certificateholder making the exchange is entitled to
receive.
(i) No service charge shall be made for any transfer or exchange of
Certificates, but the Certificate Registrar may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates. All Certificates
surrendered for transfer and exchange shall be marked canceled by the Trustee.
Section 4.03 Mutilated, Destroyed, Lost or Stolen Certificates.
If (i) any mutilated Certificate is surrendered to the Certificate
Registrar, or the Trustee and the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Certificate, and (ii)
there is delivered to the Servicer, the Trustee and the Certificate Registrar
such security or indemnity (which may include a letter of indemnity delivered by
an insurance company) as may be required by each of them to save each of them
harmless, then, in the absence of notice to the Servicer, the Trustee and the
Certificate Registrar that such Certificate has been acquired by a bona fide
purchaser, the Servicer shall execute and deliver, and the Trustee shall
authenticate, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like Class, tenor and Percentage
Interest, but bearing a number not contemporaneously outstanding. Upon the
issuance of any new Certificate under this Section 4.03, the Servicer and the
Trustee may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses connected therewith. Any duplicate Certificate issued pursuant to this
Section 4.03 shall constitute complete and indefeasible evidence of ownership in
the applicable Trust Fund, as if originally issued, whether or not the
mutilated, destroyed, lost or stolen Certificate shall be found at any time.
Section 4.04 Persons Deemed Owners.
Prior to due presentation of a Certificate for registration of transfer,
the Servicer, the Representative, the Trustee, the Certificate Insurer and the
Certificate Registrar may treat the Person in whose name any Certificate is
registered as the owner of such Certificate for the purpose of receiving
remittances pursuant to Section 6.08 and for all other purposes whatsoever, and
the Representative, the Servicer, the Trustee, the Certificate Insurer and the
Certificate Registrar shall not be affected by notice to the contrary.
<PAGE>
ADMINISTRATION AND SERVICING OF MORTGAGE LOANS
Section 5.01 Duties of the Servicer.
(a) It is intended that each of REMIC I and REMIC II hereunder shall
constitute, and that the affairs of each of REMIC I and REMIC II shall be
conducted so as to qualify as a "real estate mortgage investment conduit" as
defined in and in accordance with the REMIC Provisions. In furtherance of such
intention, the Servicer covenants and agrees that it shall act as agent (and the
Servicer is hereby appointed to act as agent) on behalf of REMIC I and REMIC II
and as Tax Matters Person on behalf of REMIC I and REMIC II, and that in such
capacities it shall: (i) prepare and file, or cause to be prepared and filed, in
a timely manner, U.S. Real Estate Mortgage Investment Conduit Income Tax Returns
(Form 1066) and any other Tax Return required to be filed by REMIC I or REMIC II
using a calendar year as the taxable year for each of REMIC I and REMIC II and
using the accrual method of accounting, including, without limitation,
information reports relating to "original issue discount," as defined in the
Code, based upon the Prepayment Assumption and calculated by using the issue
price of the Certificates; (ii) make, or cause to be made, an election, on
behalf of each of REMIC I and REMIC II, to be treated as a REMIC on the federal
tax return of each of REMIC I and REMIC II for their first taxable year; (iii)
prepare and forward, or cause to be prepared and forwarded, to the Trustee, the
Certificateholders and to the Internal Revenue Service and any other relevant
governmental taxing authority all information returns or reports as and when
required to be provided to them in accordance with the REMIC Provisions and any
other provision of federal, state or local income tax laws; (iv) to the extent
that the affairs of REMIC I or REMIC II are within its control, conduct such
affairs at all times that any Certificates are outstanding so as to maintain the
status of each of REMIC I and REMIC II as a REMIC under the REMIC Provisions and
any other applicable federal, state and local laws; (v) not knowingly or
intentionally take any action or omit to take any action that would cause the
termination of the REMIC status of either REMIC I or REMIC II or that would
cause the imposition of a prohibited transaction tax or a tax on contributions
to REMIC I or REMIC II; (vi) pay the amount of any and all federal, state, and
local taxes, including, without limitation, prohibited transaction taxes as
defined in Section 860F of the Code imposed on each of REMIC I and REMIC II when
and as the same shall be due and payable (but such obligation shall not prevent
the Servicer or any other appropriate Person from contesting any such tax in
appropriate proceedings and shall not prevent the Servicer from withholding
payment of such tax, if permitted by law, pending the outcome of such
proceedings); (vii) ensure that any such returns or reports filed on behalf of
REMIC I and REMIC II are properly executed by the appropriate person; (viii)
represent REMIC I and REMIC II in any administrative or judicial proceedings
relating to an examination or audit by any governmental taxing authority,
request an administrative adjustment as to any taxable year of REMIC I and REMIC
II, enter into settlement agreements with any governmental taxing agency, extend
any statute of limitations relating to any item of REMIC I or REMIC II and
otherwise act on behalf of REMIC I and REMIC II in relation to any tax matter
involving either REMIC I or REMIC II; (ix) as provided in Section 5.11 hereof,
make available information necessary for the computation of any tax imposed (1)
on transferors of residual interests to transferees that are not Permitted
Transferees or (2) on pass-through entities, any interest in which is held by an
entity which is not a Permitted Transferee; and (x) in connection with any FHA
Loan, timely pay to the FHA the FHA Insurance Premium required to be paid for
each FHA Loan. The Trustee will cooperate with the Servicer in the foregoing
matters and will sign, as Trustee, any and all Tax Returns required to be filed
by the REMIC I and REMIC II. Notwithstanding the foregoing, at such time as the
Trustee becomes the successor Servicer, the Representative shall serve as Tax
Matters Person and as such shall perform the duties described in this Section
5.01(a) until such time as an entity is appointed to succeed the Trustee as
Servicer. The Servicer shall indemnify the Trustee and REMIC I or REMIC II, as
applicable, for any liability it may incur in connection with this Section
5.01(a) including reimbursement to the Certificate Insurer for any Insured
Payments made by the Certificate Insurer in connection with such liability with
respect to the Pool I and Pool IV Mortgage Loans, if any, which indemnification
shall survive the termination of REMIC I and REMIC II; provided, however, that
the Servicer shall not indemnify the Trustee for its negligence or willful
misconduct.
With respect to any Mortgage Note (other than a Mortgage Note relating to a
Pool III Mortgage Loan) released by the Trustee to the Servicer or to any
Subservicer in accordance with the terms of this Agreement, other than a release
or satisfaction pursuant to Section 7.02, prior to such release, the Trustee
shall (a) complete all endorsements in blank so that the endorsement reads "Pay
to the order of The Bank of New York, as Trustee under the Pooling and Servicing
Agreement dated as of August 31, 1997, 1997-C" and (b) complete a restrictive
endorsement that reads "The Bank of New York is the holder of the mortgage note
for the benefit of the Certificateholders under the Pooling and Servicing
Agreement dated as of August 31, 1997, 1997-C" with respect to those Mortgage
Notes (other than a Mortgage Note relating to a Pool III Mortgage Loan)
currently endorsed "Pay to the order of holder."
With respect to any Mortgage Note relating to a Pool III Mortgage Loan
released by the Co-Trustee to the Servicer or any Subservicer in accordance with
the terms of this Agreement, other than a release or satisfaction pursuant to
Section 7.02 or a release to the Claims Administrator pursuant to Section
5.15(b), prior to such release, the Co-Trustee shall (a) complete all
endorsements in blank so that the endorsement reads "Pay to the order of First
Union Trust Company, National Association, as Co-Trustee under the Pooling and
Servicing Agreement dated as of August 31, 1997, 1997-C" and (b) complete a
restrictive endorsement that reads "First Union Trust Company, National
Association is the holder of the mortgage note for the benefit of the
Certificateholders under the Pooling and Servicing Agreement dated as of August
31, 1997, 1997- C" with respect to those Mortgage Notes relating to Pool III
Mortgage Loans currently endorsed "Pay to the order of Holder."
(b) The Servicer, as independent contract servicer, shall service and
administer the Mortgage Loans and shall have full power and authority, acting
alone, to do any and all things in connection with such servicing and
administration which the Servicer may deem necessary or desirable and consistent
with the terms of this Agreement. The Servicer may enter into Subservicing
Agreements for any servicing and administration of Mortgage Loans with any
institution which is in compliance with the laws of each state necessary to
enable it to perform its obligations under such Subservicing Agreement and (x)
has (i) been designated an approved Seller- Servicer by FHLMC or FNMA for first
and second mortgage loans and (ii) has a net worth of at least $5,000,000 or (y)
is an Originator or another affiliate of the Servicer. The Servicer shall give
notice to the Certificate Insurer of the appointment of any Subservicer. Any
such Subservicing Agreement shall be consistent with and not violate the
provisions of this Agreement. The Servicer shall be entitled to terminate any
Subservicing Agreement in accordance with the terms and conditions of such
Subservicing Agreement and to either itself directly service the related
Mortgage Loans or enter into a Subservicing Agreement with a successor
subservicer which qualifies hereunder.
(c) Notwithstanding any Subservicing Agreement, any of the provisions of
this Agreement relating to agreements or arrangements between the Servicer and
Subservicer or reference to actions taken through a Subservicer or otherwise,
the Servicer shall remain obligated and primarily liable to the Trustee, the
Certificateholders and, in the case of Pool I and Pool IV Mortgage Loans, the
Certificate Insurer, 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 Subservicing Agreements or
arrangements or by virtue of indemnification from the Subservicer and to the
same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering the Mortgage Loans. For purposes of this
Agreement, the Servicer shall be deemed to have received payments on Mortgage
Loans when any Subservicer has received such payments. The Servicer shall be
entitled to enter into any agreement with a Subservicer for indemnification of
the Servicer by such Subservicer, and nothing contained in this Agreement shall
be deemed to limit or modify such indemnification.
(d) Any Subservicing Agreement that may be entered into and any
transactions or services relating to the Mortgage Loans involving a Subservicer
in its capacity as such and not as an originator shall be deemed to be between
the Subservicer 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 Subservicer except as set
forth in Section 5.01(e).
(e) In the event the Servicer shall for any reason no longer be the
Servicer (including by reason of an Event of Default), the Trustee or its
designee shall, subject to Section 10.02 hereof, thereupon assume all of the
rights and obligations of the Servicer under each Subservicing Agreement that
the Servicer may have entered into, unless the Trustee is then permitted and
elects to terminate any Subservicing Agreement in accordance with its terms. The
Trustee, its designee or the successor servicer for the Trustee shall be deemed
to have assumed all of the Servicer's interest therein and to have replaced the
Servicer as a party to each Subservicing Agreement to the same extent as if the
Subservicing Agreements had been assigned to the assuming party, except that the
Servicer shall not thereby be relieved of any liability or obligations under the
Subservicing Agreements. The Servicer at its expense and without right of
reimbursement therefor, shall, upon request of the Trustee, deliver to the
assuming party all documents and records relating to each Subservicing Agreement
and the Mortgage Loans then being serviced and an accounting of amounts
collected and held by it and otherwise use its best efforts to effect the
orderly and efficient transfer of the Subservicing Agreements to the assuming
party.
(f) Consistent with the terms of this Agreement, the Servicer may waive,
modify or vary any term of any Mortgage Loan or consent to the postponement of
strict compliance with any such term or in any manner grant indulgence to any
Mortgagor if in the Servicer's determination such waiver, modification,
postponement or indulgence is not materially adverse to the interests of the
Pool I, Pool II, Pool III and Pool IV Certificateholders or, with respect to the
Pool I and Pool IV Mortgage Loans, the Certificate Insurer, provided, however,
that (unless (x) the Mortgagor is in default with respect to a Mortgage Loan, or
such default is, in the judgment of the Servicer, imminent and in the case of a
Pool I or Pool IV Mortgage Loan the Servicer obtains written consent of the
Certificate Insurer and (y) the Servicer determines that any modification would
not be considered a new mortgage loan for federal income tax purposes) the
Servicer may not permit any modification with respect to any Mortgage Loan that
would change the Mortgage Interest Rate, defer (subject to Section 5.12), or
forgive the payment of any principal or interest (unless in connection with the
liquidation of the related Mortgage Loan), or extend the final maturity date on
such Mortgage Loan. No costs incurred by the Servicer or any Subservicer in
respect of Servicing Advances shall for the purposes of distributions to
Certificateholders be added to the amount owing under the related Mortgage Loan.
Without limiting the generality of the foregoing, and subject to the consent of
the Certificate Insurer, the Servicer shall continue, and is hereby authorized
and empowered, to execute and deliver on behalf of the Trustee and each
Certificateholder, all instruments of satisfaction or cancellation, or of
partial or full release, discharge and all other comparable instruments, with
respect to the Mortgage Loans and with respect to the Mortgaged Properties. If
reasonably required by the Servicer, the Trustee shall furnish the Servicer with
any powers of attorney and other documents necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties under this
Agreement.
The Servicer, in servicing and administering the Mortgage Loans, shall
employ or cause to be employed procedures (including collection, foreclosure and
REO Property management procedures) and exercise the same care that it
customarily employs and exercises in servicing and administering mortgage loans
for its own account, in accordance with accepted second mortgage servicing
practices (or, in the case of FHA Loans, in accordance with accepted Title I
servicing practices or, in the case of Multifamily Loans, in accordance with
accepted multifamily loan servicing practices) of prudent lending institutions
and giving due consideration to the Certificate Insurer's and the
Certificateholders' reliance on the Servicer.
(g) On and after such time as the Trustee and the Co-Trustee receive the
resignation of, or notice of the removal of, the Servicer from its rights and
obligations under this Agreement, and with respect to resignation pursuant to
Section 9.04, after receipt of the Opinion of Counsel required pursuant to
Section 9.04, the Trustee or its designee (or, with respect to the Pool III
Mortgage Loans, the Co-Trustee or its designee) shall assume all of the rights
and obligations of the Servicer, subject to Section 10.02 hereof. The Servicer
shall, upon request of the Trustee but at the expense of the Servicer, deliver
to the Trustee (or, with respect to the Pool III Mortgage Loans, the Custodian)
all documents and records (including computer tapes and diskettes) relating to
the Mortgage Loans and an accounting of amounts collected and held by the
Servicer and otherwise use its best efforts to effect the orderly and efficient
transfer of servicing rights and obligations to the assuming party.
(h) In the event that any tax is imposed on REMIC I or REMIC II, such tax
shall be charged against amounts otherwise distributable to the Holders of the
Class R-1 or Class R-2 Certificates, respectively. Notwithstanding anything to
the contrary contained herein, the Servicer is hereby authorized to retain from
the Pool Remaining Amount Available for the respective Pool sufficient funds to
reimburse the Servicer for the payment of such tax (to the extent that the
Servicer has paid any such tax and has not been previously reimbursed or
indemnified therefor). The Servicer agrees to first seek indemnification for any
such tax payment from any indemnifying parties before reimbursing itself from
amounts otherwise distributable to the Holders of the Class R- 1 or Class R-2
Certificates.
(i) After the Closing Date, the Servicer shall confirm, or
cause to be confirmed, whether all on-site or off-site improvements on the
Mortgaged Properties relating to FHA Loans have been completed and, if such
improvements have not been completed, to submit the appropriate filings to the
FHA.
Section 5.02 Liquidation of Mortgage Loans.
In the event that any payment due under any Mortgage Loan and not postponed
pursuant to Section 5.01 is not paid when the same becomes due and payable, or
in the event the Mortgagor fails to perform any other covenant or obligation
under the Mortgage Loan and such failure continues beyond any applicable grace
period, the Servicer shall take such action as it shall deem to be in the best
interests of the Certificate Insurer (if such Liquidated Mortgage Loan is a Pool
I or Pool IV Mortgage Loan) and the Certificateholders, as the case may be. The
Servicer shall foreclose upon or otherwise comparably effect the ownership in
the name of the Trustee for the benefit of the Certificateholders, as the case
may be, of Mortgaged Properties relating to defaulted Mortgage Loans as to which
no satisfactory arrangements can be made for collection of delinquent payments
in accordance with the provisions of Section 5.10 and, in the case of FHA Loans,
for which a Claim is not required to be submitted to the FHA pursuant to Section
5.15. In connection with such foreclosure or other conversion, the Servicer
shall exercise collection and foreclosure procedures with the same degree of
care and skill in its exercise or use as it would exercise or use under the
circumstances in the conduct of its own affairs. 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 Resource Conservation and Recovery Act of
1976, or other federal, state or local environmental legislation, on a Mortgaged
Property in determining whether to foreclose upon or otherwise comparably
convert the ownership of a Mortgaged Property. Any amounts advanced in
connection with such foreclosure or other action shall constitute "Servicing
Advances."
After a Mortgage Loan has become a Liquidated Mortgage Loan, the Servicer
shall promptly prepare and forward to the Trustee, the Certificate Insurer (if
such Liquidated Mortgage Loan is a Pool I or Pool IV Mortgage Loan) and, upon
request, any Certificateholder, a Liquidation Report, in the form attached
hereto as Exhibit N, detailing the Liquidation Proceeds received from the
Liquidated Mortgage Loan, expenses incurred with respect thereto, and any
Realized Loss incurred in connection therewith.
Section 5.03 Establishment of Principal and Interest Accounts; Deposits in
Principal and Interest Accounts.
(a) The Servicer shall cause to be established and maintained one or more
Principal and Interest Accounts for the Trust Fund, in one or more Designated
Depository Institutions, in the form of time deposit or demand accounts, which
may be interest-bearing or such accounts may be trust accounts wherein the
moneys therein are invested in Permitted Instruments, titled "The Money Store
Inc., in trust for the registered holders of The Money Store Asset Backed
Certificates, Series 1997-C and various Mortgagors." Each such Principal and
Interest Account shall be insured by the BIF or SAIF administered by the FDIC to
the maximum extent provided by law. The creation of any Principal and Interest
Account shall be evidenced by a letter agreement in the form of Exhibit C
hereto.
A copy of such letter agreement shall be furnished to the Trustee, the
Certificate Insurer and, upon request, any Certificateholder.
(b) The Servicer and each Subservicer shall deposit without duplication
(within 24 hours of receipt thereof) in the applicable Principal and Interest
Account and retain therein:
(i) all payments received after the Cut-Off Date on
account of principal on the Pool I, Pool II, Pool III or Pool
IV Mortgage Loans, as the case may be, including all Excess
Payments, Principal Prepayments and Curtailments received
after the Cut-Off Date and all payments in respect of the
applicable FHA Insurance Premium;
(ii) all payments received after the Cut-Off Date on
account of interest on the Pool I, Pool II, Pool III or Pool
IV Mortgage Loans, as the case may be;
(iii) all Net Liquidation Proceeds received with
respect to the Pool I, Pool II, Pool III or Pool IV Mortgage
Loans, as the case may be;
(iv) all Insurance Proceeds received with respect to
the Pool I, Pool II, Pool III or Pool IV Mortgage Loans, as
the case may be (other than amounts to be applied to the
restoration or repair of the related Mortgaged Property, or to
be released to the Mortgagor in accordance with customary
second mortgage servicing procedures);
(v) all Released Mortgaged Property Proceeds received
with respect to the Pool I, Pool II, Pool III or Pool IV
Mortgage Loans, as the case may be;
(vi) any amounts paid in connection with the purchase
of any Pool I, Pool II, Pool III or Pool IV Mortgage Loan, as
the case may be, and the amount of any
Substitution Adjustment received with respect to the Pool I,
Pool II, Pool III or Pool IV Mortgage Loans, as the case may
be, paid pursuant to Sections 2.05 and 3.03;
(vii) any amount required to be deposited in the
applicable Principal and Interest Account pursuant to Section
5.04, 5.08, 5.10 or 5.15(c); and
(viii) the amount of any credit life insurance
premium refund which is not due to the related Mortgagor.
Also, for each Mortgage Loan delivered to the Trustee or Co-Trustee on the
Closing Date that was originated on or after September 1, 1997, the Servicer
shall deposit in the applicable Principal and Interest Account 30 days' interest
on the original principal balance of each such Mortgage Loan calculated at the
applicable Mortgage Interest Rate.
(c) The foregoing requirements for deposit in the Principal and Interest
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, the Servicing Fee and the Contingency
Fee with respect to each Mortgage Loan, and payments in the nature of prepayment
penalties or premiums, late payment charges and assumption fees, to the extent
received and permitted by Sections 7.01 and 7.03, together with the difference
between any Liquidation Proceeds and the related Net Liquidation Proceeds, need
not be deposited by the Servicer in the Principal and Interest Account.
(d) Any interest earnings on funds held in the Principal and Interest
Account paid by a Designated Depository Institution shall be for the account of
the Servicer and may only be withdrawn from the applicable Principal and
Interest Account by the Servicer immediately following its monthly remittance of
the Pool Available Remittance Amounts for the related Pool to the Trustee. Any
reference herein to amounts on deposit in the Principal and Interest Account
shall refer to amounts net of such investment earnings.
Section 5.04 Permitted Withdrawals From the Principal and Interest
Accounts.
The Servicer shall withdraw funds from the Principal and Interest Accounts
for the following purposes:
(a) to effect the remittance to the Trustee on each Determination Date as
follows: the portion of the Excess Spread relating to the Mortgage Loans of the
related Pool and the portion of the Pool Available Remittance Amounts of the
related Pool, that are net of Compensating Interest and Monthly Advances for the
related Remittance Date to the Trustee for deposit in the Certificate Account.
For the purposes of this Section 5.04(a), the calculation of the Pool Available
Remittance Amounts shall be made without reference to the actual deposit of
funds in the respective Certificate Accounts;
(b) to reimburse itself for any accrued unpaid Servicing Fees, unpaid
Contingency Fees, unreimbursed Monthly Advances and for unreimbursed Servicing
Advances to the extent that funds relating to such amount have been deposited in
the applicable Principal and Interest Account (and not netted from Monthly
Payments received). The Servicer's right to reimbursement for unpaid Servicing
Fees, unpaid Contingency Fees and, except as provided in the following sentence,
Servicing Advances and Monthly Advances shall be limited to Liquidation
Proceeds, Released Mortgaged Property Proceeds, Insurance Proceeds and such
other amounts as may be collected by the Servicer from the Mortgagor or
otherwise relating to the Mortgage Loan in respect of which such unreimbursed
amounts are owed. The Servicer's right to reimbursement for Servicing Advances
and Monthly Advances in excess of such amounts shall be limited to any late
collections of interest received on the related Pool of Mortgage Loans,
generally, including Liquidation Proceeds, Released Mortgaged Property Proceeds
and Insurance Proceeds and any other amounts which would otherwise be
distributed to the Class X or Class R Certificateholders; provided, however,
that the Servicer's right to such reimbursement pursuant hereto shall be
subordinate to the rights of the applicable Class A, Class M and/or Class B
Certificateholders to receive the Shortfall Carryforward Amounts and the right
of the Certificate Insurer to receive the Pool Carry-Forward Amounts relating to
Pool I and Pool IV;
(c) to withdraw any amount received from a Mortgagor that is recoverable
and sought to be recovered as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code in accordance with a final,
nonappealable order of a court having competent jurisdiction;
(d) (i) to make investments in Permitted Instruments and (ii) to pay to
itself, as permitted by Section 5.03(d), interest paid in respect of Permitted
Instruments or by a Designated Depository Institution on funds deposited in the
applicable Principal and Interest Account;
(e) to withdraw any funds deposited in the applicable Principal and
Interest Account that were not required to be deposited therein or were
deposited therein in error;
(f) (i) to pay itself servicing compensation pursuant to Section 7.03
hereof or interest as permitted under the definition of Excess Proceeds or (ii)
to pay the Remainder Excess Spread Amount with respect to any Remittance Date to
itself and/or the Representative for any Reimbursable Amounts and the remainder
to the Trustee for remittance to the Class X Certificateholders, as the case may
be;
(g) to withdraw amounts required to be deposited into the Servicing Account
pursuant to Section 6.15(b).
(h) to clear and terminate each Principal and Interest Account upon the
termination of the related Trust Fund.
So long as no default or Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, the Principal and
Interest Account shall either be maintained as an interest-bearing accounts
meeting the requirements set forth in Section 5.03(a), or the funds held therein
may be invested by the Servicer (to the extent practicable) in Permitted
Instruments. In either case, funds in the Principal and Interest Account must be
available for withdrawal without penalty, and any Permitted Instruments must
mature not later than the Business Day immediately preceding the Determination
Date next following the date of such investment (except that if such Permitted
Instrument is an obligation of the institution that maintains such account, then
such Permitted Instrument shall mature not later than such Determination Date)
and shall not be sold or disposed of prior to its maturity. All Permitted
Instruments must be held by or registered in the name of "The Money Store Inc.
in trust for the registered holders of The Money Store Asset Backed
Certificates, Series 1997-C." All interest or other earnings from funds on
deposit in the Principal and Interest Account (or any Permitted Instruments
thereof) shall be the exclusive property of the Servicer, and may be withdrawn
from either Principal and Interest Account pursuant to clause (d)(ii) above. The
amount of any losses incurred in connection with the investment of funds in the
applicable Principal and Interest Account in Permitted Instruments shall be
deposited in the applicable Principal and Interest Account by the Servicer from
its own funds immediately as realized without reimbursement therefor.
Section 5.05 Payment of Taxes, Insurance and Other Charges.
With respect to each Mortgage Loan, the Servicer shall maintain accurate
records reflecting fire and hazard insurance coverage.
With respect to each Mortgage Loan which is a first Mortgage Loan, or as to
which the Servicer has advanced the outstanding principal balance of any Prior
Lien pursuant to Section 5.14 or as to which the Servicer maintains escrow
accounts, the Servicer shall maintain accurate records reflecting the status of
ground rents, taxes, assessments, water rates and other charges which are or may
become a lien upon the Mortgaged Property and the status of primary mortgage
guaranty insurance premiums, if any, and fire and hazard insurance coverage and
shall obtain, from time to time, all bills for the payment of such charges
(including renewal premiums) and shall effect payment thereof prior to the
applicable penalty or termination date and at a time appropriate for securing
maximum discounts allowable, employing for such purpose deposits of the
Mortgagor in any escrow account which shall have been estimated and accumulated
by the Servicer in amounts sufficient for such purposes, as allowed under the
terms of the Mortgage (provided, however, that to the extent the Servicer
advances its own funds, such advances shall constitute "Servicing Advances"). To
the extent that a Mortgage does not provide for escrow payments, the Servicer
shall determine that any such payments are made by the Mortgagor at the time
they first become due. Notwithstanding anything contained herein to the
contrary, the Servicer may choose not to make the payments described above on a
timely basis, provided that collections on the related Mortgage Loan that are
required to be remitted to the Trust Fund would not be reduced, as a result of
such failure to timely pay, from the amount that would otherwise be remitted to
the Trust Fund; provided further, however, that this provision shall not have
the effect of permitting the Servicer to take, or fail to take, any action in
respect of the payments described herein that would adversely affect the
interest of the Trust Fund in any Mortgaged Property.
Section 5.06 Transfer of Accounts.
The Servicer may, upon written prior notice to the Trustee and the
Certificate Insurer, transfer the Principal and Interest Account to a different
Designated Depository Institution.
Section 5.07 Maintenance of Hazard Insurance.
The Servicer shall cause to be maintained, subject to the provisions of
Section 5.08 hereof, fire and hazard insurance with extended coverage customary
in the area where the Mortgaged Property is located, in an amount which is at
least equal to the least of (a) the outstanding principal balance owing on the
Mortgage Loan and any Prior Lien, (b) the full insurable value of the premises
securing the Mortgage Loan and (c) the minimum amount required to compensate for
damage or loss on a replacement cost basis. If the Mortgaged Property is in an
area identified in the Federal Register by the Flood Emergency Management Agency
as having special flood hazards (and such flood insurance has been made
available) the Servicer will cause to be purchased a flood insurance policy 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 and any Prior Lien, (ii) the full insurable value of the Mortgaged
Property, or (iii) the maximum amount of insurance available under the National
Flood Insurance Act of 1968, as amended. The Servicer shall also maintain, to
the extent such insurance is available, on REO Property, fire and hazard
insurance in the amounts described above, liability insurance and, to the extent
required and available under the National Flood Insurance Act of 1968, as
amended, flood insurance in an amount equal to that required above. Any amounts
collected by the Servicer under any such policies (other than amounts to be
applied to the restoration or repair of the Mortgaged Property, or to be
released to the Mortgagor in accordance with customary second mortgage servicing
procedures) shall be deposited in the applicable Principal and Interest Account,
subject to withdrawal pursuant to Section 5.04. It is understood and agreed that
no earthquake or other additional insurance need be required by the Servicer of
any Mortgagor or maintained on REO Property, 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 policies required hereunder shall be
endorsed with standard mortgagee clauses with losses payable to the Servicer.
Section 5.08 Maintenance of Mortgage Impairment Insurance Policy.
In the event that the Servicer shall obtain and maintain a blanket policy
insuring against fire and hazards of extended coverage on all of the Mortgage
Loans, then, to the extent such policy names the Trustee or the Co-Trustee on
behalf of the Certificateholders as loss payee and provides coverage in an
amount equal to the aggregate unpaid principal balance on the Mortgage Loans
without co-insurance, and otherwise complies with the requirements of Section
5.07, the Servicer shall be deemed conclusively to have satisfied its
obligations with respect to fire and hazard insurance coverage under Section
5.07, it being understood and agreed that such blanket policy may contain a
deductible clause, in which case the Servicer shall, in the event that there
shall not have been maintained on the related Mortgaged Property a policy
complying with Section 5.07, and there shall have been a loss which would have
been covered by such policy, deposit in the applicable Principal and Interest
Account from the Servicer's own funds the difference, if any, between the amount
that would have been payable under a policy complying with Section 5.07 and the
amount paid under such blanket policy. Upon the request of the Certificate
Insurer, the Trustee, the Co-Trustee or any Certificateholder, the Servicer
shall cause to be delivered to the Trustee, the Co-Trustee or such
Certificateholder, as the case may be, a certified true copy of such policy. The
current issuer of such policy is Lloyds of London.
Section 5.09 Fidelity Bond.
The Servicer shall maintain with a responsible company, and at its own
expense, a blanket fidelity bond and an errors and omissions insurance policy,
in a minimum amount equal to $1,500,000, and a maximum deductible of $100,000,
if commercially available, with coverage on all employees acting in any capacity
requiring them to handle funds, money, documents or papers relating to the
Mortgage Loans ("Servicer Employees"). The fidelity bond shall insure the
Trustee, the Co-Trustee and their respective officers, and employees, against
losses resulting from forgery, theft, embezzlement or fraud, by such Servicer
Employees. The errors and omissions policy shall insure against losses resulting
from the errors, omissions and negligent acts of such Servicer Employees. No
provision of this Section 5.09 requiring such fidelity bond and errors and
omissions insurance shall relieve the Servicer from its duties as set forth in
this Agreement. Upon the request of the Trustee, the Co-Trustee, the Certificate
Insurer or any Certificateholder, the Servicer shall cause to be delivered to
the Trustee, the Co-Trustee, the Certificate Insurer or such Certificateholder a
certified true copy of such fidelity bond and insurance policy. The current
issuer of such fidelity bond and insurance policy is National Union Fire
Insurance Company of Pittsburgh, Pennsylvania.
Section 5.10 Title, Management and Disposition of REO Property.
In the event that title to the Mortgaged Property is acquired in
foreclosure or by deed in lieu of foreclosure (an "REO Property"), the deed or
certificate of sale shall be taken in the name of the Trustee (or, with respect
to the Pool III Mortgage Loans, the Co-Trustee) for the benefit of the
applicable Certificateholders.
The Servicer shall manage, conserve, protect and operate each REO Property
for the Certificateholders and the Certificate Insurer (with respect to any REO
Property that was a Pool I or Pool IV Mortgage Loan) solely for the purpose of
its prudent and prompt disposition and sale. The Servicer shall, either itself
or through an agent selected by the Servicer, manage, conserve, protect and
operate the REO Property in the same manner that it manages, conserves, protects
and operates other foreclosed property for its own account, and in the same
manner that similar property in the same locality as the REO Property is
managed. The Servicer shall attempt to sell the same (and may temporarily rent
the same) on such terms and conditions as the Servicer deems to be in the best
interest of the Certificate Insurer (with respect to any REO Property that was a
Pool I or Pool IV Mortgage Loan) and the Pool I, Pool II, Pool III or Pool IV
Certificateholders, as the case may be.
The Servicer shall cause to be deposited in the applicable Principal and
Interest Account, no later than five Business Days after the receipt thereof,
all revenues received with respect to the conservation and disposition of the
related REO Property net of funds necessary for the proper operation, management
and maintenance of the REO Property and the fees of any managing agent acting on
behalf of the Servicer.
The disposition of REO Property shall be carried out by the Servicer at
such price, and upon such terms and conditions, as the Servicer deems to be in
the best interest of the Pool I, Pool II, Pool III or Pool IV
Certificateholders, as the case may be and (with respect to any REO Property
that was a Pool I or Pool IV Mortgage Loan) the Certificate Insurer. The
proceeds of sale of the REO Property shall be promptly deposited in the
Principal and Interest Account as received from time to time and, as soon as
practicable thereafter, the expenses of such sale shall be paid, the Servicer
shall, subject to Section 5.04, reimburse itself for any related unreimbursed
Servicing Advances, unpaid Servicing Fees, unpaid Contingency Fees and
unreimbursed Monthly Advances, and the Servicer shall deposit in the Principal
and Interest Account the net cash proceeds of such sale to be distributed to the
Pool I, Pool II, Pool III or Pool IV Certificateholders, as the case may be, in
accordance with Section 6.08 hereof.
In the event any Mortgaged Property is acquired as aforesaid or otherwise
in connection with a default or imminent default on a Mortgage Loan, the
Servicer shall dispose of such Mortgaged Property within two years after its
acquisition unless the Servicer shall have received an Opinion of Counsel also
addressed to the Certificate Insurer (if such Mortgage Loan is a Pool I or Pool
IV Mortgage Loan) to the effect that the holding of such Mortgaged Property
subsequent to two years after its acquisition will not result in the imposition
of taxes on "prohibited transactions" as defined in section 860F of the Code or
cause the Trust Fund to fail to qualify as a REMIC at any time that any Pool I,
Pool II, Pool III, Pool IV or Class X Certificates are outstanding.
Notwithstanding any other provision of this Agreement, no Mortgaged Property
acquired by the Servicer pursuant to this Section shall be rented (or allowed to
continue to be rented) or otherwise used for the production of income by or on
behalf of the Trust Fund, and no construction shall take place on such Mortgaged
Property, in such a manner or pursuant to any terms that would cause such
Mortgaged Property to fail to qualify as "foreclosure property" within the
meaning of Section 860G(a)(8) of the Code or result in the receipt by the Trust
Fund of any "income from non-permitted assets" which is subject to taxation
within the meaning of Sections 860G(c) and 857(b)(4)(B) of the Code. If a period
greater than two years is permitted under this Agreement and is necessary to
sell any REO Property, the Servicer shall give appropriate notice to the Trustee
(and, with respect to a Pool I or Pool IV Mortgage Loan, the Certificate Insurer
and, with respect to a Pool III Mortgage Loan, the Co-Trustee) and shall report
monthly to the Trustee (and, with respect to a Pool III Mortgage Loan, the
Co-Trustee) as to the progress being made in selling such REO Property.
Section 5.11 Certain Tax Information.
The Servicer shall furnish (a) any information which may be required under
the Code including the computation of the present value of the "excess
inclusions" (as defined in Section 860E of the Code) with respect to any
transfer of a Class R Certificate, and, upon request, shall provide such
information to any Holder of a Class R Certificate and to the Internal Revenue
Service within 60 days of such request for a reasonable fee and (b) the
information required to be furnished pursuant to Sections 1.860F-4 and 1.6049-7
of the Regulations.
Section 5.12 Collection of Certain Mortgage Loan Payments.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Mortgage Loans, and shall, to the
extent such procedures shall be consistent with this Agreement, comply with the
terms and provisions of any applicable hazard insurance policy. Consistent with
the foregoing, the Servicer may in its discretion waive or permit to be waived
any late payment charge, prepayment charge, assumption fee or any penalty
interest in connection with the prepayment of a Mortgage Loan or any other fee
or charge which the Servicer would be entitled to retain hereunder as servicing
compensation and extend the due date for payments due on a Mortgage Note for a
period (with respect to each payment as to which the due date is extended) not
greater than 125 days after the initially scheduled due date for such payment
provided that the Servicer determines such extension would not be considered a
new mortgage loan for federal income tax purposes. In the event the Servicer
shall consent to the deferment of the due dates for payments due on a Mortgage
Note, the Servicer shall nonetheless make payment of any required Monthly
Advance with respect to the payments so extended to the same extent as if such
installment were due, owing and delinquent and had not been deferred, and shall
be entitled to reimbursement therefor in accordance with Section 5.04(b) hereof.
Section 5.13 Access to Certain Documentation and Information Regarding the
Mortgage Loans.
The Servicer shall provide to the Trustee, the Co-Trustee, the
Certificateholders, the Certificate Insurer, the FDIC, the Office of Thrift
Supervision and the supervisory agents and examiners of each of the foregoing
access to the documentation regarding the Mortgage Loans required by applicable
local, state and federal regulations, such access being afforded without charge
but only upon reasonable request and during normal business hours at the offices
of the Servicer designated by it.
Section 5.14 Superior Liens.
The Servicer shall file of record a request for notice of any action by a
superior lienholder under a Prior Lien for the protection of the Trustee's
interest (or, with respect to a Pool III Mortgage Loan, the Co-Trustee), where
permitted by local law and whenever applicable state law does not require that a
junior lienholder be named as a party defendant in foreclosure proceedings in
order to foreclose such junior lienholder's equity of redemption. The Servicer
must also notify any superior lienholder in writing of the existence of the
Mortgage Loan and request notification of any action (as described below) to be
taken against the Mortgagor or the Mortgaged Property by the superior
lienholder.
If the Servicer is notified that any superior lienholder has accelerated or
intends to accelerate the obligations secured by any Prior Lien, or has declared
or intends to declare a default under the mortgage or the promissory note
secured thereby, or has filed or intends to file an election to have the
Mortgaged Property sold or foreclosed, the Servicer shall take, on behalf of the
Trust Fund, whatever actions are necessary to protect the interests of the
related Certificateholders and the Certificate Insurer, in the case of Pool I or
Pool IV Mortgage Loans, and/or to preserve the security of the related Mortgage
Loan, subject to the application of the REMIC Provisions. The Servicer shall
immediately notify the Trustee (and, with respect to a Pool I or Pool IV
Mortgage Loan, the Certificate Insurer and, with respect to a Pool III Mortgage
Loan, the Co-Trustee) of any such action or circumstances. The Servicer will
advance the necessary funds to cure the default or reinstate the superior lien,
if such advance is in the best interests of the Certificate Insurer, in the case
of Pool I or Pool IV Mortgage Loans, and the related Certificateholders. The
Servicer shall thereafter take such action as is necessary to recover the amount
so advanced.
Section 5.15 Duties of the Claims Administrator.
(a) In connection with each FHA Loan, the Representative, the Servicer, the
Claims Administrator and the Originators will comply at all times with the
provisions of Title I and the rules and regulations promulgated thereunder in
servicing each FHA Loan and making claims for reimbursement with respect to each
FHA Loan, and will at all times hold a valid Contract of Insurance from the FHA
for such purposes (unless such Contract of Insurance is terminated so as not to
affect the obligation of FHA to provide insurance coverage with respect to the
FHA Loans).
(b) If any FHA Loan becomes a 90 Day Delinquent FHA Loan, and if sufficient
coverage is available in the Reserve Amount to make an FHA Payment with respect
to such FHA Loan, the Claims Administrator may, in its sole discretion, during
any subsequent Due Period, determine to file a Claim with the FHA with respect
to such 90 Day Delinquent FHA Loan. If the Claims Administrator determines to
file such a Claim, the Claims Administrator will notify the Co- Trustee and the
Custodian no later than the Determination Date following such determination by
an Officer's Certificate in the form of Exhibit J-1 hereto and shall request
delivery of the related Trustee's Mortgage File. Upon receipt of such
certification and request, the Custodian shall, no later than the related
Remittance Date, release to the Claims Administrator the related Trustee's
Mortgage File and the Co-Trustee and the Custodian shall execute and deliver
such instruments necessary to enable the Claims Administrator to file a Claim
with the FHA on behalf of the Co-Trustee. Within 120 days of its receipt of the
related Trustee's Mortgage File, the Claims Administrator shall, in its sole
discretion, either file a Claim with the FHA for an FHA Payment with respect to
such 90 Day Delinquent FHA Loan or, if the Claims Administrator determines not
to file such a Claim, return to the Custodian on behalf of the Co-Trustee the
related Trustee's Mortgage File.
(c) With respect to any 90 Day Delinquent FHA Loan transferred to the
Claims Administrator pursuant to clause (b) above, the Claims Administrator
shall deposit (or, if the Claims Administrator is not also the Servicer, the
Claims Administrator shall instruct the Servicer to deposit) in the Principal
and Interest Account within 24 hours of receipt the following amounts (such
amounts to be net of any amounts that would be reimbursable to the Servicer
under Section 5.04(b) with respect to amounts in the Principal and Interest
Account): (i) any FHA Payments; (ii) the amount, if any, by which the FHA
Payment was reduced in accordance with FHA Regulations due to the Claims
Administrator enforcing a lien on the Mortgaged Property prior to the lien of
the related 90 Day Delinquent FHA Loan; and (iii) any principal and interest
payments received with respect to a 90 Day Delinquent FHA Loan after the Due
Period in which the FHA Loan is transferred to the Claims Administrator and
before either the related FHA Payment is paid or the related Trustee's Mortgage
File is returned to the Co-Trustee on behalf of the Trustee, as the case may be
(the amounts referred to in (ii) and (iii) above are referenced to herein as
"Related Payments").
(d) If an FHA Loan becomes a 90 Day Delinquent FHA Loan when there is
insufficient coverage in the Reserve Amount, or if the Claims Administrator
determines not to file a Claim with the FHA with respect to such 90 Day
Delinquent FHA Loan, the Co-Trustee will not transfer such FHA Loan to the
Claims Administrator, no Claim will be made to the FHA and the Servicer may take
other action, including the commencement of foreclosure proceedings on the
related Mortgaged Property.
(e) If a Claim is rejected by the FHA and if the Claims Administrator is no
longer The Money Store Inc., the Claims Administrator shall promptly notify the
Servicer and the Representative of such rejection. Further, if a Claim is
rejected by the FHA, other than as a result of depletion of the Reserve Amount,
the related Originator shall be deemed to have breached its representation and
warranty contained in Section 3.02 (nnn) and the Representative shall be
required to repurchase the related 90 Day Delinquent FHA Loan by depositing in
the Principal and Interest Account, on the next succeeding Determination Date,
an amount and in the manner specified in Section 2.05(b).
Section 5.16 [Reserved]
<PAGE>
ARTICLE VI
PAYMENTS TO THE CERTIFICATEHOLDERS
Section 6.01 Establishment of Certificate Accounts; Deposits in Certificate
Accounts; Permitted Withdrawals from Certificate Accounts.
(a) No later than the Closing Date, the Trustee will establish and maintain
with itself in its trust department four separate trust accounts, which shall
not be interest-bearing, titled "TMS Certificate Account 1997-C-I," "TMS
Certificate Account 1997-C-II," "TMS Certificate Account 1997-C-III" and "TMS
Certificate Account 1997-C-IV (each a "Certificate Account" and together, the
"Certificate Accounts"). The Trustee shall, promptly upon receipt, deposit in
the applicable Certificate Account and retain therein:
(i) the Pool Available Remittance Amount of the
related Pool (net of the amount of Monthly Advances and
Compensating Interest deposited pursuant to subclause (ii)
below) plus the Excess Spread and any Subordination Reduction
Amounts with respect to the Mortgage Loans of the related Pool
remitted by the Servicer;
(ii) the Compensating Interest and the portion of the
Monthly Advance based on the Class Adjusted Mortgage Loan
Remittance Rates for the Classes of Pool I Certificates, in
the case of Pool I, the Class Adjusted Mortgage Loan
Remittance Rates for the Classes of Pool II Certificates, in
the case of Pool II, the Class Adjusted Mortgage Loan
Remittance Rates for the Classes of Pool III Certificates, in
the case of Pool III, and the Class Adjusted Mortgage Loan
Remittance Rate for Class AMF Certificates, in the case of
Pool IV, remitted to the Trustee by the Servicer;
(iii) amounts transferred from the Spread Account
pursuant to Section 6.05(b)(iii) and Insured Payments received
by the Trustee after a claim pursuant to Section 6.08(c);
(iv) amounts required to be paid by the Servicer
pursuant to Section 6.07(e) in connection with losses on
investments of amounts in the applicable Certificate Account;
and
(v) amounts transferred from the Pre-Funding Account
and the Capitalized Interest Account on the Special Remittance
Date pursuant to Sections 6.02(c) and (h), respectively.
(b) Amounts on deposit in each Certificate Account shall be withdrawn on
each Remittance Date by the following parties in the following order of priority
(provided that only amounts on deposit in the Certificate Account relating to
(x) Pool I and Pool IV shall be withdrawn to make deposits pursuant to subclause
(i), (y) Pool II shall be withdrawn to make deposits pursuant to subclause (iii)
and (z) Pool III shall be withdrawn pursuant to subclause (ii) below):
(i) by the Trustee, to make deposits in the
applicable Insurance Account pursuant to Section
6.04(a)(i);
(ii) by the Trustee, to make deposits in the FHA
Premium Account pursuant to Section 6.06(a)(i);
(iii) by the Trustee, to pay the Auction Agent the
required Auction Agent Fee pursuant to the terms of the
Auction Agent Agreement;
(iv) by the Trustee, or the Paying Agent on its
behalf, to effect the applicable distributions described in
Section 6.08(d);
and also, in no particular order of priority:
(v) by the Trustee, to invest amounts on deposit
in the applicable Certificate Account in Permitted
Instruments pursuant to Section 6.07;
(vi) by the Trustee, to pay on a monthly basis to the
Servicer as additional servicing compensation interest paid
and earnings realized on Permitted Instruments;
(vii) by the Trustee, to withdraw any amount not
required to be deposited in the applicable Certificate Account
or deposited therein in error; and
(viii) by the Trustee, to clear and terminate the
applicable Certificate Account upon the termination of the
related Trust Fund in accordance with the terms of Section
11.01 hereof.
Section 6.02 Establishment of Pre-Funding Account and Capitalized Interest
Account; Deposits in Pre-Funding Account and Capitalized Interest Account;
Permitted Withdrawals from Pre-Funding Account and Capitalized Interest Account.
(a) No later than the Closing Date, the Representative shall establish and
maintain with the Trustee in its trust department a trust account, which shall
not be interest-bearing, titled "TMS Pre-Funding Account 1997-C" (the
"Pre-Funding Account"). The Pre-Funding Account shall constitute part of the
Trust Fund but not be asset of the REMIC I or REMIC II. It is an outside reserve
fund, the owners of which are the Class R-1 Certificateholders and for Federal
tax purposes, amounts, if any, transferred by REMIC I to the Pre-Funding Account
are treated as distributed by REMIC I to the Class R-1 Certificateholders. The
Trustee shall, promptly upon receipt, deposit into the Pre-Funding Account and
retain therein the Original Pre-Funded Amount in an amount equal to the sum of
(i) $31,491,748.17 from the proceeds of the sale of the Pool I Certificates,
(ii) $119,370,266.19 from the proceeds of the sale of the Pool II Certificates,
(iii) $59,001,142.51 from the proceeds of the sale of the Pool III Certificates
and (iv) $6,206,387.73 from the proceeds of the sale of the Pool IV
Certificates.
(b) On each Subsequent Transfer Date, the Representative shall instruct the
Trustee to withdraw from the Pre-Funding Account an amount equal to 100% of the
aggregate Principal Balances of the Subsequent Mortgage Loans (or, with respect
to the Low Interest Mortgage Loans, an amount equal to the product of the
percentage set forth on Exhibit T attached hereto determined by referring to the
columns entitled "Coupon" and "Remaining Term" and the aggregate Principal
Balances of such Subsequent Mortgage Loans) sold to the Trust Fund on such
Subsequent Transfer Date and pay such amount to or upon the order of the
Representative with respect to such transfer; in connection with such
instruction, the Representative shall additionally inform the Trustee whether
such Subsequent Mortgage Loans are being transferred in respect of Pool I, Pool
II, Pool III or Pool IV. In no event shall the Representative be permitted to
instruct the Trustee to release from the Pre-Funding Account with respect to
subsequent Mortgage Loans to be transferred to Pool I, Pool II, Pool III or Pool
IV an amount in excess of $31,491,748.17, $119,370,266.19, $59,001,142.51 and
$6,206,387.73, respectively.
(c) If at the end of the Funding Period amounts still remain in the
Pre-Funding Account, the Servicer shall instruct the Trustee to withdraw from
the Pre-Funding Account on the immediately following Remittance Date and deposit
in the appropriate Certificate Account any Pre- Funded Amount relating to the
Pool I, Pool II, Pool III and Pool IV Mortgage Loans, as the case may be, then
remaining in the Pre-Funding Account. However, if at the close of business on
December 26, 1997, amounts still remain in the Pre-Funding Account, the Servicer
shall instruct the Trustee to withdraw from the Pre-Funding Account on the
Special Remittance Date and deposit in the applicable Certificate Account any
Pre-Funded Amount then remaining in the Pre-Funding Account.
(d) On the Remittance Dates occurring in October, November and December
1997, the Trustee shall transfer from the Pre-Funding Account to the appropriate
Certificate Account the Pool Pre-Funding Earnings for the related Pool, if any,
applicable to each such Remittance Date.
(e) No later than the Closing Date, the Representative shall establish and
maintain with the Trustee in its trust department a trust account, which shall
not be interest-bearing, titled "TMS Capitalized Interest Account 1997-C" (the
"Capitalized Interest Account"). The Capitalized Interest Account shall
constitute part of the Trust Fund but not a part of REMIC I or REMIC II. It is
an outside reserve fund, the owners of which are the Class R-1
Certificateholders and for Federal tax purposes amounts, if any, transferred by
REMIC I to the Capitalized Interest Account are treated as distributed by REMIC
I to the Class R Certificateholders. The Trustee shall, promptly upon receipt,
deposit into the Capitalized Interest Account $2,351,234.20. If prior to the end
of the Funding Period the funds on deposit in the Pre-Funding Account are
invested in a guaranteed investment contract, repurchase agreement or other
arrangement acceptable to the Certificate Insurer, that constitutes a Permitted
Instrument, the Trustee shall, within one Business Day of its receipt of written
notification from the Certificate Insurer, withdraw from the Capitalized
Interest Account and pay to the Owners of the Class R-1 Certificates the amount
set forth in such written notification.
(f) On each Subsequent Transfer Date the Representative may instruct the
Trustee to withdraw from the Capitalized Interest Account and pay on such
Subsequent Transfer Date to the Owners of the Class R-1 Certificates the
Overfunded Interest Amount for such Subsequent Transfer Date, as calculated by
the Representative pursuant to Section 2.09(e) hereof.
(g) On the Remittance Dates occurring in October, November and December
1997, the Trustee shall transfer from the Capitalized Interest Account to the
appropriate Certificate Account the Capitalized Interest Requirement for the
related Pool, if any, for such Remittance Dates.
(h) On the Special Remittance Date, the Trustee shall transfer from the
Capitalized Interest Account to the Certificate Account the Capitalized Interest
Requirement, if any, for such Special Remittance Date. Any amounts remaining in
the Capitalized Interest Account after taking into account such transfer shall
be paid on such Special Remittance Date to the Holders of the Class R-1
Certificates, and the Capitalized Interest Account shall be closed.
Section 6.03 Establishment of Expense Accounts; Deposits in Expense
Accounts; Permitted Withdrawals from Expense Accounts.
(a) No later than the Closing Date, the Trustee will establish with itself
in its trust department four separate trust accounts, which shall not be
interest-bearing, titled "TMS Expense Account 1997-C-I," "TMS Expense Account
1997-C-II," "TMS Expense Account 1997-C- III" and "TMS Expense Account
1997-C-IV" (each, an "Expense Account" and together the "Expense Accounts"). The
Trustee shall deposit into the applicable Expense Account:
(i) on each Remittance Date from the amounts on
deposit in the applicable Certificate Account an amount equal
to one-twelfth of that portion of the Annual Expense Escrow
Amount relating to the Pool I, Pool II, Pool III or Pool IV
Mortgage Loans, as the case may be, subject to the provisions
of Section 6.08(d); and
(ii) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 6.07(e) in connection with losses
on investments of amounts in the applicable Expense Account.
If, at any time the aggregate amount then on deposit in the Expense
Accounts shall be insufficient to pay in full the fees and expenses of the
Trustee and the Co-Trustee then due with respect to the Trust Fund, the Trustee
shall make demand on the Servicer to advance the amount of such insufficiency,
and the Servicer shall promptly advance such amount to the Trustee for deposit
in the Expense Accounts, pro rata in accordance with the amounts then on deposit
in each such Expense Account. Thereafter, the Servicer shall be entitled to
reimbursement from the applicable Expense Account for the amount of any such
advance from any excess funds available pursuant to subclause (c)(ii) below.
Without limiting the obligation of the Servicer to advance such insufficiency,
in the event the Servicer does not advance the full amount of such insufficiency
by the Business Day immediately preceding the Determination Date, the amount of
such insufficiency shall be deposited into the applicable Expense Account for
payment to the Trustee or the Co-Trustee, as the case may be, pursuant to
Section 6.08(d)(X)(i), 6.08(d)(Y)(i) or 6.08(d)(Z)(i), as the case may be, to
the extent of available funds in the applicable Certificate Account.
(b) The Trustee may invest amounts on deposit in each Expense Account in
Permitted Instruments pursuant to Section 6.07 hereof, and the Trustee shall
withdraw amounts on deposit in the applicable Expense Account to:
(i) pay the Trustee's and Co-Trustee's fees and
expenses with respect to the Trust Fund as described in
Section 2.08 hereof (amounts shall be withdrawn from each
Expense Account pro rata in accordance with the then aggregate
Principal Balances of the Pool I, Pool II, Pool III and Pool
IV Mortgage Loans);
(ii) pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings
realized on Permitted Instruments;
(iii) to withdraw any amounts not required to be
deposited in the applicable Expense Account or deposited
therein in error; and
(iv) to clear and terminate the applicable Expense
Account upon the termination of the Trust Fund in accordance
with Section 11.01 hereof.
(c) On the twelfth Remittance Date following the Closing Date, and on each
twelfth Remittance Date thereafter, the Trustee shall determine that all
payments required to be made during the prior twelve month period pursuant to
subclauses (b)(i), (b)(ii) and (b)(iii) above, have been made, and, if all such
payments have been made, from the amounts remaining in the applicable Expense
Account, the Trustee shall (in the following order of priority):
(i) reimburse the Servicer and/or the
Representative, for reimbursable advances made pursuant
to Section 9.01;
(ii) reimburse the Servicer for advances made by it
pursuant to the last paragraph of subclause (a) above; and
(iii) remit to the Servicer as additional servicing
compensation any amounts remaining in any Expense Account
after payments made pursuant to subclauses (b)(i), (b)(ii),
(b)(iii), (c)(i) and (c)(ii), above.
Section 6.04 Establishment of Insurance Accounts; Deposits in Insurance
Accounts; Permitted Withdrawals from Insurance Accounts.
(a) No later than the Closing Date, the Trustee will establish with itself
in its trust department two separate trust accounts for the benefit of the
Certificate Insurer, titled "TMS MBIA Insurance Account 1997-C-I" and "TMS MBIA
Insurance Account 1997-C-IV" (each an "Insurance Account, and together, the
"Insurance Accounts"). The Trustee shall deposit into the applicable Insurance
Account:
(i) on each Remittance Date, prior to making the
remittances required pursuant to Section 6.08(d)(X), from the
applicable Certificate Account an amount equal to the Premium
Deposit Amount relating to the Pool I or Pool IV Certificates,
as the case may be; and
(ii) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 6.07(e) in connection with losses
on investments of amounts in the applicable Insurance Account.
If at any time that a Monthly Premium is due, the aggregate amount then on
deposit in the Insurance Accounts is insufficient to pay in full the Monthly
Premium then due with respect to the Pool I and Pool IV Certificates pursuant to
the terms of the Insurance Agreement, the Certificate Insurer shall make demand
on the Servicer to advance the amount of such insufficiency, and the Servicer
shall promptly advance such amount to the Trustee for deposit in the Insurance
Accounts, pro rata in accordance with the amounts then on deposit in each such
Insurance Account. Thereafter, the Servicer shall be entitled to reimbursement
from the applicable Insurance Account for the amount of any such advance from
moneys on deposit therein not related to the Premium Deposit Amount necessary to
make timely payment of the next Monthly Premium.
(b) The Trustee may invest amounts on deposit in each Insurance Account in
Permitted Instruments pursuant to Section 6.07, and the Trustee shall withdraw
amounts on deposit in the applicable Insurance Account to:
(i) remit on a monthly basis sufficient funds to the
Insurance Paying Agent to pay the Certificate Insurer the
Monthly Premium with respect to the Pool I or Pool IV
Certificates, as the case may be, on each Remittance Date
commencing in October 1997 as required by the Insurance
Agreement;
(ii) pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings
realized on Permitted Instruments;
(iii) withdraw amounts not required to be deposited
in the applicable Insurance Account or deposited therein in
error; and
(iv) reimburse the Servicer for advances made by it
pursuant to the last paragraph of subclause (a) above to the
extent such funds are not needed to pay the Monthly Premium.
If sufficient funds are available in the Insurance Account to timely pay
the Monthly Premium, the Trustee has received from the Servicer any information
necessary to determine the amount of the Monthly Premium and the Trustee and the
Insurance Paying Agent (if the Insurance Paying Agent and the Trustee are the
same party) fail to timely remit the Monthly Premium to the Certificate Insurer
from funds on deposit in the Insurance Account in accordance with subsections
(a) and (b) above, the Trustee shall, contemporaneous with the payment of the
Monthly Premium, pay to the Certificate Insurer from its own funds, for which
reimbursement shall not be available, interest on the Monthly Premium at the
Prime Rate published in the most recent Wall Street Journal plus 3.0% for each
day that the Monthly Premium is not paid to the Certificate Insurer.
Section 6.05 Establishment of Spread Account; Deposits in Spread Account;
Permitted Withdrawals from Spread Account.
(a) The Representative shall, no later than the Closing Date, establish and
maintain with the Trustee in its trust department a trust account, which shall
not be interest-bearing, titled "TMS Spread Account 1997-C" (the "Spread
Account"). The Spread Account shall constitute part of the Trust Fund but shall
not be an asset of either REMIC I or REMIC II. It is an outside reserve fund,
the owners of which are the Holders of the Class X Certificates and for federal
tax purposes, amounts, if any, transferred by REMIC I to the Spread Account are
treated as distributed by REMIC I to the Holders of the Class X Certificates. If
during or after the Funding Period the Certificate Insurer determines to
increase the Pool I or Pool IV Initial Specified Subordinated Amount pursuant to
the terms of the Insurance Agreement, the Representative shall give the Trustee
written notice thereof, which notice shall include the new Pool I or Pool IV
Initial Specified Subordinated Amount for the related Pool. The Trustee shall,
promptly upon receipt, deposit into the Spread Account:
(i) on the Closing Date, an amount equal to $0 ($0 of
which will be allocated to Pool I and $0 of which will be
allocated to Pool IV);
(ii) up to the difference, if any, between the
revised Pool I or Pool IV Initial Specified Subordinated
Amount and the original Pool I or Pool IV Initial Specified
Subordinated Amount, as the case may be;
(iii) [Reserved];
(iv) [Reserved];
(v) amounts, if any, received pursuant to Section
2.09(b)(ix); and
(vi) amounts, if any, received pursuant to Section
6.14(b)(iv).
(b) The Trustee may invest amounts on deposit in the Spread Account in
Permitted Instruments pursuant to Section 6.07, and the Trustee shall withdraw
amounts on deposit in the Spread Account to:
(i) [Reserved];
(ii) deposit in the applicable Certificate Account on
any Remittance Date an amount equal to (x) the amount of any
Insured Payment otherwise required with respect to such
Remittance Date and (y) the aggregate Subordinated Deficiency
Amounts for Pool I and Pool IV for such Remittance Date (to be
allocated pro rata based upon such amounts);
(iii) on any Remittance Date for which the Pool
Subordinated Amount for Pool I and Pool IV exceeds its
respective Specified Subordinated Amount, including any
increases thereto during or after the Funding Period, and the
amount deposited into the Spread Account pursuant to Section
6.14(b)(iv) equals the full amount required to be deposited
pursuant thereto, distribute the excess, if any, of the Pool
Subordinated Amounts for Pool I and Pool IV for such
Remittance Date over the Pool I and Pool IV Specified
Subordinated Amounts,
respectively, including any increases thereto after the
Funding Period, for such Remittance Date, to the Holders
of the Class X Certificates (provided, however, that any such
excess shall be applied first to the payment of the
Certificateholders of the other such Pool in an amount up to
the Subordinated Deficiency Amount with respect to such Pool
(allocated among the Certificates in Pool I in the same order
principal payments are made with respect to Pool I) pursuant
to Section 6.14(b)(vii) and then to the payment of any
Subordination Deficit with respect to Pool I and/or Pool IV
and/or any current Realized Loss which would otherwise be
allocated to Pool II and/or Pool III in reduction of the Class
Principal Balances of the Certificates thereof, pro rata based
upon the amounts so required by each such Pool of
Certificates) in accordance with Section 6.14(b)(viii)
hereof);
(iv) distribute to the Holders of the Class X
Certificates such amounts then remaining on deposit in the
Spread Account as the Certificate Insurer may consent to in
writing;
(v) withdraw any amounts not required to be deposited
in the Spread Account or deposited therein in error; and
(vi) subject to subsection (c) below, distribute to
the Holders of the Class X Certificates any amounts remaining
in the Spread Account upon the termination of this Agreement
in accordance with Section 11.01 hereof.
(c) [Reserved].
(d) [Reserved].
(e) [Reserved].
(f) [Reserved].
Section 6.06 Establishment of FHA Premium Account; Deposits in FHA Premium
Account; Permitted Withdrawals from FHA Premium Account.
(a) No later than the Closing Date, the Trustee will establish with itself
in its trust department a trust account, which shall not be interest bearing,
titled "TMS FHA Premium Account 1997-C" (the "FHA Premium Account"). The FHA
Premium Account shall not be available for payment of Certificates. The Trustee
shall deposit into the FHA Premium Account:
(i) on each Remittance Date, prior to making the
remittances required pursuant to Section 6.08(c), upon receipt
an amount equal to the FHA Premium Amount; and
(ii) upon receipt, amounts required to be paid by the
Servicer pursuant to Section 6.07(e) in connection with losses
on investments of amounts in the FHA Premium Account.
If the Servicer fails to pay the FHA Insurance Premium with respect to an FHA
Loan in accordance with Section 5.01 hereof, the Trustee shall, upon written
instructions from the Servicer, withdraw an amount from the FHA Premium Account
sufficient to pay in full the FHA Insurance Premium then due.
(b) The Trustee may invest amounts on deposit in the FHA Premium Account in
Permitted Instruments pursuant to Section 6.07, and the Trustee shall withdraw
amounts on deposit in the FHA Premium Account to:
(i) remit, upon certification of payment made to the
FHA, funds requested by the Servicer (including any successor
to the Servicer appointed pursuant to Section 10.02) as
reimbursement for the FHA Insurance Premiums paid by the
Servicer, or remit to the FHA amounts payable in respect of
FHA Insurance Premiums pursuant to the last paragraph of
subclause (a) above;
(ii) pay on a monthly basis to the Servicer as
additional servicing compensation interest paid and earnings
realized on Permitted Instruments;
(iii) withdraw amounts not required to be deposited
in the FHA Premium Account or deposited therein in error; and
(iv) [Reserved]
(v) clear and terminate the FHA Premium Account upon
the termination of this Agreement in accordance with the terms
of Section 11.01 hereof.
Section 6.07 Investment of Accounts.
(a) So long as no default or Event of Default shall have occurred and be
continuing, and consistent with any requirements of the Code, all or a portion
of any Account held by the Trustee shall be invested and reinvested by the
Trustee as directed in writing by the Servicer, in one or more Permitted
Instruments bearing interest or sold at a discount. No such investment in the
Certificate Accounts shall mature later than the Business Day immediately
preceding the next Remittance Date and no such investment in the Insurance
Accounts, Expense Accounts, Pre- Funding Account, Capitalized Interest Account,
FHA Premium Account or Spread Account shall mature later than the Business Day
immediately preceding the date such funds will be needed to pay fees or premiums
or be transferred to the applicable Certificate Account, as the case may be;
provided, however, the Trustee or any affiliate thereof may be the obligor on
any investment which otherwise qualifies as a Permitted Instrument and any
investment on which the Trustee is the obligor may mature on such Remittance
Date or date when needed, as the case may be.
(b) If any amounts are needed for disbursement from any Account held by the
Trustee and sufficient uninvested funds are not available to make such
disbursement, the Trustee shall cause to be sold or otherwise converted to cash
a sufficient amount of the investments in such Account. The Trustee shall not be
liable for any investment loss or other charge resulting therefrom.
(c) Subject to Section 12.01 hereof, the Trustee shall not in any way be
held liable by reason of any insufficiency in any Account held by the Trustee
resulting from any investment loss on any Permitted Instrument included therein
(except to the extent that the Trustee is the obligor thereon).
(d) The Trustee shall invest and reinvest funds in the Accounts held by the
Trustee to the fullest extent practicable, in such manner as the Servicer shall
from time to time direct in writing, but only in one or more Permitted
Instruments.
(e) All income or other gain from investments in any Account held by the
Trustee shall be deposited in such Account, immediately on receipt, and the
Trustee shall notify the Servicer of any loss resulting from such investments.
The Servicer shall remit the amount of any such loss from its own funds, without
reimbursement therefor, to the Trustee for deposit in the Account from which the
related funds were withdrawn for investment by the next Determination Date
following receipt by the Servicer of such notice.
Section 6.08 Priority and Subordination of Distributions.
(a) The rights of the Certificateholders to receive distributions from the
proceeds of the Trust Fund, and all ownership interests of the
Certificateholders in such distributions, shall be as set forth in this
Agreement. In this regard, all rights of the Class X and Class R
Certificateholders to receive distributions in respect of the Class X and Class
R Certificates, respectively, and all ownership interests of the Class X and
Class R Certificateholders in and to such distributions, shall be subject and
subordinate to the preferential rights of the Class A, Class M and Class B
Certificateholders, to receive distributions in respect of the Class A, Class M
and Class B Certificates, respectively, and the ownership interests of the Class
A, Class M and Class B Certificateholders, respectively, in such distributions,
as described herein. In accordance with the foregoing, the ownership interests
of the Class X and Class R Certificateholders in amounts deposited in the
applicable Principal and Interest Account or in any Accounts from time to time
shall not vest unless and until such amounts are distributed in respect of the
Class X and Class R Certificates in accordance with the terms of this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, the Class
X and Class R Certificateholders shall not be required to refund any amount
properly distributed on the Class X and Class R Certificates.
(b) [Reserved]
(c) As soon as possible, and in no event later than 10:00 a.m. New York
time on the Business Day immediately preceding each Remittance Date, the Trustee
shall furnish the Certificate Insurer and the Servicer with a completed notice
in the form set forth as Exhibit L (the "Notice") hereto, which will be based
upon the information set forth in the Servicer's Certificate, in the event that
an Event of Nonpayment will occur with respect to such Remittance Date. The
Notice shall specify the total amount of the Insured Payment to be paid on the
applicable Remittance Date, stated separately for each Class of Pool I or Pool
IV Certificates, as applicable, and shall constitute a claim for an Insured
Payment pursuant to the applicable Certificate Insurance Policy. The Certificate
Insurer shall remit or cause to be remitted to the Insurance Paying Agent the
amount of the Insured Payment. Upon receipt of such Insured Payment by the
Insurance Paying Agent on behalf of the Holders of the respective Class of Pool
I or Pool IV Certificates under the applicable Certificate Insurance Policy, it
shall remit such amounts to the Trustee who shall deposit such Insured Payment
in the applicable Certificate Account and shall distribute such Insured Payment
in accordance with Sections 6.08(d)(X) and (e) hereof.
Notwithstanding the foregoing, if an Event of Nonpayment with respect to
Pool I or Pool IV will occur with respect to a Remittance Date and funds are on
deposit in the Spread Account, the amount of the Insured Payment shall be
reduced up to the amount then on deposit in the Spread Account. Pursuant to
Section 6.05(b)(ii), the Trustee shall, on such Remittance Date, transfer such
amount to the applicable Certificate Account from the Spread Account.
The Trustee shall serve as Insurance Paying Agent hereunder for so long as
a Certificate Insurance Policy shall remain in effect; provided, however, that
the Insurance Paying Agent may be located in another jurisdiction with the
written consent of the Certificate Insurer. The Insurance Paying Agent shall act
as the agent of the Trustee and shall (i) pay amounts required by Section
6.04(b)(i) hereof to the Certificate Insurer, (ii) pay Insured Payments received
from the Certificate Insurer as the Trustee shall direct and (iii) take such
other actions with respect to the Certificate Insurer and the Certificate
Insurance Policies as the Trustee shall direct. The Trustee shall act initially
as the Insurance Paying Agent.
The Trustee shall receive through the Insurance Paying Agent, as
attorney-in-fact of each Holder of Pool I or Pool IV Certificates, any Insured
Payment from the Certificate Insurer and disburse the same to each Holder of
Pool I or Pool IV Certificates in accordance with the provisions of this Section
6.08. Insured Payments disbursed by the Trustee from proceeds of the Certificate
Insurance Policies shall not be considered payment by the Trust Fund nor shall
such payments discharge the obligation of the Trust Fund with respect to such
Pool I or Pool IV Certificates, and the Certificate Insurer shall become the
owner of such unpaid amounts due from the Trust Fund in respect of such
Certificates. The Trustee hereby agrees on behalf of each Holder of Pool I or
Pool IV Certificates for the benefit of the Certificate Insurer that it
recognizes that to the extent the Certificate Insurer makes Insured Payments,
either directly or indirectly (as by paying through the Insurance Paying Agent),
to the Pool I or Pool IV Certificateholders, the Certificate Insurer will be
subrogated to the rights of the such Pool I or Pool IV Certificateholders with
respect to such Insured Payment, shall be deemed to the extent of the payments
so made to be a registered Certificateholder of the related Class, and shall
receive the Pool Carry-Forward Amounts of the related Pools in accordance with
Section 6.08(d)(X) below until all such Insured Payments by the Certificate
Insurer have been fully reimbursed. To evidence such subrogation, the Trustee
shall, or shall cause the Certificate Registrar to, note the Certificate
Insurer's rights as subrogee on the registration books maintained by the Trustee
or the Certificate Registrar upon receipt from the Certificate Insurer of proof
of payment of any Insured Payment.
Each Pool I or Pool IV Certificateholder shall promptly (i) notify the
Trustee in writing upon the receipt of a court order to the effect that any
amounts described in Clause (iv) of the definition of Pool Remittance Amount
constitute a voidable preference pursuant to the United States Bankruptcy Code
and (ii) shall enclose a certified copy of such order with such notice to the
Trustee.
(d) (X) With respect to Pool I and Pool IV, on each Remittance Date, and
after making the allocations set forth in Section 6.14 (including provision for
the Pool I Strip Amount), the Trustee shall withdraw from the applicable
Certificate Account the sum of (i) the Pool Available Amount for each such Pool
and (ii) the Remainder Excess Spread Amount for each such Pool, net of
reimbursements to the Servicer or the Representative for Reimbursable Advances
pursuant to Section 5.04(f), and make distributions thereof in the following
order of priority:
(i) to the Expense Account relating to Pool I or Pool
IV, an amount equal to one-twelfth of the Annual Expense
Escrow Amount with respect to the Mortgage Loans of the
related Pool, plus any amount required to be paid to the
Trustee or the Co-Trustee pursuant to Section 6.03(a)
resulting from insufficiencies in the applicable Expense
Account;
(ii) then to the Certificateholders of each such
Pool, the lesser of the Pool Available Amount for the related
Pool less the amount applied under clause (i) with respect to
such Pool and the Pool Remittance Amount for the related Pool
first in payment of the applicable Class Current Interest
Requirements and then in reduction of the applicable Class
Principal Balances of the applicable Certificates;
(iii) then to the Servicer and/or the Representative,
an amount, if any, equal to the Reimbursable Amounts with
respect to the applicable Pool to the extent the Servicer has
not previously netted such amounts from Monthly Payments;
(iv) [Reserved];
(v) then to the Class X Certificateholders, an amount
equal to the lesser of (a) the sum of the Pool I Strip Amount
and the Pool Remaining Amount Available for Pool I and Pool IV
and (b) any interest accrued (and yet unpaid) with respect to
the Class X Certificates in accordance with footnote (4) of
Section 4.01(d); and
(vi) then to the Class R Certificateholders, any
remainder.
On each Remittance Date, the amount to be distributed to the Pool I
Certificates pursuant to clause (ii) above will be allocated in the following
order of priority:
(A) first, concurrently to the Certificateholders of each Class of Pool I
Certificates, the applicable Class Current Interest Requirement for such
Remittance Date, pro rata in accordance with such Class Current Interest
Requirements;
(B) second, to the Class AF-8 Certificateholders, an amount equal to the
Class AF-8 Principal Distribution Amount for such Remittance Date; and
(C) third, to the Class AF-1, Class AF-2, Class AF-3, Class AF-4, Class
AF-5, Class AF-6, Class AF-7 and Class AF-8 Certificateholders, sequentially in
that order, the excess, if any, of the amount to be distributed to the Pool I
Certificates on such Remittance Date over the amount distributed pursuant to (A)
and (B) above, until the Class Principal Balance of each such Class (in
ascending order of numerical designation) is reduced to zero and such
Certificateholders have received an amount equal to the amount described in
clause (iv) of the definition of Pool Remittance Amount that is recovered from
such Certificateholders.
Additionally, on the Special Remittance Date, the Trustee shall withdraw
from the Certificate Account the amount, if any, deposited therein pursuant to
Section 6.01(a)(v) with respect to Pool I and Pool IV and make distributions
thereof as follows: (i) from amounts transferred from the Pre-Funding Account,
distributions of principal to the Classes of Pool I or Pool IV Certificates, as
applicable, and in the case of the Pool I Certificates allocated to the Classes
thereof then entitled to receive distributions of principal in the priority and
proportions set forth in this Section 6.08(d)(X)(B) and (C) and (ii) from
amounts transferred from the Capitalized Interest Account, distributions of
interest to such Classes of Pool I or Pool IV Certificates equal to the
applicable Capitalized Interest Requirement for such Pool.
(Y) With respect to Pool II, on each Remittance Date, and after making the
allocations set forth in Section 6.14 (including provision for the Pool II Strip
Amount), the Trustee shall withdraw from the applicable Certificate Account the
Pool Available Amount for such Pool, net of reimbursements to the Servicer or
the Representative for the Reimbursable Advances pursuant to Section 5.04(f) and
net of amounts withdrawn pursuant to Section 6.01(b)(iii) to pay the Auction
Agent Fee and make distributions thereof in the following order of priority
(based solely upon information provided by the Servicer):
(i) to the Expense Account, an amount equal to one-twelfth of
the Annual Expense Escrow Amount with respect to the Pool II Mortgage
Loans, plus any amount required to be paid to the Trustee pursuant to
Section 6.03(a) resulting from insufficiencies in the Expense Account;
(ii) after the payment of the amounts specified in clause (i)
above, to pay the Class Current Interest Requirement concurrently to
the Holders of the Pool II Class A Certificates;
(iii) after payment of the amounts specified in clauses (i)
and (ii) above, to pay the Class Current Interest Requirement for the
Pool II Class M Certificates as follows and in the following order of
priority:
(A) the Class Current Interest Requirement applicable
to the Class MV-1 Certificates to the Holders of the Class MV-1
Certificates; and
(B) the Class Current Interest Requirement applicable
to the Class MV-2 Certificates to the Holders of the Class MV-2
Certificates;
(iv) after payment of the amounts specified in clauses (i),
(ii) and (iii) above, to pay the Class Current Interest Requirement
applicable to the Pool II Class B Certificates to
the Holders of the Class BV Certificates;
(v) after payment of the amounts specified in clauses (i)
through (iv) above, to pay the Class A Pool Principal Distribution
Amount for the Pool II Class A Certificates to the Holders of the Class
AV Certificates (but in no event more than is necessary to reduce the
Class Principal Balance of such Class to zero);
(vi) after payment of the amounts specified in clauses (i)
through (v) above, to pay the Class MV-1 Principal Distribution Amount
to the Holders of the Class MV-1 Certificates, but in no event more
than is necessary to reduce the Class Principal Balance of the Class
MV-1 Certificates to zero;
(vii) after payment of the amounts specified in clauses (i)
through (vi) above, to pay the Class MV-2 Principal Distribution Amount
to the Holders of the Class MV-2 Certificates, but in no event more
than is necessary to reduce the Class Principal Balance of the Class
MV-2 Certificates to zero;
(viii) after payment of the amounts specified in clauses (i)
through (vii) above, to pay the Class B Pool Principal Distribution
Amount for Pool II to the Holders of the Class BV Certificates, but in
no event more than is necessary to reduce the Class Principal Balance
of the Class BV Certificates to zero;
(ix) after payment of the amounts specified in clauses (i)
through (viii) above, to pay any Interest Shortfall Carryforward
Amounts applicable to the Pool II Class A Certificates to the Holders
of the Class AV Certificates.
(x) after payment of the amounts specified in clauses (i)
through (ix) above, to pay any Accelerated Principal Distribution
Amount to the Holders of the Pool II Class A, Pool II Class M and Pool
II Class B Certificates, in the order and priority that amounts are
being distributed as set forth in clauses (v), (vi), (vii) and (viii)
above, inclusive;
(xi) after payment of the amounts specified in clauses (i)
through (x) above, to pay the Interest Shortfall Carryforward Amounts
applicable to the Class MV-1 Certificates to the Holders of the Class
MV-1 Certificates;
(xii) after payment of the amounts specified in clauses (i)
through (xi) above, to pay the Class MV-1 Realized Loss Amount to the
Holders of the Class MV-1 Certificates;
(xiii) after payment of the amounts specified in clauses (i)
through (xii) above, to pay the Interest Shortfall Carryforward Amounts
applicable to the Class MV-2 Certificates to the Holders of the Class
MV-2 Certificates;
(xiv) after payment of the amounts specified in clauses (i)
through (xiii) above, to pay the Class MV-2 Realized Loss Amount to the
Holders of the Class MV-2 Certificates;
(xv) after payment of the amounts specified in clauses (i)
through (xiv) above, to pay the Interest Shortfall Carryforward Amounts
applicable to the Class BV Certificates to the Holders of the Class BV
Certificates;
(xvi) after payment of the amounts specified in clauses (i)
through (xv) above, to pay the Class B Pool Realized Loss Amount for
Pool II to the Holders of the Class BV Certificates;
(xvii) after payment of the amounts specified in clauses (i)
through (xvi) above, to the Servicer and/or the Representative, an
amount, if any, equal to the Reimbursable Amounts to the extent the
Servicer has not previously netted such amounts from Monthly Payments;
(xviii) after payment of the amounts specified in clauses (i)
through (xvii) above, to the Class X Certificateholders, the lesser of
(i) the sum of the Pool II Strip Amount and the Pool Remaining Amount
Available for Pool II and (ii) any interest accrued (and yet unpaid)
with respect to the Class X Certificates in accordance with footnote
(4) of Section 4.01(d); and
(xix) after payment of the amounts specified in clauses (i)
through (xviii) above, to the Class R Certificateholders, any
remainder.
Additionally, on the Special Remittance Date, the Trustee shall withdraw
from the Certificate Account the amount, if any, deposited therein pursuant to
Section 6.01(a)(v) with respect to Pool II and make distributions thereof as
follows: (i) from amounts transferred from the Pre- Funding Account,
distributions of principal to the Classes of Pool II Certificates then entitled
to receive distributions of principal in the priority and proportions set forth
in this Section 6.08(d)(Y) and (ii) from amounts transferred from the
Capitalized Interest Account, distributions of interest to such Classes of Pool
II Certificates equal to the applicable Capitalized Interest Requirement for
Pool II. Notwithstanding the foregoing and Section 6.08(f), if on the Special
Remittance Date the amount of principal allocated to a Class of Auction Rate
Certificates is not equal to $25,000 or an integral multiple of $25,000 in
excess thereof, the entire amount (if less than $25,000) or the amount exceeding
an integral multiple of $25,000 will, instead, be distributed to the Class AV
Certificates.
(Z) With respect to Pool III, on each Remittance Date, and after making the
allocations set forth in Section 6.14 the Trustee shall withdraw from the
applicable Certificate Account the Pool Available Amount for such Pool, net of
reimbursements to the Servicer or the Representative for Reimbursable Advances
pursuant to Section 5.04(f) and net of amounts withdrawn pursuant to Section
6.01(b)(ii) to make deposits to the FHA Premium Account, and make distributions
thereof in the following order of priority (based solely upon information
provided by the Servicer):
(i) to the Expense Account, an amount equal to one-twelfth of
the Annual Expense Escrow Amount with respect to the Pool III Mortgage
Loans, plus any amount required to be paid to the Trustee or the
Co-Trustee pursuant to Section 6.03(a) resulting from insufficiencies
in the Expense Account;
(ii) after the payment of the amounts specified in clause (i)
above, to pay the Class Current Interest Requirement concurrently to
the Holders of the Pool III Class A Certificates, pro rata to each
Class of Pool III Class A Certificates in accordance with their
respective Class Current Interest Requirements;
(iii) after payment of the amounts specified in clauses (i)
and (ii) above, to pay the Class Current Interest Requirement for the
Pool III Class M Certificates as follows and in the following order of
priority:
(A) the Class Current Interest Requirement applicable
to the Class MH-1 Certificates to the Holders of the Class MH-1
Certificates; and
(B) the Class Current Interest Distribution
Requirement applicable to the Class MH-2 Certificates to the Holders of
the Class MH-2 Certificates;
(iv) after payment of the amounts specified in clauses (i),
(ii) and (iii) above, to pay the Class Current Interest Requirement
applicable to the Pool III Class B Certificates to the Holders of the
Class BH Certificates;
(v) after payment of the amounts specified in clauses (i)
through (iv) above, to pay the Class A Pool Principal Distribution
Amount for the Pool III Class A Certificates sequentially to the Class
AH-1, Class AH-2, Class AH-3, Class AH-4, Class AH-5 and Class AH-6
Certificateholders, in that order of priority, but in no event will any
Class of Pool III
Class A Certificates be paid more than is necessary to reduce the
Class Principal Balance of such Class to zero; provided, however, that
on each Remittance Date on and after the Remittance Date on which the
Class Principal Balances of the Pool III Class M and Class B
Certificates have been reduced to zero, amounts paid to the Pool III
Class A Certificateholders pursuant to this clause (v) shall be paid
pro rata to each Class of Pool III Class A Certificates based upon the
Class Principal Balance of each such Class of Pool III Class A
Certificates;
(vi) after payment of the amounts specified in clauses (i)
through (v) above, to pay the Class MH-1 Principal Distribution Amount
to the Holders of the Class MH-1 Certificates, but in no event more
than is necessary to reduce the Class Principal Balance of the Class
MH-1 Certificates to zero;
(vii) after payment of the amounts specified in clauses (i)
through (vi) above, to pay the Class MH-2 Principal Distribution Amount
to the Holders of the Class MH-2 Certificates, but in no event more
than is necessary to reduce the Class Principal Balance of the Class
MH-2 Certificates to zero;
(viii) after payment of the amounts specified in clauses (i)
through (vii) above, to pay the Class B Pool Principal Distribution
Amount for Pool III to the Holders of the Class BH Certificates, but in
no event more than is necessary to reduce the Class Principal Balance
of the Class BH Certificates to zero;
(ix) after payment of the amounts specified in clauses (i)
through (viii) above, to pay any Interest Shortfall Carryforward
Amounts applicable to the Pool III Class A Certificates concurrently to
the Holders of the Class AH-1, Class AH-2, Class AH-3, Class AH-4,
Class AH-5 and Class AH-6 Certificates, pro rata to each Class of Pool
III Class A Certificates in accordance with their respective Interest
Shortfall Carryforward Amounts;
(x) after payment of the amounts specified in clauses (i)
through (ix) above, to pay any Accelerated Principal Distribution
Amount to the Holders of the Pool III Class A, Pool III Class M and
Pool III Class B Certificates, in the order and priority that amounts
are being distributed as set forth in clauses (v), (vi), (vii) and
(viii) above, inclusive;
(xi) after payment of the amounts specified in clauses (i)
through (x) above, to pay the Interest Shortfall Carryforward Amounts
applicable to the Class MH-1 Certificates to the Holders of the Class
MH-1 Certificates;
(xii) after payment of the amounts specified in clauses (i)
through (xi) above, to pay the Class MH-1 Realized Loss Amount to the
Holders of the Class MH-1 Certificates;
(xiii) after payment of the amounts specified in clauses (i)
through (xii) above, to pay the Interest Shortfall Carryforward Amounts
applicable to the Class MH-2 Certificates to the Holders of the Class
MH-2 Certificates;
(xiv) after payment of the amounts specified in clauses (i)
through (xiii) above, to pay the Class MH-2 Realized Loss Amount to the
Holders of the Class MH-2 Certificates;
(xv) after payment of the amounts specified in clauses (i)
through (xiv) above, to pay the Interest Shortfall Carryforward Amounts
applicable to the Class BH Certificates to the Holders of the Class BH
Certificates;
(xvi) after payment of the amounts specified in clauses (i)
through (xv) above, to pay the Class B Pool Realized Loss Amount for
Pool III to the Holders of the Class BH Certificates;
(xvii) after payment of the amounts specified in clauses (i)
through (xvi) above, to the Servicer and/or the Representative, an
amount, if any, equal to the Reimbursable Amounts to the extent the
Servicer has not previously netted such amounts from Monthly Payments;
(xviii) after payment of the amounts specified in clauses (i)
through (xvii) above, to the Class X Certificateholders, the lesser of
(i) the Pool Remaining Amount Available for Pool III and (ii) any
interest accrued (and yet unpaid) with respect to the Class X
Certificates in accordance with footnote (4) of Section 4.01(d); and
(xix) after payment of the amounts specified in clauses (i)
through (xviii) above, to the Class R Certificateholders, any
remainder.
Additionally, on the Special Remittance Date, the Trustee shall withdraw
from the Certificate Account the amount, if any, deposited therein pursuant to
Section 6.01(a)(v) with respect to Pool III and make distributions thereof as
follows: (i) from amounts transferred from the Pre- Funding Account,
distributions of principal to the Classes of Pool III Certificates then entitled
to receive distributions of principal in the priority and proportions set forth
in this Section 6.08(d)(Z) and (ii) from amounts transferred from the
Capitalized Interest Account, distributions of interest to such Classes of Pool
III Certificates equal to the applicable Capitalized Interest Requirement for
such Pool.
(e) All distributions made to the Certificateholders on each Remittance
Date and the Special Remittance Date will be made on a pro rata basis (except
with respect to payments of principal to the Auction Rate Certificateholders)
among the Certificateholders of the respective Class of record on the next
preceding Record Date based on the Percentage Interest represented by their
respective Certificates, and shall, except for the final payment on such
Certificates, be made by wire transfer of immediately available funds to the
account of such Certificateholder as shall appear on the Certificate Register
without the presentation or surrender of the Certificate or the making of any
notation thereon, at a bank or other entity having appropriate facilities
therefor, at the expense of each such Certificateholder unless such
Certificateholder shall own of record Certificates which have original principal
amounts aggregating (i) at least $5,000,000 or (ii) one of the two highest
outstanding amounts less than $5,000,000.
(f) Notwithstanding the foregoing, principal payments will be made to each
Class of Auction Rate Certificates only in amounts equal to $25,000 and integral
multiples in excess thereof. If the amount in the Certificate Account for Pool
II otherwise required to be applied as a payment of principal on the Auction
Rate Certificates either (i) is less than $25,000 or (ii) exceeds an integral
multiple of $25,000, then, in the case of (i), such entire amount or, in the
case of (ii), such excess amount, will not be paid as principal on the upcoming
Remittance Date, but will be retained in the Certificate Account for Pool II
until the amount therein available for payment of principal on the Auction Rate
Certificates equals $25,000 or any integral multiple thereof. In no event,
however, shall amounts remain in the Certificate Account for Pool II more than
13 months after the related payments are deposited into the Trust Fund. The
amount being distributed to a Class of Auction Rate Certificates as principal
will be allocated to the specific Certificates of such Class selected no later
than 5 Business Days prior to the related Remittance Date by lot or such other
manner as may be determined, which allocations will be made only in amounts
equal to $25,000 and integral multiples of $25,000 in excess thereof.
Section 6.09 Allocation of Realized Losses.
(a) With respect to Pool I and Pool IV, prior to each Determination Date,
the Servicer shall determine the total amount of Realized Losses, if any, that
occurred in the related Due Period for Pool I and Pool IV. The amount of each
Realized Loss shall be evidenced by an Officers' Certificate, stated separately
for each Pool of Mortgage Loans, and, to the extent paid by the Certificate
Insurer as an Insured Payment, shall constitute a Pool Carry-Forward Amount for
the related Pool. Any Realized Losses relating to the Mortgage Loans of Pool I
or Pool IV shall be allocated to each outstanding Class of Certificates of such
Pool (pro rata in the case of Pool I in accordance with the respective Class
Principal Balances of each such Class), but only if and to the extent that the
Certificateholders of such Pool did not receive Insured Payments in connection
with the related Unrecovered Pool Portions on the Remittance Date on which a
Subordination Deficit occurs. Further, any allocation of Realized Losses among a
Class of Certificates shall be made on a pro rata basis among the
Certificateholders of record of such Class on the next preceding Record Date
based on the Percentage Interest represented by their respective Certificates by
reducing their respective Principal Balances by the amount so allocated, which
allocation shall be deemed to have occurred on the related Remittance Date.
(b) With respect to Pool II and Pool III, on and after the Remittance Date
on which the Pool Available Maximum Subordinated Amount for Pool II or Pool III
has been reduced to zero, (i) no further Interest Shortfall Carryforward Amounts
or Unpaid Realized Loss Amounts for the Pool II or Pool III Class M or Class B
Certificates, respectively, shall be carried forward to succeeding Remittance
Dates or be created as a result of shortfalls in the Pool Available Remittance
Amount, and (ii) interest shall cease to accrue on all Interest Shortfall
Carryforward Amounts remaining outstanding at the time the related Pool
Available Maximum Subordinated Amount becomes zero.
If on any Remittance Date after taking into account all Realized Losses
experienced during the prior Due Period and after taking into account the
distribution of principal (including the applicable Accelerated Principal
Distribution Amount) with respect to the Pool II or Pool III Certificates, as
applicable on such Remittance Date, the aggregate Class Principal Balance of the
Pool II or Pool III Certificates, as applicable exceeds the aggregate Principal
Balance of the Pool II or Pool III Mortgage Loans, respectively, as of the end
of the related Due Period, then the Class Principal Balance of the Pool II or
Pool III Class M and/or Class B Certificates, as applicable, will be reduced (in
effect, "written down") such that the level of the Spread Amount is zero, rather
than negative. The resulting Pool Applied Realized Loss Amount for the
applicable Class will be applied as a reduction in the Class Principal Balance
of the related Pool II or Pool III Class M and/or Class B Certificates in
reverse order of seniority, i.e., first against the Pool II or Pool III, as
applicable, Class B Class Principal Balance until it is reduced to zero, then
against the Class MV-2 or MH-2 Class Principal Balance, as applicable, until it
is reduced to zero and then against the Class MV-l or Class MH-1 Class Principal
Balance, as applicable, until it is reduced to zero. In no event shall the Class
Principal Balance of any Class A Certificate be written down as a result of
applying Realized Losses.
Once the Class Principal Balance of a Class of Pool II or Pool III Class M
and/or Class B Certificates, as applicable, has been "written down," the amount
of such write down will no longer bear interest, nor will such amount thereafter
be "reinstated" or "written up," although the amount of such write down may, on
future Remittance Dates, be paid to Holders of the Pool II or Pool III Class M
and/or Class B Certificates which experienced the write down, in direct order of
seniority as distributions on account of the related Class MV-1, Class MV-2 or
Class BV Realized Loss Amounts or Class MH-1, Class MH-2 or Class BH Realized
Loss Amounts, as applicable.
Section 6.10 Statements.
Each month for so long as a Class of Auction Rate Certificates is
Outstanding, not later than 12:00 noon New York time on the Auction Reporting
Date, the Servicer shall deliver to the Trustee, by telecopy, the receipt and
legibility of which shall be confirmed telephonically, with hard copy thereof to
be delivered on the Business Day following the Determination Date, a certificate
signed by a Servicing Officer stating the date (day, month and year), the Series
number of the Certificates, the date of this Agreement, and the amount to be
distributed on the upcoming Remittance Date to each Class of Auction Rate
Certificates as a payment of principal.
Each month, not later than 12:00 noon New York time on the Determination
Date, the Servicer shall deliver to the Certificate Insurer and to the Trustee,
by telecopy, for distribution to the Certificateholders, the receipt and
legibility of which shall be confirmed telephonically, with hard copy thereof
and the Servicer's Monthly Computer Tape in the form attached hereto as Exhibit
R (both in hard copy and in computer tape form) to be delivered on the Business
Day following the Determination Date, a certificate signed by a Servicing
Officer (a "Servicer's Certificate") stating the date (day, month and year), the
Series number of the Certificates, the date of this Agreement, and the
following:
(i) the Pool Available Remittance Amounts for each
Pool for the related Remittance Date;
(ii) the Class Principal Balances for each Class of
Pool I, Pool II, Pool III and Pool IV Certificates as reported
in the prior Servicer's Certificate pursuant to
subclause (xv) below, or, in the case of the first
Determination Date, the Original Principal Balance for each
Class of Pool I, Pool II, Pool III and Pool IV
Certificates;
(iii) the Pool Principal Distribution Amounts for
each Pool for the related Remittance Date, in the aggregate
and listed separately for the portions relating to each Class
of Pool I, Pool II, Pool III and Pool IV Certificates;
(iv) the total amount of any Insured Payments
included in the Pool Available Remittance Amount for Pool I or
Pool IV for the related Remittance Date;
(v) the Subordinated Amount and Specified
Subordinated Amount for the related Remittance Date, listed
separately for each Pool and the Pool Available Maximum
Subordinated Amount for Pool II and Pool III;
(vi) the number and Principal Balances of all Loans
in each Pool which were the subject of Principal Prepayments
during the Due Period;
(vii) the amount of all Curtailments which were
received during the Due Period, stated separately for each
Pool;
(viii) the aggregate amount of all Excess Payments
and the amounts of Monthly Payments in respect of principal
received during the Due Period, stated separately for each
Pool;
(ix) the amount of interest received on the Mortgage
Loans, stated separately for each Pool;
(x) the amount of the Monthly Advances to be made on
the Determination Date, the portion of the Monthly Advances to
be deposited in the Certificate Accounts pursuant to Section
6.01(a)(ii), and the Compensating Interest payment to be made
on the Determination Date, in each case stated separately for
each Pool;
(xi) the delinquency and foreclosure information set
forth in the form attached hereto as Exhibit O, stated
separately for each Pool;
(xii) the amount of any Realized Losses incurred
during the related Due Period, stated separately for each
Pool;
(xiii) the Pool Remittance Amounts for Pool I and
Pool IV and the Class Current Interest Requirement and the
Pool Principal Distribution Amount for Pool II and Pool III
for the Remittance Date, in the aggregate and by component and
listed separately for the portions relating to each Class of
Certificates in the related Pool, any Interest Shortfall
Carryforward Amount relating to each Class of Certificates
and, with respect to the Auction Rate Certificates, the amount
otherwise required to be distributed thereon with respect to
principal and retained in the Certificate Account for Pool II
pursuant to Section 6.08(f);
(xiv) the Reimbursable Amounts, the Pool I and Pool
II Strip Amounts and the Class X Remittance Amount payable
pursuant to Section 6.08(d)(X)(v), Section 6.08(d)(Y)(xviii)
and Section 6.08(d)(Z)(xviii) with respect to the Remittance
Date;
(xv) the Class Principal Balance for each Class of
Certificates and the Pool Principal Balance for each Pool
after giving effect to the distribution to be made on the
Remittance Date and after allocation of Realized Losses made
on such Remittance Date;
(xvi) the Monthly Excess Spread Percentage, the
Excess Spread, and the Remainder Excess Spread Amount (in each
case, in the aggregate and stated separately for each Pool);
(xvii) the Cumulative Realized Losses, stated
separately for each Pool, with respect to the
Remittance Date;
(xviii) the weighted average maturity and weighted
average Interest Rate, stated separately for each Pool;
(xix) the Servicing Fees, the Contingency Fees, the
Auction Agent Fees and amounts to be deposited to the Expense
Accounts, the Insurance Accounts and the FHA Premium Account,
in each case, as applicable, stated separately for each Pool;
(xx) the amount of all payments and reimbursements to
the Servicer pursuant to Section 5.04(b), (c), (d)(ii), (e)
and (f)(i), stated separately with respect to each Pool;
(xxi) the Class Pool Factor for each Class determined
using the balances in subclause (xv) above;
(xxii) the weighted average Mortgage Interest Rate
and Adjusted Mortgage Interest Rate of the Mortgage Loans for
each Pool and the weighted average Class Adjusted Loan
Remittance Rates for each Pool, in each case for the related
Remittance Date, and the weighted average Mortgage Interest
Rate for the prior three month period;
(xxiii) the Class AV, Class MV-1, Class MV-2 and
Class BV Remittance Rates with respect to the Remittance Date
and if any of the Class AV, Class MV-1, Class MV-2 and Class
BV Remittance Rates was based on the applicable Net Funds Cap
for the related Pool, what it would have been if based on
LIBOR plus the applicable Margin or the Auction Rate, as the
case may be;
(xxiv) the rate of LIBOR and the Auction Rate with
respect to the Remittance Date;
(xxv) the Net Funds Cap for each Class of Pool II
Certificates with respect to the Remittance Date;
(xxvi) if the Remittance Rate for Class of Pool II
Certificates for such Remittance Date is based on the Net
Funds Cap, the amount of any Certificateholders' Interest
Carryover for such Class for such Remittance Date;
(xxvii) the amount of the distribution, if any,
allocable to Certificateholders' Interest Carryover and the
amount of any Certificateholders' Interest Carryover for all
prior Remittance Dates after giving effect to such
distribution (in each case, stated separately by
Class and in the aggregate);
(xxviii) whether the Trigger Event for Pool II and
Pool III and the S&P Trigger and the Pool II Cumulative Loss
Trigger for Pool II is in effect;
(xxix) the Senior Percentage and the Class B
Percentage for the current Remittance Date;
(xxx) the amount of any Applied Realized Loss Amount,
Realized Loss Amount and Unpaid Realized Loss Amount for each
Class of Pool II and Pool III Certificates as of the close of
such Remittance Date;
(xxxi) the Accelerated Principal Distribution
Amount for Pool II and Pool III for such Remittance
Date;
(xxxii) the amount to be deposited into the FHA
Premium Account on the related Remittance Date and the amount
reimbursable to the Servicer and/or the Certificate Insurer
from the FHA Premium Account pursuant to Section 6.06(b)(i);
(xxxiii) The amount of FHA Payments and Related
Payments received during the related Due Period;
(xxxiv) The Reserve Amount for the related
Remittance Date;
(xxxv) Claims filed during the Due Period;
(xxxvi) Claims paid during the Due Period;
(xxxvii) Claims denied by the FHA during the Due
Period;
(xxxviii) Claims pending payment by the FHA during
the Due Period; and
(xxxix) Such other information as the Certificate
Insurer and the Certificateholders may reasonably require.
The Trustee shall forward such report to the
Certificateholders and, with respect to the report on the Pool I and Pool IV
Mortgage Loans, to the Certificate Insurer on the Remittance Date, together with
a separate report indicating the amount of funds deposited in each Certificate
Account pursuant to Section 6.01(a)(iv); and the amounts which are reimbursable
to the Servicer or the Representative, as appropriate, pursuant to Sections
6.03(c)(i), 6.03(c)(ii), 6.04(b)(iv), 6.08(d)(X)(iii), 6.08(d)(Y) and 6.08(d)(Z)
(all reports prepared by the Trustee of such withdrawals and deposits will be
based in whole or in part upon the information provided to the Trustee by the
Servicer or the Claims Administrator).
To the extent that there are inconsistencies between the telecopy of the
Servicer's Certificate and the hard copy thereof, the Trustee shall be entitled
to rely upon the telecopy. In the discretion of the Servicer, in the case of
certain information furnished pursuant to the above provisions, the amounts
shall be expressed in a separate section of the report as a dollar amount for
each Class per $1,000 (or, in the case of the Auction Rate Certificates, per
$25,000) original dollar amount as of the Cut-Off Date.
Additionally, on the Special Remittance Date the Trustee shall, based upon
information received from the Servicer, forward to the Certificateholders and
the Rating Agencies, a report setting forth the amount of principal and
interest, if any, being paid to each Class of Certificates on the Special
Remittance Date, and to the Certificate Insurer, a report setting forth such
information only with respect to the Pool I and Pool IV Certificates.
(a) Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish to the Trustee for distribution to each Person who at
any time during the calendar year was a Certificateholder the amount of interest
and principal distributed with respect to each Class of Certificates plus such
other customary information as the Servicer determines to be necessary and/or
required by the Internal Revenue Service to enable the Certificateholders to
prepare their tax returns for such calendar year. Such obligation of the
Servicer shall be deemed to have been satisfied to the extent that substantially
comparable information shall be provided by the Servicer pursuant to any
requirements of the Code as from time to time are in force.
(b) On each Remittance Date and the Special Remittance Date, the Trustee
shall forward to the Class X and Class R Certificateholders a copy of the report
forwarded to the Certificateholders of each Pool in respect of such Remittance
Date or the Special Remittance Date, as the case may be, and a statement setting
forth the amounts actually distributed to the Class X and Class R
Certificateholders, on such Remittance Date together with such other information
as the Servicer provides and deems necessary or appropriate.
(c) Within a reasonable period of time after the end of each calendar year,
the Servicer shall furnish to the Trustee for distribution to each Person who at
any time during the calendar year was a Class X or Class R Certificateholder
such information as is reasonably necessary to provide to such Person a
statement containing the information provided pursuant to the previous paragraph
aggregated for such calendar year or applicable portion thereof during which
such Person was a Class X or R Certificateholder, as applicable. Such obligation
of the Servicer shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Servicer pursuant
to any requirements of the Code as from time to time in force.
(d) Upon reasonable advance notice in writing, the Servicer will provide to
each Certificateholder which is a savings and loan association, bank or
insurance company certain reports and access to information and documentation
regarding the Mortgage Loans sufficient to permit such Certificateholder to
comply with applicable regulations of the Office of Thrift Supervision or other
regulatory authorities with respect to investment in the Certificates.
(e) The Servicer shall furnish to each Certificateholder and the
Certificate Insurer, during the term of this Agreement, such periodic, special,
or other reports or information, whether or not provided for herein, as shall be
necessary, reasonable, or appropriate with respect to the Certificateholder or
the Certificate Insurer, or otherwise with respect to the purposes of this
Agreement, all such reports or information to be provided by and in accordance
with such applicable instructions and directions as the Certificateholder or the
Certificate Insurer may reasonably require; provided, that the Servicer shall be
entitled to be reimbursed by such Certificateholder or the Certificate Insurer
for the Servicer's actual expenses incurred in providing such reports if such
reports are not producible in the ordinary course of the Servicer's business.
Section 6.11 Advances by the Servicer.
Not later than the close of business on each Determination Date, the
Servicer shall remit to the Trustee for deposit in the applicable Certificate
Account an amount (as indicated in the Servicer's Certificate prepared pursuant
to Section 6.10), to be distributed on the related Remittance Date pursuant to
Section 6.08, equal to the amount, if any, by which (a) the sum of (i) the
amount equal to 30 days' interest (or, with respect to the Pool II Certificates,
the actual number of days since the last Remittance Date or, in the case of the
October 1997 Remittance Date, from September 15, 1997) with respect to the
Adjustable Rate Certificates and from the Closing Date with respect to the
Auction Rate Certificates at the weighted average Class Adjusted Mortgage Loan
Remittance Rates for Certificates in the applicable Pool on the related Pool
Principal Balance immediately prior to the related Remittance Date plus (ii) the
Monthly Excess Spread relating to the Mortgage Loans of the related Pool with
respect to such Remittance Date exceeds (b) the amount received by the Servicer
as of the related Record Date in respect of interest on the Mortgage Loans of
the related Pool (and, with respect to the Remittance Dates in October, November
and December 1997, the sum of (i) all funds to be transferred to the applicable
Certificate Account from the Capitalized Interest Account for such Remittance
Date pursuant to Section 6.02(g) and (ii) the related Pool Pre-Funding Earnings
for the applicable Remittance Date). The sum of such excess calculated for each
Pool is defined herein as the "Monthly Advance." The Servicer may reimburse
itself for Monthly Advances made pursuant to Section 5.04.
Section 6.12 Compensating Interest.
The Certificateholders shall be entitled to a full month's interest for
each Mortgage Loan for any month during which a Principal Prepayment or
Curtailment is received on such Mortgage Loan. Not later than the close of
business on each Determination Date, with respect to each Mortgage Loan for
which a Principal Prepayment or Curtailment was received during the related Due
Period, the Servicer shall remit to the Trustee for deposit in the applicable
Certificate Account from amounts otherwise payable to it as servicing
compensation, an amount (such amount required to be delivered to the Trustee is
referred to herein as "Compensating Interest") (as indicated in the Servicer's
Certificate prepared pursuant to Section 6.10) equal to the difference between
(a) 30 days' interest (or, with respect to a Pool II Loan, the actual number of
days since the last Remittance Date to but not including the upcoming Remittance
Date or, with respect to the October 1997 Remittance Date, from September 15,
1997) at the then weighted average Class Adjusted Mortgage Loan Remittance Rates
for the applicable Pool on the Principal Balance of each such Mortgage Loan and
(b) the amount of interest actually received on each such Mortgage Loan for such
Due Period as of the beginning of the Due Period applicable to the Remittance
Date on which such amount will be distributed.
Section 6.13 Reports of Foreclosure and Abandonment of Mortgaged Property.
Each year the Trustee shall make the reports of foreclosures and
abandonments of any Mortgaged Property required by Section 6050J of the Code. In
order to facilitate this reporting process, the Servicer, on or before January
15th of each year, shall provide to the Trustee and the Certificate Insurer
reports relating to each instance occurring during the previous calendar year in
which the Servicer (i) on behalf of the Trust Fund acquires an interest in a
Mortgaged Property through foreclosure or other comparable conversion in full or
partial satisfaction of the Mortgage Loan, or (ii) knows or has reason to know
that a Mortgaged Property has been abandoned. The reports from the Servicer
shall be in form and substance sufficient to enable the Trustee to meet the
reporting requirements imposed by such Section 6050J. The Servicer will deliver
to the Trustee an aggregate summary of all information needed by the Trustee to
prepare such Section 6050J reports.
Section 6.14. Allocation of Total Monthly Excess Cashflow.
(a) On each Remittance Date, for each Pool of Mortgage Loans the Trustee
shall, based upon information provided in the related Servicer's Certificate
delivered pursuant to Section 6.10, allocate an amount equal to the sum of (x)
the Monthly Excess Spread with respect to each such Pool and Remittance Date
plus (y) any Subordination Reduction Amount with respect to each such Pool and
Remittance Date plus (z) with respect to Pool I or Pool IV any Pool Available
Remittance Amount Surplus with respect to each such Pool (such sum being the
"Total Monthly Excess Cashflow" with respect to such Pool and Remittance Date),
in the following order of priority:
(i) first, to the related Pool in an amount up to (A)
the Pool Available Remittance Amount Shortfall for such Pool
in the case of Pool I and Pool IV and (B) the excess of (x)
the sum of the aggregate Current Interest Requirements for the
Certificates of such respective Pool, plus the applicable
Class A and Class B Formula Principal Distribution Amounts
plus the Class MV-1 and Class MV-2 Formula Principal
Distribution Amounts with respect to Pool II and the Class
MH-1 and Class MH-2 Formula Principal Distribution Amounts
with respect to Pool III over (y) the Pool Available Amount
for the respective Pool calculated without giving effect to
the addition of any Total Monthly Excess Cashflows pursuant to
clause (ii) of the definition of Pool Available Amount;
(ii) second, with respect to Pool I and Pool IV to
the Certificate Insurer in respect of amounts owed on account
of any Insured Payments theretofore made with respect to the
related Pool of Mortgage Loans (any such amount so owed to the
Certificate Insurer and not theretofore paid, together with
accrued interest thereon, the "Insurer Reimbursable Amount"
with respect to the related Pool of Mortgage Loans); and
(iii) third, with respect to Pool I and Pool IV to
the Certificate Insurer in respect of any Insurer Reimbursable
Amount with respect to the other such Pool;
(b) The amount, if any, of the Total Monthly Excess Cashflow with respect
to a Pool of Mortgage Loans on a Remittance Date remaining after the allocations
described in (a) above is the "Net Monthly Excess Cashflow" with respect to such
Pool for such Remittance Date; such amount is required to be applied in the
following order of priority:
(i) first, in the case of Pool I and Pool II, the
Pool I Strip Amount and the Pool II Strip Amounts,
respectively, for allocation to the Class X Certificateholders
pursuant to Sections 6.08(d)(X)(v) and 6.08(d)(Y)(xviii);
(ii) second, to the related Pool, in an amount up to
the Subordinated Deficiency Amount for such Pool as of such
Remittance Date;
(iii) third, in the case of Pool II and Pool III to
reduce the related Class Interest Shortfall Carryforward
Amounts and then the Class Realized Loss Amounts in the order
provided under Section 6.08(d)(Y)(ix)-(xvi) and Section
6.08(d)(Z)(ix)- (xvi), respectively;
(iv) fourth, in the case of Pool I and Pool IV to the
Spread Account until the amount deposited therein is at its
required level;
(v) fifth, to the Servicer to the extent of any
unreimbursed Servicing Advances and accrued and unpaid
Servicing Fees;
(vi) sixth, to the Pool II Certificateholders to the
extent of any Certificateholders' Interest Carryover owing for
such Remittance Date and all prior Remittance Dates (to the
extent such Net Monthly Excess Cashflow is attributable to
Pool II Mortgage Loans);
(vii) seventh, in the case of Pool I and Pool IV, to
pay the Certificateholders of the other such Pool (in the
order provided for the payment of principal in the case of
Pool I) an amount up to the amount of any Subordinated
Deficiency Amount until its Specified Subordination Amount is
reached;
(viii) eighth, to provide funds to Pool I and/or Pool
IV to cover any Subordination Deficit with respect to such
respective Pool prior to a claim being made against the
applicable Certificate Insurance Policy and/or to Pool II
and/or Pool III to cover current Realized Losses which would
otherwise be allocated in reduction of the Class Principal
Balances of one or more Classes of Certificates of such Pool
on such Remittance Date, pro rata, based on the amount so
required by each such Pool; and
(ix) ninth, any excess to the Holders of the Class X
Certificates.
Section 6.15 Establishment of Servicing Accounts; Collection of Taxes,
Assessments and Similar Items.
(a) The Servicer shall establish and maintain, or cause to be established
and maintained, one or more Servicing Accounts. The Servicer will deposit and
retain, or cause to be deposited and retained, therein all collections from the
Mortgagors for the payment of taxes, assessments, insurance premiums, or
comparable items as agent of the Mortgagors.
(b) The deposits in the Servicing Accounts shall be held in a Designated
Depository Institution in an account designated as a "Mortgage Loan Servicing
Account," held in trust by the Servicer or a Subservicer acting on its own
behalf and as agent for holders of various pass-through securities and other
interests in mortgage loans sold by it. The amount at any time credited to a
Servicing Account must be fully insured by FDIC, or, to the extent that such
deposits exceed the limits of such insurance, such excess must be (i)
transferred to another fully insured account in another Designated Depository
Institution or (ii) if permitted by applicable law, invested in Permitted
Investments held in trust by the Servicer or a Subservicer. Withdrawals of
amounts from the Servicing Accounts may be made only to effect timely payment of
taxes, assessments, insurance premiums, or comparable items, to reimburse the
related Servicer or Subservicer for any advances made with respect to such
items, to refund to any Mortgagors any sums as may be determined to be overages,
to pay interest, if required, to Mortgagors on balances in the Servicing
Accounts, to pay the related Servicer or Subservicer the remainder of any income
on balances in the Servicing Accounts or to clear and terminate the Servicing
Accounts at or any time after the termination of this Agreement.
<PAGE>
ARTICLE VII
GENERAL SERVICING PROCEDURE
Section 7.01 Assumption Agreements.
When a Mortgaged Property has been or is about to be conveyed by the
Mortgagor, the Servicer shall, to the extent it has knowledge of such conveyance
or prospective conveyance, exercise its rights to accelerate the maturity of the
related Mortgage Loan under any "due-on-sale" clause contained in the related
Mortgage or Mortgage Note; provided, however, that the Servicer shall not
exercise any such right if the "due-on-sale" clause, in the reasonable belief of
the Servicer, is not enforceable under applicable law or if such enforcement
would materially increase the risk of default or delinquency on, or materially
decrease the security for, such Mortgage Loan. In such event, the Servicer shall
enter into an assumption and modification agreement with the person to whom such
property has been or is about to be conveyed, pursuant to which such person
becomes liable under the Mortgage Note and, unless prohibited by applicable law
or the Mortgage, the Mortgagor remains liable thereon. The Servicer is also
authorized to enter into a substitution of liability agreement with such person,
pursuant to which the original Mortgagor is released from liability and such
person is substituted as Mortgagor and becomes liable under the Mortgage Note;
provided, however, that if any such Mortgaged Property shall constitute a part
of either Pool I or Pool IV, the Servicer must obtain the prior approval of the
Certificate Insurer. The Servicer shall notify the Trustee (and, with respect to
Pool III Mortgage Loans, the Co-Trustee and the Custodian and, with respect to
Pool I or Pool IV Mortgage Loans, the Certificate Insurer, that any such
substitution or assumption agreement has been completed by forwarding to the
Trustee (and, with respect to the Pool III Mortgage Loans, the Custodian) the
original of such substitution or assumption agreement and in the case of Pool I
and Pool IV Mortgage Loans, a duplicate thereof to the Certificate Insurer,
which original shall be added by the Trustee (and, with respect to the Pool III
Mortgage Loans, the Custodian) to the related Trustee's Mortgage File and shall,
for all purposes, be considered a part of such Trustee's Mortgage File to the
same extent as all other documents and instruments constituting a part thereof.
In connection with any assumption or substitution agreement entered into
pursuant to this Section 7.01, the Servicer shall not change the Mortgage
Interest Rate or the Monthly Payment, defer or forgive the payment of principal
or interest, reduce the outstanding principal amount or extend the final
maturity date on such Mortgage Loan. Any fee collected by the Servicer for
consenting to any such conveyance or entering into an assumption or substitution
agreement shall be retained by or paid to the Servicer as additional servicing
compensation.
Notwithstanding the foregoing paragraph or any other provision of this
Agreement, (i) the Servicer shall not be deemed to be in default, breach or any
other violation of its obligations hereunder by reason of any assumption of a
Mortgage Loan by operation of law or any assumption which the Servicer may be
restricted by law from preventing, for any reason whatsoever; and (ii) the
Servicer shall not take any action which would adversely affect the coverage of
an FHA Loan for insurance by the FHA under Title I.
Section 7.02 Satisfaction of Mortgages and Release of Mortgage Files.
The Servicer shall not grant a satisfaction or release of a Mortgage
without having obtained payment in full of the indebtedness secured by the
Mortgage or otherwise prejudice any right the Certificateholders may have under
the mortgage instruments, subject to Section 5.01 hereof. The Servicer shall
maintain the Fidelity Bond as provided for in Section 5.09 insuring the Servicer
against any loss it may sustain with respect to any Mortgage Loan not satisfied
in accordance with the procedures set forth herein.
Upon the payment in full of any Mortgage Loan, or the receipt by the
Servicer of a notification that payment in full will be escrowed in a manner
customary for such purposes, the Servicer will immediately notify the Trustee
(and, with respect to the Pool III Mortgage Loans, the Custodian), by an
Officers' Certificate in the form of Exhibit J attached hereto (which
certification shall include a statement to the effect that all amounts received
or to be received in connection with such payment which are required to be
deposited in the applicable Principal and Interest Account pursuant to Section
5.03 have been or will be so deposited) of a Servicing Officer and shall request
delivery to it of the Trustee's Mortgage File. Upon receipt of such
certification and request, the Trustee (and, with respect to the Pool III
Mortgage Loans, the Custodian) shall promptly release the related Trustee's
Mortgage File to the Servicer. Expenses incurred in connection with any
instrument of satisfaction or deed of reconveyance shall be payable only from
and to the extent of servicing compensation and shall not be chargeable to the
Principal and Interest Account or the Certificate Accounts.
From time to time and as appropriate for the servicing or foreclosure of
any Mortgage Loan, including, for this purpose, collection under any primary
mortgage guaranty insurance policy, the Trustee (and, with respect to the Pool
III Mortgage Loans, the Custodian) shall, upon request of the Servicer and
delivery to the Trustee (and, with respect to the Pool III Mortgage Loans, the
Custodian) of a certification in the form of Exhibit J attached hereto signed by
a Servicing Officer, release the related Trustee's Mortgage File to the
Servicer, and the Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian and the Co-Trustee) shall execute such documents as shall be necessary
to the prosecution of any such proceedings. Such servicing receipt shall
obligate the Servicer to return the Mortgage File to the Trustee (or, with
respect to the Pool III Mortgage Loans, the Custodian) when the need therefor by
the Servicer no longer exists, unless the Mortgage Loan has been liquidated and
the Liquidation Proceeds relating to the Mortgage Loan have been deposited in
the applicable Principal and Interest Account and remitted to the Trustee for
deposit in the applicable Certificate Account or the Mortgage File or such
document has been delivered to an attorney, or to a public trustee or other
public official as required by law, for purposes of initiating or pursuing legal
action or other proceedings for the foreclosure of the Mortgaged Property either
judicially or non-judicially, and the Servicer has delivered to the Trustee
(and, with respect to the Pool III Mortgage Loans, the Custodian) a certificate
of a Servicing Officer certifying as to the name and address of the Person to
which such Mortgage File or such document was delivered and the purpose or
purposes of such delivery. Upon receipt of a certificate of a Servicing Officer
stating that such Mortgage Loan was liquidated, the servicing receipt shall be
released by the Trustee (or, with respect to the Pool III Mortgage Loans, the
Custodian) to the Servicer.
The Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee) shall execute and deliver to the Servicer any court pleadings,
requests for trustee's sale or other documents 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 (or, with respect to the Pool III Mortgage Loans, the Co-Trustee) a
certificate of a Servicing Officer requesting that such pleadings or documents
be executed by the Trustee (or, with respect to the Pool III Mortgage Loans, the
Co- Trustee) and certifying as to the reason such documents or pleadings are
required and that the execution and delivery thereof by the Trustee (or, with
respect to the Pool III Mortgage Loans, the Co-Trustee) will not invalidate or
otherwise affect the lien of the Mortgage, except for the termination of such a
lien upon completion of the foreclosure or trustee's sale. The Trustee (or, with
respect to the Pool III Mortgage Loans, the Co-Trustee) shall, upon receipt of a
written request from a Servicing Officer, execute any document provided to the
Trustee (or, with respect to the Pool III Mortgage Loans, the Co-Trustee) by the
Servicer or take any other action requested in such request, that is, in the
opinion of the Servicer as evidenced by such request, required by any state or
other jurisdiction to discharge the lien of a Mortgage upon the satisfaction
thereof and the Trustee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee) will sign and post, but will not guarantee receipt of, any such
documents to the Servicer, or such other party as the Servicer may direct,
within five Business Days of the Trustee's (or, with respect to the Pool III
Mortgage Loans, the Co-Trustee's) receipt of such certificate or documents. Such
certificate or documents shall establish to the Trustee's (or, with respect to
the Pool III Mortgage Loans, the Co-Trustee's) satisfaction that the related
Mortgage Loan has been paid in full by or on behalf of the Mortgagor and that
such payment has been deposited in the applicable Principal and Interest
Account.
Section 7.03 Servicing Compensation and Contingency Fee.
(a) As compensation for its services hereunder, the Servicer shall be
entitled to withdraw from the applicable Principal and Interest Account or to
retain from interest payments on the Mortgage Loans the Servicer's Servicing
Fee. Additional servicing compensation in the form of assumption and other
administrative fees, prepayment penalties and premiums, interest paid on funds
on deposit in the Principal and Interest Account, interest paid and earnings
realized on Permitted Instruments, amounts remitted pursuant to Sections
6.03(c)(iii) and 6.04(b)(ii) and late payment charges shall be retained by or
remitted to the Servicer to the extent not required to be remitted to the
Trustee for deposit in the applicable Certificate Account. The Servicer shall be
required to pay all expenses incurred by it in connection with its servicing
activities hereunder and shall not be entitled to reimbursement therefor except
as specifically provided for herein.
(b) The Servicer shall be entitled to withdraw from the applicable
Principal and Interest Account or to retain from interest payments on the
Mortgage Loans the Contingency Fee. In the event that The Money Store Inc. is
terminated as Servicer pursuant to this Agreement, any duly appointed successor
to the Servicer shall also be entitled to withdraw from the applicable Principal
and Interest Account or to retain from interest payments on the Mortgage Loans
the successor Servicer's Contingency Fee.
Section 7.04 Annual Statement as to Compliance.
The Servicer will deliver to the Certificate Insurer, the Trustee, the
Co-Trustee and each of the Rating Agencies, on or before March 31 of each year
beginning March 31, 1998, an Officers' Certificate stating that (i) the Servicer
has fully complied with the provisions of Articles V and VII and the Claims
Administrator has fully complied with Section 5.15, (ii) a review of the
activities of the Servicer and the Claim Administrator during the preceding
calendar year and of performance under this Agreement has been made under such
officers' supervision, and (iii) to the best of such officers' 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
officers and the nature and status thereof and the action being taken by the
Servicer and the Claims Administrator, as applicable, to cure such default.
Section 7.05 Annual Independent Public Accountants' Servicing Report.
On or before March 31 of each year beginning March 31, 1998, the Servicer,
at its expense, shall cause a firm of independent public accountants reasonably
acceptable to the Trustee and the Certificate Insurer to furnish a letter or
letters to the Certificate Insurer, the Trustee, the Co- Trustee and the Rating
Agencies to the effect that such firm has with respect to the Servicer's overall
servicing operations examined such operations in accordance with the
requirements of the Uniform Single Audit Program for Mortgage Bankers, and
stating such firm's conclusions relating thereto.
Section 7.06 Trustee's, Co-Trustee's and Certificate Insurer's Right to
Examine Servicer Records and Audit Operations.
The Trustee, the Co-Trustee and the Certificate Insurer shall have the
right upon reasonable prior notice, during normal business hours and as often as
reasonably required, to examine and audit any and all of the books, records or
other information of the Servicer and the Claims Administrator, whether held by
the Servicer or by another on behalf of the Servicer and the Claims
Administrator, which may be relevant to the performance or observance by the
Servicer and the Claims Administrator of the terms, covenants or conditions of
this Agreement. The Certificate Insurer shall have the right upon reasonable
prior notice, during normal business hours and as often as reasonably required
to perform ongoing diligence of the Servicer's operations through loans reviews,
re-appraisals or other reasonable review of Servicer operations. No amounts
payable in respect of the foregoing shall be paid from the Trust Fund.
Section 7.07 Reports to the Trustee and the Certificate Insurer; Principal
and Interest Account Statements.
Not later than 20 days after each Record Date, the Servicer shall forward
to the Trustee a statement, certified by a Servicing Officer, setting forth the
status of each Principal and Interest Account as of the close of business on the
preceding Record Date and showing, for the period covered by such statement, the
aggregate of deposits into each Principal and Interest Account for each category
of deposit specified in Section 5.03, the aggregate of withdrawals from each
Principal and Interest Account for each category of withdrawal specified in
Section 5.04, the aggregate amount of permitted withdrawals not made in the
related Due Period, and the amount of any Monthly Advances or payments of
Compensating Interest, in each case, for the related Due Period. The Servicer
shall also forward a copy of such report containing such information for Pool I
and Pool IV to the Certificate Insurer. In addition, the Servicer shall deliver
to the Certificate Insurer on a quarterly basis, beginning in January 1997, a
computer diskette containing a quarterly summary of the information provided in
the statement forwarded to the the Certificate Insurer pursuant to the previous
sentence, and also containing information similar to the information provided in
the Mortgage Loan Schedule delivered to the Trustee as Exhibits H and H-3.
<PAGE>
ARTICLE VIII
REPORTS TO BE PROVIDED BY SERVICER
Section 8.01 Financial Statements.
The Servicer understands that, in connection with the transfer of the
Certificates, Certificateholders may request that the Servicer make available to
prospective Certificateholders annual audited financial statements of the
Servicer for one or more of the most recently completed five fiscal years for
which such statements are available, which request shall not be unreasonably
denied.
<PAGE>
ARTICLE IX
THE SERVICER
Section 9.01 Indemnification; Third Party Claims.
(a) The Servicer agrees to indemnify and hold the Trustee, the Co-Trustee,
the Certificate Insurer and each Certificateholder harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments, and any other costs, fees and expenses that the Trustee, the
Co-Trustee, the Certificate Insurer and any Certificateholder may sustain in any
way related to the failure of the Servicer and the Claims Administrator to
perform its duties and service the Mortgage Loans in compliance with the terms
of this Agreement. The Servicer shall immediately notify the Trustee, the
Co-Trustee, the Certificate Insurer and each Certificateholder if a claim is
made by a third party with respect to this Agreement, and the Servicer shall
assume (with the consent of the Trustee) the defense of any such claim and pay
all expenses in connection therewith, including reasonable counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Servicer, the Claims Administrator, the Trustee, the Co- Trustee,
the Certificate Insurer and/or Certificateholder in respect of such claim. The
Trustee may reimburse the Servicer from the related Expense Account pursuant to
Section 6.03(c)(i), and, if necessary, from amounts otherwise payable to the
Holders of the Class X Certificates from the Pool Remaining Amount Available
with respect to each Pool for all amounts advanced by it pursuant to the
preceding sentence with respect to the Trust Fund except when the Claim relates
directly to the failure of the Servicer or the Claims Administrator to service
and administer the Mortgages in compliance with the terms of this Agreement.
(b) The Representative agrees to indemnify and hold the Trustee, the
Co-Trustee, the Certificate Insurer and each Certificateholder harmless against
any and all claims, losses, penalties, fines, forfeitures, legal fees and
related costs, judgments, and any other costs, fees and expenses that the
Trustee, the Co-Trustee, the Certificate Insurer and any Certificateholder may
sustain in any way related to the failure of the Servicer, if it is an affiliate
thereof, or the failure of the Representative to perform their respective duties
in compliance with the terms of this Agreement and in the best interests of the
Certificate Insurer and the Certificateholders. The Representative shall
immediately notify the Trustee, the Co-Trustee, the Certificate Insurer and each
Certificateholder if a claim is made by a third party with respect to this
Agreement, and the Representative shall assume (with the consent of the Trustee)
the defense of any such claim and pay all expenses in connection therewith,
including reasonable counsel fees, and promptly pay, discharge and satisfy any
judgment or decree which may be entered against the Servicer, the
Representative, the Trustee, the Co-Trustee, the Certificate Insurer and/or
Certificateholder in respect of such claim. The Trustee may reimburse the
Representative from the related Expense Account pursuant to Section 6.03(c)(i),
and, if necessary, from amounts otherwise payable to the Holders of the Class X
Certificates from the Pool Remaining Amount Available with respect to each Pool
for all amounts advanced by it pursuant to the preceding sentence with respect
to the Trust Fund except when the claim relates directly to the Representative's
indemnification pursuant to Section 2.05 and Section 3.03 or to the failure of
the Servicer, if it is an affiliate of the Representative, to perform its
obligations to service and administer the Mortgages in compliance with the terms
of this Agreement, or the failure of the Representative to perform its duties in
compliance with the terms of this Agreement and in the best interests of the
Certificate Insurer and the Certificateholders.
Section 9.02 Merger or Consolidation of the Representative, the Servicer
and the Claims Administrator.
The Servicer, the Representative and the Claims Administrator 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 necessary to protect the validity and
enforceability of this Agreement or any of the Mortgage Loans and to perform its
duties under this Agreement.
Any Person into which the Servicer, the Representative may be merged or
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Servicer, the Representative or the Claims
Administrator shall be a party, or any Person succeeding to the business of the
Servicer, the Representative or the Claims Administrator, shall be an
established mortgage loan servicing institution that has a net worth of at least
$15,000,000 and a valid Contract of Insurance and shall be the successor of the
Servicer, the Representative or the Claims Administrator, as applicable,
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. The Servicer, the Representative or the Claims Administrator
shall send notice of any such merger or consolidation to the Trustee, the
Co-Trustee and the Certificate Insurer.
Section 9.03 Limitation on Liability of the Servicer and Others.
The Servicer and the Claims Administrator and any director, officer,
employee or agent of the Servicer and the Claims Administrator may rely on any
document of any kind which it in good faith reasonably believes to be genuine
and to have been adopted or signed by the proper authorities respecting any
matters arising hereunder. Subject to the terms of Section 9.01 herein, the
Servicer and the Claims Administrator shall have no obligation to appear with
respect to, prosecute or defend any legal action which is not incidental to the
Servicer's duty to service the Mortgage Loans in accordance with this Agreement.
Section 9.04 Servicer and Claims Administrator Not to Resign.
The Servicer and the Claims Administrator shall not assign this Agreement
nor resign from the obligations and duties hereby imposed on it except by mutual
consent of the Servicer, the Claims Administrator, the Certificate Insurer, the
Trustee and the Majority Certificateholders, or upon the determination that the
Servicer's or Claims Administrator's duties hereunder are no longer permissible
under applicable law and such incapacity cannot be cured by the Servicer or the
Claims Administrator. Any such determination permitting the resignation of the
Servicer and the Claims Administrator shall be evidenced by a written Opinion of
Counsel (who may be counsel for the Servicer and the Claims Administrator) to
such effect delivered to the Trustee, the Co-Trustee, the Certificate Insurer
and to each Certificateholder, which Opinion of Counsel shall be in form and
substance acceptable to the Trustee and the Certificate Insurer. No such
resignation shall become effective until a successor has assumed the Servicer's
or the Claims Administrator's responsibilities and obligations hereunder in
accordance with Section 10.02.
Section 9.05 Appointment of Assistant Claims Administrator.
The Claims Administrator hereby appoints TMS Mortgage Inc., a New Jersey
corporation, as Assistant Claims Administrator and, in such capacity, the
Assistant Claims Administrator shall have all the rights, powers, obligations
and duties of the Claims Administrator in acting in such capacity.
Notwithstanding such appointment, the Claims Administrator shall remain
obligated to the Trustee, the Co-Trustee and the Certificateholders in
accordance with the provisions of this Agreement.
Section 9.06 Right of Certificate Insurer to Replace Servicer and Claims
Administrator.
From and after the occurrence of a Servicing Delinquency Trigger (i) with
respect to Pool I or Pool IV, the Certificate Insurer or (ii) with respect to
Pool II or Pool III, the Majority Certificateholders of Pool II and Pool III
Certificates taken together may, upon written notice to the Trustee, the
Co-Trustee and the Rating Agencies and in the case of clause (ii) with the
consent of the Certificate Insurer, replace the Servicer and/or the Claims
Administrator with a successor. No such replacement shall become effective until
a successor has assumed the Servicer's and/or the Claims Administrator's
responsibilities and obligations hereunder in accordance with Section 10.02.
<PAGE>
ARTICLE X
DEFAULT
Section 10.01 Events of Default.
(a) In case one or more of the following Events of Default shall occur and
be continuing, that is to say:
(i) (A) an Event of Nonpayment; (B) the failure by
the Servicer to make any required Servicing Advance, to the
extent such failure materially and adversely affects the
interests of the Certificate Insurer or the
Certificateholders; (C) the failure by the Servicer to make
any required Monthly Advance; (D) the failure by the Servicer
to remit any Compensating Interest; (E) the failure by the
Servicer to pay the FHA Insurance Premium relating to any FHA
Loan or (F) any failure by the Servicer or the Claims
Administrator to remit to Certificateholders, or to the
Trustee for the benefit of the Certificateholders, any payment
required to be made under the terms of this Agreement which,
except with respect to FHA Payments to which no grace period
shall apply, continues unremedied 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 to the Servicer and the Trustee by any Certificateholder or
the Certificate Insurer; or
(ii) failure by the Servicer, the Claims
Administrator or the Representative duly to observe or
perform, in any material respect, any other covenants,
obligations or agreements of the Servicer, the Claims
Administrator or the Representative as set forth in this
Agreement, which failure continues unremedied for a period of
60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been
given to the Servicer, the Claims Administrator or the
Representative, as the case may be, by the Trustee or to the
Servicer, the Claims Administrator or the Representative, as
the case may be, and the Trustee by any Certificateholder or
the Certificate Insurer; or
(iii) 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 or
the Claims Administrator and such decree or order shall have
remained in force, undischarged or unstayed for a period of 60
days; or
(iv) the Servicer or the Claims Administrator shall
consent to the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings
of or relating to the Servicer or the Claims Administrator or
of or relating to all or substantially all of the Servicer's
or the Claims Administrator's property; or
(v) the Servicer or the Claims Administrator shall
admit in writing its inability to pay its debts as they become
due, file a petition to take advantage of any applicable
insolvency or reorganization statute, make an assignment for
the benefit of its creditors, or voluntarily suspend payment
of its obligations;
(b) then, and in each and every such case, so long as an Event of Default
shall not have been remedied, and in the case of clause (i) above (except for
clause (i)(C) or, with respect to FHA Payments, clause (i)(F)), if such Event of
Default shall not have been remedied within 30 days after the Servicer or the
Claims Administrator has received notice of such Event of Default, (x) with
respect solely to clause (i)(C) above, if such Monthly Advance is not made
earlier than 4:00 p.m. New York time on the Determination Date, the Trustee
shall give immediate telephonic notice of such failure to a Servicing Officer of
the Servicer or the Claims Administrator, as the case may be, and, unless such
failure is cured, either by receipt of payment or receipt of evidence
satisfactory to the Certificate Insurer (e.g., a wire reference number
communicated by the sending bank) that such funds have been sent, by 12:00 Noon
New York time on the following Business Day, the Trustee (or, with respect to
the Pool III Mortgage Loans, the Co-Trustee) shall immediately assume, pursuant
to Section 10.02 hereof, the duties of a successor Servicer and the Claims
Administrator; and (y) in the case of clauses (i)(A), (i)(B), (i)(D), (i)(E),
(i)(F), (ii), (iii), (iv) and (v), the Certificate Insurer or the Majority
Certificateholders, subject to the prior written consent of the Certificate
Insurer, which consent may not be unreasonably withheld, by notice in writing to
the Servicer and the Claims Administrator, may, in addition to whatever rights
such Certificateholders or the Certificate Insurer may have at law or equity
including damages, injunctive relief and specific performance, in each case
commence termination of all the rights and obligations of the Servicer and the
Claims Administrator under this Agreement and in and to the Mortgage Loans and
the proceeds thereof, as Servicer and the Claims Administrator. Upon receipt by
the Servicer and the Claims Administrator of a second written notice from the
Certificate Insurer or the Majority Certificateholders stating that they or it
intend to terminate the Servicer and the Claims Administrator as a result of
such Event of Default, all authority and power of the Servicer and the Claims
Administrator under this Agreement, whether with respect to the Mortgage Loans
or otherwise, shall, subject to Section 10.02, pass to and be vested in the
Trustee or its designee (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee or its designee) and the Trustee (or, with respect to the Pool III
Mortgage Loans, the Co-Trustee) is hereby authorized and empowered to execute
and deliver, on behalf of the Servicer and the Claims Administrator, as
attorney-in-fact or otherwise, any and all documents and other instruments and
do or cause to be done all other acts or things necessary or appropriate to
effect the purposes of such notice of termination, including, but not limited
to, the transfer and endorsement or assignment of the Mortgage Loans and related
documents. The Servicer and the Claims Administrator agree to cooperate with the
Trustee and the Co-Trustee in effecting the termination of the Servicer's and
the Claims Administrator's responsibilities and rights hereunder, including,
without limitation, the transfer to the Trustee or its designee for
administration by it of all amounts which shall at the time be credited by the
Servicer to each Principal and Interest Account or thereafter received with
respect to the Mortgage Loans.
Section 10.02 Trustee and Co-Trustee to Act; Appointment of Successor.
On and after the time the Servicer or the Claims Administrator receives a
notice of termination pursuant to Section 10.01 or the Trustee receives the
resignation of the Servicer and the Claims Administrator evidenced by an Opinion
of Counsel pursuant to Section 9.04 or the Servicer and the Claims Administrator
are removed as servicer and claims administrator pursuant to this Article X, the
Trustee (or, with respect to the Pool III Mortgage Loans, the Co-Trustee) shall
be the successor in all respects to the Servicer in its capacity as servicer and
the Claims Administrator in its capacity as claims administrator under this
Agreement and the transactions set forth or provided for herein and shall be
subject to all the responsibilities, duties and liabilities relating thereto
placed on the Servicer and the Claims Administrator by the terms and provisions
hereof, provided, however, that the Trustee and the Co-Trustee shall not be
liable for any actions of any servicer or claims administrator prior to it, and
that the Trustee and the Co-Trustee shall not be obligated to make advances or
payments pursuant to Sections 6.03, 6.04, 6.11, 6.12, 5.05, 5.10 or 5.14 but
only to the extent the Trustee or the Co-Trustee, as the case may be, determines
reasonably and in good faith that such advances would not be recoverable, such
determination to be evidenced with respect to each such advance by a
certification of a Responsible Officer of the Trustee or the Co-Trustee, as the
case may be. As compensation therefor, the Trustee (or, with respect to the Pool
III Mortgage Loans, the Co-Trustee) shall be entitled to all funds relating to
the Mortgage Loans which the Servicer and Claims Administrator would have been
entitled to receive from the Principal and Interest Account pursuant to Section
5.04 if the Servicer had continued to act as servicer and claims administrator
hereunder, together with other servicing compensation in the form of assumption
fees, late payment charges, the Contingency Fee or otherwise as provided in
Sections 7.01 and 7.03.
Notwithstanding the above, the Trustee or the Co-Trustee may, if it shall
be unwilling to so act, or shall, if it is unable to so act or if the Majority
Certificateholders or the Certificate Insurer so request in writing to the
Trustee or the Co-Trustee, appoint, or petition a court of competent
jurisdiction to appoint, any established mortgage loan servicing institution
acceptable to the Certificate Insurer, which acceptance shall not be
unreasonably withheld, that has a net worth of not less than $15,000,000 and
which is approved as a servicer by FNMA and FHLMC (and, in the case of FHA
Loans, is a Title I approved lender pursuant to FHA Regulations) as the
successor to the Servicer and the Claims Administrator hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer and the Claims Administrator hereunder. Any collections received by
the Servicer and the Claims Administrator after removal or resignation shall be
endorsed by it to the Trustee and remitted directly to the Trustee or, at the
direction of the Trustee, to the successor servicer. The compensation of any
successor servicer and claims administrator (including, without limitation, the
Trustee and Co-Trustee) so appointed shall be the aggregate Servicing Fees,
together with the Contingency Fee and other servicing compensation in the form
of assumption fees, late payment charges or otherwise. In the event the Trustee
or Co- Trustee is required to solicit bids as provided herein, the Trustee or
Co-Trustee shall solicit, by public announcement, bids from housing and home
finance institutions, banks and mortgage servicing institutions meeting the
qualifications set forth above. Such public announcement shall specify that the
successor servicer and claims administrator shall be entitled to, with respect
to the Mortgage Loans each would be servicing, the full amount of the aggregate
Servicing Fees and Contingency Fee relating to such Mortgage Loans as servicing
compensation, together with the other servicing compensation in the form of
assumption fees, late payment charges or otherwise. Within thirty days after any
such public announcement, the Trustee or Co-Trustee shall negotiate and effect
the sale, transfer and assignment of the servicing rights and responsibilities
hereunder to the qualified party submitting the highest qualifying bid. The
Trustee or Co-Trustee shall deduct from any sum received by the Trustee or
Co-Trustee from the successor to the Servicer and Claims Administrator in
respect of such sale, transfer and assignment all costs and expenses of any
public announcement and of any sale, transfer and assignment of the servicing
rights and responsibilities hereunder and the amount of any unreimbursed
Servicing Advances and Monthly Advances. After such deductions, the remainder of
such sum shall be paid by the Trustee or Co-Trustee to the Servicer and Claims
Administrator at the time of such sale, transfer and assignment to the
Servicer's and Claims Administrator's successor. The Trustee or Co-Trustee and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession. The Servicer and Claims
Administrator agree to cooperate with the Trustee or Co-Trustee and any
successor servicer and claims administrator in effecting the termination of the
Servicer's and Claims Administrator's servicing responsibilities and rights
hereunder and shall promptly provide the Trustee or Co-Trustee or such successor
servicer, as applicable, all documents and records reasonably requested by it to
enable it to assume the Servicer's and Claims Administrator's functions
hereunder and shall promptly also transfer to the Trustee or Co-Trustee or such
successor servicer and claims administrator, as applicable, all amounts which
then have been or should have been deposited in the Principal and Interest
Account or Spread Account by the Servicer and Claims Administrator or which are
thereafter received with respect to the Mortgage Loans. Neither the Trustee, the
Co-Trustee nor any other successor servicer or claims administrator shall be
held liable by reason of any failure to make, or any delay in making, any
distribution hereunder or any portion thereof caused by (i) the failure of the
Servicer and Claims Administrator to deliver, or any delay in delivering, cash,
documents or records to it, or (ii) restrictions imposed by any regulatory
authority having jurisdiction over the Servicer and Claims Administrator
hereunder. No appointment of a successor to the Servicer and Claims
Administrator hereunder shall be effective until written notice of such proposed
appointment shall have been provided by the Trustee to each Certificateholder
and the Certificate Insurer, and the Trustee shall have consented thereto.
Neither the Trustee nor the Co- Trustee shall resign as servicer until a
successor servicer reasonably acceptable to the Certificate Insurer has been
appointed.
Pending appointment of a successor to the Servicer and the Claims
Administrator hereunder, the Trustee and the Co-Trustee shall act in such
capacity as hereinabove provided. In connection with such appointment and
assumption, the Trustee and the Co-Trustee may make such arrangements for the
compensation of such successor out of payments on Mortgage Loans as it and such
successor shall agree; provided, however, that no such compensation shall be in
excess of that permitted the Servicer and Claims Administrator pursuant to
Section 7.03 or otherwise as provided in this Agreement. The Servicer, the
Claims Administrator, the Trustee, the Co-Trustee, any Custodian and such
successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
Section 10.03 Waiver of Defaults.
The Certificate Insurer or the Majority Certificateholders may, on behalf
of all Certificateholders, and subject to the consent of the Certificate
Insurer, which consent may not be unreasonably withheld, waive any events
permitting removal of the Servicer and the Claims Administrator as servicer
pursuant to this Article X, provided, however, that the Majority
Certificateholders or the Certificate Insurer may not waive a default in making
a required distribution on a Certificate without the consent of the holder of
such Certificate. Upon any 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 thereto except to the
extent expressly so waived.
Section 10.04 Transfer of Tax Matters Person Residual Interest.
Upon any termination of, or appointment of any successor to, the Servicer
hereunder, the Servicer shall promptly upon the request of the Trustee transfer
all of the Tax Matters Person Residual Interest to the Representative, for such
time as the Trustee shall serve as successor Servicer and thereafter the
Representative shall transfer such Tax Matters Person Residual Interest to the
entity that is appointed to succeed the Trustee as Servicer.
Section 10.05. Control by Majority Certificateholders.
The Certificate Insurer or the Majority Certificateholders with the consent
of the Certificate Insurer, which consent may not be unreasonably withheld, may
direct the time, method and place of conducting any proceeding relating to the
Trust Fund or the Certificates or for any remedy available to the Trustee or the
Co-Trustee with respect to the Certificates or exercising any trust or power
conferred on the Trustee or the Co-Trustee with respect to the Certificates or
the Trust Fund provided that:
(i) such direction shall not be in conflict with
any rule of law or with this Agreement;
(ii) the Trustee or the Co-Trustee, as the case may
be, shall have been provided with indemnity satisfactory to
it; and
(iii) the Trustee and the Co-Trustee may take any
other action deemed proper by the Trustee and the Co-Trustee
which is not inconsistent with such direction; provided,
however, that the Trustee and the Co-Trustee need not take any
action which it determines might involve it in liability or
may be unjustly prejudicial to the Holders not so directing.
<PAGE>
ARTICLE XI
TERMINATION
Section 11.01 Termination.
Subject to Section 11.03, this Agreement shall terminate upon notice to the
Trustee of either: (a) the latter of the final payment or other liquidation 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 (b) mutual consent of the Servicer,
the Certificate Insurer and all Certificateholders in writing; provided,
however, that in no event shall the Trust established by this Agreement
terminate later than twenty-one years after the death of the last surviving
lineal descendant of Joseph P. Kennedy, late Ambassador of the United States to
the Court of St. James, alive as of the date hereof.
Subject to Section 11.03, the Servicer may, at its option, and in the
absence of the exercise thereof by the Servicer, the Certificate Insurer may, at
its option, on any date on which the aggregate Principal Balances of the
Mortgage Loans are less than ten percent of the sum of (i) the aggregate
Principal Balances of the Initial Mortgage Loans as of the Cut-Off Date and (ii)
the Original Pre-Funded Amount (such date, the "Optional Servicer Termination
Date"), purchase on the next succeeding Remittance Date, all of the Mortgage
Loans and any related REO Properties at a price equal to the sum of (x) 100% of
the Principal Balances of the Mortgage Loans before the occurrence of Realized
Losses, and any related REO Property, and including the portion of the principal
balance of each 90 Day Delinquent FHA Loan for which the Certificateholders have
not received payment and for which a Claim was submitted to the FHA (y) 30 days'
interest thereon (or, with respect to the Pool II Mortgage Loans, interest for
the actual number of days since the last Remittance Date to but not including
the upcoming Remittance Date) at the weighted average Class AF-1, Class AF-2,
Class AF-3, Class AF-4, Class AF-5, Class AF-6, Class AF-7 and Class AF-8
Remittance Rates in the case of the Pool I Mortgage Loans, the weighted average
Class AV, Class MV-1, Class MV-2 and Class BV Remittance Rates in the case of
the Pool II Mortgage Loans, the weighted average Class AH-1, Class AH-2, Class
AH-3, Class AH-4, Class AH-5, Class AH-6, Class MH-1, Class MH-2 and Class BH
Remittance Rates in the case of the Pool III Mortgage Loans and the Class AMF
Remittance Rate in the case of the Pool IV Mortgage Loans, and (z) with respect
to the Pool I and Pool IV Mortgage Loans, the interest portion of any
unreimbursed Insured Payments made by the Certificate Insurer (the "Termination
Price").
On any Remittance Date on or after the Cross-Over Date when Pool I and/or
Pool IV Mortgage Loans with aggregate original Principal Balances that equal or
exceed 25% of the sum of (i) the aggregate Principal Balance of the Initial
Mortgage Loans as of the Cut-Off Date and (ii) the Original Pre-Funded Amount,
in each case with respect to Pool I and Pool IV Mortgage Loans, have become
Liquidated Mortgage Loans, the Certificate Insurer may determine to purchase and
may cause the purchase from the Trust Fund of all Mortgage Loans and REO
Properties at a price equal to the sum of the Termination Price with respect to
the Trust Fund and the outstanding and unpaid fees and expenses of the Trustee
and the Servicer. In connection with such purchase, the Servicer shall remit to
the Trustee all amounts then on deposit in the applicable Principal and Interest
Account for deposit to the applicable Certificate Account, which deposit shall
be deemed to have occurred immediately preceding such purchase.
In connection with any purchase pursuant to this Section 11.01, the
Certificate Insurer shall provide to the Trustee and the Co-Trustee an opinion
of counsel experienced in federal income tax matters in form and substance
satisfactory to the Trustee and the Co-Trustee to the effect that such purchase
constitutes a "Qualified Liquidation," as such term is defined in the REMIC
Provisions.
Notice of any termination, specifying the Remittance Date upon which the
Trust Fund will terminate and the Certificateholders shall surrender their
Certificates to the Trustee for payment of the final distribution and
cancellation shall be given promptly by the Servicer or the Certificate Insurer
by letter to the Certificateholders mailed during the month of such final
distribution before the Determination Date in such month, specifying (i) the
Remittance Date upon which final payment of the Certificates will be made upon
presentation and surrender of such Certificates at the office of the Trustee
therein designated, (ii) the amount of any such final payment and (iii) that the
Record Date otherwise applicable to such Remittance Date is not applicable,
payments being made only upon presentation and surrender of such Certificates at
the office of the Trustee therein specified. The Servicer shall give such notice
to the Trustee therein specified. The Servicer shall give such notice to the
Trustee at the time such notice is given to Certificateholders. The obligations
of the Certificate Insurer hereunder with respect to the Trust Fund shall
terminate upon the deposit by the Servicer or the Certificate Insurer with the
Trustee of the Termination Price with respect to the Trust Fund. Any obligation
of the Servicer to pay amounts due to the Certificate Insurer and the Trustee
shall survive the termination of the Trust Fund.
In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Servicer shall give a second written notice
to such remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto and shall
at the expense of the Trust Fund cause to be published once, in the eastern
edition of The Wall Street Journal notice that such money remains unclaimed. If
within six months after the second notice all of such Certificates shall not
have been surrendered for cancellation, the Trustee may take appropriate steps,
or may appoint an agent to take appropriate 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 subject
hereto. If within the period then specified in the escheat laws of the State of
New York after the second notice all the Certificates shall not have been
surrendered for cancellation, the Class R Certificateholders shall be entitled
to all unclaimed funds and other assets which remain subject hereto and the
Trustee upon transfer of such funds subject hereto and the Trustee upon transfer
of such funds shall be discharged of any responsibility for such funds and the
Certificateholders shall look to the Class R Certificateholders for payment.
Section 11.02. Termination Upon Loss of REMIC Status.
(a) Following a final determination by the Internal Revenue Service, or by
a court of competent jurisdiction, in either case, from which no appeal is taken
within the permitted time for such appeal, or if any appeal is taken, following
a final determination of such appeal from which no further appeal can be taken,
to the effect that either of REMIC I or REMIC II does not and will no longer
qualify as a REMIC pursuant to Section 860D of the Code (the "Final
Determination"), at any time on or after the date which is 30 calendar days
following such Final Determination, (i) the Majority Certificateholders may
direct the Trustee and the Co-Trustee on behalf of REMIC I and REMIC II to adopt
a "plan of complete liquidation" (within the meaning of Section 860F(a)(4) of
the Code) and (ii) the Certificate Insurer may notify the Trustee of the
Certificate Insurer's determination to purchase from REMIC II all Mortgage Loans
and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then remaining in
REMIC II at a price equal to the Termination Price for the REMIC II. Upon
receipt of such direction by the Majority Certificateholders or of such notice
from the Certificate Insurer, the Trustee shall notify the Class R
Certificateholders of such election to liquidate or such determination to
purchase, as the case may be (the "Termination Notice"). The Holders of a
majority of the Percentage Interest of the Class R Certificates then outstanding
may, within 60 days from the date of receipt of the Termination Notice (the
"Purchase Option Period"), at their option, purchase from REMIC II all Mortgage
Loans and all property theretofore acquired by foreclosure, deed in lieu of
foreclosure, or otherwise in respect of any Mortgage Loan then remaining in
REMIC II at a purchase price equal to the Termination Price for REMIC II.
(b) If, during the Purchase Option Period, the Class R Certificateholders
have not exercised the option described in the immediately preceding paragraph,
then upon the expiration of the Purchase Option Period (i) in the event that the
Majority Certificateholders have given the Trustee and the Co-Trustee the
direction described in clause (a)(i) above, the Trustee (or, with respect to the
Pool III Mortgage Loans, the Co-Trustee) shall sell the Mortgage Loans and
distribute the proceeds of the liquidation of REMIC II in accordance with the
plan of complete liquidation, such that, if so directed, the liquidation of
REMIC II, the distribution of the proceeds of the liquidation and the
termination of this Agreement occur no later than the close of the 60th day, or
such later day as the Class A, Class M and Class B Certificateholders shall
permit or direct in writing, after the expiration of the Purchase Option Period
and (ii) in the event that the Certificate Insurer has given the Trustee notice
of the Certificate Insurer's determination to purchase from REMIC II the assets
described in clause (a)(ii) preceding, the Certificate Insurer shall so purchase
such assets from REMIC II within 60 days after the expiration of the Purchase
Option Period. In connection with such purchase, the Servicer shall remit to the
Trustee all amounts then on deposit in the Principal and Interest Account for
deposit to the Certificate Account, which deposit shall be deemed to have
occurred immediately preceding such purchase.
(c) Following a Final Determination, the Holders of a majority of the
Percentage Interest of the Class R Certificates then outstanding may, at their
option and upon delivery to the Trustee and the Certificate Insurer of an
opinion of nationally recognized tax counsel selected by the Holders of the
Class R Certificates which opinion shall be reasonably satisfactory in form and
substance to the Majority Certificateholders and the Certificate Insurer to the
effect that the effect of the Final Determination is to increase substantially
the probability that the gross income of REMIC II will be subject to federal
taxation, purchase from REMIC II all Mortgage Loans and all property theretofore
acquired by foreclosure, deed in lieu of foreclosure, or otherwise in respect of
any Mortgage Loan then remaining in REMIC II at a purchase price equal to the
Termination Price for REMIC II. In connection with such purchase, the Servicer
shall remit to the Trustee all amounts then on deposit in the Principal and
Interest Account for deposit to the applicable Certificate Account, which
deposit shall be deemed to have occurred immediately preceding such purchase.
The foregoing opinion shall be deemed satisfactory unless the Majority
Certificateholders give the Holders of a majority of the Percentage Interest of
the Class R Certificates notice that such opinion is not satisfactory within
thirty days after receipt of such opinion.
Section 11.03 Additional Termination Requirements.
(a) In the event the Servicer or the Certificate Insurer exercises its
purchase option as provided in Section 11.01 or 11.02, each of REMIC I and REMIC
II shall be terminated in accordance with the following additional requirements,
unless the Trustee has been furnished with an Opinion of Counsel to the effect
that the failure of the Trust Fund to comply with the requirements of this
Section 11.03 will not (i) result in the imposition of taxes on "prohibited
transactions" on REMIC I or REMIC II as defined in Section 860F of the Code, or
(ii) cause REMIC I or REMIC II to fail to qualify as a REMIC at any time that
any Certificates are outstanding:
(i) Within 90 days prior to the final Remittance
Date, the holders of the Class R-1 and Class R-2 Certificates
shall adopt a plan of complete liquidation of REMIC I and
REMIC II, respectively, meeting the requirements of a
"Qualified Liquidation" under Section 860F of the Code and any
regulations thereunder;
(ii) At or after the time of adoption of such a plan
of complete liquidation and at or prior to the final
Remittance Date, the Trustee (or, with respect to the Pool III
Mortgage Loans the Co-Trustee) shall sell for cash all of the
assets of REMIC I and REMIC II to the Servicer, the
Certificate Insurer or the Certificate Insurer's designee; and
(iii) At the time of the making of the final payment
on the Certificates, the Trustee shall (x) deposit into and
withdraw from the Certificate Accounts the amount of such
final payment and shall distribute or credit, or cause to be
distributed or credited, to the Certificateholders of each
Class, the related Class Principal Balance, plus 30 days'
interest thereon (or, with respect to the Adjustable Rate
Certificates and the Auction Rate Certificates, interest on
the actual number of days since the last Remittance Date up to
but not including the upcoming Remittance Date) at the related
Class Remittance Rate, and (y) to the Class R-1
Certificateholders, distribute all cash on hand after such
payment to the respective Certificateholders, and REMIC I and
REMIC II shall terminate at such time.
(b) By their acceptance of the Class R Certificates the holders thereof
hereby (i) agree to adopt such a plan of complete liquidation upon the written
request of the Servicer or Certificate Insurer and to take such other action in
connection therewith as may be reasonably requested by the Servicer and (ii)
appoint the Servicer as their attorney-in-fact, with full power of substitution,
for purposes of adopting such a plan of complete liquidation.
Section 11.04 [omitted]
Section 11.05 Accounting Upon Termination of Servicer and Claims
Administrator.
Upon termination of the Servicer and Claims Administrator under Article X
hereof, the Servicer and Claims Administrator shall:
(a) deliver to its successor or, if none shall yet have been appointed, to
the Trustee the funds in any Principal and Interest Account;
(b) deliver to its successor or, if none shall yet have been appointed, to
the Trustee (or, with respect to the Pool III Mortgage Loans, the Custodian) all
Mortgage Files and related documents and statements held by it hereunder and a
Mortgage Loan portfolio computer tape;
(c) deliver to its successor or, if none shall yet have been appointed, to
the Trustee and, upon request, to the Certificateholders a full accounting of
all funds, including a statement showing the Monthly Payments collected by it
and a statement of monies held in trust by it for the payments or charges with
respect to the Mortgage Loans; and
(d) execute and deliver such instruments and perform all acts reasonably
requested in order to effect the orderly and efficient transfer of servicing of
the Mortgage Loans and administering of the Claims to their successor and to
more fully and definitively vest in such successor all rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer and the Claims
Administrator under this Agreement.
<PAGE>
ARTICLE XII
THE TRUSTEE
Section 12.01 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 perform
such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Default has occurred and has not been cured or waived,
the Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement, provided, however that the
Trustee shall not be responsible for the accuracy or content of any resolution,
certificate, statement, opinion, report, document, order or other instrument
furnished by the Servicer, the Representative, the Claims Administrator or any
Originator hereunder. If any such instrument is found not to conform to the
requirements of this Agreement in a material manner, the Trustee shall take
action as it deems appropriate to have the instrument corrected, and if the
instrument is not corrected to the Trustee's satisfaction, the Trustee will
provide notice thereof to the Certificateholders.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own willful misconduct; provided, however, that:
(i) Prior to the occurrence of an Event of Default,
and after the curing of all such Events of Default which may
have occurred, the duties and obligations of the Trustee shall
be determined solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically
set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed
therein, upon any certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement;
(ii) The Trustee shall not be personally liable for
an error of judgment made in good faith by officers of the
Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with
respect to any action taken, suffered or omitted to be taken
by it in good faith in accordance with the direction of the
Certificate Insurer or the Class A, Class M and Class B
Certificateholders, relating to the time, method and place of
conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Agreement;
(iv) In the absence of actual knowledge of an Event
of Default other than an Event of Nonpayment, the Trustee
shall not be required to take notice or be deemed to have
notice or knowledge of any default or Event of Default unless
the Trustee shall be specifically notified in writing by the
Servicer or the Certificate Insurer or any of the
Certificateholders. In the absence of actual knowledge or
receipt of such notice, the Trustee may conclusively assume
that there is no default or Event of Default; and
(v) The Trustee shall not be required to expend or
risk its own funds or otherwise incur financial liability for
the performance of any of its duties hereunder or the exercise
of any of its rights or powers if there is reasonable ground
for believing that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably
assured to it.
Section 12.02 Certain Matters Affecting the Trustee.
(a) Except as otherwise provided in Section 12.01:
(i) The Trustee may rely 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;
(ii) The Trustee may consult with counsel and any
opinion of counsel shall be full and complete authorization
and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with
such opinion of counsel;
(iii) 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 by litigation
hereunder or in relation hereto at the request, order or
direction of the Certificate Insurer or any of the
Certificateholders, pursuant to the provisions of this
Agreement, unless such Certificateholders or the Certificate
Insurer, as applicable, 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 its exercise as a prudent person
would exercise or use under the circumstances in the conduct
of such person's own affairs;
(iv) The Trustee shall not be personally liable for
any action taken, suffered or omitted by it in good faith and
believed by it to be authorized or within the discretion or
rights or powers conferred upon it by this Agreement;
(v) 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 the Certificate Insurer, Holders of Class A, Class M and
Class B Certificates evidencing Percentage Interests
aggregating not less than 25% of the Class Principal Balances
of all Class A, Class M and Class B Certificates; 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 taking any such action.
The reasonable expense of every such examination shall be paid
by the Servicer or, if paid by the Trustee, shall be repaid by
the Servicer upon demand from the Servicer's own funds;
(v) The right of the Trustee to perform any
discretionary act enumerated in this Agreement shall not be
construed as a duty, and the Trustee shall not be
answerable for other than its negligence or willful
misconduct in the performance of such act;
(vi) The Trustee shall not be required to give any
bond or surety in respect of the execution of the trust
created hereby or the powers granted hereunder; and
(vii) 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.
(b) Following the Startup Day, except for deposits into the Spread Account
pursuant to Section 6.05, the Trustee shall not knowingly accept any
contribution of assets to the Trust Fund, unless the Trustee shall have received
an Opinion of Counsel to the effect that the inclusion of such assets in the
Trust Fund will not cause the Trust Fund to fail to qualify as a REMIC at any
time that any Certificates are outstanding or subject the Trust Fund to any tax
under the REMIC Provisions or other applicable provisions of federal, New York
State or New York City law or ordinances.
Section 12.03 Trustee Not Liable for Certificates or Mortgage Loans.
The recitals contained herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall be taken as the
statements of the Servicer, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Agreement or of the Certificates or of any Mortgage Loan or
related document. The Trustee shall not be accountable for the use or
application by 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
Servicer in respect of the Mortgage Loans or deposited in or withdrawn from the
Principal and Interest Account by the Servicer. The Trustee shall not be
responsible for the legality or validity of the Agreement or the validity,
priority, perfection or sufficiency of the security for the Certificates issued
or intended to be issued hereunder.
Section 12.04 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, and may otherwise deal with the parties hereto.
Section 12.05 Servicer To Pay Trustee's Fees and Expenses.
The Servicer covenants and agrees to pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trusts
hereby created and in the exercise and performance of any of the powers and
duties hereunder of the Trustee, and the Servicer will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any of the provisions of this
Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
except any such expense, disbursement or advance as may arise from its
negligence or bad faith, provided that the Trustee shall have no lien on the
Trust Fund, other than the Expense Accounts, for the payment of its fees and
expenses. To the extent that actual fees and expenses of the Trustee exceed the
amount available for payment thereof on deposit in the Expense Accounts as of
the date such fees and expenses are due and payable, the Servicer shall
reimburse the Trustee for such shortfall out of its own funds without
reimbursement therefor, except as provided in Section 6.03. The Trustee and any
director, officer, employee or agent of the Trustee shall be indemnified by the
Servicer and held harmless against any loss, liability or expense (i) incurred
in connection with any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense incurred by reason of
willful misfeasance, bad faith or negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
hereunder, and (ii) resulting from any error in any tax or information return
prepared by the Servicer. The obligations of the Servicer under this Section
12.05 shall survive payment of the Certificates, and shall extend to any
co-trustee appointed pursuant to this Article XII.
Section 12.06 Eligibility Requirements for Trustee.
The Trustee hereunder shall at all times be a banking association organized
and doing business under the laws of any state or the United States of America,
(i) authorized under such laws to exercise corporate trust powers, (ii) having a
combined capital and surplus of at least $30,000,000, (iii) except in the case
of The Bank of New York, whose unsecured and unguaranteed long-term debt
obligations shall be rated at least "A" by S&P, or such other rating as is
acceptable to the Certificate Insurer, (iv) subject to supervision or
examination by federal or state authority, and (v) is reasonably acceptable to
the Certificate Insurer. If such banking association 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 its combined capital and surplus shall be deemed to be 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, upon the request of the Certificate Insurer
or the Majority Certificateholders, in the manner and with the effect specified
in Section 12.07.
Section 12.07 Resignation and Removal of the Trustee.
The Trustee may at any time resign and be discharged from the trusts hereby
created by giving written notice thereof to the Servicer, the Certificate
Insurer and to all Certificateholders. Upon receiving such notice of
resignation, the Servicer shall with the consent of the Certificate Insurer
promptly appoint a successor trustee by written instrument, in duplicate, which
instrument shall be delivered to the resigning Trustee and to the successor
trustee. A copy of such instrument shall be delivered to the Certificateholders
by the Servicer. Unless a successor trustee shall have been so appointed and
have accepted appointment within 60 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 the resigning
Trustee fails to petition an appropriate court, the Certificate Insurer may,
after such 60 day period, 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 12.06 and shall fail to resign after written request
therefor by the Servicer, 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 Servicer may remove the
Trustee and appoint, subject to the approval of the Certificate Insurer, a
successor trustee by written instrument, in duplicate, which instrument shall be
delivered to the Trustee so removed and to the successor trustee. A copy of such
instrument shall be delivered to the Certificateholders by the Servicer.
The Majority Certificateholders with the consent of the Certificate
Insurer, which consent will not be unreasonably withheld, or the Certificate
Insurer 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 Servicer, one complete set to the Trustee so removed
and one complete set to the successor Trustee so appointed.
Any resignation or removal of the Trustee and appointment of a successor
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
12.08.
Section 12.08 Successor Trustee.
Any successor trustee appointed as provided in Section 12.07 shall execute,
acknowledge and deliver to the Servicer and to its predecessor trustee an
instrument accepting such appointment hereunder, and thereupon the resignation
or removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor
hereunder, with 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 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 12.06.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the Servicer shall mail notice of the succession of such trustee
hereunder to all Holders of Certificates at their addresses as shown in the
Certificate Register. If the Servicer fails to mail such notice within 10 days
after acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be mailed at the expense of the Servicer.
Section 12.09 Merger or Consolidation of Trustee.
Any Person into which the Trustee may be merged or converted or with which
it may be consolidated or any corporation or national banking association
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation or national banking association succeeding
to the business of the trustee, shall be the successor of the Trustee hereunder,
provided such corporation or national banking association shall be eligible
under the provisions of Section 12.06, 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 12.10 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, 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
Servicer and the Trustee acting jointly shall have the power and shall execute
and deliver all instruments to appoint one or more Persons approved by the
Trustee, and the Certificate Insurer pursuant to the procedure set forth below,
to act as co-trustee or co-trustees, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust 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 12.10,
such powers, duties, obligations, rights and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in 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 12.06 hereunder and no notice to Holders of
Certificates of the appointment of co-trustee(s) or separate trustee(s) shall be
required under Section 12.08 hereof. Any co-trustee with respect to the FHA
Loans must at all times have a valid FHA Contract of Insurance. The Trustee
shall notify the Certificate Insurer prior to the appointment of any
co-trustee(s) or separate trustee(s) and the Certificate Insurer shall have four
Business Days from its receipt of such notice to notify the Trustee whether it,
in its reasonable judgment, disapproves of such co-trustee(s) or separate
trustee(s). If the Certificate Insurer does not notify the Trustee within such
time frame, it will be deemed to have approved such co-trustee(s) or separate
trustee(s). If the Certificate Insurer notifies the Trustee within such time
frame that it, in its reasonable judgment, disapproves of such co-trustee(s) or
separate trustee(s) (which notice shall be accompanied by the name(s) of the
Certificate Insurer's alternative proposed co-trustee(s) or separate
trustee(s)), such appointments shall not be effective.
In the case of any appointment of a co-trustee or separate trustee pursuant
to this Section 12.10, 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 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.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Every
such instrument shall be filed with the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee, its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. The Trustee shall not be responsible
for any action or inaction of any such separate trustee or co-trustee. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor trustee.
The Servicer and the Trustee hereby appoint First Union Trust Company,
National Association, as Co-Trustee with respect to all Pool III Mortgage Loans
that constitute, or may in the future constitute, part of the Trust Fund. Except
as otherwise specifically provided herein, whenever action, consent, approval or
delivery to or from the Trustee is required under this Agreement in connection
with a Pool III Mortgage Loan, such action, consent, approval or delivery to or
from shall be taken or made by the Co-Trustee. Also, any obligations of or
benefits, protection and indemnities provided to, the Trustee with respect to
the Mortgage Loans shall be obligations of, and benefits, protection and
indemnities provided to, the Co-Trustee with respect to the Pool III Mortgage
Loans.
Notwithstanding any contrary provision contained herein, the Co-Trustee
shall be responsible hereunder solely for the express duties and functions
specified for it herein with respect to the acceptance, ownership, servicing
compliance oversight, FHA Title I insurance coverage, substitution, sale,
release and discharge of Pool III Mortgage Loans, and shall not be responsible
for, and shall incur no liability in connection with, the actions, duties and
functions of the Trustee, including without limitation the payment of
Certificates or the oversight of servicing compliance for Mortgage Loans not
constituting Pool III Mortgage Loans.
Section 12.11 Authenticating Agent.
Upon the request of the Servicer, the Trustee shall appoint an
Authenticating Agent, with power to act on the Trustee's behalf and subject to
its direction in the authentication and delivery of the Certificates in
connection with transfers and exchanges under Section 4.02, as fully to all
intents and purposes as though the Authenticating Agent had been expressly
authorized by that Section to authenticate and deliver Certificates. For all
purposes of this Agreement, the authentication and delivery of Certificates by
the Authenticating Agent pursuant to this Section shall be deemed to be the
authentication and delivery of Certificates by the Trustee. Such Authenticating
Agent shall at all times be a Person meeting the requirements for the Trustee
set forth in Section 12.06, other than Section 12.06(iv).
Any corporation or national banking association into which any
Authenticating Agent may be merged or converted or with which it may be
consolidated, or any corporation or national banking association resulting from
any merger, consolidation or conversion to which any Authenticating Agent shall
be a party, or any corporation or national banking association succeeding to the
corporate trust business of any Authenticating Agent, shall be the successor of
the Authenticating Agent hereunder, if such successor corporation or national
banking association is otherwise eligible under this Section, without the
execution or filing of any further act on the part of the parties hereto or the
Authenticating Agent or such successor corporation.
Any Authenticating Agent may at any time resign by giving notice of
resignation to the Trustee and the Servicer. 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 Servicer. Upon receiving such a
notice of resignation or upon such a termination, or in case at any time any
Authenticating Agent shall cease to be eligible under this Section, the Trustee
shall promptly appoint a successor Authenticating Agent and shall give written
notice of such appointment to all Certificateholders as their names and
addresses appear on the Certificate Register. The Servicer agrees to pay to the
Authenticating Agent from time to time reasonable compensation for its services.
The provisions of Sections 4.04 and 12.03 shall be applicable to any
Authenticating Agent.
Section 12.12 Tax Returns and Reports.
The Trustee, upon request, will furnish the Servicer with all such
information as may be reasonably required in connection with the Servicer's
preparation of all Tax Returns of REMIC I and REMIC II and, upon request within
five (5) Business Days after its receipt thereof, shall (i) sign on behalf of
REMIC I and REMIC II any Tax Return that the Trustee is required to sign
pursuant to applicable federal, state or local tax laws, and (ii) cause such Tax
Return to have been returned to the Servicer for filing.
For Federal income tax purposes, the taxable year of the Trust Fund shall
be a calendar year and the Servicer shall maintain or cause the maintenance of
the books of REMIC I and REMIC II on the accrual method of accounting.
The Servicer shall prepare and file or cause to be filed with the Internal
Revenue Service Federal tax information returns with respect to REMIC I and
REMIC II and the Certificates containing such information and at the times and
in the manner as may be required by the Code or applicable Treasury regulations,
and shall furnish to each Holder of Certificates at any time during the calendar
year for which such returns or reports are made such statements or information
at the times and in the manner as may be required thereby. In connection with
the foregoing, the Servicer shall provide the name, address and telephone number
of the person who can be contacted to obtain information required to be reported
to the holders of regular interests in REMIC I and REMIC II (the "REMIC
Reporting Agent") as required by IRS Form 8811. The Servicer shall indicate the
election to treat each of REMIC I and REMIC II as a REMIC (which election shall
apply to the taxable period ending December 31, 1997 and each calendar year
thereafter) in such manner as the Code or applicable Treasury regulations may
prescribe. The Trustee shall sign all tax information returns filed pursuant to
this Section and any other returns as may be required by the Code, and in doing
so shall rely entirely upon, and shall have no liability for information
provided by, or calculations provided by, the Servicer. The Representative is
hereby designated as the Tax Matters Person (within the meaning of Section
1.860F-4(d) of the Regulations) for each of REMIC I and REMIC II. Any Holder of
a Class R Certificate will by acceptance thereof so appoint the Representative
as agent and attorney-in-fact for the purpose of acting as Tax Matters Person
for the related REMIC. In the event that the Code or applicable Treasury
Regulations prohibit the Trustee from signing tax or information returns or
other statements, or the Representative from acting as Tax Matters Person (as an
agent or otherwise), the Trustee or the Representative shall take whatever
action that in its sole good faith judgment is necessary for the proper filing
of such information returns or for the provision of a tax matters person,
including designation of the Holder of a Class R Certificate to sign such
returns or act as tax matters person. Each Holder of a Class R Certificate shall
be bound by this Section.
The Trustee shall provide upon request such information as required in
Section 860D(a)(6)(B) of the Code to the Internal Revenue Service and any Person
purporting to transfer a Class R Certificate.
Section 12.13 Appointment of Custodians.
The Trustee may (or, with respect to the Pool III Mortgage Loans, the
Co-Trustee may), with the consent of the Servicer, appoint one or more
Custodians to hold all or a portion of the Trustee's Mortgage Files as agent for
the Trustee (or, with respect to the Pool III Mortgage Loans, the Co-Trustee),
by entering into a Custodial Agreement. Subject to this Article XII, the Trustee
(or, with respect to the Pool III Mortgage Loans, the Co-Trustee) agrees to
comply with the terms of each Custodial Agreement and to enforce the terms and
provisions thereof against the Custodian for the benefit of the
Certificateholders and the Certificate Insurer. The Trustee (or, with respect to
the Pool III Mortgage Loans, the Co-Trustee) shall be liable for the fees of any
Custodian appointed hereunder. Each Custodian (other than First Trust National
Association) shall be a depository institution subject to supervision by federal
or state authority, shall be qualified to do business in the jurisdiction in
which it holds any Mortgage File.
The Co-Trustee and the Servicer hereby appoint First Trust National
Association as Custodian with respect to the Trustee's Mortgage Files relating
to all Pool III Mortgage Loans that constitute, or may in the future constitute,
part of the Trust Fund. The Custodian shall be responsible hereunder solely for
the express duties and functions specified for it herein with respect to the
custody, review and confirmation, safekeeping, substitution and release of the
Trustee's Mortgage Files relating to the Pool III Mortgage Loans.
Section 12.14. Protection of Trust Fund.
(a) The Trustee will hold the Trust Fund in trust for the benefit of the
Holders and the Certificate Insurer and, upon request of the Certificate
Insurer, or, with the consent of the Certificate Insurer, at the request of the
Representative, will from time to time execute and deliver all such supplements
and amendments hereto pursuant to Section 13.02 hereof and all instruments of
further assurance and other instruments, and will take such other action upon
such request as it deems reasonably necessary or advisable, to:
(i) more effectively hold in trust all or any
portion of the Trust Fund;
(ii) perfect, publish notice of, or protect the
validity of any grant made or to be made by this
Agreement;
(iii) enforce any of the Mortgage Loans; or
(iv) preserve and defend title to the Trust Fund and
the rights of the Trustee, and the ownership interests of the
Owners represented thereby, in the Trust Fund against the
claims of all Persons and parties.
The Trustee shall send copies of any request received from the Certificate
Insurer or the Representative to take any action pursuant to this Section 12.14
to the others.
(b) Subject to Article X hereof, the Trustee shall have the power to
enforce, and shall enforce the obligations of the other parties to this
Agreement and of the Certificate Insurer, by action, suit or proceeding at law
or equity, and shall also have the power to enjoin, by action or suit in equity,
any acts or occurrences which may be unlawful or in violation of the rights of
the Holders; provided, however, that nothing in this Section 12.14 shall require
any action by the Trustee unless the Trustee shall first (i) have been furnished
indemnity satisfactory to it and (ii) when required by this Agreement, have been
requested to take such action by the Majority Certificateholders, the
Certificate Insurer or the Representative in accordance with the terms of this
Agreement.
(c) The Trustee shall execute any instrument required pursuant to this
Section so long as such instrument does not conflict with this Agreement or with
the Trustee's fiduciary duties.
Section 12.15. Calculation of LIBOR.
(a) On each Interest Determination Date, the Trustee will determine LIBOR
based on the rate for one-month U.S. dollar deposits (the "One Month Index
Maturity") which appears on Telerate Page 3750 as of 11:00 a.m., London time, on
such date in determining the Class AV and Class BV Remittance Rates for the
Remittance Date in the following month. If such LIBOR rate does not appear on
Telerate Page 3750, the LIBOR rate for that day will be determined on the basis
of the rates at which deposits in United States dollars, having the One-Month
Index Maturity and in a principal amount of not less than U.S. $1,000,000, are
offered at approximately 11:00 a.m., London time, on that day to prime banks in
the London interbank market by the Reference Banks. The Trustee will request the
principal London office of each of the Reference Banks to provide a quotation of
its rate. If at least two such quotations are provided, the rate for that day
will be the arithmetic mean of the quotations. If fewer than two quotations are
provided, the rate for that day will be the arithmetic mean of the rates quoted
by major banks in New York City, selected by the Trustee, at approximately 11:00
a.m., New York City time, on that day for loans in United States dollars to
leading European banks having a One-Month Index Maturity and in a principal
amount equal to an amount of not less than U.S. $1,000,000; provided that if the
banks selected as aforesaid are not quoting as mentioned in this sentence, LIBOR
in effect for the applicable Interest Period will be LIBOR in effect for the
previous Interest Period.
Neither the Representative, Servicer nor the Trustee shall have any
liability or responsibility to any Person for the selection of any Reference
Bank for the purpose of determining LIBOR. In determining LIBOR and the Class AV
and Class BV Remittance Rates, the Trustee may conclusively rely and shall be
protected in relying upon the rates appearing on Telerate Page 3750 or the
offered quotations (whether written, oral or on Telerate Page 3750) from
Reference Banks, as appropriate, in effect from time to time. Neither of the
Representative, the Servicer, the Certificate Insurer nor the Trustee shall have
liability or responsibility to any Person for (i) the Trustee's selection of
Reference Banks for purposes of determining LIBOR or (ii) the Trustee's or the
Servicer's inability, as applicable, following a good-faith reasonable effort,
to obtain such quotations from Reference Banks or such New York City banks or to
determine such arithmetic mean, all as provided for in this Section 12.15.
The establishment of LIBOR and the Class AV and Class BV Remittance Rates
by the Trustee shall (in the absence of manifest error) be final, conclusive and
binding upon each Holder of a Certificate, the Representative and the Servicer.
The Trustee is not responsible for determining (or for the failure of the
Servicer to determine) the Net Funds Cap.
<PAGE>
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 Acts of Certificateholders.
Except as otherwise specifically provided herein, whenever
Certificateholder action, consent or approval is required under this Agreement,
such action, consent or approval shall be deemed to have been taken or given on
behalf of, and shall be binding upon, all Certificateholders if the Majority
Certificateholders agree to take such action or give such consent or approval.
Section 13.02 Amendment.
(a) This Agreement may be amended from time to time by the Servicer and the
Trustee by written agreement, upon the prior written consent of the Certificate
Insurer, without notice to or consent of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions herein, to comply with any
changes in the Code, or to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement, any Custodial Agreement or the Insurance
Agreement; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel delivered to the Trustee, adversely affect the interests of
any Certificateholder in any material respect or any other party and further
provided that no such amendment shall 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, or change the rights or obligations of any other party hereto
without the consent of such party.
(b) This Agreement may be amended from time to time by the Originators, the
Representative, the Servicer and the Trustee, with the prior written consent of
the Certificate Insurer, the Majority Certificateholders and the Holders of the
majority of the Percentage Interest in each of the Class X, Class R-1 and Class
R-2 Certificates 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; provided, however, that no such amendment
shall be made unless the Trustee receives an Opinion of Counsel, at the expense
of the party requesting the change, that such change will not adversely affect
the status of either REMIC I or REMIC II as a REMIC or cause a tax to be imposed
on REMIC I or REMIC II, and provided further, that no such amendment shall
reduce in any manner the amount of, or delay the timing of, any amounts which
are required to be distributed on any Certificate without the consent of the
Holder of such Certificate or reduce the percentage for each Class the Holders
of which are required to consent to any such amendment without the consent of
the Holders of 100% of each Class of Certificates affected thereby.
(c) It shall not be necessary for the consent of Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent shall approve the substance thereof.
Section 13.03 Recordation of Agreement.
To the extent permitted by applicable law, this Agreement is subject to
recordation in all appropriate public offices for real property records in all
of the counties or other comparable jurisdictions in which any or all of the
properties subject to the Mortgages are situated, and in any other appropriate
public recording office or elsewhere, such recordation to be effected by the
Servicer at the Certificateholders' expense on direction of the Majority
Certificateholders, but only when accompanied by an Opinion of Counsel to the
effect that such recordation materially and beneficially affects the interests
of the Certificateholders or is necessary for the administration or servicing of
the Mortgage Loans.
Section 13.04 Duration of Agreement.
This Agreement shall continue in existence and effect until terminated as
herein provided.
Section 13.05 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, without giving effect to
principles of conflicts of law.
Section 13.06 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
overnight mail, certified mail or registered mail, postage prepaid, to (i) in
the case of the Representative, the Servicer, the Claims Administrator, and each
Originator, The Money Store Inc., 2840 Morris Avenue, Union, New Jersey 07083,
Attention: Executive Vice President, or such other addresses as may hereafter be
furnished to the Certificateholders in writing by the Representative and the
Servicer, (ii) in the case of the Trustee, The Bank of New York, 101 Barclay
Street, 12th Floor East, New York, New York 10286, Attention: Corporate Trust
MBS Administration, (iii) in the case of the Certificateholders, as set forth in
the Certificate Register, (iv) in the case of Moody's, to Moody's Investors
Service, Home Equity Group, 99 Church Street, 4th Floor, New York, New York
10007, (v) in the case of S&P, to Standard & Poor's Investors Services, 25
Broadway, 20th Floor, New York, New York 10004, Attention: Residential
Mortgages, (vi) in the case of Fitch, to Fitch Investors Service, L.P., One
State Street Plaza, New York, New York 10004, Attention: Residential Mortgage
Loan Structured Finance and, (vii) in the case of the Co-Trustee, First Union
Trust Company, National Association, One Rodney Square, First Floor, 920 King
Street, Wilmington, Delaware 19801, Attention: Corporate Trust Department. Any
such notices shall be deemed to be effective with respect to any party hereto
upon the receipt of such notice by such party, except that notices to the
Certificateholders shall be effective upon mailing or personal delivery.
Section 13.07 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or terms of
this Agreement shall be held invalid for any reason whatsoever, 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 covenants,
agreements, provisions or terms of this Agreement.
Section 13.08 No Partnership.
Nothing herein contained shall be deemed or construed to create a
co-partnership or joint venture between the parties hereto and the services of
the Servicer shall be rendered as an independent contractor and not as agent for
the Certificateholders.
Section 13.09 Counterparts.
This Agreement may be executed in one or more counterparts and by the
different parties hereto on separate counterparts, each of which, when so
executed, shall be deemed to be an original; such counterparts, together, shall
constitute one and the same agreement.
Section 13.10 Successors and Assigns.
This Agreement shall inure to the benefit of and be binding upon the
Representative, the Servicer, the Originators, the Trustee and the
Certificateholders and their respective successors and assigns.
Section 13.11 Headings.
The headings of the various sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed to be part of this
Agreement.
Section 13.12 The Certificate Insurer.
Any right conferred to the Certificate Insurer shall be suspended during
any period in which the Certificate Insurer is in default in its payment
obligations under a Certificate Insurance Policy. At such time as the Pool I and
Pool IV Certificates are no longer outstanding hereunder, and no amounts owed to
the Certificate Insurer hereunder remain unpaid, the Certificate Insurer's
rights hereunder shall terminate. The notice address of the Certificate Insurer
is MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504,
Attention: Surveillance Department (The Money Store).
Section 13.13 Paying Agent.
The Trustee may, subject to the eligibility requirements for the Trustee
set forth in Section 12.06 hereof, other than Section 12.06(iv), appoint one or
more successor Paying Agents.
Each Paying Agent, immediately upon such appointment, shall signify its
acceptance of the duties and obligations imposed upon it by this Agreement by
written instrument of acceptance deposited with the Trustee.
Each such Paying Agent other than the Trustee shall execute and deliver to
the Trustee an instrument in which such Paying Agent shall agree with the
Trustee, subject to the provisions of Section 6.06, that such Paying Agent will:
(i) allocate all sums received for distribution to the
Holders of Certificates of each Class for which it is
acting as Paying Agent on each Remittance Date among
such Holders in the proportion specified by the
Trustee; and
(ii) hold all sums held by it for the distribution of
amounts due with respect to the Certificates in trust
for the benefit of the Holders entitled thereto until
such sums shall be paid to such
Holders or otherwise disposed of as herein provided
and pay such sums to such Persons as herein provided.
Any Paying Agent other than the Trustee may at any time resign and be
discharged of the duties and obligations created by this Agreement by giving at
least sixty (60) days written notice to the Trustee. Any such Paying Agent may
be removed at any time by an instrument filed with such Paying Agent signed by
the Trustee.
In the event of the resignation or removal of any Paying Agent other than
the Trustee such Paying Agent shall pay over, assign and deliver any moneys held
by it as Paying Agent to its successor, or if there be no successor, to the
Trustee.
Upon the appointment, removal or notice of resignation of any Paying Agent,
the Trustee shall notify the Certificate Insurer and the Certificateholders by
mailing notice thereof to their addresses appearing on the Certificate Register.
Section 13.14 Notification to Rating Agencies.
The Trustee shall give prompt notice to the Rating Agencies of the
occurrence of any of the following events of which it has received notice: (1)
any modification or amendment to this Agreement, (2) any appointment of a
Custodian (other than First Trust National Association), (3) any change of the
Trustee or the Servicer (4) any Event of Default, and (5) the final payment of
all the Certificates. The Servicer shall promptly deliver to the Rating Agencies
a copy of each of the Servicer's Certificates. Further, the Representative shall
give prompt notice to the Rating Agencies if the Representative or any of its
affiliates acquire any Pool I or Pool IV Certificates, which notice shall
acknowledge that the Representative, or such affiliate understands that such
Pool I or Pool IV Certificates so acquired will not be entitled to the benefits
of the Certificate Insurance Policy and, accordingly, will not be rated by the
Rating Agencies so long as such Pool I or Pool IV Certificates are owned by the
Representative or any such affiliate.
Section 13.15 Third Party Rights.
The Trustee, the Representative, the Servicer and each of the Originators
listed herein agree that the Certificate Insurer shall be deemed a third-party
beneficiary of this Agreement entitled to all the rights and benefits set forth
herein as fully as if it were a party hereto.
<PAGE>
IN WITNESS WHEREOF, the Representative, the Servicer, the Claims
Administrator, the Trustee and each Originator have caused their names to be
signed hereto by their respective officers thereunto duly authorized as of the
day and year first above written.
THE MONEY STORE INC., as
Representative, Servicer
and Claims Administrator
By: /S/ MICHAEL H. BENOFF
Name: Michael H. Benoff
Title: Executive Vice President
THE BANK OF NEW YORK, as Trustee
By: /S/ ROBERT MULLER
Name: Robert Muller
Title: Assistant Treasurer
THE ORIGINATORS
The Money Store/Minnesota Inc.
The Money Store/D.C. Inc.
The Money Store/Kentucky Inc.
The Money Store Home Equity Corp.
TMS Mortgage Inc.
By: /S/ MICHAEL H. BENOFF
Name: Michael H. Benoff
Title: Executive Vice President
<PAGE>
ACCEPTANCE OF ASSISTANT CLAIMS ADMINISTRATOR
TMS Mortgage Inc., a New Jersey corporation, hereby accepts its appointment
pursuant to Section 9.05 of the within instrument to serve as Assistant Claims
Administrator. In connection therewith, TMS Mortgage Inc. agrees to be bound by
all applicable provisions of such instrument.
TMS MORTGAGE INC.,
as Assistant Claims
Administrator
By: /S/ MICHAEL H. BENOFF
Name: Michael H. Benoff
Title: Executive Vice President
<PAGE>
ACCEPTANCE OF CO-TRUSTEE
First Union Trust Company, National Association hereby accepts its
appointment pursuant to Section 12.10 of the within instrument to serve as
Co-Trustee with respect to the Pool III Mortgage Loans. In connection therewith,
First Union Trust Company, National Association agrees to be bound by all
applicable provisions of such instrument.
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, as Co-Trustee
By: /S/ PABLO DE LA CANAL
Name: Pablo dela Canal
Title:
<PAGE>
ACCEPTANCE OF CUSTODIAN
First Trust National Association hereby accepts its appointment pursuant to
Section 12.13 of the within instrument to serve as Custodian with respect to the
Pool III Mortgage Loans. In connection therewith, First Trust National
Association agrees to be bound by all applicable provisions of such instrument.
FIRST TRUST NATIONAL ASSOCIATION, as
Custodian
By: /S/ JUDY SPAHN
Name: Judy Spahn
Title:
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW York )
On the 30th day of September 1997 before me, a Notary Public in and for
said State, personally appeared ____________________ known to me to be an
officer of The Bank of New York, a New York banking corporation that executed
the within instrument, and also known to me to be the person who executed it on
behalf of said New York banking corporation, and acknowledged to me that such
New York banking corporation, executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
My Commission expires
STATE OF NEW JERSEY )
: ss.:
COUNTY OF NEW JERSEY )
On the 30th day of September 1997 before me, a Notary Public in and for the
State of New Jersey, personally appeared Michael Benoff known to me to be the
Executive Vice President of The Money Store Inc., one of the corporations that
executed the within instrument and also known to me to be the person who
executed it on behalf of said corporation, and acknowledged to me that such
corporation executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
My Commission expires
<PAGE>
STATE OF NEW JERSEY )
: ss.:
COUNTY OF NEW JERSEY )
On the 30th day of September 1997 before me, a Notary Public in and for the
State of New Jersey, personally appeared Michael Benoff known to me to be the
Executive Vice President of each Originator listed on Exhibit I to the within
instrument, and also known to me to be the person who executed it on behalf of
each such corporation, and acknowledged to me that each such corporation
executed the within instrument.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year in this certificate first above written.
Notary Public
My Commission expires
